Fremont Indemnity Inducted into Insolvency Hall of Fame
By Robert Warne - June 4, 2003After staggering around for three years under the supervision of the California Department of Insurance (CDI), the remaining portion of Fremont General’s Fremont Indemnity got one step closer to becoming a piece of California history today.
Another one bites the dust said Insurance Commissioner John Garamendi after obtaining a conservation order for Fremont Indemnity June 4.
With its surplus level around a red $290 million and a need to boost its reserves by about $300 million, the company under California law was insolvent.
The CDI’s Conservation & Liquidation Office (CLO) has assumed control of Fremont’s operations and will oversee the management of the company. The few anomalous policies left are set to expire this month and all workers' compensation claims will continue to be paid in full and on time during conservation.
If the Los Angeles Superior Court grants Garamendi his petition for liquidation in the next 30 days, the California Insurance Guarantee Association will take over for the CLO and administer the estimated $1 billion in unpaid claims.
This could have been a bigger disaster if Fremont hadn’t practically stopped writing new business after 2000 and hadn’t dumped a $105 million portion of its book of business on Fremont Employers Insurance Company last year.
Whether Fremont General is silently thanking the CDI for taking over its landfill of claims, we’ll never know.
But earlier this year Fremont announced that it had set aside $119 million in reserves that would be used to make yearly payments for six years as part of an arrangement made with the CDI.
And according to Fremont General, because the conservation occurred before March 1, 2004, it is no longer obligated to provide any further cash contributions to Fremont Indemnity.
| 
__May11th2017.gif)
.gif)