ST. PETERSBURG — Florida’s insurance regulator took the unusual step of asking the state to take over a private property insurer Friday.
The Florida Office of Insurance Regulation recommended that St. Petersburg-based American Capital Assurance Corp. be placed in the state’s care because of insolvency. The company agreed with the recommendation, the office said.
The Florida Department of Financial Services will have final say on the decision.
Last month, two private insurance ratings agencies revised their assessments of the property insurer citing significant losses from last year’s severe storms. American Capital, which writes policies for commercial residences such as apartment complexes, has less than 2,000 policies in Florida. It has customers across the southeast and Carolinas.
The “receivership” process initiated Thursday is a last-resort step where the state can take control of a company if it becomes insolvent. Companies can either be rehabilitated or liquidated. In a regulatory filing Friday, the company’s directors admitted the company is “presently unable to pay its debts” and agreed to liquidation.
In a liquidation, policyholders are shifted over to one or more other carriers, according to the Department of Financial Services.
“The consent to receivership was made only after (the Office of Insurance Regulation) had reviewed numerous proposals and exhausted all other efforts,” spokeswoman Alexis Bakofsky said. “(The Office of Insurance Regulation)’s priority remains the protection of consumers.”
In March, ratings company Demotech Inc. withdrew its financial stability rating for the company at American Capital’s request. It was previously rated an “A,” for excellent. AM Best, another ratings company, dropped the insurer’s “A-” grade to a “C,” citing its “very weak” financials.
American Capital sustained much of its losses in Louisiana, where five named storms hit the state.
The company did not respond to a call and email request for comment.