|Title:||United States top 10 largest insurer insolvencies ranked by payments and recoveries in dollars including recovery-to-total-payment percentages as of 2011|
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XX Largest Insolvencies
Here are the top XX insolvencies within the property and casualty
guaranty fund system, based on payments and recoveries. Guaranty fund
payments include claim loss payments, claim expenses and unearned
premium payments less any loss expense recoveries. Net expenses
reflect the total guaranty payments less recoveries.
Guaranty Guaranty Fund Fund Net Insolvent Company Payments Recoveries Expenses
Reliance Insurance Co. $X.XXb $X.XXb $X.XXb Legion Insurance Co. $X.XXb $XXX.Xm $XXX.Xm California Compensation Insurance Co. $X.XXb $XXX.Xm $XXX.Xm Fremont Indemnity Co. $X.XXb $XXX.Xm $XXX.Xm Phico Insurance Co. $XXX.Xm $XXXm $XXX.Xm Southern Family Insurance Co. $XXX.Xm $XXX.Xm $XXX.Xm American Mutual Liability Insurance Co. $XXX.Xm $XXX.Xm $XXX.Xm Transit Casualty Co. $XXX.Xm $XXX.Xm $XXX.Xm Midland Insurance Co. $XXX.Xm $XX.Xm $XXX.Xm Superior National Insurance Co. $XXX.Xm $XXX.Xm $XXX.Xm Total Top XX $XX.XXb $X.XXb $X.XXb Grand Total All Insolvencies $XX.XXb $XX.XXb $XX.XXb
Recoveries As To Total Insolvent Company Payments
Reliance Insurance Co. XX% Legion Insurance Co. XX% California Compensation Insurance Co. XX% Fremont Indemnity Co. XX% Phico Insurance Co. XX% Southern Family Insurance Co. XX% American Mutual Liability Insurance Co. XX% Transit Casualty Co. XX% Midland Insurance Co. XX% Superior National Insurance Co. XX% Total Top XX XX% Grand Total All Insolvencies XX%
Note: Covers period from guaranty fund inception through 2009.
Source: National Conference of Insurance Guaranty Funds
Insolvent insurers may come and never quite go away quickly enough, but Reliance Insurance Co. will always occupy a special place in Joe DiMemmo's memory.
As Pennsylvania's deputy insurance commissioner for the Office of Liquidations, Rehabilitation and Special Funds, DiMemmo has spent the last decade leading a collective effort to resolve not just one, but three of the insurance industry's largest insolvencies.
DiMemmo said he keeps telling the Reliance team that they have two more years of cleanup work, but realizes it will take at least twice that time, if not more.
"We're looking at a five-year span to be pretty much done," DiMemmo said.
That same time span goes for Legion Insurance Co., an insurer that came under his office's supervision March XX, 2002--just five months after a judge ordered Reliance's liquidation.
Sandwiched in between those two events was the court-ordered liquidation of Phico Insurance Co., a state-based medical professional liability provider. These three Pennsylvania companies remain among the industry's top five property/casualty insolvencies, according to the National Conference of Insurance Guaranty Funds.
It's not something that DiMemmo brags about, but there is a confidence in the level of success that he anticipates once the three insolvencies conclude.
"I would think that Reliance, Legion and Phico, when they are completed, will be good examples of how to conduct a liquidation," DiMemmo said.
At the end of 2010, Reliance had estimated liabilities of $X billion, according to the most recent court filing. Assets stood at $X billion, with roughly $X billion coming from reinsurance proceeds--a key recovery area in receiverships that can grow contentious and quickly chew up time and resources.
For another measure of success in Reliance's receivership, DiMemmo notes that $X billion has been paid out to guaranty association funds for reimbursement of covered claims.
There also have been XXX,XXX proofs-of-claim filed against the Reliance estate.
"If we had X,XXX before that, that was a big number," DiMemmo said, referring to the magnitude of Reliance's insolvency. He said state regulators spent the first year trying to get their arms around what was essentially a multiline New York City-based operation with XXX employees.
It's not just sheer size that separates Reliance from other insolvencies. DiMemmo said several aspects have become "firsts" In prior insolvencies, about XX% of the value in filed claims was covered under state guaranty association limits. In Reliance's case, that level tapered off to XX%, meaning that the balance of those claims must be recovered from estate proceeds.
"That's the first time that we've actually seen that kind of allocation between covered and uncovered," he said.
Some claimants didn't qualify for guaranty association coverage because they had a net worth in excess of $XX million, something else DiMemmo said he's never come across.
The state also has posted detailed quarterly financial legal filings on Reliance, as well as other insolvencies, to a department-run public website. "It is information that is available to claimants to gauge where they stand and the likelihood of what they are going to get at the end of the day," DiMemmo said.
That effort indirectly serves yet another new wrinkle that DiMemmo saw while unfolding Reliance's book of business: claimants selling their stakes in the estate to third parties.
"There are people out there saying, 'I'll give you XX cents on the dollar now,' hoping that they'll get XX cents on that claim at the end of the day," DiMemmo said.
Fewer Impairments in 2010
The number of financially impaired insurers tapered off in 2010. Eleven property/casualty companies were deemed financially impaired in 2010, according to an A.M. Best Co. Special Report issued May X, 2011. That was down from XX in 2009. Of that 2010 group, seven were commercial insurers. The report also noted three impairments in 2011: two Florida automobile insurers and a California workers' compensation writer.