Lumbermen’s Underwriting Alliance, a Boca Raton, Florida-based workers compensation insurer, has been placed into rehabilitation by a Missouri court, according to the Missouri Department of Insurance.
A Cole County, Missouri, circuit court granted a rehabilitation order Tuesday from the Missouri insurance department, according to a statement on Lumbermen’s website. The insurance department’s director, John M. Huff, has been named as receiver of the insurer, allowing him to take over operations for the company, the insurance department said in a statement Thursday.
Lumbermen’s, which specializes in property/casualty insurance for the forest products industry, has 3,000 policyholders and more than 6,000 open workers comp claims nationwide, according to the Missouri insurance department.
“With a rehabilitation, the director’s priority will be to process existing claims,” the insurance department statement reads. “Policies will continue pursuant to their terms and conditions. Policyholders must continue making their premium payments to keep their insurance coverage intact. Payments should continue to be sent to” Lumbermen’s.
The rehabilitation was requested after one of Lumbermen’s policyholders, a large professional employer organization — New York-based TS Employment Inc. — failed to fully fund its collateral obligations and filed for Chapter 11 bankruptcy protection in February, the insurance department said.
A.M. Best Co. Inc. downgraded Lumbermen’s financial strength rating to E from B+ in March after the Missouri insurance department requested in February that the insurer be placed into receivership, according to a statement from Best.
The Oldwick, New Jersey-based ratings agency said Lumbermen’s had a $22.5 million deficit position at the end of 2014, which was caused by the professional employer organization bankruptcy filing.
Outstanding asbestos liabilities continue to drag on insurance industry earnings, although the liabilities are predominantly well-managed.