California’s Conservation and Liquidation Office (CLO) has distributed $121 million to policyholders and claimants from the liquidated estate of the Mission Insurance Companies, the California Department of Insurance reported. This distribution brings the total amount distributed from the Mission companies to approximately $1.5 billion. Policyholder claims to both the Mission and Mission National insolvencies have already received 100 percent of their approved claims.
A Superior Court ruling in November approved the Insurance Commissioner Steve Poizner’s plan to distribute the money. Under the plan, Mission Insurance Co. general creditors received an additional $28 million toward their approved claims. This additional payment brings to total amount paid to Mission general creditors to 36.5 percent of their approved claims. Mission National Insurance Co. released an additional $93 million in interest payments to its approved policyholders, who have already been paid 100 percent of their approved claims.
In addition to the cash distributions, the Commissioner obtained approval to distribute shares of common stock of Covanta Holding Corp., the parent company of the Mission insurance companies. In accordance with the court approved closure plan, the Mission and Mission National distributed approximately 1 million shares of Covanta stock to approved claimants.
Throughout the early 1980s, the Mission Insurance Companies were one of the country’s top workers’ compensation insurers. However, subsequent market competition spurred declines in the cost of property and casualty insurance, leading to financial problems for the Mission companies. Formal court conservation proceedings began in late 1985, with liquidation proceedings commencing in early 1987.
The Mission Companies became insolvent ultimately because they had underwritten unprofitable business, including reinsurance coverage to other insurance companies. Many of the losses incurred were severe and long-term by nature — such as a number of large asbestos-related claims and other environmental pollution claims, the DOI indicated.
Exacerbating these problems was the fact that companies which reinsured the Mission Companies, failed to honor their financial obligations. Without them, insolvency was virtually inevitable. At the time of failure in 1987, the Mission Companies were the largest property/casualty insurance insolvency in the country, with policies written in all 50 states.
Since liquidation, the Mission Companies have collected in excess of $1.22 billion in legal and reinsurance recoveries, and processed over 165,000 claims that were filed with the liquidated estates. There remain material assets to be recovered and the Commissioner intends to continue to release distributions to claimants as the assets are collected. All claims to the Mission companies have been resolved and any future recoveries go to pay any unfunded portion of those fixed claims.
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