LMI and Highlands Sued by Ohio Insurance Director

Ohio Director of Insurance Lee Covington, acting in his capacity as liquidator of property and casualty insurer LMI Insurance Company, has sued LMI’s parent, Highlands Insurance Group and other affiliated companies and the directors and officers of LMI, Highlands, and the affiliated companies.

Covington obtained a court order in March of 2000 placing LMI into rehabilitation, after which a rehabilitator retained by the department operated the company. In May of 2000, Covington obtained a court order placing the one-time Mansfield based company, now located in Lawrenceville, N.J., into liquidation. LMI was once licensed to conduct business in 30 states.

The suit, filed March 29 in Franklin County Common Pleas Court, alleges various breaches of duties by directors and officers of LMI Insurance Company, Highlands Insurance Group and its affiliated companies and also breaches of a Group Services Agreement by each of the affiliated companies, which significantly damaged the estate of LMI Insurance Company in liquidation.

According to the state’s insurance department, the complaint alleges that:

* The board of directors of Highlands Insurance Group made representations to the Ohio Department of Insurance when seeking to acquire LMI that Highlands Insurance Group did not fulfill;
* The Board of Directors of LMI, Highlands, and the affiliated companies failed to maintain adequate controls to preserve the assets of LMI;
* Each of the Highlands subsidiaries breached the terms of the Group Services Agreement by failing to provide LMI with the services required by the agreement; * Some directors and officers of Highlands Insurance Group breached their fiduciary duties to maintain and preserve the assets of LMI by permitting Highlands subsidiaries to waste the assets of LMI.

Topics Lawsuits Ohio