The Superior Court of Providence County has granted the petition of Rhode Island’s Insurance Commissioner, Marilyn Shannon McConaghy, to place two local insurers, Pawtucket Mutual Insurance Company and its sister company, Narragansett Bay Insurance Company, under voluntary rehabilitation.
The order, dated the first of May, appointed McConaghy as the Rehabilitator for the two companies and enabled her to take possession of their assets, to be administered in accordance with the state’s rehabilitation procedures.
The Department posted answers to questions on its Web site indicating that “for the time being, no new business will be written by Pawtucket Mutual and Narragansett Bay.” It also said that policies expiring before June 30, 2003 may be renewed, but “for the time being, policies expiring after June 30, 2003 will not be renewed.”
The action follows findings, as detailed in the Insurance Department’s petition, that “Respondents’ financial condition renders the further transaction of business without rehabilitation orders hazardous financially to their policyholders, their creditors and/or the public.” It noted that as of March 31, 2003 “the company’s surplus is approaching Authorized Control Level RBC.”
The Board of Directors of the two companies issued a statement, noting that they had agreed to “place the companies in voluntary rehabilitation with the Rhode Island Department of Business Regulation.” The statement added that “Pawtucket Mutual and Narragansett Bay are not insolvent nor are they going out of business. By agreeing to place the companies in voluntary rehabilitation, we are acknowledging that there are some financial concerns that need to be addressed. We will continue to cooperate with the Department.”
The announcement stressed that “this action does not jeopardize any of our customers and policyholders in any way. People who have insurance policies with Pawtucket Mutual or Narragansett Bay should be assured that their policies remain in force and their coverage remains in place. The situation remains very much ‘business as usual’ and customers should continue to make their premium payments.”
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