FOR IMMEDIATE RELEASE
COURT ASKED TO APPROVE PAYMENTS TO MIDLAND CREDITORS
Superintendent of Insurance Howard Mills announced today that the Midland Insurance Companys largest creditors could receive a cumulative disbursement of up to $50 million, subject to court approval. The petition is now in the hands of a Manhattan State Supreme Court Justice and disbursements could be made in early 2006.
The Midland Insurance Company was declared insolvent by order of the Supreme Court of the State of New York in 1986. Since that time, the New York State Liquidation Bureau (NYLB) has been charged with oversight of the Midland Insurance Company as Liquidator. Midland has more than 5,000 creditors. Many of the largest creditors were briefed on the NYLBs current petition to the court at a meeting held on Tuesday, November 29, 2005 at the Insurance Departments Manhattan office. Most will see an initial disbursement that is equivalent to anywhere from 5 to 10 cents on the dollar.
"This weeks creditor status meeting for Midland was the first one weve held in a very long time. I hope to be hosting more of these information sessions with Midlands creditors in 2006," Superintendent Mills stated. "I also want to congratulate Special Deputy Superintendent Jody Hall, who became the Liquidation Bureaus chief executive officer in August, for making this matter a top priority and allocating the resources necessary to facilitate the distribution process."
Midland is the largest and perhaps the most complex insolvent domestic insurer administered by the NYLB, with a diverse book of excess loss business that included policyholders who are part of the Fortune 1000. Founded in 1959, the Midland Insurance Company was a New York-domiciled insurer and had offices at 160 Water Street, Manhattan.
In bringing this distribution plan to fruition, the NYLB worked closely with a team of experts to establish best business practices, improve technology platforms and institute new procedures for the aggressive recovery of reinsurance assets that were due to the Midland estate. The reforms implemented to develop Midlands distribution plan will provide a new model for the NYLB, according to Peter Molinaro, the Senior Deputy Superintendent at the Insurance Department, who also played a key role in the project.
Should the state Supreme Court approve the Midland distribution plan, it will be the first of what the Liquidation Bureau hopes will be many payments to Midlands creditors. Among these creditors are all of the nations 59 guaranty funds, and the disbursement if authorized for payment by the court will provide them with a financial boost. These state-administered guaranty funds safeguard insurance policyholders in the event their insurer becomes insolvent.
The NYLB carries out the responsibilities of the Superintendent of Insurance as Receiver, and acts on the Superintendents behalf in discharging his statutorily defined duties, which include protecting the interests of the policyholders and creditors of insurance companies that have been declared impaired or insolvent.
The NYLB has performed this function since 1909, when the New York State Legislature passed a law mandating that the Superintendent assume the separate responsibility of Receiver. In the case of each insurance company in receivership, the Superintendent as Receiver is appointed by the New York State Supreme Court. The Court approves all of the actions of the Superintendent, and by extension those of the NYLB. The Liquidation Bureaus web site can be found online at http://www.nylb.org and the court report is at http://www.nylb.org/CourtReportMidland.pdf.