At the Sept. 30 meeting of the Louisiana Insurance Guaranty Association (LIGA) board of directors, LIGA Executive Director John Wells, reported that, since the June 24 meeting of the board of directors, there has been a rapid increase in claim activity for LIGA, including a brand new insolvency plus another one on the way.
The brand new insolvency is Gulfstream Property and Casualty Insurance Company (GPCIC)/Gulfstream Select Insurance Company (GSIC). GSIC was a Louisiana domiciled property carrier that recently merged into GPCIC, a Florida domiciled company. GPCIC was placed into liquidation on July 28 by a Florida court.
At the time of the liquidation GSIC/GPCIC had approximately 5,000 policies in-force in Louisiana. Wells reported to the board that LIGA has so far received 115 claims and expects to receive at least an additional 70.
LIGA, according to Wells, received its first batch of unearned premium claims and is issuing approximately $3.8 million to the 4,903 policyholders presented to date. LIGA expects the remaining policies to be submitted by the Florida receiver within the next 30 days.
The insolvency on the way, according to LIGA Claims Manager Deidre Arceneaux, is a Texas-domiciled commercial general liability and specialty lines carrier. Arceneaux added that there are open Louisiana environmental claims where LIGA expects the net worth statute may come into play.
Under the net worth statute, LIGA is exempt from liability for a claim by any insured whose net worth exceeds $25 million, according to the 1999 legislation.
Wells and Arceneaux updated the board on the other recent liquidations that LIGA has received: Bedivere Insurance Company, American Capital Assurance Corp. (AmCap), ACCC Insurance Company, Gateway Insurance Company/American Service Insurance Company, and Capson Physicians Insurance Company.
Bedivere Insurance Company
After receiving only limited claim information from the Bedivere receiver, LIGA set up just under 6,000 additional environmental claims in July and August, Arceneaux reported.
In addition, she reported that the six-month statutory stay ended Sept. 11, and litigation activity has picked up as expected. Arceneaux told the board that the majority of Bedivere’s experienced defense attorneys have been approved for LIGA work.
LIGA is working closely with Bedivere’s attorneys and LIGA General Counsel Stephanie Laborde to get up to speed on the voluminous number of active asbestos claims as LIGA prepares to apply the current LIGA statute on many complex and novel legal issues which have not yet been vetted by Louisiana courts.
Bedivere was placed in liquidation by the Pennsylvania courts on March 11. 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. The Bedivere claim filing deadline is Dec. 31, 2021.
In addition to the asbestos claims, LIGA has 24 open workers’ compensation claims from Bedivere with dates of accident ranging from the mid-1970s to 2001.
American Capital Assurance Corporation
American Capital Assurance Corp. (AmCap), a Florida-domiciled property insurer, specialized in multi-tenant dwellings such as apartments, condominiums and nursing homes. LIGA received 39 claims that were assigned to one adjuster. In addition, LIGA contracted with a TPA to assist in handling these complex property claims.
Although property claims are generally short tailed, according to Wells, these claims from the 2020 hurricanes are significant in scope and required vetting of net worth prior to determination of damages. He added that claim adjudication and unearned premium payments continue.
According to Arceneaux, the majority of the claims are 2020 hurricane losses involving apartment complexes concentrated in the southwest corner of the state. The claim filing deadline is Oct. 14, 2021, and she expects LIGA to get some additional new claims as well as a few reopened claims.
LIGA Examiner Leah Weber is supervising both the Gulfstream and AmCap claims.
ACCC Insurance Company
ACCC, a Texas-domiciled nonstandard auto insurer, went into liquidation on Dec. 14, 2020. While the company was admitted in Louisiana, no policies were in effect and no open claims existed in Louisiana at the time of the liquidation. LIGA has received approximately 11 claims from other state guaranty funds where the ACCC insured resided in Louisiana at the time of the loss, and LIGA has accepted these claims. LIGA continues to work with the receiver to determine the appropriate state guaranty fund to handle any future claims presented.
Gateway Insurance Company/American Service Insurance Company
Gateway Insurance Company, a commercial auto insurer domiciled in Illinois, was placed in liquidation on June 10, 2020. LIGA received 129 claims and currently has 74 claims open.
American Service Insurance Company, a commercial auto insurer domiciled in Illinois, was placed in liquidation on Aug. 11, 2020. LIGA received 190 claims and currently has 91 claims open.
Capson Physicians Insurance Company
Capson Physicians Insurance Company, a Texas-domiciled carrier writing medical malpractice insurance, was placed in liquidation on June 28, 2019. LIGA currently has 52 open medical malpractice claims from the Capson liquidation.
In his report to the board, Wells was complimentary of the several staff members, especially Administrative Assistant Lacey Anderson, who stepped up to insure that claimants and vendors were paid timely and that essential reporting was performed after the accounting clerk departed. Wells is enthusiastic about the new accounting clerk and thinks he will bring a new dynamic to the role and to LIGA in general.
In Arceneaux’s report, the claims staff of LIGA now consists of 11 members: one manager, eight examiners, and two claims assistants. LIGA’s eight examiners are dedicated to the following specialties: one workers’ compensation examiner, Bryan Johnson; two auto examiners, Leah Weber and Wanda Poche; five environmental examiners, Mac Twiner, Jay Mayfield, Carolyn Pitre, Ken Mann and Krystal Williamson.
As of Aug. 31, 2021, the claims department had 7,256 pending files: 6,723 of those files are environmental, 146 are workers’ compensation, and 387 are auto and others. The pending claims do not include any Gulfstream Property and Casualty Insurance Company (GPCIC)/Gulfstream Select Insurance Company (GSIC) claims, which LIGA started receiving in September.
LIGA’s current reserves at the end of August 2021 amount to $147,300,248, up from $128,470,746 at the end of June 2021.
Arceneaux reported that LIGA’s current filings with the Second Injury Fund are $228,135.30. There were $420,844.81 in recoveries in 2018, $385,515.48 in 2019, $372,754.41 in 2020, and $65,595.52 in recoveries so far this year.
Wells reported that LIGA’s investment account had a market value, as of July 31, of $147,860,814 with a cost basis of $143,099,660. LIGA’s investment holdings, on a cost basis, consist of 16 percent corporate bonds and 84 percent U.S. Treasuries/Agencies.