Frontier Insurance Co. Withdraws From Marketplace

Frontier Insurance Group Inc. announced March 13 that its primary operating subsidiary, Frontier Insurance Co., headquartered in Rock Hill, N.Y., has voluntarily stopped writing new and renewal business.

Mark Mishler, president of Frontier Insurance Company, described the action as “a difficult one,” but one that the company believes “to be in the best interest of all constituents.” This includes both policyholders and independent agents alike.

“If they [independent agents] currently write business on Frontier Insurance Company paper, they’ll need to find another market-and we’re helping with that where we can,” said Maureen Michulski, assistant vice president, corporate communications, Frontier Insurance Group Inc.

“We focus on a very different market segment-specialty and small programs-and our focus is a small segment area,” Michler said, explaining that this might make it difficult for some agents and producers to quickly find a market. Frontier’s core business consists of more than 50 small and large specialty programs including child care facilities, children’s summer camps, social service agencies, artisan contractors, crane operators and pest control firms.

Mishler said that the company is trying to develop an MGA strategy. “We have a company called Medical Professional Liability Agency, doing business as Frontier Managers, and we’re trying to work with other carriers to make this as seamless as possible.

“We would love to have carriers come on board and we would love to continue in the process as it is and just not be a risk taker…but we’ve been working on the process for a while, and we know it takes time,” Mishler explained.

It’s no secret that it’s been a troubling year thus far for the once-prosperous Frontier. Numerous announcements made throughout the year highlighted the execution of the company’s Corrective Action Plan. “Our focus was taking the company down from $700 million of written premiums down to about $150 million of profitable written premiums,” Mishler said. “And we’re working on strategies to continue business during the period Frontier is not assuming risk.”

As a result of the reduced level of insurance business and the closing of the company’s statutory year-end process, Frontier Insurance Group’s president and CEO Harry Rhulen knew that he needed to streamline his executive team. Last September, Frontier announced the implementation of salary reductions for senior management and a reduction of staff. Since February 2000, Frontier’s Executive Management Group has been reduced from 11 to seven members.

During the fourth quarter 2000, the Company continued to restructure, resulting in the elimination of additional positions. Since January 2000, Frontier’s total employee count has decreased from approximately 1,600 to 680 through asset sales, attrition and job elimination.

On March 2, Patrick Kenny, executive vice president and CFO; Douglas Moat, executive vice president; and Richard Seyffarth, executive vice president and chief investment officer-all members of Frontier’s Executive Management Group-announced their resignation, bringing the total number of the Group to four.

So what does this mean for other Frontier employees? “All of our employees are Frontier Insurance Group employees, so at this point, employees functions would continue to be evaluated to see what would need going forward…we may need additional support, and that sort of thing,” Michulski said.

Frontier has been busy taking the necessary steps to strengthen its financial position, including removing poor performing business from the books.

“The changes started taking place in 1999 in our main business and then it really picked up steam in 2000,” Mishler said. “We spent the entire year [2000] retrofitting the organization to one that needed to be smaller and needed to focus on business that was profitable…And we were able to retain it as a ‘C++’ insurance carrier utilizing various different reinsurance arrangements.”