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The Louisiana insurance commissioner is seeking a government takeover of two regional insurance companies that are facing insolvency due to losses from Hurricane Ida to ensure the company's policyholders are paid what they are owed, officials said, the Associated Press reported. The insolvency could cause thousands of Louisiana residents to get kicked off their insurance policies. However, policyholders whose insurers go out of business are guaranteed up to $500,000 in payments through a state program. Insurance Commissioner Jim Donelon filed injunctions in Baton Rouge's 19th Judicial District Court on Wednesday against two carriers who had their financial stability ratings withdrawn by industry watchdog Demotech in October. The carriers, State National Fire Insurance Company of Baton Rouge and Access Home Insurance Company of New Orleans, are responsible for 1% of the state's property insurance market. They take in a combined $20.5 million in direct premiums, according to state data. Once he receives approval from the courts, he can sell off the insurer's assets to pay down claims.

One of the primary insurers of the Boy Scouts of America announced Tuesday that it has reached a tentative settlement agreement with the organization and with attorneys representing tens of thousands of men who say they were molested decades ago by scoutmasters and others, the Associated Press reported. Under the agreement, insurance company The Hartford will pay $787 million into a fund to be established for the men, the company said in a news release. In exchange for the payment, the Boy Scouts organization and its local councils have agreed to release The Hartford from further liability regarding sexual abuse claims. Under a separate settlement, the Church of Jesus Christ of Latter-day Saints has agreed to pay $250 million into the fund for abuse claimants, said church spokesman Eric Hawkins. The denomination, commonly known as the Mormon church, was the largest single sponsor of Boy Scout troops before ending its partnership with the BSA at the beginning of last year. The proposed settlements are part of an ongoing effort by the Boy Scouts, which declared bankruptcy in February 2020, to forge a reorganization plan that must win approval by a majority of abuse victims and the court. Attorneys are still trying to negotiate a settlement with the Boy Scouts’ other major insurer, Century Indemnity. The proposed settlements are opposed by the official victims committee appointed by the U.S. bankruptcy trustee, as well as law firms separately representing hundreds of men who have filed sexual abuse claims. Representatives of the official victims committee described the proposed settlements as “grossly unfair.” The proposed settlements will be incorporated into a new reorganization plan that attorneys for the Boy Scouts were expected to file late last night. The new agreement with The Hartford was negotiated after the bankruptcy judge last month rejected two key provisions of an $850 million deal that the BSA had reached with attorneys representing a majority of abuse claimants. Judge Laura Selber Silverstein denied the BSA’s request as part of that deal for permission to withdraw from a previous $650 million settlement it had reached with The Hartford. The Boy Scouts sought to withdraw from that April agreement after attorneys for abuse claimants repeatedly insisted that their clients would never vote for a reorganization plan that included it.

The Boy Scouts of America are nearing a revised deal with Hartford Financial Services Group Inc. for the insurer to compensate survivors of childhood sexual abuse and ease the youth group’s exit from bankruptcy, WSJ Pro Bankruptcy reported. Hartford’s contribution could approach $800 million under the possible deal, though negotiations continue and there is no guarantee of a final agreement. A settlement would clear Hartford of any further obligation under policies it wrote for the Boy Scouts decades ago, while providing compensation for abuse survivors. To take effect, any settlement with Hartford would require bankruptcy-court approval and support from a majority of survivors who have filed claims in the Boy Scouts bankruptcy case. Liability insurers have had “productive” talks with the Boy Scouts over a broader proposed restructuring of the youth group’s liabilities for past sexual abuse, its lawyer Jessica Lauria said in a court hearing yesterday. Abuse survivors in April rejected a previous deal between Hartford and the Boy Scouts valued at up to $650 million. Negotiations continued to find an insurance framework acceptable to survivors. Talks concerning a new agreement have included a coalition of law firms representing most of the roughly 82,500 men who stepped forward after the Boy Scouts filed for bankruptcy.

Personal residential insurer Gulfstream Property and Casualty Insurance Co. has agreed to liquidate according to a July 22 order signed by the Florida Office of Insurance Regulation, the Insurance Journal reported. The Florida Department of Financial Services must agree to receivership before the liquidation process can formally begin. Once the DFS signs off, Gulfstream customers will have 30 days to find new coverage. n the OIR’s Consent To Order Of Receivership, Commissioner David Altmaier wrote that the office has determined that “one or more grounds exist for the initiation of delinquency proceedings,” which include Gulfstream’s admission of insolvency. The liquidation process caps off a tumultuous stretch for the Sarasota-based insurer. Gulfstream was placed under administrative supervision in late June after it failed to maintain the minimum surplus necessary to pay claims. Weeks earlier, Demotech Inc. withdrew its “A” designation, citing the company’s shaky finances. Gulfstream suffered significant losses in 2020. The company reported a decrease in surplus of more than $5.2 million as of Dec. 31, 2020 compared with the same date in 2019 including a net loss of $22.6 million and a net underwriting loss of $34.9 million.

A group of insurers have convinced the judge overseeing Purdue Pharma LP’s bankruptcy to halt litigation over the scope of the OxyContin maker’s insurance policies so the matter can go to arbitration instead, Reuters reported. U.S. Bankruptcy Judge Robert Drain in White Plains, New York said he would stay the case during a virtual hearing on Monday. He determined that the company’s insurance coverage is not critical to its proposed reorganization that includes a settlement that resolves extensive litigation accusing it of fueling the national opioid crisis through deceptive marketing. “The insurance dispute here, while clearly important, in the context of these chapter 11 cases, is not so fundamentally important as to warrant its centralization in the court presiding over the bankruptcy cases,” Judge Drain said. The insurers include AIG Specialty Insurance Co, represented by Willkie Farr & Gallagher, and Liberty Mutual Insurance Europe SE, represented by Abrams Gorelick Friedman & Jacobson. The arbitration, which can start now, likely will not conclude until well after Purdue's bankruptcy wraps up.

The expectation that hundreds of so-called zombie companies will fail over the next few years and drag on the economy is among the major concerns prompting insurers to reduce risk and charge higher premiums, a trend likely to continue as failures increase, Swiss Re AG said today. Zombies — which lack the cash flow to cover the cost of their debt — are "a ticking time bomb" whose explosive effects will be felt as governments and central banks withdraw measures that have helped keep these companies alive during the pandemic, Jerome Haegeli, chief economist at the Swiss insurer, told Reuters. The sober prediction comes as stock prices hit records and the U.S. economy appears headed for 6.5% growth this year. Yet these strengths are illusory, Haegeli said, because they are based on temporary fiscal and monetary support. Haegeli said the proportion of companies that are zombies certainly increased during the pandemic, as central banks flooded markets with money and governments provided relief. At the same time, U.S. company bankruptcies fell 5% in 2020, Swiss Re said in a report released today. Before the pandemic, about 20% of listed firms in the United States and UK were zombies, and 30% in Australia and Canada, the Bank for International Settlements said in September. By comparison, zombies constituted about 15% of listed companies in 14 advanced economies in 2017 and 4% before the 2008 financial crisis. Insurers are being cautious as they forecast where the economy will be in a year or more, Haegeli said. They are reining in underwriting risk, being more prudent about investment portfolio asset allocations and even taking precaution on insuring operations and supply-chain risk.