Florida’s Guarantee Insurance Co. Has Been Declared Insolvent
This month, the Fort Lauderdale, Florida-based workers’ compensation insurance carrier Guarantee Insurance Co. has been declared insolvent and then placed under state receivership by state regulators. Receivership refers to a type of corporate bankruptcy in which the courts or creditors appoint a receiver (in this case, state insurance regulators) to run the company and have control over the company’s decision-making and how assets will be handled.
This decision was made in response to findings that Guarantee Insurance Co. does not have the assets to pay its outstanding obligations; as of June 30, the company has a $236,775 deficit, a far cry from its former surplus of $42.18 million. In addition, it has been found that the carrier has violated Florida state law by systematically transferring funds to founder and majority owner Steven Mariano, “with no documented business purpose and no discernable benefit to GIC”. The funds totaled at least $15.7 million and the transactions occurred between 2016 and June 2017.
A November 17 referral letter sent to the Florida Department of Financial Services (DFS) Division of Rehabilitation and Liquidation from David Altmaier, the Florida Insurance Commissioner, stated that Mariano “benefited individually” from these transfers, and that other parties that have been linked to Mariano also received funds in transactions that “have been harmful to GIC”. The letter continued to specify that GIC “booked and availed itself of reinsurance credit at a time that it knew it did not have sufficient cash and invested assets to cover this liability.” Specifically, GIC, with full knowledge, filed a false financial statement with regulators in which it reported collateral for unauthorized reinsurance as a liability for GIC funds under reinsurance treaties, with the amount totaling to $144.6 million as of December 31, 2016.
GIC consented to being placed in state receivership under the Department of Financial Services, Division of Rehabilitation and Liquidation on November 13, and DFS was officially appointed as receiver late on Monday, November 27, two weeks after the decision was made. The company was initially placed under administrative supervision by OIR on August 18. DFS officials, according to a spokesman, will be “on site assisting Guarantee Insurance Co. with moving forward through the liquidation process.” The outstanding claims will be paid by Florida Guaranty Association, a nonprofit state fund for insolvent insurance companies.
As a result of GIC’s insolvency and placement into state receivership, Patriot National, which was also founded by Mariano and of which 2.8 million shares (valued at $6 million) were owned by GIC, has been reported by the Securities and Exchange Commission to have lost 60 percent of its business and had to lay off 250 employees.
About Caitlin Morgan
Caitlin Morgan specializes in providing Workers’ Compensation insurance to residential care facilities, including offering a program designed for members of the Indiana Health Care Association (IHCA), HOPE, and Leading Age Indiana associations. We can assist you in reviewing an existing Workers’ Compensation plan, securing coverage, boosting safety plans and implementing RTW programs for your nursing home clients. Please contact us at 317.575.4440.