Louisiana Insurance Guaranty Association (LIGA) Executive Director John Wells told the LIGA board of directors at its March 25 meeting that Bedivere Insurance Company was placed in liquidation by the Pennsylvania courts on March 11. Wells reported that the Pennsylvania Department of Insurance has only given LIGA a count of approximately 30 workers’ compensation claims. He expects LIGA to receive more because LIGA has already started to get calls from defense attorneys involved in asbestos litigation.
According to Wells, Bedivere was the “surviving” company in the December 2020 merger of three run-off insurers in the Trebuchet group, itself a part of the Armour group. The companies changed names in 2014 when they were acquired by Trebuchet from OneBeacon Group. In February 2021, Bedivere was presented with a large judgment that forced Bedivere to approach the Pennsylvania Insurance Department.
Wells expects to have a clearer idea of the losses from Bedivere by the June board meeting.
In addition, Wells reported that Postlethwaite and Netterville finished the financial audit of LIGA, and the process and results were similar to previous years with nothing negative to report.
He also reported that LIGA made an accountant change. For the past decade, Sheryl Dawkins with Thomas W. Kleinpeter, CPA, has assisted LIGA with monthly accounting. Thomas W. Kleinpeter, CPA, has decided to simplify its practice and do taxes only. LIGA has engaged the services of the Chesteen and Associates, CPA, to fill the void left by the Thomas W. Kleinpeter, CPA, decision.
In his report, Wells informed the board that LIGA’s investment account had a market value, as of Jan. 31, of $151,861,970 with a cost basis of $145,870,623. LIGA’s holdings, on a cost basis, consist of 16 percent corporate bonds and 84 percent U.S. Treasuries/Agencies.
In her report to the board, LIGA Claims Manager Deidre Arceneaux relayed that LIGA received 407 new claims in 2020. LIGA began 2020 with a pending open claims count of 1,094 claims and ended 2020 with an open claims count of 1,232 claims. She indicated that LIGA ended 2020 well below the budget projections for loss payments and claims expense payments, paying $5.4 million and $1.9 million respectively. LIGA budgeted to spend $9 million in loss payments and $2.85 million in expense payments for 2020.
Arceneaux declared that 2021 began much like most of 2020 with lower than normal claim activity due to the pandemic, but things are picking up rather quickly since the beginning of March with an uptick in new environmental claims being reported, the end of the statutory stay for both Gateway Insurance Company and American Service Insurance Company insolvencies and the brand new liquidation of Bedivere.
Arceneaux updated the board on the Gateway and American Service liquidations, both companies are domiciled in Illinois. She reported that, now that the six month statutory stay has ended for both Gateway and American Service, litigation activity for both insolvencies is increasing at a brisk pace. The net worth investigations are concluded on all insureds from both estates, and LIGA is still working closely with the receiver to obtain all claim documents and corrected financial data to properly set reserves and defend the claims.
According to Arceneaux, LIGA received 125 claims from the Gateway liquidation and 184 claims from the American Service liquidation, with the majority of these claims involving litigation. LIGA currently has 82 open claims in the Gateway liquidation and 105 claims in the American Service liquidation. Both companies sold policies in Louisiana that mainly covered taxi cabs, Uber/Lyft and non-emergency para-transit vehicles. While they are separate estates that have not been consolidated to date, both insurers were owned by the same holding company, claims were handled by the same staff and they utilized the same claim systems. She informed the board that current LIGA staffing has the capacity to handle these files.
She reported to the board about the Capson Physicians Insurance Company, a Texas-domiciled carrier in liquidation. Capson, which wrote medical malpractice insurance, was declared insolvent on June 28, 2019. LIGA currently has 52 open claims and, since the policies were claims-made policies and the liquidation order canceled all policies, including tail/extended reporting policies, effective July 28, 2019, Arceneaux does not expect to receive additional claims.
Of the Claims Department’s 1,213 pending files, 730 are environmental; 129 are workers’ compensation, and 354 are auto and others.
LIGA’s current reserves, according to Arceneaux, amount to $123,112,097.
She reported that LIGA’s current filings with the Second Injury Fund are $156,776.45. There were $420,844.81 in recoveries in 2018, $385,515.48 in 2019, $372,754.41 in 2020, and $5,068.03 in recoveries so far this year.