View this article online: https://www.claimsjournal.com/news/southeast/2010/04/08/108848.htm
Florida insurance officials have moved to shut down Northern Capital Insurance Co. after concluding that the firm is insolvent.
The Office of Insurance Regulation (OIR) made an official request to the state’s Department of Financial Services (DFS) to initiate delinquency proceedings on Wednesday. Northern Capital CEO Wayne Fletcher and company directors signed an order consenting to the state’s action on Feb. 25.
As a result, agents and policyholders are being advised to cancel their Northern Capital policies and seek new coverage immediately. Unearned premium will be refunded to policyholders. If customers cannot get replacement coverage from a private insurer, they are eligible to apply for coverage with state-backed Citizens.
OIR said it anticipates that DFS will petition the court to order Northern Capital into receivership. If the company is ordered into liquidation all policies will be cancelled no later than 30 days from the date of the liquidation order. Based on the insurer’s financial statements, liquidation appears to be a strong possibility, according to OIR.
Insurance Commissioner Kevin McCarty said OIR had placed the insurer under close watch last May. Since then the firm’s finances have deteriorated and its management has been unable to attract additional capital or find another carrier to purchase it.
Last December, Northern Capital and its affiliate, Northern Capital Select Insurance Co., stopped writing any new business and soon thereafter stopped renewing existing policies as the companies’ surplus had reached minimum level.
By Feb. 19, Northern Capital reported it had been under-reserving for claims by about $6.4 million, which impaired its surplus even further, dropping it below the $4 million minimum required by the state.
At that time, the company lost its financial stability rating rating from Demotech.
Attempts to find a company to purchase Northern Capital collapsed.
“The Office has been continuously monitoring operations and reviewing corrective action and other measures undertaken during this extended period of supervision. Even after these extensive efforts, Northern Capital no longer meets the minimum capital and surplus requirements, is unable to raise sufficient additional capital to continue operations, and all other discussions to sell the company have come to an end,” OIR said in a statement.
The carrier has about 70,000 policyholders in the state. When state regulators first began monitoring it on a monthly basis, they expressed concern about a high concentration of business in Dade, Broward and Palm Beach counties.
The state has seized four other property insurers within the past year — Magnolia, Coral, American Keystone and First Commercial— while another remains under state supervision. In another rescue, Florida Peninsula Holdings agreed to acquire Edison Insurance. The situation has alarmed insurance agents, consumer groups and some lawmakers.
Northern Capital began writing in the state in 2005, one of a few dozen domestic insurers that started-up after other insurers left in the wake of Hurricane Andrew.
Northern Capital was named the fastest growing small company in the nation by Inc. Magazine in 2009.