FOR IMMEDIATE RELEASE
MILLS ANNOUNCES INTERBORO REHABILITATION SUCCESSFUL
Long Islands oldest insurance company to stay on the Island, keep jobs there
Superintendent of Insurance Howard Mills today announced that the Interboro Mutual Indemnity Insurance Company is on track to emerge in early 2007 from three years of insolvency and subsequent rehabilitation and return to the marketplace as a private sector company. The company is the oldest insurance company on and serving Long Island.
"Interboros rehabilitation is a tribute to everyone who worked so hard to resolve the many issues facing the company," said Superintendent Mills. "A successful rehabilitation is rare and inspiring. The New York Liquidation Bureau and Judge McCarty especially deserve praise for helping turn what could have been a burden on taxpayers into a contributing taxpayer itself."
"I think the outcome of the Interboro case was a unique collaboration of all concerned parties to do what was in the best interests of their particular concern," said Judge Edward W. McCarty, III, Justice of the Supreme Court of the State of New York, 10th Judicial District, Nassau County, who has overseen the case.
"Without the direction and cooperation of Superintendent Mills, these outstanding results would never have occurred," Judge McCarty added.
Most companies declared insolvent end up in liquidation. Interboros successful rehabilitation means the company will continue as a going concern, preserving close to 70 jobs. The investor group scheduled to become the new owners has committed to keeping the jobs and the companys operations on Long Island.
Judge McCarty has scheduled a hearing for Feb. 1, 2007 to show cause why Interboro should not be discharged from rehabilitation. With an influx of capital from an investor group, Interboro will no longer be insolvent, paving the way for its discharge from rehabilitation.
The New York Liquidation Bureau (NYLB), which secured the investor group, managed Interboro during the period of rehabilitation. A particular difficulty with Interboro involved the need to secure sufficient capital to make the company solvent because Interboro, as a mutual company owned by its policyholders, was unable to issue stock to access capital.
The Bureau was able to successfully set the stage for the first demutualization of an insurance company in rehabilitation in New York. This will end with the transformation of Interboro into a stock company with stock to sell to the investor group, subject to court approval on or after the Feb. 1 hearing.
At that hearing, the court will be asked to approve the conversion to a stock insurer (the demutualization), the acquisition by the investor group to bring in the capital to render the company solvent and the discharge of the company from rehabilitation thereby allowing it to commence business again as a stock insurer.
The Liquidation Bureau, which receives no taxpayer funding, by law carries out the responsibilities of the Superintendent of Insurance as Receiver during rehabilitation. The NYLB acts on his behalf in the discharging of his statutorily defined duties to protect the interests of the policyholders and creditors of insurance companies that have been declared impaired or insolvent.
Rehabilitation involves the Superintendent taking possession of the property of an insurer, conducting its business, and taking steps toward the removal of the causes and conditions that have made the rehabilitation proceeding necessary. This usually occurs after a company is declared insolvent.
An insurance company is declared to be insolvent when it no longer meets the statutory definition of solvency. Even though the company may still have assets, the company is deemed to be "Unable to pay its outstanding lawful obligations as they mature in the regular course of business ..." and the existing assets of the company are then preserved to allow for the settlement of outstanding claims and debts to creditors.
Interboro is a property and casualty insurer domiciled in the State of New York. The company was placed in rehabilitation and the New York Superintendent of Insurance was appointed as Rehabilitator on April 6, 2004 by order of the Supreme Court of the State of New York.
Interboro primarily wrote private passenger auto, homeowners and general liability coverage, as well as a small amount of commercial auto and workers compensation coverage.