American Capital Assurance Corp. in Receivership, Being Liquidated

May 3, 2021

A Florida-based insurer with a strong presence in Louisiana and Texas is in receivership and being liquidated after Florida’s insurance regulator deemed it insolvent.

The Florida Department of Financial Services in April was granted a consent order for liquidation, injunction and notice of automatic stay of American Capital Assurance Corp. by the Second Judicial Court in Leon County, Florida.

DFS said all insurance policies issued by AmCap in effect at the time of the court’s order will be cancelled as of 12:01 a.m. on May 14, 2021, except for the insurer’s flood policies.

Policies with expiration dates prior to May 14, or policies which are terminated by the insured or cancelled for non-payment of premium will be cancelled as of their earlier date.

AmCap wrote commercial multi-peril and allied coverage lines in Florida, Georgia, Louisana, North Carolina, South Carolina and Texas.

AmCap was deemed insolvent by the Florida Office of Insurance Regulation on April 2 after the regulator found that grounds existed for the “initiation of delinquency proceedings.” A consent to order of receivership signed by AmCap “in which it admits that is insolvent,” was submitted to DFS by OIR.

The order came after AmCap’s rating was downgraded by AM Best and withdrawn by Demotech in March at the company’s request.

Best had assessed AmCap’s balance sheet strength as “very weak.”

It said its rating actions were a result of net underwriting losses from multiple severe weather events in the second half of 2020, particularly in Louisiana, which led to significant surplus loss and a severe negative impact to AmCap risk-adjusted capitalization on a standard and catastrophe-stressed basis, as measured by Best’s Capital Adequacy Ratio (BCAR).

“These diminished operating results are also indicative of product and geographic concentration concerns in the commercial property insurance book of business in Florida, Texas and Louisiana, calling into question the soundness and fundamentals of [AmCap’s] enterprise risk management program,” Best said.

The company had a total of 55 employees and more than 450 appointed agents.