Weston Property & Casualty Company has now had a receiver confirmed for an insolvency process and liquidation of the company, and it’s been claimed that the insurers assets were insufficient to meet its liabilities, while it had also failed to place its mid-year reinsurance renewal.
The Florida Department of Financial Services has now been appointed as a receiver to wind-down the insolvent insurer, sell off its assets and recover any dues.
Among issues listed that caused the push for insolvency of the carrier, which was also stimulated by a rating downgrade from Demotech, are the fact Weston Property & Casualty Company was deemed to have insufficient assets to meet its liabilities, should they have been called.
In addition, the fact Weston failed to complete its reinsurance placement has also been seen as a critical factor in the determination of its insolvency.
As we explained last week, Weston never completed its Marlin Re catastrophe bond issuance.
Weston, which counts insurance-linked securities (ILS) investment manager Hudson Structured Capital Management (investing as HSCM Bermuda), as a majority stakeholder, had its all-important Demotech ‘A’ rating downgraded to a NR Not Rated status.
The Florida Office of Insurance Regulation deemed Weston P&C Insurance “impaired or insolvent”, but it does not seem the carrier is deemed viable enough as a going concern to qualify to fall under the new guarantee arrangement with Florida Citizens support.
Weston was unable to fill the lower layers of its reinsurance tower that it needed at the renewals, but the lack of assets to meet liabilities may have been an even more critical driver of its journey to insolvency, it seems.
With somewhere around the 20,000 policy mark in Florida, Weston heading into insolvency means that policies will be cancelled as of September 7th, and as a result it’s expected that additional policies will now flow to residual market insurer Citizens, with Weston the fifth carrier to go insolvent in Florida since February.
Numerous Hudson Structured and HSCM entities, including founder Michael Millette, are named as affiliates of Weston in a consent order assigning the receiver that has been seen by Artemis. It’s unclear how much of the investment made into Weston could be recovered through the liquidation process.
All affiliates need to cooperate with the Florida Department of Financial Services through the insolvency process, and any assets, estate or property belonging to Weston in the hands of affiliates will have to be surrendered to the liquidation process.
This process will involve a continued investigation into the causes of Weston’s insolvency and whether any false statements were filed, or if any laws were violated.
Florida Citizens policy count looks set to start rising more rapidly again, with the Weston policies set to boost its exposure growth.