Citation Insurance Group Faces Conservation Order and Rate Increase in California

Strategic Insights -

Citation Insurance Group, a regional multiple-line specialist in the workers' compensation and commercial property and casualty marketplace, has faced significant challenges in California. The company announced that the California Department of Insurance has placed its subsidiary, Citation General Insurance Company, into conservation, effective July 21, 1995. This decision was made due to substantial adverse claim development related to construction defects against artisan contractor liability policies written in earlier years.

Citation Insurance Group has been anticipating this conservation order since early 1995. The company has canceled and rewritten most of its in-force policies from Citation General into Citation Insurance Company, which has the necessary assets and product line to compete effectively in the western insurance marketplace. Donald Henderson, president and chief executive officer, stated, "We can now concentrate our efforts toward building the market credibility of Citation Insurance Company."

In related news, the California Department of Insurance issued an interim approval for a 70% increase in Citation Insurance Company's private passenger automobile insurance rates. The original rates were deemed inadequate based on the company's loss experience. The interim rate approval may lead to a hearing and subsequent adjustment to these rates.

Key Takeaways:

  • Citation General Insurance Company was placed into conservation by the California Department of Insurance due to adverse claim development related to construction defects.
  • The conservation order is effective as of July 21, 1995, and Citation General's policies have been canceled and rewritten into Citation Insurance Company.
  • Citation Insurance Company has received an interim approval for a 70% increase in private passenger automobile insurance rates due to inadequate original rates.
  • Donald Henderson, president and chief executive officer, emphasized the company's focus on building market credibility for Citation Insurance Company.
  • Citation Insurance Group has approximately 190 employees at offices in San Jose, Costa Mesa, Sacramento, Denver, and Phoenix.
  • The company's common shares (6.4 million) are traded on the Nasdaq National Market System under the symbol: CITN.

Statistics:

  • 6.4 million: number of Citation Insurance Group's common shares traded on the Nasdaq National Market System.
  • 190: number of employees working for Citation Insurance Group across multiple offices.
  • 70%: increase approved for Citation Insurance Company's private passenger automobile insurance rates.
  • 1995: year Citation General Insurance Company was placed into conservation by the California Department of Insurance.
  • July 21, 1995: effective date of the conservation order on Citation General Insurance Company.

Sources:

  • PRNewswire, July 24, 1995
  • "Citation Insurance Group (CITN) Gets Going!" Available via Fax at no cost, dial 1-800-PRO-INFO, Code #108.
  • Financial Relations Board, 415-986-1591.