Weston Property & Casualty Insurance Co. is insured and must be placed in receivership, making it the fifth Florida insurance this year to expire, according to state regulators.
The Florida Office of Insurance Regulation on Tuesday issued a notice to the Department of Finance that 10-year-old Weston, which has about 22,000 points in the state, is “bankrupt or close to bankruptcy,” and DFS should initiate criminal charges.
The filing was made on the same day that financial services firm Demotech announced that it has withdrawn financial stability from Coral Gables-based Weston. But the company’s board of directors on July 29 had already approved receivership after losses of more than $94 million in the past two years and rising insurance costs, OIR information showed.
The carrier also disclosed in its books that it was consolidating income from a related company, a move that was not approved by the OIR. Without a captive plan, Weston did not have adequate supplies, the OIR dispatch letter to DFS explained.
Weston’s CEO is Deanne Nixon, who replaces Michael Lyons in early 2021, according to a company statement. The company did not mention the attack on its website on Wednesday.
The OIR transmission letter he also included an affidavit from Virginia Christy, director of the office of Property & Casualty Financial Oversight, which details Weston’s financial struggles:
- In the summer of 2020, OIR required Weston to file a bankruptcy plan to reduce its costs and reduce the millions of dollars in debt owed to its general manager, Weston Insurance Management. Around the same time, in July 2020, Hudson Structured Capital Management took a 50% stake in the company, Christy’s affidavit explained.
- In December 2020, Weston asked to be allowed to start banning just over 1,500 points. The OIR approved the minimum number of early bans.
- In December 2021, West Insurance Co. merged with Weston Specialty Insurance, a Texas-based company. The combined company was reorganized in Florida and renamed Weston Property & Casualty. His combined earnings were reported as $28 million, which included approximately $50 million in cash. “Despite Mr. Weston’s efforts to reduce existing nonprofit policies, reorganize the company’s governance, change its reinvestment plan, and increase the amount paid, the balance … is getting worse,” Christy said in an official statement.
- In June of this year, Weston said that it would not be able to complete its reinsurance program due to its cost and the lack of availability of a low-cost reinsurance policy. The company participated in the Reinsurance to Assist Policyholders, or RAP program, a $2 billion fund created by the Florida Legislature in May as a type of hurricane recovery program for Florida carriers. This does not seem to have changed much.
Also in June, Weston floated the idea of using a captive program called the Weston Cell, through a partnership. The insurer did not fully commit to the plan “but instead decided to withdraw money from Weston Insurance Management,” to be repaid later with higher payments to MGA. OIR rejected the idea.
OIR then discovered that Weston for several months had been accounting for the seized cells as if the move had been approved. Without the money, Weston’s balance would have fallen below the $15 million required by Florida law, the affidavit said.
On July 27, OIR held a meeting with Weston’s leadership to discuss ending the seizure. Company officials also revealed that the carrier also owed about $50 million in payments to reinsurers, which were not included in its list of liabilities in its financial statements.
“The sums owed by Weston, but not recorded as debts, are added to the debts stated on the . . .
At the July 27 meeting, Weston officials admitted that he was a failure. The insurer stopped writing new business on July 15 and stopped renewing it three days later.
The OIR filing did not indicate when the liquidation would begin.
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