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CORRECTED: An earlier version of this story misstated the relationship between Patriot National Inc. and Guarantee Insurance Co.
Florida insurance regulators took over Fort Lauderdale-based Guarantee Insurance Co. on Monday and have started liquidating its assets, a spokesman for the Department of Financial Services confirmed Thursday.
“Officials will be on site assisting (Guarantee) with moving forward through the liquidation processes,” the spokesman wrote in an email. “With the entry of the liquidation order, the applicable state guaranty associations will be activated to help pay outstanding covered claims of (Guarantee’s) workers compensation policies. The processing and payment of pending covered claims will be transitioned to the appropriate state guaranty associations.”
The move comes two weeks after the agency determined that the company was insolvent or was on its way to becoming insolvent.
Guarantee was licensed in 40 states and the District of Columbia, and wrote business in 31 states and the District of Columbia at the time of liquidation; it had approximately 8,600 active policies as of Nov. 13, including 1,250 in Florida, according to the spokesman.
Guarantee was the largest customer of Patriot National Inc. The company stated in a Nov. 17 filing with the U.S. Securities and Exchange Commission that it lost 60% of its revenue as a result of Guarantee’s financial issues and had to lay off 250 of its employees. Guarantee's holding company is majority owned by Steven Mariano, the former CEO of Patriot National. Mr. Mariano is also the majority owner of Patriot National but the insurer is planning to recapitalize under Chapter 11 of the United States bankruptcy code and the equity interests in the insurer will be "extinguished", according to SEC filings.
Florida’s Office of Insurance Regulation is asking the state’s chief financial officer to initiate delinquency proceedings against an insurer underwriting workers compensation, claiming the company “is impaired or insolvent” or “is about to become insolvent,” according to a letter issued Friday.