FAQ Regarding the Delaware Department of Insurance Actions Related to Ullico Casualty Company As of March 14, 2013

Transcription

1 1 FAQ Regarding the Delaware Department of Insurance Actions Related to Ullico Casualty Company As of March 14, 2013 On March 10, the Delaware Chancery Court granted a petition filed by the Delaware Department of Insurance seeking an order of rehabilitation for Ullico Casualty Company arising from the posting of negative surplus. The Company consented to the order. As a result, a statutory Receiver appointed by the Court will control Ullico Casualty Company s operations going forward. Ullico Inc. s management team has been cooperating with the Department and is working closely with the Receiver s team to ensure a smooth transition. Below are questions that may arise as a result: 01. What is Rehabilitation? Rehabilitation is a process where the state regulator takes over the assets and liabilities of a financiallytroubled insurance company. The objective of rehabilitation is to reform and revitalize the insurance carrier, in this case Ullico Casualty Company. A Deputy Receiver appointed by the Court will control Ullico Casualty Company s operations going forward. Ullico Inc. s management team has been cooperating with the Department and is working closely with the Receiver s team to ensure a smooth transition. 02. Why is this happening? The financial problems with Ullico Casualty Company relate to losses and exposures related to the discontinued Workers Compensation programs and Surety line of business. Current management identified these non core programs as potential risks, and in addition to terminating all of these programs it set aside significant reserves to meet Ullico Casualty Company s obligations. These significant reserves led directly to the negative surplus. 03. What is Ullico Casualty Company? Ullico Casualty Company is a property and casualty insurance company, and is one of Ullico, Inc. s Family of Companies, which also include: The Union Labor Life Insurance Company, Ullico Casualty Group, Inc., Ullico Investment Company, Inc., and Ullico Investment Advisors, Inc. 04. Does the Order of Rehabilitation include Ullico Inc. s other companies? The rehabilitation order has only been placed on Ullico Casualty Company. The other Ullico Inc. sister companies are operating as normal.

2 2 The Union Labor Life Insurance Company is domiciled in Maryland, and its life and health insurance operations remain in a strong position. The company posted impressive earnings in It will continue to offer its complete product line to its customers. The assets of The Union Labor Life Insurance Company are not affected by the rehabilitation process. Ullico Investment Advisors, Inc. and Ullico Investment Company, Inc. continue to offer all products and services for tax exempt, institutional investors. These companies are regulated by the federal government. Products for institutional investors remain unchanged and all products and services will continue to be offered. The assets of these companies are not affected by the rehabilitation process J for Jobs, Ullico Labor Life s flagship investment product sold through Ullico Investment Company, Inc., is currently involved with exciting commercial real estate developments around the country. The infrastructure investment opportunities are generating excitement and support in our marketplace. Investors in the company s suite of competitive investment products can rest assured the rehabilitation order does not affect their investments. 05. What is Ullico Casualty Group, Inc.? (Ullico Casualty Group) Ullico Casualty Group, Inc. founded in 1999 is a member of the Ullico Family of companies. It is Managing General Agency representing insurance carriers that provide coverage to its core union clients, trust funds and related labor organizations. These products include: Fiduciary Liability Insurance Governmental Fiduciary Liability Insurance Union Liability Insurance Commercial Package Insurance Workers Compensation Insurance Ullico Casualty Group is highly regarded for its underwriting and claims management expertise in the union marketplace. This is attested to by the relationships it has formed with three A rated carriers in the past year. 06. With which Insurance carrier is my policy written? Over the last several years Ullico Casualty Company and Ullico Casualty Group have offered policies written with several fronting carriers in addition to policies written on its own paper. If you refer to the declarations page of your policy it will specify which insurance carrier worked with Ullico to provide your insurance. 07. Why would policies written on fronting carriers be affected? Prior to the relationship with Alterra, Ullico Casualty Company retained the risk on all business written through fronting carriers. This meant though written on their paper, claims costs were reimbursed to

3 3 the fronting carrier through Ullico Casualty Company. Though the current financial troubles are not related to internally underwritten business for our core customer base, all of Ullico Casualty Company s accounts are currently under Delaware control. For those policies written with fronting carriers this means, temporarily, accounts are on hold until Ullico management is able to negotiate with these carriers to find an alternative means of paying claims and administering policies. Ultimately those carriers are responsible for the business written on their paper but Ullico Casualty Company has established collateral accounts with significant funds for them to provide for the payment of claims. 08. Who is Alterra America and why is the relationship different? In 2012, Ullico Casualty Group entered into a long term agreement with Alterra America Insurance Company (Alterra America), which has a financial strength rating (FSR) of A XV (Excellent) (as of 12/31/2012) by A.M. Best Company. Under this agreement Ullico Casualty Group and Alterra provide competitive multiemployer and governmental fiduciary liability and union liability insurance. The partnership with Alterra America is a key component to Ullico s strategy to return to its core mission of serving the union market place with A rated carriers. In 2013, Ullico Casualty Group began offering new and renewal fiduciary and union liability insurance policies through Alterra America. Policies up for renewal will be placed with Alterra America, with Ullico Casualty Group providing expert underwriting and claims management. The policies provided through this relationship are not reinsured by Ullico Casualty Company. 09. Are policies written on Alterra paper affected? No. The relationship with Alterra does not involve Ullico Casualty Company in any way. 10. What happens to my policy and coverage written on Ullico Casualty Company paper? Ullico Casualty Company, under the rehabilitation order, will not renew existing policies or issue insurance policies on new business. Ullico Casualty Group will also be offering commercial insurance products, including workers compensation coverage for union halls through multiple highly rated Insurance Carriers. 11. What if I have a claim on my fiduciary or union liability policy? Most of these policies have been written through State National Insurance Company or Hudson Insurance Group. The advantage of having written these policies through an A rated front is that these carriers have the freedom to act independently of the rehabilitation process. Ullico Inc. is working to determine the appropriate procedures for claims made under these policies. Ullico Casualty Company has deposited significant funds in collateral accounts with significant funds for the benefit of both of these carriers to provide for the payment of claims. Since February 01, 2013 these policies have been written with Alterra America and are unaffected by the Order of Rehabilitation. In addition Alterra in support of Ullico and its continuing program has

4 4 backed all State National policies since February 01, This means if your State National policy has an effective date after February 1 it is also unaffected by the rehabilitation process. For those fiduciary and union liability policies written directly on Ullico Casualty Company, the Delaware appointed receiver will be administering these claims. 12. What if I have a claim for a policy written on a Ullico Casualty Company policy? The Delaware Department of Insurance will now be responsible for administering and paying claims. Delaware has set up a phone number 1 (800) and a website where claimants can obtain information about the status of claims. 13. Does the effective date of my policy matter with regard to the rehabilitation? Yes. If you have a fiduciary, governmental, or union liability policy written through Alterra or State National with an effective date of February 01, 2013 or after your policy is unaffected by the Rehabilitation process. 14. Who is going to pay my claim or administer my policy? If your policy is written on Ullico Casualty Company paper the claims and in force policy administration will be managed by Delaware. Delaware has set up a phone number 1 (800) and a website where claimants can obtain information about the status of claims. If your policy is written with a fronting carrier, i.e. State National Insurance Company, Hudson Insurance Company or The Republic Group, that carrier has the authority to administer its claims and policies. Ullico management is currently working with these carriers to resolve the logistics of these processes and meet our mutual clients needs. 15. Why is my claims payment or request to endorse a Ullico Casualty Company policy being held up? Delaware is undergoing a process to ascertain the exact liabilities and assets available to it during the rehabilitation process. When this review is complete it will begin the process of discharging the liabilities of the company. During this review it is not allowing the distribution of any funds out of Ullico Casualty Company s accounts, or allowing any policy transaction that would increase the risk or liabilities of the company. 16. Why is my claims payment or request to endorse a fronted policy being held up? Prior to the relationship with Alterra, Ullico Casualty Company retained the risk on all business written through fronting carriers. This meant though written on their paper, claims costs were reimbursed to

5 5 the fronting carrier by Ullico Casualty Company. Though the current financial troubles are not related to internally underwritten business for our core customer base, all of Ullico Casualty Company s accounts are currently under Delaware control. For those policies written with fronting carriers this means, temporarily, accounts are on hold until Ullico management is able to negotiate with these carriers to find an alternative means of paying claims and administering policies. 17. Who do I contact for loss runs on my existing Ullico Casualty Company Policies? If you would like loss runs for your Ullico Casualty Company policy sent to you please contact Alieu Jallow at ajallow@ullico.com. 18. What does the future hold for Ullico? Ullico is an 85 year old insurance company owned by the labor movement. The company will continue to provide union leaders, trustees, members and union employers with a variety of insurance coverage including supplemental life and group life insurance products, and property casualty insurance. Ullico has built its reputation on innovating new products specifically designed for its unique labor union customer. Several new product lines will be launched this year. And, in partnership with other A rated insurance companies, Ullico Casualty Group will be able to offer its traditional menu of propertycasualty insurance products including fiduciary liability coverage, property coverage for union owned facilities, and other property casualty products. Ullico Casualty Group has shifted its strategy to become a managing general agency providing the same level of protection for union property casualty risk as it has in the past through its partnerships with A rated insurance carriers. The company will continue to invest in commercial real estate projects under its flagship J for Jobs investment product. It will continue to grow its infrastructure investment business, and is a leader in forging public private partnerships designed to re build America s aging infrastructure. Information about all of Ullico s products and services are available on the company s website, Ullico Inc. will remain the leader in insuring union risk.