California Regulators Approve Plan to Rehabilitate Superior National Insurance Cos.

California's acting insurance commissioner has approved a plan to rehabilitate Superior National Insurance Cos., involving the transfer of certain assets and liabilities to Kemper Insurance Cos. The plan includes the lifting of a temporary suspension of claims-related payments, and checks are being issued again to policyholders. This decision follows the conservation of four California-domiciled Superior National subsidiaries in March, citing severe under-reservation and hazardous financial conditions. The companies have a balance sheet deficit of more than $300 million.

Key Takeaways:

• California's acting insurance commissioner, J. Clark Kelso, approved a plan to rehabilitate Superior National Insurance Cos. by transferring assets and liabilities to Kemper Insurance Cos.
• The plan includes the lifting of a temporary suspension of claims-related payments, allowing checks to be issued again to policyholders.
• Superior National Insurance Cos. had a balance sheet deficit of more than $300 million.
• The companies, including Superior National Insurance Co., Superior Pacific Casualty Co., California Compensation Insurance Co., and Combined Benefits Insurance Co., were taken under conservation by California insurance regulators in March due to severe under-reservation and hazardous financial conditions.
• A fifth subsidiary, Commercial Compensation Insurance Co., has since redomiciled to California and is included in the rehabilitation plan.
• Kemper was granted the exclusive right to renew policies for existing policyholders of Superior National Insurance Group subsidiaries in July.
• Kemper has been providing reinsurance for new and renewal Superior National policies since April 5.
• A.M. Best rates Superior National Insurance, Superior Pacific Casualty, California Compensation Insurance, Combined Benefits Insurance, and Commercial Compensation Insurance E (Under Regulatory Supervision).

Statistics:

• Superior National ranked 31st in the nation among workers' compensation insurers, with $214.9 million in direct premiums written in 1999.
• Kemper ranked eighth among workers' compensation insurers, with $1.09 billion in 1999 direct premiums written.
• The companies have a balance sheet deficit of more than $300 million.
• Superior National's 1999 direct premiums written comprised a significant portion of its overall assets and liabilities.

Sources:

• BestWire, March 3, 2000
• BestWire, July 21, 2000
• BestWire, July 20, 2000
• BestWire, April 7, 2000