Pennsylvania’s Insurance Commissioner, Diane Koken, announced that her department will recover $10 million in a settlement of its legal complaint against a number of former officers and directors of the now-defunct PHICO Insurance Company.
“This is a tremendous victory for PHICO’s former policyholders,” Koken stated. “The settlement will be used to cover losses that the policyholders suffered as a result of the company’s insolvency.” The Insurance Department had filed a lawsuit in November 2001 against 15 former directors and officers of PHICO, asserting that they breached their fiduciary duties while serving in positions with the company.
It reached a settlement in March this year that was then approved by the Commonwealth Court in June. “With the final approval from the United States Bankruptcy Court, we will be able to secure the $10 million in proceeds from PHICO’s directors and officers insurance policy,” Koken continued. “This is part of our ongoing effort to marshal assets to pay policyholder claims and to hold responsible parties accountable for their actions. We fully expect to receive the settlement money by the end of this year.”
PHICO’s primary business was writing medical malpractice insurance for health systems, hospitals and physicians. In addition, PHICO wrote workers’ compensation. The last financial report indicated the company’s capital and surplus was approximately $250 million in the negative.
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