Frontier Insurance Company, which was seized by New York officials four years ago, is closer to reopening for business thanks to a recent court decision awarding the New York Liquidation Bureau greater flexibility over its financial position.
Superintendent of Insurance Howard Mills told the Frontier Insurance Company’s 150-plus employees at the insurer’s headquarters that a recent State Supreme Court decision gives the company a combination of debt relief and additional cash.
“The court’s decision enabled Frontier to continue the rehabilitation process,” Mills stated, referring to Justice Nicholas A. Clemente’s recent approval of an agreement between the Superintendent of Insurance, acting as Frontier’s receiver, and the National Indemnity Company. NICO provides reinsurance to Frontier Insurance Company.
The state has thus far saved the company from liquidation and still hopes it can become a viable insurer again. According to Mills, Frontier’s negative surplus has been improved by $57 million over the past four years, at the same that more than $500 million in claims have been paid.
“The New York State Insurance Department could have placed the Frontier Insurance Company into liquidation four years ago,” Mills said. “But that would have put each and every Frontier employee out of work and adversely affected Sullivan County’s economy while also sending shock waves through the nation’s already overburdened guarantee fund system. Instead, New York’s Liquidation Bureau, in concert with Frontier employees, continues to devote considerable energies to Frontier’s emergence from rehabilitation so that it may once again operate as an independent company.”
Mills credited the remaining employees of the company for making the improvements possible. At its peak in 2000, the Rock Hill headquarters housed 700 employees out of a total of 1,500 nationwide.
Frontier Insurance Company was the largest subsidiary of Frontier Insurance Group, based in Rock Hill, which itself filed for Chapter 11 bankruptcy a few months ago. That filing does not affect Frontier Insurance Company that is under state control.
Troubles for the group began in 1999 when it reported a $176 million loss for the third quarter. By February 2000, it was laying off employees by the dozen. In February 20001, Frontier was de-listed by the New York Stock Exchange and in April of that year it reported it lost nearly $300 million in 2000. In August 2001, the state insurance department stepped in and took control of the largest subsidiary, Frontier Insurance Co.
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