Personal residential insurer Gulfstream Property and Casualty Insurance Co. has agreed to liquidate according to a July 22 order signed by the Florida Office of Insurance Regulation.
The Florida Department of Financial Services must agree to receivership before the liquidation process can formally begin. Once the DFS signs off, Gulfstream customers will have 30 days to find new coverage.
In the OIR’s Consent To Order Of Receivership, Commissioner David Altmaier wrote that the office has determined that “one or more grounds exist for the initiation of delinquency proceedings,” which include Gulfstream’s admission of insolvency.
The liquidation process caps off a tumultuous stretch for the Sarasota-based insurer.
Gulfstream was placed under administrative supervision in late June after it failed to maintain the minimum surplus necessary to pay claims. Weeks earlier, ratings firm Demotech Inc. withdrew its “A” designation, citing the company’s shaky finances.
Gulfstream suffered significant losses in 2020. The company reported a decrease in surplus of more than $5.2 million as of Dec. 31, 2020 compared with the same date in 2019 including a net loss of $22.6 million and a net underwriting loss of $34.9 million.
Gulfstream was in the process of securing a well-heeled investor this year until a string of severe winter storms forced higher required contributions, leading the suitor to pull out.
In May, Gulfstream received OIR approval to cancel 20,311 personal residential policies. The company said it would not accept risk on any policies outside Florida past June 1.
“They had to get rate increases, they had to get additional capital, and I think the reality is they were doing both,” Demotech President Joseph Petrelli told Insurance Journal. “Management had put in money. The company had filed for rate increases and received rate increases and then filed for more. They just couldn’t get enough money in fast enough.”
Remaining Gulfstream policies are expected to go to a combination of private carriers and state-run Citizens Property Insurance Co., the insurer of last resort.
“OIR has worked closely with other private carriers to secure consumers streamlined options for replacement coverage in the private market,” said Alexis Bakofsky, Director of Communications at OIR. “Florida Peninsula Insurance Company along with its affiliate Edison Insurance Company, and Homeowners’ Choice Property Casualty Insurance Company, with its affiliate Typ Tap Insurance Company, will be offering coverage to a substantial number of Gulfstream policyholders through direct contact with their agent.”
Citizens President and CEO Barry Gilway said during a Wednesday, July 14 Board of Governors meeting that 35,000 Gulfstream policies were likely be subject to liquidation.
“The bottom line is we do believe there may be opportunities for one and maybe two companies to pick up the 35,000 policies,” Gilway said. If they do, there is very limited impact on Citizens.”
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