Troubled Insurance Company Delinquency Proceedings
Tharp and Associates has extensive experience and expertise in all aspects of interim and/or permanent replacement management for state departments of insurance as receiver, in rehabilitation and liquidation proceedings, including other regulatory actions and oversight taken by state departments of insurance in conjunction with troubled insurance companies, such as administrative supervision.
- Supervision is an administrative proceeding available to the Commissioner of Insurance to correct problems and deficiencies of troubled insurers. Administered internally within the Departments of Insurance, supervision provides the Commissioner (Director or Superintendant) of Insurance a “veto” power remedy, requiring the troubled insurer to obtain approval of the Department of Insurance for cash disbursements and material transactions. Tharp has served as supervisor in numerous troubled insurance company situations. In 2011, Tharp was appointed supervisor for two of the largest mortgage guaranty insurers in the United States, PMI Mortgage Insurance Co. and its wholly-owned subsidiary, PMI Insurance Co. These insurers write and reinsure mortgage guaranty insurance throughout the United States, having experienced significant losses and claims given defaults prevalent in the U.S. economic climate. Tharp is assisting in the pursuit of a run-off plan with management in an attempt to avoid delinquency proceedings.
- Rehabilitation is a change of management and court proceeding resulting in the removal of the troubled insurer’s problems and re-emergence of the troubled insurer back into the marketplace. The achievement of a successful rehabilitation plan is a rare and pinnacle event. During 2004 and 2005, Tharp successfully rehabilitated Old West Annuity & Life Insurance Company through a court-approved rehabilitation plan.
On March 14, 2012 PMI Mortgage Insurance Co. (“PMI”) was placed in Rehabilitation by the Arizona Superior Court, and Tharp has been administering the Company under a rehabilitation plan since that time. In 2014, Tharp closed a material transaction with a large insurance holding company system, resulting in the sale of several PMI subsidiaries, PMI’s information technology platform and the transfer of PMI employees, while entering into a services agreement to facilitate the PMI run-off. The transaction resulted in the infusion of nearly $300 million into PMI, requiring court approval, regulatory approvals and approvals by Fannie Mae and Freddie Mac.
- Liquidation is a change of management and court proceeding whereby further attempts to rehabilitate the insurer are futile. State guaranty associations are activated for “covered claims” and assets are marshaled and distributed to creditor classes based on the domiciliary state priority of distribution statute. Tharp has liquidated dozens of insolvent insurance companies, formulating and implementing liquidation plans and pursuing complex litigation to the benefit of its policyholders and creditors.
Tharp has an unprecedented track record of successes in each stage of regulatory action having served in all capacities — supervisor, rehabilitator, and liquidator.