In today’s post, I am going to share a list of out of business, defunct and bankrupt insurance companies. This list comes from independent research online. All sources are cited.
Like any other industry, not all insurance companies stay in business. There is a fairly small failure rate in the insurance industry compared to other industries, mostly because these companies are HUGE. Let’s face it, you don’t see many small “mom and pop” insurance companies.
Although the insurance industry is highly regulated, and well funded, some insurance companies do fail. Some of the companies on this list were BILLION DOLLAR companies at one point in time.
In the list below, we will cover the following things about these bankrupt insurance companies:
- When the company was founded
- When it went out of business
- A brief history
- And if available, what caused it to fail
List of Out of Business, Defunct & Bankrupt Insurance Companies
# 1 Penn Treaty Network America Insurance Company
(Created: 1975; Liquidation Date: March 1, 2017)
Penn Treaty and American Network have about 76,000 policyholders nationwide, with 9,000 in Pennsylvania. The Wall Street Journal recently described Penn Treaty’s expected demise as “one of the nation’s costliest insurance failures ever” in the life-health category. The company has $500 million in assets to cover long-term care claims projected to be $4.6 billion, according to Insurance Commission spokesman Ron Ruman.
Source: The Morning Call
# 2 American Medical and Life Insurance Company
(Created: 1964; Liquidation Date: December 28, 2016)
American Medical and Life Insurance Company (AMLICO) was a New York domiciled company licensed in 41 states. AMLICO wrote both individual (limited benefit medical, ordinary life and short term disability) and group business (dental, life, accident and sickness and vision).
The company experienced losses in 2013 and soon after began winding down business. A liquidation petition was filed on November 16, 2016 and was approved on December 28, 2016.
# 3 CoOportunity Health
(Created: 2012; Liquidation Date: February 28, 2015)
West Des Moines-based CoOpportunity was created in 2012 with $145 million in federal loans and garnered 120,000 individual and group members in 2014’s open enrollment. The dynamics of loans, premium revenue, membership health and changing regulations, though, put the insurer on a path towards insolvency.
# 4 Executive Life Insurance Company of New York
(Created: 1964 ; Liquidation Date: August 08, 2013)
On April 19, 2012, the Supreme Court of the State of New York, Nassau County Receivership Court entered an Order finding Executive Life Insurance Company of New York (ELNY) to be insolvent and approved a Restructuring Agreement in connection with the liquidation and restructuring of ELNY. By Order of the Receivership Court, the Superintendent of Financial Services of the State of New York, as Receiver, was directed to liquidate ELNY’s business and affairs in accordance with New York Insurance Law and in substantially the manner provided in the Restructuring Agreement. The Liquidation Date of ELNY was the closing date of the Restructuring Agreement, which occurred on August 8, 2013.
Source: New York Liquidation Bureau
# 5 Lumbermens Mutual Casualty Company
(Created: 1912 ; Liquidation Date: May 10, 2013)
Lumbermens Mutual Casualty Company engages in property and casualty insurance business. The company was founded in 1912 and is based in Lake Zurich, Illinois. Lumbermens Mutual Casualty Company operates as a subsidiary of Lumbermens Mutual Group. As of May 10, 2013, Lumbermens Mutual Casualty Company is in liquidation.
# 6 Universal Health Care Insurance Company, Inc.
(Created: 2006 ; Liquidation Date: April 01, 2013)
Universal Health Care Insurance Company, Inc. went out of business. Universal Health Care Insurance Company, Inc. offers insurance services. Its products include Medicare plans. The company was incorporated in 2006 and is based in St. Petersburg, Florida. Universal Health Care Insurance Company, Inc. is a former subsidiary of Universal Health Care Group, Inc.
# 7 Standard Life Insurance Company of Indiana
(Created: 1934; Liquidation Date: July 26, 2012)
Standard Life Insurance Company of Indiana was incorporated in Indiana on July 3, 1934, and was acquired by Capital Assurance Company (CAC) on June 8, 2005. Under CAC ownership, Standard Life’s product offerings shifted from annuities with life contingencies to annuities without life contingencies, also known as deposit-type contracts. When the company was placed into rehabilitation on December 18, 2008, Standard Life was licensed in all states (except New Jersey and New York) and in the District of Columbia. Standard Life wrote business primarily in California, Florida, Michigan, Indiana, and Ohio.
# 8 Golden State Mutual Life Insurance Company
(Created: 1925; Liquidation Date: January 28, 2011)
The Golden State Mutual Life Insurance Company was founded in 1925 by three African-American businessmen. Serving African-Americans who had been denied coverage by insurance companies because of racial discrimination, the company opened in a storefront in South Los Angeles and later built its own headquarters on Central Avenue (Historic-Cultural Monument #580; 1929). The company quickly grew to become the largest black-owned business west of the Mississippi River and in 1948 commissioned the construction of a new home office on Adams Boulevard. The building served as the headquarters for the company for over 60 years.
In 2009, state insurance regulators seized control of Golden State Mutual Life Insurance Company after convincing a Los Angeles County Superior Court judge that the insurer’s reserves had run dangerously low. By law, the state insurance commissioner has the power to reorganize and revitalize the company –much as with a bankruptcy for corporations – or he or she can liquidate it.
# 9 National States Insurance Company
(Created: 1964; Liquidation Date: November 15, 2010)
National States Insurance Company was licensed in 37 states as a life, accident, and health insurer. The company was domiciled in Missouri and was incorporated in 1964 as American Independence Life Insurance Company. It was renamed and reorganized in 1967 as National States Insurance Company.
National States’ total capital and surplus slowly declined after year-end 1996. By year-end 2008, the decline became more significant. The company was put in Rehabilitation on April 1, 2010.
Source: Society of Actuaries
# 10 American International Group, Inc. (AIG)
(Created: 1919; Liquidation Date: late 2008)
AIG was a central player in the financial crisis of 2008. It was bailed out by the federal government for $180 billion, and the government took control. The Financial Crisis Inquiry Commission (FCIC) of the US government concluded AIG failed primarily because it sold massive amounts of insurance without hedging its investment. Its enormous sales of credit default swaps were “made without putting up initial collateral, setting aside capital reserves, or hedging its exposure—a profound failure in corporate governance, particularly its risk-management practices”. The US government sold off its shares after the crisis and completed the process in 2012.
# 11 Legion Insurance Company
(Created: 1964; Liquidation Date: July 28, 2003)
Legion Insurance Company primarily engaged in property and casualty insurance, with health insurance representing a small proportion of their total business. Legion belonged to a family of companies under Mutual Risk Management (MRM), a Bermuda-based holding company. In April 2002, the Pennsylvania Department of Insurance placed Legion into rehabilitation. The company was placed into liquidation in July 2003. All health policies were cancelled where applicable and guaranty associations paid off all outstanding covered obligations.
# 12 Conseco
(Created: 1979; Liquidation Date: December 2002)
Conseco, which grew from a small company set up in 1979 to become one of the largest U.S. home lenders and personal insurers by the late 1990s, collapsed under the weight of debts caused by ambitious expansion and mounting bad loans. Conseco’s filing, made in bankruptcy court in Chicago, is the third largest in the U.S. ever, after WorldCom Inc. and Enron Corp. Conseco listed $52.3 billion of assets and $51.2 billion of debts in its latest financial report.
Source: Fox News
# 13 PHICO Insurance Company
(Created: 1978; Liquidation Date: February 1, 2002)
PHICO’s primary business was writing medical malpractice insurance for health systems, hospitals and physicians. In addition, PHICO wrote workers’ compensation. The last financial report indicated the company’s capital and surplus was approximately $250 million in the negative.
Source: Insurance Journal
# 14 Reliance Insurance Company
(Created: 1817; Liquidation Date: October 3, 2001)
Reliance Group Holdings (RGH), the parent company of Reliance Insurance Company (RIC), one of America’s oldest insurers which traces its roots back to 1817, filed for bankruptcy protection in the Southern District of New York on June 12, 2001. The petition listed total assets of $12.598 billion and total liabilities of $12.877 billion.
As of 1998 the company was still profitable, earning $326 million on gross revenues of $3.4 billion. Aggressive acquisition strategy and quest for ever higher dividend payments, however, left RIC vulnerable in the cutthroat competition for market share, which led to a deterioration in underwriting standards that eventually resulted in the unsustainable losses.
Source: Insurance Journal
# 15 Mission Insurance Company
(Created: Unknown; Liquidation Date: February 24, 1987)
Mission Insurance Group, the holding company for the Mission Insurance Company, the Mission American Insurance Company and other units, agreed to an involuntary petition that places it in bankruptcy proceedings and protects it from creditors as it attempts to restructure its debt.
Mission Insurance Group is controlled by the Cincinnati-based financier Carl H. Lindner through the American Financial Corporation, which holds 49.9 percent of Mission’s stock. In the petition, regulators said the company had assets of $164.7 million and liabilities of $612.8 million, or a negative net worth of $448.1 million.
Source: The New York Times
There you have it folks. This is our list of the out of business, defunct and bankrupt insurance companies. What are your thoughts? Can you think of any other bankrupt insurance companies we might have missed? Leave a comment below to share your thoughts. I look forward to hearing from you.