California Insurance Commissioner Harry Low applied for and obtained a Conservation Order April 26 for PAULA Insurance Company.
In a statement in March, PAULA reported a negative policyholders surplus of $22,028,334, meaning it was statutorily insolvent. The Conservation Order granted by the Los Angeles County Superior Court allows Low to conduct the business of the company with Conservation & Liquidation Office (CLO) staff during the conservation.
CLO will manage the conserved company and the offices of PAULA will remain open during normal business hours.
PAULA Financial announced that its underwriting subsidiary, PAULA Insurance Company, would voluntarily cease underwriting workers’ compensation business back in March.
That decision came as a result of claims reserve development primarily from claims relating to accident years 1997-1999 on California workers’ comp business. The Company reported it would focus its ongoing business activities through its agency subsidiary, Pan American Underwriters, and the third party administrator, Pan Pacific Benefit Administrators.
According to Robert Farnam, a Senior Financial Analyst & Actuary for A.M. Best, 100 percent of sales for PAULA Insurance comes from workers’ comp underwriting, with 55 percent of sales in California, 18 percent in Texas, and the remaining percentage from other states.
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