STATE SEIZES WORKERS' COMP FIRM.Byline: Chris Sieroty Staff Writer CALABASAS - State regulators on Friday seized Superior National Insurance Group Inc., California's largest private-sector workers' compensation workers' compensation, payment by employers for some part of the cost of injuries, or in some cases of occupational diseases, received by employees in the course of their work. insurer, saying it lacked the reserves to pay claims. The state Department of Insurance on Monday will seek permission in Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. and Sacramento Superior Courts to place day-to-day operations of the company under control of Insurance Commissioner Chuck Quackenbush Charles "Chuck" Quackenbush (born 1954) is a Florida law enforcement officer and former California politician. He served as Insurance Commissioner of California from 1995–2000 and as a California State Assemblyman representing the 22nd District, from 1986–1994. . Superior's 1,200 workers were given a paid day off Friday and all but the executive team will be back at work on Monday, said Department of Insurance spokesman Scott Edelen. The last time a similar action was taken was in January 1997, when the department seized San Diego-based Golden Eagle Insurance Co. after investigators discovered its reserves were too low. ``Superior National faced unforeseen loss ratios and an adverse claims history that has resulted in a significant shortfall in reserves,'' Quackenbush said in a statement. Based in Calabasas, Superior National consists of five companies. Four of them - California Compensation Insurance Co., Combined Benefits Insurance Co., Superior National Insurance Co., and Superior Pacific Casualty Co. - were seized by regulators. New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of officials are investigating Superior National's fifth company, Commercial Compensation Insurance Co., said Edelen. Officials with Superior National could not be reached for comment. Edelen said all claims by customers of the seized companies will be paid and there will be no interruption in coverage while state regulators are in control of the company. Superior National had assets of $730 million and $240 million in premium income last year. When the companies reopen Monday, Edelen said they will operate under the management of the department's Conservation and Liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy Office, which could eventually liquidate To pay and settle the amount of a debt; to convert assets to cash; to aggregate the assets of an insolvent enterprise and calculate its liabilities in order to settle with the debtors and the creditors and apportion the remaining assets, if any, among the stockholders or owners of the the company if less drastic measures don't solve its financial problems. Analysts say a number of workers' compensation insurers could face financial problems since margins at many of them have dropped sharply since the industry was deregulated in 1995. ``The workers' compensation insurance market here in California is fiercely competitive,'' Quackenbush said in his statement. ``A byproduct by·prod·uct or by-prod·uct n. 1. Something produced in the making of something else. 2. A secondary result; a side effect. Noun 1. of that reality is the possibility of circumstances arising such as these, where a carrier cannot remain competitive and financially solvent at the same time.'' Edelen said the insurer faced a shortfall in its financial reserves due to unforeseen losses from claims filed by its customers. State regulators first became aware of the potential problems at Superior National last year. The department had been working with the company, but when no solutions were reached, the state issued the seizure order, Edelen said. He would not explain how the department was trying to help the company. In the previous case of Golden Eagle, investigators for the state uncovered evidence of data tampering tampering The adulteration of a thing. See Drug tampering. within the company's records, as well as $69 million in unsecured loans Unsecured Loan A loan that is issued and supported only by the borrower's creditworthiness, rather than by some sort of collateral. Notes: Generally, a borrower must have a high credit rating to receive an unsecured loan. taken out of Golden Eagle by its former chairman John Mabee through an offshore reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. business he owned. Golden Eagle was eventually sold to Boston-based Liberty Mutual in September 1997. Superior National, the nation's 13th largest workers' compensation insurer, has 11 offices in California and 26 offices nationwide, and employs more than 1,200 people. Trading in Superior's shares was halted Friday after the seizure was announced. Shares fell 61 percent and stand at $1.59. ``The seizure (of Superior National) doesn't surprise me,'' said Michael Dion, a property and casualty insurance analyst with Hoefer & Arnett in San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden . ``I think it's the culmination of four or five years of declining premiums.'' Customers with questions about coverages or policies with Superior National can contact the Department of Insurance Consumer Hotline at 800- 927-HELP or 213-897-8921. CAPTION(S): photo, box, chart Photo: Superior National Insurance Group Inc. has been seized by the state Department of Insurance. Michael Owen
Box: INSIDE --Financial advisory firm taken over. BUSINESS Chart: SUPERIOR'S LONG SLIDE Stock in Superior National Insurance Group, Inc. has plunged as rates have fallen and competition increased. |
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