Florida Insurer Taken Over by State Regulators
State insurance regulators announced Monday that they’ve taken over a troubled Ponte Vedra Beach-based property insurer formed in 2007 to insure higher value homes and condominiums.
Following up on a circuit court ruling issued Friday, American Keystone Insurance Co. was placed in receivership and will be liquidated following unsuccessful attempts to shore up the two-year-old company that insures approximately, 7,618 policyholders.
“We worked with the company to resolve the outstanding issues,” said Florida Insurance Commissioner Kevin McCarty. “However, when it became evident the issues could not be remedied, “I had to take action to protect their policyholders.”
Leon County Circuit Court Judge John C. Cooper on Friday appointed the Florida Department of Financial Services as receiver. The designation gives the agency the authority to sell assets, pay debts, salaries and small claims as it shuts company doors.
Policyholders should immediately contact their insurance agent to secure coverage with a new company. All policies will be cancelled effective 11:59 p.m. on November 8, 2009.
“Given that this liquidation order comes during hurricane season, it is imperative that homeowners who have coverage with American Keystone immediately contact their agents to secure new coverage,” said Florida CFO Alex Sink. “We will continue working diligently to help make the transition as smooth as possible for policyholders.”
In a letter to Sink, McCarty said the agency had been working with the company since early 2009 to find ways to keep its corporate head above water. Financial records, however, showed that by Aug. 30, the company was about $12.3 million in the hole and could not cover its obligations.
Attempts to add capital were unsuccessful McCarty said, leaving the agency to begin liquidation proceedings. Allowing the company to continue writing policies, he said, would be “hazardous to policyholders.”
“It became apparent… that American Keystone would not be able to meet its financial obligations nor were there viable options to transfer the company’s book of business,” McCarty wrote in a letter to Sink.