In Rare Development, Md. Regulators and Insurance Agent Rescue Insurer

In a rare instance of an insurer surviving a state takeover, Mutual Fire Insurance Company of Carroll County has been successfully rehabilitated and has emerged from state receivership as a fully operational insurer, Maryland Insurance Commissioner Alfred W. Redmer, Jr. announced.

Carroll County Mutual, which has been in business in Maryland for 130 years, will continue operations under the ownership of John J. Scott, Sr., an experienced insurance agency owner in Calvert and Montgomery Counties.

As part of the $5 million purchase agreement with Snow, Carroll County Mutual will remain a Maryland-based insurance company for at least 10 years and maintain its headquarters in Westminster, Md. for at least 7 years.

In a news conference announcing the rescue, Redmer described what he said was the unique and “creative private sector solution” that the Maryland Insurance Administration utilized to stabilize and restore Carroll County Mutual, which insures more than 8,000 homeowners throughout the state, to financial health.

Carroll County Mutual, primarily a homeowners’ insurance company doing business throughout Maryland, was placed in receivership in April of 2004 as a result of its deteriorated financial condition. Redmer immediately hired a former insurance executive, William Furr, to act as a Special Deputy Receiver, and employed the resources of a team of MIA staff to help run and stabilize the company along with a group of Carroll County Mutual employees.

At the same time, the collective group sought an investor who would be interested in continuing the company in Maryland. Nationally, such an approach and this successful outcome for a financially troubled company are uncommon.

The new investor, Scott, is a Calvert County resident who has more than 40 years of experience in the insurance business. He started Associated Insurance Management in Silver Spring, Md. in 1969 with a group of producers. Associated is a now a $50 million property and casualty insurance agency writing in the Baltimore-Washington Metro area.

“It is indeed a rare event for an insurance company to successfully complete rehabilitation,” said Trish Getty, president of the International Association of Insurance Receivers said in a release from Redmer’s office. “We are pleased to learn that Carroll County Mutual has been able to accomplish this difficult task. As receivers, it is always our hope that we can bring a company back from the depths of financial woes, but so often, by the time they are placed into rehabilitation, the problems are insurmountable. Our congratulations to the Maryland Insurance Administration.”

Redmer said he was pleased that Carroll County Mutual would remain a Maryland-based insurance company.

“I truly appreciate John’s (Snow) dedication to this community and this company and the efforts of everyone involved that help us achieve this goal,” said Redmer. “It is quite a victory to have preserved this company as an option for consumers around the state and the local jobs that mean so much to communities like Westminster.”

As of June 28, 2005, Carroll County Mutual maintained nearly 8,000 policies in the state.