Louisiana Insurance Guaranty Association (LIGA) Executive Director John Wells updated the LIGA board of directors at its March 31 meeting on the continued effort to pay the claim liabilities from the failed insurance companies that wrote homeowners coverage.
With the assistance of Legion Claims and five independent adjusting firms, LIGA is deep into the payment of the claim liabilities of State National Fire Insurance Company, rehabilitated on Nov. 20, 2021, and liquidated on Jan. 7, 2022; Access Home Insurance Company, rehabilitated on Nov. 10, 2021, and liquidated on Jan. 13, 2022, and Americas Insurance Company, rehabilitated on Jan. 14, 2022.
Wells reported to the board that as of March 22, LIGA had thus far paid out $132 million on these three estates, $70.9 million for Access Home, $33.4 million for State National Fire, and $27.9 million for Americas Insurance Company.
In the Access Home estate, of the $70.9 million paid out by LIGA, $10 million was paid to the receiver to prevent default on checks already issued by Access Home, $8.5 million was paid to the receiver for unearned premiums, $48.7 million was paid to policyholders for claims, $360,492 was paid to policyholders for unearned premium claims, and $3.4 million was paid to vendors.
In the State National Fire estate, of the $33.4 million paid out by LIGA, $10.3 million was paid to the receiver to prevent the default on checks already issued by State National Fire, $4 million was paid to the receiver for unearned premium claims, $17.8 million was paid to policyholders for claims, $193,624 was paid to policyholders for unearned premiums, and $1.2 million was paid to vendors.
In the Americas estate, of the $27.9 million paid out by LIGA, $26.4 million was paid to policyholders for claims, $483,071 was paid to policyholders for unearned premium claims, and $1.0 million was paid to vendors.
Of the $132 million, approximately $63 million was disbursed in 2021 and $69 million was disbursed thus far in 2022. Wells estimates that LIGA’s future payments on these estates will be between $80 million to $90 million. At the time of the meeting, LIGA was still waiting for a court ruling on the transition of the policies from Americas to SafePoint Insurance Company.
Wells reported to the board that LIGA staff is currently preparing invoices for the 2022 assessments. Wells had hoped that the $80 million to $90 million estimates would trend lower, but LIGA is trying to get a better gauge on the outstanding reserves before assessing more than needed. The 2021 assessments were sent out at the end of 2021, and at the end of February LIGA had received approximately 85 percent of the 2021 assessments. LIGA expects to get $100 million from each assessment.
In his report, Wells informed the board that LIGA’s investment account had a market value, as of Jan. 31, 2022, of $59,860,123 with a cost basis of $60,715,554. At the end of Jan. 31, 2021, LIGA’s investment account had a market value of $151,861,970 with a cost basis of $145,870,623. The balance at the end of Feb. 28, 2022, was $75,042,653.
Due to the high volume of property claims, LIGA’s Claims Committee met on Dec. 6, 2021, to discuss a new process for review and approval of large loss payments. The committee approved the motion to suspend the normal claim ballot process for the property insolvency claims with the knowledge that claims over $100,000 will be reviewed by either LIGA Claims Manager Deidre Arceneaux or Ken Mann and claims over $250,000 would be sent to the Claims Committee, giving the committee the opportunity to object if necessary. The LIGA board voted to approve the new process for property claims.
In her report to the board, Arceneaux briefed the board on the recent insolvencies:
Americas Insurance Company insolvency. Just prior to the company being placed into rehabilitation the company was re-domiciled to Louisiana. A joint motion was filed by the courts on Jan. 20, 2022, allowing LIGA to begin handling claims prior to liquidation. LIGA has received 11,127 homeowners property claims.
Access Home Insurance Company insolvency. The Louisiana domiciled homeowners insurer went into rehabilitation on Nov. 11, 2021. SafePoint Insurance Company assumed all Access Home policies with an effective date of Dec. 1, 2021. On Jan. 13, 2022, the court ordered Access Home into liquidation. The claim filing deadline set by the court is April 29, 2022. LIGA has received 5,963 homeowners property claims.
State National Fire Insurance Company. The Louisiana domiciled homeowners insurer, went into rehabilitation on Nov. 10, 2021. SafePoint Insurance Company assumed all of State National Fire Insurance Company policies with an effective date of Dec. 1, 2021. On Jan. 7, 2022, the court ordered State National Fire into liquidation. The claim filing deadline set by the court is April 29, 2022. LIGA has received 1,491 homeowners property claims.
Gulfstream Property and Casualty Insurance Company. The Florida domiciled carrier went into liquidation on July 28, 2021. Just prior to liquidation, Gulf Stream Property and Casualty merged with its wholly owned subsidiary Gulfstream Select Insurance Company, a Louisiana domiciled carrier. The claim filing deadline set by the court is July 28, 2022. LIGA received 221 claims with 102 remaining open.
American Capital Assurance Corporation. The Florida domiciled commercial property insurer was declared insolvent on April 14, 2021. LIGA received 35 claims, the majority of which are 2020 hurricane losses involving apartment complexes concentrated in the southwest corner of Louisiana. The claim filing deadline set by the court is Oct. 14, 2021. The majority of LIGA’s net worth investigations are not complete, and LIGA hired a third-party administrator to assist in handling these complex property claims. LIGA currently has 24 open claims.
Bedivere Insurance Company. The Pennsylvania domiciled insurer was placed into liquidation on March 11, 2021. Bedivere’s remaining lines of business include workers’ comp, asbestos, environmental and professional liability. The claim filing deadline set by the court is Dec. 31, 2021. LIGA has 21 open workers’ comp claims with dates of accident ranging from the mid-1970s to 2001. LIGA has a few net worth investigations pending. Arceneaux reported that with the expiration of the Bedivere statutory stay on Sep. 11, 2021, litigation activity has increased as expected. LIGA continues to work closely with LIGA’s General Counsel Stephanie Laborde and LIGA approved defense attorneys to apply the updated 2010 LIGA statute regarding asbestos claims. The Bedivere claim filing deadline of Dec. 31, 2021, has passed so LIGA does not expect to receive any more claims.
Gateway Insurance Company and American Service Insurance Company. Both companies are commercial auto insurance companies domiciled in Illinois. LIGA received 132 claims in the Gateway liquidation, with 60 currently open, and 193 claims in the American Service liquidation, with 81 currently open.
Arceneaux reported to the board that at the end of Feb. 28, 2022, LIGA had 25,338 open claims, of which 18,597 were auto and other, 130 were workers’ comp and 6,611 were environmental claims.
LIGA’s current reserves, according to Arceneaux, amount to $252,576,985, with $9.8 million in auto, $25.7 million in workers’ comp, $97.9 million in environmental, and $119.2 million in other lines.
She reported that LIGA’s current filings with the Second Injury Fund are $117,239. There were $384,515.48 in 2019, $372,754.41 in 2020, $175,992.99 in 2021 and $61,000.34 in recoveries so far this year.