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Home . International Insurance News . Americas | Canada | Mexico . Famed Insurer of the Titanic, Atlantic Mutual, Sinks Into Liquidation

Famed Insurer of the Titanic, Atlantic Mutual, Sinks Into Liquidation

Friday, May 06, 2011

New York, May 6, 2011 (BestWire) – The 173-year-old Atlantic Mutual Insurance Co., New York, which survived paying claims on the Titanic, is in liquidation.
 
New York State Superintendent of Insurance James J. Wrynn took over as liquidator April 27, following an order of the Supreme Court of the State of New York, County of New York. The order also applied to its subsidiary, Centennial Insurance Co. It followed the placement of the insurer into rehabilitation on Sept. 16, 2010, according to the New York Liquidation Bureau.
 
In May 2010, Ohio regulators revoked Atlantic Mutual's license. The insurer reported negative capital and surplus of $25.1 million as of December 31, 2009. Ohio state law required commercial lines carriers to maintain a minimum capital and surplus of $5 million (BestWire, May 28, 2010).
 
Arkansas Insurance Commissioner Jay Bradford had already suspended Atlantic Mutual's license for the negative 2009 surplus (BestWire, March15, 2010).
 
Liquidation enables the state insurance department as liquidator or its appointed deputy to wind up the insurance company's affairs by selling its assets and settling claims upon those assets.
 
Oklahoma suspended Centennial's license due to negative surplus of $2 million, according to a June 2010 A.M. Best report. Atlantic Mutual and Centennial have operated under an intercompany pooling reinsurance arrangement since 1956. Atlantic Mutual's surplus has been deteriorating due to severe loss-reserve development in its commercial lines business, primarily workers' compensation and general liability, according to the report.                                                                    
 
Adverse loss development also resulted from the commutation of the insurer's aggregate excess-of-loss agreements; catastrophe losses; and from the company's discontinued personal lines business, which has been in runoff since 2007. In 2004, the company scaled down its operations to focus solely on personal lines business, particularly in the high net worth market.                                                             
 
In March 2006, A.M. Best downgraded Atlantic Mutual's financial strength rating to B- (Fair) from B+ (Good) citing a $100 million decline in surplus due to adverse reserve development in its discontinued commercial lines reserves. In 2007, it sold its high net worth personal lines business to Ace Group. At the time of its impairment, Atlantic Mutual was not rated by A.M. Best. From its peak rating of A+ (Superior), assigned in late 1991, A.M. Best downgraded Atlantic Mutual's rating a number of times, lowering it six notches to B- by March 2006. In August 2006, the rating was withdrawn at the company's request and it was assigned an NR-4.
 
Atlantic Mutual and Centennial Insurance each currently has a Best's financial strength rating of E (under regulatory supervision).
 
Atlantic Mutual was founded in 1838 and incorporated in New York State on April 11, 1842, according to the NYLB. One week after the Titanic struck an iceberg and went down in April 1912, Atlantic Mutual paid $100,000 in hull coverage (Best's Review, January 2001).



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