Receivership activity in the U.S. insurance industry increased slightly year over year in 2021.
Regulators placed 15 insurers into rehabilitation or liquidation last year, according to an S&P Global Market Intelligence analysis, compared with 12 companies put into liquidation or rehabilitation in 2020.
P&C insurers hit hard
In 2021, 11 insurers, eight of them property and casualty carriers, were liquidated, while four were put in rehabilitation. Net total assets of companies under receivership in 2021 totaled $716.8 million, a sharp decline from $2.42 billion in 2020.
Two of the P&C carriers that were liquidated, Florida-based American Capital Assurance Corp. and Gulfstream Property & Casualty Insurance Co., were casualties of the Sunshine State's chaotic homeowners insurance market, which has been beset by excessive litigation.
American Capital was ordered liquidated April 14, 2021, nine days after the company agreed to enter receivership due to insolvency. The company agreed to liquidation, noting in a regulatory filing that the insurer was unable to pay its debts.
The St. Petersburg-based carrier was licensed in Florida in 2011 and authorized to write homeowners multiple peril, commercial multiple peril, inland marine, allied lines, fire and other liability coverage in six states. American Capital had approximately 2,300 policies in force when it went into receivership.
The Florida Department of Financial Services took Gulfstream into receivership July 28, 2021. It reported a full-year net loss of $22.6 million, a net underwriting loss of $34.9 million and $17.1 million in capital contributions. Without the capital contributions, Gulfstream was short of the state's minimum capital surplus standards and consented to receivership. Licensed in 2004, Gulfstream had approximately 45,000 policies in force at the time it went into receivership.
COVID claims dental insurer
Midwestern Dental Plans Inc. of Dearborn, Mich., which went into rehabilitation in October 2020, was ordered liquidated Feb. 3, 2021, after a hearing in Ingham County Circuit Court.
The COVID-19 pandemic had a direct effect on the company, which was a network of dental providers comprising seven offices between Detroit and Lansing. Midwestern Dental had to close six of its locations after Gov. Gretchen Whitmer issued an executive order limiting nonessential medical and dental procedures because of the pandemic.
A continuing trend
In 2017, seven out of the nine companies placed in receivership were P&C carriers. That figure climbed to nine in 2018 and then soared to 14 out of the 22 total insurers put into receivership in 2019. In 2020, eight of the 12 total companies placed into receivership were P&C insurers.
Of the 70 insurers put in receivership since 2017, 49 were P&C underwriters, 13 were health insurers and eight were life insurers.