Pennsylvania Insurance Commissioner Jessica Altman announced March 19 that the Commonwealth Court approved a petition to liquidate Bedivere Insurance Company, formerly OneBeacon Insurance Company on March 11. Through the liquidation process, policyholder claims will be paid through the state guaranty association system, subject to statutory limits and conditions.
“Bedivere, a domestic stock property and casualty company based in Pennsylvania, has consented to the liquidation process, and the Commonwealth Court has approved the liquidation, recognizing that the company’s financial liabilities have exceeded their assets,” Altman said in a news release. “PID’s responsibility now is to take the necessary steps to orderly liquidate the company. The court’s liquidation order triggers the state guaranty associations to pay policyholder claims to the maximum levels allowed by law.”
The company wrote policies in all 50 states plus the District of Columbia, Puerto Rico, the U.S. Virgin Islands, American Samoa and Guam, according to Altman, although the company stopped writing most new or renewal business in 2010. Bedivere wrote workers’ compensation, commercial auto, commercial liability, products liability and personal auto coverage.
According to Annette Evans, claims director for the Texas Property Casualty Insurance Guaranty Association, the Pennsylvania appointed receiver has not yet made known the full extent of the holdings in individual states. “At this time, each state is just beginning to receive information on claims and reserves,” Evans added.
Bedivere, known then as OneBeacon, entered runoff in 2013. OneBeacon consolidated its runoff business into four companies, including OneBeacon Insurance Company, OneBeacon America Insurance Company, Employers Fire Insurance Company, and Potomac Insurance Company, Altman explained in the release.
In 2014, OneBeacon’s runoff companies were acquired by Trebuchet, a wholly owned subsidiary of Armour Group Holdings Limited, and the four companies were renamed Bedivere Insurance Company, Lamorak Insurance Company, Employers Fire Insurance Company and Potomac Insurance Company. Pursuant to that transaction, certain business of OneBeacon Insurance Company, consisting of the runoff of certain property and casualty claims (the majority of which involved asbestos and environmental liabilities), along with OneBeacon Insurance Company’s then existing assets, reserves and capital relating thereto, was acquired by Trebuchet, according to the liquidation order.
In connection with the acquisition, the insurance commissioner at the time issued an order placing certain restrictions on the companies’ operations,
In December 2020, Lamorak, (formerly OneBeacon America Insurance Company) a Pennsylvania domestic stock casualty insurance company; Employers Fire, a Pennsylvania domestic stock property insurance company, and Potomac, a Pennsylvania domestic stock casualty insurance company, merged with and into Bedivere Insurance Company.
During the continued runoff, Bedivere’s assets and liabilities reached the point that, taking into account administrative expenses, continued runoff under the supervision of the commissioner became unfeasible, the Pennsylvania department stated in the liquidation order.
Part of the problem is a judgment on Feb. 4, 2021, by the United States District Court for the Southern District of New York in which the court ruled against Lamorak, and in favor of Olin Corp. in the amount of $25,177,789, plus prejudgment interest, according to the liquidation order. On Feb. 12, the court added $24,169,014 in prejudgment interest for a total due of $49,346,803.
On Feb. 25, pursuant to unanimous consent of the board of directors of Bedivere, and with the consent of Trebuchet, the president of Bedivere executed the consent to an order of liquidation.
Bedivere filed its annual statement and risk based capital report on March 1, indicating a negative surplus.
As of Dec. 31, 2020, Bedivere’s liabilities, plus its authorized and issued capital stock, exceeded its admitted assets by almost $282 million. At that time, admitted assets amounted to $300,973,189; liabilities were $578,458,453; capital stock, $4,200,000, leaving a deficit of $281,685,264, according to the liquidation order.
The liquidation order triggers the following process:
-The Pennsylvania Department, as liquidator, takes over, secures the company and marshals all available assets to pay policyholder claims.
-Working remotely, the liquidator analyzes the company’s most recent financial data to understand the full scope of the company’s financial hole.
-Policies (bonds) terminate within 30 days of the liquidation order.
-Policyholders with open claims will receive notice fully explaining the triggering of the guaranty funds and the process that will ensue.
-Creditors are also paid in order of priority and follow a proof of claims process.
-The liquidator distributes any surplus funds to the shareholders.
-The company is then formally dissolved.
According to the Pennsylvania Department, files will be shipped to the appropriate guaranty associations across the country for their review. Anyone having unpaid claims should wait until they are contacted by their guaranty association. Within 60-90 days from the liquidation date, any known claimants, general creditors, or other related parties should have received a packet of information including a Proof of Claim form, a Question and Answer form and general information regarding the liquidation process.