January 10, 2013
Missouri Department of Insurance closes two receiverships
Transit Casualty (1985) and International Financial Services Life (1999)
The Missouri Department of Insurance has announced the conclusion of the legal cases of two insurance companies that went into receivership due to insolvency.
A Cole County judge ordered Transit Casualty Co. into receivership in November 1985. It is Missouri's second-longest receivership. Despite the insolvency, Department Director John M. Huff says the department was able to secure enough funds from the company's assets to pay 87 percent of policyholder claims. The remaining 13 percent was paid by insurance guaranty associations, which protect policyholders when their insurance company becomes insolvent.
Cole County Circuit Judge Patricia Joyce on Dec. 20 granted the department's request to close the receivership, after assurance from the department that all claims and liabilities have been satisfied.
International Financial Services Life Insurance Company was ordered into receivership in May 1999. Huff says the department was able to secure enough funds from the company's assets to pay 100 percent of policyholder claims, with no payments being necessary from guaranty associations.
Judge Joyce on Dec. 21 granted the department's request to close the receivership, after assurance from the department that all claims and liabilities have been satisfied.
"I'm pleased to report the high percentages of claims that were able to be paid out of these companies' assets," said John M. Huff, director of the Missouri Department of Insurance. "Shortfalls are paid by charges to insurance companies, which can ultimately increase premiums for consumers. So while receiverships often take many years, it is an orderly process of winding down the business of an insurer while protecting Missouri consumers."
Receivership is a legal step taken by a court, at the request of the Department of Insurance. When an insurance company is financially impaired, a court can appoint the department to take control of the insurer to protect policyholders, creditors, and owners. The department's priority is to pay claims to the extent possible using the company's available assets.