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CA Department of Insurance

CastlePoint National ordered into liquidation to protect policyholders

News: 2017 Press Release

For Release: April 3, 2017
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CastlePoint National ordered into liquidation to protect policyholders
California implements the final stage of the Commissioner’s plan to protect CastlePoint’s policyholders nationwide by efficiently winding down this troubled insurer

SACRAMENTO, Calif. — Insurance Commissioner Dave Jones announced today that CastlePoint National Insurance Company (CastlePoint), the California insurance company affiliate of the defunct Tower Group, has been ordered into formal liquidation, paving the way for protection of CastlePoint's policyholders through the national system of insurance guaranty associations. The filing on March 30, 2017, of an Order of Liquidation by the San Francisco Superior Court was the final judicial stage of a meticulously planned and complex process of winding up a group of financially impaired insurers that wrote insurance across the country.

The Commissioner started the process in January 2016 when he took the lead in convincing insurance commissioners in six other states to redomicile all of the insurers within the Tower Insurance Group to California so that the companies could be consolidated into CastlePoint National to achieve an orderly conservation and liquidation of the companies. In July the commissioner implemented the second phase of the plan, by asking the Court to order CastlePoint into conservation and appoint him as Conservator of the company. As Conservator, the Commissioner developed and implemented a multi-stage Conservation & Liquidation Plan that infused $200 million in liquid assets into CastlePoint and locked in the resources required to ensure the uninterrupted administration and payment of CastlePoint's policyholder claims during the conservation phase. The final phase of the plan is the entry of a liquidation order.

"The liquidation order for CastlePoint was an essential step in our efforts to protect CastlePoint's policyholders across the country," said Commissioner Jones. "The order triggers the legal obligation of the national network of insurance guaranty associations to step up to pay CastlePoint's insurance claims in a timely and fair manner. It's never good when an insurance company fails, but through careful planning and execution we have provided CastlePoint's policyholders with the maximum protection available under the law."

All CastlePoint claims continued to be adjusted and paid throughout the eight-month conservation phase of this process. During the final stage of conservation, the Commissioner prepared for a seamless transition into liquidation by arranging for pre-funding of all workers' compensation indemnity (or wage replacement) benefits for the next 60 to 90 days. This pre-funding process ensures that there will be no interruption or avoidable delay in payments to the many injured workers who are relying on CastlePoint for the financial means to survive while they recover from workplace injuries.

"The protection of injured workers was one of my primary objectives in this conservation," added Commissioner Jones. "Workers who get injured on the job should be confident that they will be covered by their employer's workers' compensation insurance, even if the insurer fails."

Media Notes:

  • The Order of Liquidation also sets a deadline for filing any and all claims against CastlePoint. The Court has set this "claims bar date" as December 31, 2017.
  • All claims against CastlePoint must be filed by that date or they will be deemed barred and forever waived. Notice of the claims bar date, along with a proof of claim form and instructions, will be distributed by the Commissioner's Conservation & Liquidation Office in the coming weeks. Information may also be found at the CLO's website or by clicking here.
  • The liquidation order took effect April 1, 2017.

The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at Non-media inquiries should be directed to the Consumer Hotline at 800.927.4357. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.

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