Frontier Insurance, in Rehab in N.Y., Moves Closer to Reopening

Frontier Insurance Company, which was seized by New York officials four years ago, is closer to reopening for business thanks to a recent court decision awarding the New York Liquidation Bureau greater flexibility over its financial position.

Superintendent of Insurance Howard Mills told the Frontier Insurance Company’s 150-plus employees at the insurer’s headquarters that the decision gives the company a combination of debt relief and additional cash.
“The court’s decision enabled Frontier to continue the rehabilitation process,” Mills stated.

The state has thus far saved the company from liquidation and officials still hope it can become a viable insurer again. According to Mills, Frontier’s negative surplus has been improved by $57 million over the past four years, while more than $500 million in claims have been paid.

Very few companies that have been placed in rehabilitation are ever restored to independent operations. But New York officials think this may turn into one of the rare revivals.

Mills maintained that if the state had placed the insurer in liquidation four years ago, “that would have put each and every Frontier employee out of work and adversely affected Sullivan County’s economy while also sending shock waves through the nation’s already overburdened guarantee fund system.”

Instead, the liquidation bureau and Frontier employees have worked on the rehabilitation so that it may once again operate as an independent company.

At its peak in 2000, the Rock Hill headquarters housed 700 employees out of a total of 1,500 nationwide. Frontier Insurance Company was the largest subsidiary of Frontier Insurance Group, based in Rock Hill, which itself filed for Chapter 11 bankruptcy a few months ago. That filing does not affect Frontier Insurance Company.

Frontier’s woes surfaced in 1999 when it lost $176 million in the third quarter. In 2000, it lost nearly $300 million and began laying off employees by the dozen. In early March 2001, it voluntarily stopped writing new and renewal business. That decision forced hundreds of agents to scramble to find new markets for the more than 50 small and large specialty programs including child care facilities, summer camps, social service agencies, artisan contractors, crane operators and pest control firms Frontier wrote.

In October 2001, the courts granted the state insurance department’s request to take control of Frontier Insurance Co.

Topics Carriers New York