In recent weeks, two insurers with significant legacies of occurrence-based general liability coverage took important steps to liquidate their estates.
Bedivere Insurance Company (OneBeacon) Liquidation
The first insurers are associated with Bedivere Insurance Company, formerly known as OneBeacon Insurance Company (OBIC). OBIC’s history stretches back to the 1800s but is most well known as the successor to the General Accident and Commercial Union families of insurers. These companies wrote many policies from the 1960s through the 2000s and include Commercial Union Assurance Company, Employers Commercial Union Insurance Company, Employers’ Surplus Lines Insurance Company, Employers’ Liability Assurance Corporation Limited, General Accident Insurance Company, and CGU Insurance Company (and many other smaller companies). OBIC stopped writing new business in 2010 and entered run-off, paying claims from its historic exposures. In 2014, OneBeacon Group, OBIC’s parent, sold its run-off business to a Bermuda entity called Armour Group. The transaction included OBIC and other subsidiaries (Potomac Insurance Company, OneBeacon America Insurance Company, and The Employers Fire Insurance Company). OBIC changed its name to Bedivere Insurance Company in 2015, and in October 2020, absorbed its subsidiaries by merger.
At the time of the Armour transaction, proponents of the deal before the Pennsylvania Insurance Department, which has regulatory oversight, offered models indicating there was a 93 percent likelihood OBIC would be able to pay claims in run-off for the next 30 years. Long-tail claims experience from asbestos and environmental claims, however, had a severe impact on OBIC’s reserves and by March 2021 it was insolvent. The Insurance Commissioner of Pennsylvania filed a Petition for Liquidation of OBIC on March 6, 2021 and the Commonwealth Court of Pennsylvania entered an Order of Liquidation on March 11, 2021. All claims and litigation against OBIC and its subsidiaries are stayed during the liquidation process. The Insurance Commissioner will appoint a Liquidator to manage OBIC’s estate, establish a procedure for the submission and valuation of claims, and pay claims until the estate is wound up. The Bar Date for the submission of a Proof of Claim is December 31, 2021. The Proof of Claim form, and other helpful information on the liquidation process, can be found at the Pennsylvania Office of Liquidations, Rehabilitations and Special Funds website for OBIC. This process could likely take up to a decade or more.
Stronghold Insurance Company Limited Insolvent Scheme of Arrangement
The other legacy insurer now facing liquidation is Stronghold Insurance Company Limited. Stronghold is a United Kingdom insurance company that began writing reinsurance in the London Market in 1962. During the 1960s, 70s, and 80s, it participated in insurance policies issued in the London Market to companies in the United States. Impacts from asbestos and long-tail environmental claims in the U.S. forced Stronghold to stop active underwriting and enter run-off, paying claims as they were made. From 2016 to 2018, Stronghold’s financial condition weakened as it paid incoming claims. After assessing the magnitude of outstanding claims facing the company, Stronghold determined it was insolvent, stopped paying claims, and petitioned to be put into insolvent administration in mid-2019. An “insolvent scheme of arrangement”—a type of liquidation under English law—was instituted to wrap up the company’s run-off and distribute its assets to creditors, including insurance claimants. The scheme was proposed to creditors in December 2020. Creditors voted to approve the scheme and the High Court of Justice of England and Wales approved the scheme in early February 2021. Now that the scheme is in place, a date has been set for all claims to be submitted for payment before a deadline. This Bar Date is set for August 10, 2021, at 11:59 pm London time. Policyholders who have an active claim filed with Stronghold will be provided with an Existing Claim Form to file their claim with the company. If you are not provided with an Existing Claim Form, a New Claim Form is available on the Stronghold Administrator’s website.
Identifying whether you have coverage impacted by these recent events can be complicated. The companies issued policies far back in time. Because Stronghold often participated in policies issued through the London Market and did not issue policies directly to policyholders, it can be even more difficult to determine whether you have coverage provided by Stronghold. If you think you may have historic liability policies involving Stronghold or OBIC, and potential exposures arising from operations when those policies were issued, Pillsbury can help identify and locate those policies and assist in making a claim on these insurers’ estates.