A San Francisco Superior Court has approved California Insurance Commissioner’s rehabilitation plan for Majestic Insurance Co., a failed workers’ compensation insurance carrier.
Under the plan, Majestic’s insurance liabilities and certain assets will be transferred to AmTrust North America Inc., which will assume responsibility for the administration and payment of all policyholder claims under Majestic’s policies. The plan also includes a loss portfolio transfer reinsurance agreement, sales of renewal rights, and an asset purchase transaction.
New York State’s Workers’ Compensation Board, as well as former members of the self-insured workers’ compensation program Contractors Access Program of California, which was managed by now defunct Majestic Insurance Co., had voiced objections to the rehabilitation plan.
The former CAP members believed Majestic’s actions caused CAP to fail, and that the state Department of Industrial Relations and Department of Insurance failed to take appropriate actions as required by law.
The New York Workers’ Compensation Board objected to the rehabilitation plan and attempted to portray Majestic’s conservation as a conspiracy between California Insurance Commissioner Dave Jones, as the statutory conservatory of Majestic, to deprive NYWCB of its rights, according to Commissioner Jones. “In reality, NYWCB’s policyholder rights are 100 percent protected by the rehabilitation plan, and its objects are a transparent attempt to leverage a favorable settlement of its civil litigation in the Supreme Court of New York against Majestic’s bankrupt parent by threatening to derail the rehabilitation plan,” he said.
NYWCB has asserted policyholder claims as the successor to certain self-insurance trusts in New York that were policyholders under a number of aggregate excess loss policies issued by Majestic. NYWCB also has asserted damage claims based on its New York litigation that amounts that NYWCB estimated exceeds $475 million.
However, the California Court accepted California Commissioner Jones’ rehabilitation plan for Majestic, essentially overturning all objections.