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Doi Seeks Liquidation of Miami Insurance Company

11/8/2002

TALLAHASSEE - State Treasurer and Insurance Commissioner Tom Gallagher is urging Aries Insurance Company to consent to liquidation after an arbitration panel ruled that the company is deeper in debt than operators originally represented.

An arbitration panel ruled this week that Aries, a property and casualty insurance company based in Miami, owes its reinsurance company, General Reinsurance Corporation (Gen Re), approximately $3.7 million for overpayments. Aries had claimed that General Reinsurance owed it more than $30 million.

"Liquidation is the only avenue for making sure outstanding claims get paid," Gallagher said. "Because of the delay tactics employed by Aries' principals and their attorneys, body shops are threatening to sell policyholders' cars for non-payment. Aries should do the right thing and agree to be liquidated."

Aries primarily writes personal and commercial auto and property coverage as well as some workers' compensation coverage.

In May, the department was appointed by a Second District Circuit Court judge as receiver for the troubled insurance company for purposes of rehabilitation. Aries was ordered by the court to stop writing new policies and this summer agreed to stop renewing policies. The company still has about 70,000 policyholders.

As receiver, the department has paid nearly $20 million in claims, at one point paying as many as 600 or more claims a week.

In early September, the department filed a petition requesting that Aries be ordered into liquidation. Aries appealed the petition, and a hearing on the department's petition, scheduled for Nov. 4, was postponed by the First District Court of Appeals in Leon County. The liquidation hearing cannot be rescheduled until Aries' appeal is ruled upon or withdrawn.

If liquidation was agreed to or ordered by the courts, the Florida Insurance Guaranty Association and the Florida Workers' Compensation Insurance Guaranty Association would be activated to help pay claims. However, until further order of the court, which may not occur until the issue of liquidation is resolved, the court has directed that claim payments be limited to workers' compensation indemnity and personal injury protection (PIP) wage loss.

According to records found at Aries, the department believes Aries' managing general agency, Onyx Underwriters, Inc., may owe Aries in excess of $20 million. Onyx Underwriters, Inc. has not provided any timetable for repayment. Pending that repayment, department regulators have determined that Aries' liabilities are more than $100 million and assets and receivables are less than $45 million.