After operating a major insurer of the Washington’s rural hospitals and medical centers for more than three years under a court order, Insurance Commissioner Mike Kreidler has announced his intent to sell the financially troubled company to a Michigan corporation.
Kreidler’s proposed sale of Washington Casualty Co., of Bellevue, to FinCor, Inc., of Lansing, Mich., for $9.8 million will allow the company to emerge from receivership while helping to ensure a stable medical liability insurance market for 49 community hospitals and medical clinics in Washington, Oregon and Idaho.
A hearing date has been scheduled for 10 a.m., Oct. 6 in Thurston County Superior Court for the court’s review and approval of the sale.
Kreidler assumed control of the company under a court-approved rehabilitation order in 2003 after the company reported a negative capital and surplus of more than $8 million. Under Kreidler’s management, the company reduced that shortage by 75 percent, to a negative $2.4 million, attracting the interest of potential buyers. The company reported $7.6 million in direct premium written in 2005 with a profit of $4.9 million, making it the state’s fourth largest medical malpractice insurer.
“Our immediate goal was to maintain the company’s financial equilibrium so that insurance coverage was not interrupted,” Kreidler said. “Then we turned to the challenge of finding a way to rehabilitate the company so it could emerge from receivership and continue operating as a major player in Washington’s rural medical liability market.”
“With this sale,” he said, “we have succeeded on both counts.”
He said that the failure of Washington Casualty most certainly would have had a severe, detrimental effect on the ability of community hospitals and medical centers to find and afford medical liability coverage.
Under terms of the proposed sale, Washington Casualty will:
*Remain a separate corporate entity, operated as a domestic insurer here in Washington for at least four years;
*Retain all company employees who wish to continue their employment; and
*Maintain a separate risk pool of Washington Casualty policyholders in order to maintain predictable coverage.
Kreidler said that FinCorp, whose subsidiary provides liability coverage for hospitals in Michigan, has offered assurance that the sale, if approved, would be virtually transparent to policyholders and employees. It should be business as usual at Washington Casualty under the new ownership, he said.
If approved, the sale of Washington Casualty will mark the second successful rehabilitation of a Washington insurer under Kreidler’s leadership. Last year, he arranged the sale of KPS Health Plans of Bremerton to Group Health Cooperative of Seattle.
Two other Washington insurers, Western United Life Assurance Co. of Spokane, and Cascade National Insurance Co., of Bellevue, remain in receivership under Kreidler’s authority.
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