The California Department of Insurance has seized workers' compensation insurer, Majestic Insurance Co., to ensure continued coverage for the company’s policyholders and injured workers.
The state took over the insuer, which sells workers’ comp coverage to employers in California, Nevada, Arizona, New York, New Jersey and other states, after determining its surplus was insufficient for it to continue operating without a conservator.
The Department of Insurance proposes to transfer the company’s insurance liabilities and certain assets to AmTrust North America Inc., which would pay all of Majestic’s claims, a statement said.
“For some time, my department has been concerned with Majestic’s financial condition, and has been carefully monitoring the company to determine if an intervention is warranted to make certain that Majestic can continue to honor its claim commitments,” state Insurance Commissioner Dave Jones said in a statement. “This conservation will ensure that Majestic’s financial obligations will continue to be met.”
The company’s financial woes started in late 2009 when the New York Workers’ Compensation Board sued Majestic for more than $400 million. An insurance rating company then downgraded Majestic, which led to decreased premiums written and increased expenses and losses, the statement said.
San Francisco Superior Court will consider the proposed rehabilitation plan June 2.
Majestic wrote direct premiums of about $69 million in California, representing three-fourths of its total direct premiums, the statement said.