Lauderdale insurer taken over by state
Receivership and liquidation OK’d for Guarantee Insurance
FORT LAUDERDALE — State-appointed receivership and liquidation has been approved for Fort Lauderdale-based Guarantee Insurance Co. while former affiliate Patriot National has announced plans to restructure and file for Chapter 11 bankruptcy relief.
Meanwhile, 250 Patriot National workers who were laid off last week because of the state’s takeover of Guarantee have been told they will not receive any severance pay due to the company’s “financial difficulties.”
Guarantee, a workers compensation provider, was the largest client of insurance services company Patriot National, also based in Fort Lauderdale, until Guarantee’s board of directors agreed on Nov. 13 to a Consent to Order of Rehabilitation or Liquidation.
The agreement followed findings by state insurance regulators that Guarantee illegally transferred $15.7 million to majority shareholder Steven Mariano, and that a $42.2 million surplus reported in its secondquarater financial statement was actually a debt of $236,775.
That equity has been “extinguished” under Patriot National’s restructuring agreement and the Guarantee receivership, Patriot National said in a statement.
On Nov. 17, Insurance Commissioner David Altmaier asked Chief Financial Officer Jimmy Patronis to initiate delinquency proceedings against Guarantee. On Nov. 22, a day before Thanksgiving, Patriot National announced that the loss of Guarantee’s business forced it to terminate 250 employees.
Guarantee accounted for 60 percent to 70 percent of Patriot’s business, and the terminated employees were approximately a third of Patriot National’s workforce across the nation, Patriot National said.
On Tuesday, Patriot National announced in a news release that it was being acquired by “certain funds and accounts” managed by Cerberus Business Finance LLC and its affiliates and TCW Asset Management Company LLC. The transactions would take place under a restructuring plan between Patriot National and its lenders “under which the company and its direct and indirect U.S. subsidiaries” will file petitions for relief under Chapter 11 of the United States Bankruptcy Code.
Patriot National expects to continue to operate its day-to-day business under the reorganization plan, which it expects will be completed in the second quarter of 2018, the release said.
Following the bankruptcy announcement Tuesday, the New York Stock Exchange said it was delisting Patriot National.
The Guarantee receivership, approved by a Leon County circuit judge on Monday, authorizes the state to liquidate the company and activate state guaranty associations to process payment of the company’s outstanding covered claims, according to Jon Moore, spokesman for the Department of Financial Services.
Guarantee had about 8,600 active policies in 31 states and the District of Columbia on Nov. 13, Moore said. Of those, 1,250 were in Florida. Information about filing claims against Guarantee can be found at myfloridacfo.com/division/ receiver.
rhurtibise@sun-sentinel .com