Thursday, April 8, 2010

Northern Capital in Hazardous Financial Condition

On May 27, 2009, Northern Capital Insurance Company (Northern Capital) was placed in Administrative Supervision by the Office of Insurance Regulation (Office). The Office has been continuously monitoring operations and reviewing corrective action and other measures undertaken during this extended period of supervision.

Even after these extensive efforts, Northern Capital no longer meets the minimum capital and surplus requirements, is unable to raise sufficient additional capital to continue operations, and all other discussions to sell the company have come to an end.

On April 7, 2010, the Office notified the Department of Financial Services (DFS), that the company is insolvent and is in hazardous financial condition.

It is anticipated that in short order DFS will petition the Court to order Northern Capital into receivership. If the company is ordered into liquidation all policies will be cancelled no later than 30 days from the date of the liquidation order. Based on the financial statements filed with the Office by the company, liquidation appears to be a strong possibility.

Agents and policyholders should look now for new coverage

• Agents and policyholders should cancel coverage with Northern Capital and shop for new coverage in the voluntary market now.

• Unearned premium will be refunded to the policyholder as quickly as possible to facilitate the purchase of new coverage.

• If replacement coverage is not available in the voluntary market, Northern Capital insureds are eligible now to apply for coverage with Citizens.

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