Southern Fidelity put into receivership

Southern Fidelity Insurance Co. Inc. has been placed under receivership and is being liquidated.

A Leon County, Fla., Circuit Court judge has ordered the state's Department of Financial Services to act as receiver of Southern Fidelity. The regulator petitioned the court for the receiver appointment after the insurer exhausted its reserves and its board admitted it is insolvent.

The regulator also noted in its petition that Southern Fidelity was "operating in an unsound condition that is hazardous to policyholders, creditors, stockholders, and the public" as the insurer had failed to secure catastrophe reinsurance for the 2022-2023 Atlantic hurricane season.

Southern Fidelity had submitted a rehabilitation plan to avoid insolvency, but it did not satisfy regulators or provide enough protection to policyholders.

The receivership comes a couple of weeks after Demotech withdrew the financial stability rating of Southern Fidelity.