State shuts down American Keystone Insurance
Jacksonville Business Journal - by Rachel Witkowski
A local property insurer was placed into receivership with the Florida Department of Financial Services and will be liquidated after the company’s latest financials were insufficient to buy reinsurance, regulators said.
The Department of Financial Services was granted a circuit court order Friday to place Ponte Vedra Beach-based American Keystone Insurance Co. into receivership. The Florida Office of Insurance Regulation, which announced the receivership Monday, said regulators have been monitoring American Keystone since November 2008 and its August financial statements “indicated the company was in an impaired state due to insufficient funds to pay private reinsurers and the Florida Hurricane Catastrophe Fund.”
Last week Insurance Commissioner Kevin McCarty sent a letter to the state’s Chief Financial Officer, Alex Sink, about American Keystone’s insolvency. He said the company had $3.66 million in surplus, which was below the $4 million minimum requirement.
The property and casualty insurer also owed nearly $8.8 million to the state’s reinsurance fund, the Florida Hurricane Catastrophe Fund, and $7.2 million to private reinsurers. This means the company would not have been able to maintain its monthly payments for reinsurance based on its surplus and number of policyholders, according to the letter.
The Office of Insurance Regulation approved American Keystone to begin insuring homeowners in mid-2007. The company was among eight property and casualty insurers that received approval to come into the market while many others were pulling out after the 2004-05 hurricane seasons. The Office immediately put out an announcement that the eight insurers represented $1.2 billion in capital investments in the market place.
“These new companies not only provide much needed investment to our marketplace but demonstrate the commitment of the industry to continue to conduct business in our state,” McCarty said at the time.
With $8 million in initial capital, American Keystone began insuring primarily high-end homes beginning in April 2007.