Americas placed in receivership by court

Insurance Commissioner Jim Donelon placed financially troubled homeowners insurer Americas Insurance Company into receivership Jan. 14, via court order in the 19th Judicial District Court in Baton Rouge. The receivership moves Americas one step closer toward the Louisiana Insurance Guaranty Association (LIGA) taking over claim payments, ensuring that most policyholders with pending hurricane claims will get paid.

In a prepared statement issued Jan. 20, Donelon announced the rehabilitation of Americas. Court documents indicate that Billy Bostick was appointed receiver.

Since Americas was not domiciled in Louisiana, the court ordered an ancillary receivership, according to the court documents. The ancillary receivership is under the direction and control of Donelon and is with the concurrence and consent of the Commissioner of the Department of Insurance, Securities and Banking in the District of Columbia, where Americas was domiciled, and the board of directors of Americas that Americas be redomesticated to Louisiana.

Despite being domiciled in the District of Columbia, Americas wrote essentially all of its policies, and all of its Hurricane Ida claims originated, in Louisiana. Americas had no in-force insurance policies in the District of Columbia, according to court documents. In addition the property owned by Americas is largely situated in Louisiana. Even though the holding company, Assure Holding Corp., has offices in Vienna, Virginia.

The redomestication was effected for the purpose of conducting a domestic rehabilitation in Louisiana, according to the court order. Subject to court order, the ancillary receivership was converted to rehabilitation.

Part of the court order decrees that all authority of all owners, officers, directors and managers of Americas is suspended and vested with the rehabilitator and receiver. Ronald R. Pate Jr. is listed as the chairman, president and CEO of Americas in filings.

In a nutshell, the receiver is charged with marshalling and monetizing all of the assets of Americas to pay all administrative expenses of the receivership, followed by all obligations of the company pursuant to the orders of the court.

When the company was placed in rehabilitation, Americas had approximately 24,000 policies and 13,000 Ida-related claims, and as of Dec. 31, 2020, the insurer covered 1.31 percent of the Louisiana homeowners insurance market. Americas has been licensed in Louisiana since 1991.

The estimated amount of loss to the insurer’s policyholders from Hurricane Ida is $220 million to $230 million. In addition, Americas has approximately $180 million in catastrophe reinsurance, which is insufficient to cover the estimated losses. Americas reported a second quarter 2021 surplus of $8,189,372 and a third quarter surplus of negative $40,394,881, according to court documents.

In 2020, Americas wrote $33.4 million in Louisiana premium, according to the summary financial information on LDI’s website. At that time, the company reported $22.8 million in assets, $14.1 million in liabilities and $8.7 million in surplus.

Americas retained 0.2 percent of its direct premiums in 2020, according to Best’s Key Rating Guide. Five years earlier, the company had retained 23.2 percent of its business. The company’s net underwriting income for 2020 was a negative $1,221,000. Investment income in 2020, reduced the company’s net loss to $409,000.

In 2020, Americas Insurance’s loss and loss adjustment expense ratio deteriorated to 113.0 percent of earned premium, according to Best’s Key Rating Guide. The homeowners writer’s other profitability tests – expense ratio, operating ratio and combined ratio – had deteriorated to 999.9 percent. The company’s reinsurance recoverables were almost four times policyholders’ surplus.

In the four years prior to 2020, Americas had expense ratios that bounced from 41.1 percent to 70.7 percent to 46.6 percent and back to 40.1 percent. At the same time, the combined ratio went from 118.1 percent to 121.1 percent to 88.8 percent and 83.8 percent. Return on policyholders’ surplus was negative in three of the five years from 2016 through 2020. Loss and loss adjustment expenses tumbled from 39.2 percent of policyholders’ surplus in 2016 to 10.7 percent in 2020.

Americas is in rehabilitation, a form of receivership aimed at solving the company’s financial problems, LDI explained in a statement. Policyholders will be contacted by the court-appointed receiver or their insurance agent about claims and whether in-force policies will be transferred to another insurer.

Policyholders with questions about their insurance coverage or the status of their policies should contact their insurer or insurance agent. Policyholders with questions about claims should contact LIGA at 225-277-7151 or www.laiga.org. Policyholders may also contact LDI at 800-259-5300 or www.ldi.la.gov for assistance.