November 1, 2000
FOR IMMEDIATE RELEASE
CONTACT: CHRISTOPHER GOETCHEUS
STATEMENT FROM INSURANCE COMMISSIONER LINDA RUTHARDT
RE: Lumber Mutual Insurance Company, SEACO Insurance Company, North American Lumber Insurance Company (the "Lumber Mutual Companies")
(BOSTON, MA) The Supreme Judicial Court for Suffolk County ("the Court") today appointed Insurance Commissioner Linda Ruthardt as Receiver of Framingham-based Lumber Mutual Insurance Companies. This proceeding is a rehabilitation as distinct from a liquidation. The objective is for the Lumber Mutual Companies to continue to pay claims and otherwise meet their obligations to creditors in the normal course of business; the guaranty fund has not been triggered.
Due to adverse operating results, the Lumber Mutual Companies' combined surplus (net worth) was significantly reduced during 1999 by 36% and by 31% through August, 2000. The operating loss during August was $884,859 and further losses are expected throughout the remainder of 2000. The existing reinsurance program was terminated as to policies renewing after December 31, 2000 and the Lumber Mutual Companies were unable to renew their catastrophe reinsurance program. At the Commissioner's request, the Court has authorized the cancellation of all Lumber Mutual Companies' policies as of 12:01 a.m., January 1, 2001.
The Lumber Mutual Companies wrote commercial property and casualty insurance, primarily commercial multi-peril, workers' compensation and liability insurance. Many of their policyholders, located throughout the United States, are involved in the lumber business. There are presently approximately 16,000 policies in force. These policies are primarily serviced by approximately 175 employees located at the home office in Framingham, Massachusetts.
The Receiver will seek to identify potential buyers or merger partners within the next sixty days and will report further to the Court with her recommendations after January 1, 2001. If such options prove unavailable, the Receiver hopes to runoff the Lumber Mutual Companies' obligations in the normal course utilizing existing staff.