PROVIDENT WASHINGTON CLOSES:

Providence Washington Insurance Companies is shutting down after more than two centuries, a victim of financial losses, an inability to raise capital and failure to find a buyer. The Providence, R.I.-based company’s existing policies will remain in place, but no policies will be renewed and no new business will be written. In addition, the company has entered into an agreement with OneBeacon Insurance Co., Boston, whereby OneBeacon will acquire renewal rights in Providence Washington’s small business package policies. The 205-year-old property and casualty insurer had posted a $7 million loss for the first three months of this year. That came after a $35 million net loss in year 2003 and a $7 million net loss in year 2002. These losses contributed to the policyholders’ surplus dropping from $92 million at year-end 2002 to $59 million at year-end 2003, and to $53 million as of the quarter ending March 31, 2004. As a result of the anticipated downgrade by A.M. Best and continued decline of policyholder surplus, the company’s board of directors determined that ceasing new and renewal business and servicing Providence Washington’s current portfolio will allow it to meet its obligations. This decision was reached after failure to raise new capital or find a buyer. The company plans to gradually reduce its workforce of 235 employees. The company has agents in 16 mostly eastern states, writing personal and small commercial lines. In addition to its headquarters in Rhode Island, it has underwriting offices in Delaware, Pennsylvania, Georgia and Ohio and a claims office in New York. PW is the second Rhode Island insurer to hit the skids within the past year. Pawtucket Mutual has been under the control of the Department of Business Regulation for more than a year while officials seek a buyer. A decision on Pawtucket’s fate is expected any day.

Topics Washington