An uncertain future for limo firm’s insurer
Doubts grow whether company has capital to stay in business
Global Liberty Insurance Co. of New York, the Long Island company that issued the insurance policy for the stretch limousine involved in the Schoharie crash that killed 20 people last fall, is facing an uncertain financial future after its parent company announced last week that it was exploring a possible sale.
Global Liberty, which specializes in selling policies to taxi and limo companies, is owned by Atlas Financial Holdings, an insurance holding company based in Schaumburg, Ill. Atlas owns several other insurance carriers that mostly specialize in the commercial automobile market.
Atlas said earlier this week that it was “exploring strategic alternatives,” including “a potential sale of the company or certain assets.”
The announcement came a month after Atlas Financial revealed it had underestimated the amount of money it needed to set aside to cover
payouts on injury claims — though the period of those claims predates the Schoharie crash, which occurred on Oct. 6, 2018.
“These claims are showing higher severity and have been open for longer periods than we had estimated,” Atlas CEO Scott Wollney said.
The news has sent shares of Atlas Financial plummeting more than 75 percent since the beginning of March, from $9 per share on March 1 to less than $2 a share as of Monday.
This drop in value was enough to force at least one analyst to question whether or not Atlas had enough capital to remain in business. A.M. Best, a ratings agency, downgraded Global Liberty’s credit rating, calling its balance sheet “weak” in the process.
Prestige Limousine, the Wilton company that owned the 2001 Ford Excursion involved in the crash, had insured the vehicle through Global Liberty, although the policy was repeatedly canceled and then reinstated in the months leading up to the incident. The policy was last reinstated on Oct. 5, the day before the limo careened into the parking lot of the Apple Barrel Country Store & Cafe, killing two pedestrians, before plunging into a ditch, killing all 17 passengers and the driver.
The health of Global Liberty is of particular interest to the families of crash victims, who have started filing lawsuits against Prestige, its owner Shahed Hussain and his son, Nauman, who operated the company on behalf of his father, who is living in Pakistan.
Nauman Hussain was indicted Friday on 20 counts of second-degree manslaughter and 20 counts of criminally negligent homicide in Schoharie County Court. Prosecutors have placed the blame of the accident squarely on his shoulders.
Sal Ferlazzo, an Albany attorney who is representing the family of Amanda Rivenburg, said regulators would step in long before any New York insurance carrier had problems paying out claims.
“It is never a good thing to have the carrier downgraded, but the state (Department of Financial Services) will come in if they go bust — so it should not impact our case at all,” Ferlazzo said. “If it gets worse we can get some court relief, but that is unlikely.”
According to the Global Liberty’s latest filing with the state Department of Financial Services, which serves as the state’s insurance regulator, Global
Liberty had $58 million in assets and $49 million in liabilities, giving it a $9 million surplus.
However, over the past two years, Global Liberty has lost $8 million, and “cost-containment” expenses — such as hiring attorneys to defend policyholders in lawsuits — have outstripped the payments for premiums.
For now, Global Liberty remains in compliance with the state in terms of the reserves it needs to keep and its capital.
An attorney with Wilson Elser, the Albany firm hired by Global Liberty to defend the Hussains in the civil cases resulting from the crash, declined to comment on the insurer’s financial woes.