News: 2010 Press Release
For Release: February 26, 2010
Media Calls Only: 916-492-3566
Insurance Commissioner Poizner Announces Resolution of Golden State Mutual Insurance Company
Sale to Strong Insurance Company Protects Consumers, Creditors
California Insurance Commissioner Steve Poizner today announced that in order to protect policyholders, Golden State Mutual Life Insurance Company has entered into a letter of intent with IA American Life Insurance Company to negotiate a reinsurance agreement to transfer all in-force insurance policies of Golden State Mutual.
Golden State Mutual, the largest minority-owned life insurance company in California, was placed into conservation on Sept. 30, 2009 when the company's surplus dropped below the minimum required by the State of California. Golden State Mutual had recorded six consecutive years of net operating losses and was operating in a hazardous financial condition.
"State law requires that we protect policyholders by taking over an insurer when its finances weaken to a point where further deterioration may lead to claims not being paid," said Commissioner Poizner. "Unfortunately, despite years of warning by the Department of Insurance about its precarious financial state, we were forced take over Golden State Mutual last fall. We have now selected a bid for Golden State Mutual from a highly-rated insurance company that has the finances to pay claims and whose offer could greatly benefit the creditors of the company."
The selection of IA American Life came as a result of a national solicitation process involving more than 40 active life insurers. All prospective bidders were subject to strict financial and operation disclosure requirements to ensure the successful transition of the business. Each bid was evaluated based upon a defined criteria that included the following considerations:
- Whether the potential bidder seeks to acquire all of the insurance business.
- Whether the potential bidder is currently licensed in the jurisdictions in which Golden State Mutual is licensed to conduct business.
- Whether the potential bidder is willing to accept Golden State Mutual's bonds, stocks and mortgage loans.
- The size, financial strength and ratings of the potential bidder.
- Whether the potential bidder would seek policy restructuring.
- The potential bidder's experience and infrastructure to administer the types of business to be assumed from Golden State Mutual.
- Compliance with all financial and legal requirements associated with the RFP process as well as adequate pricing for the assets required to be transferred to the bidder.
IA American Life Insurance Company, rated A- by noted insurance rating firm AM Best, was the only bidder that satisfied all key components of the selection criteria. In addition, the pricing of the IA American Life Insurance Company bid to assume 100% of the Golden State Mutual policies will ensure that policyholders will be fully protected under the transaction while remaining creditors and investors have a much greater potential to be repaid.
Please visit the Department of Insurance Web site at www.insurance.ca.gov. Non media inquiries should be directed to the Consumer Hotline at 800.927.HELP. Callers from out of state, please dial 213.897.8921. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.
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