Leon County, Fla., Circuit Court Judge John Cooper stated in a Nov. 27 consent order that sufficient grounds exist for the liquidation of Guarantee Insurance Co.
Cooper's order referenced the insurer's insolvency, the alleged "willful violation" of two provisions of state law, the alleged diversion of funds and the joint stipulation of its board for the appointment of the Florida Department of Financial Services as receiver.
The department petitioned the court for a liquidation order Nov. 21, arguing that Guarantee's further transaction of business would be hazardous to its policyholders and creditors and to the general public. It released materials containing the allegations on Nov. 17.
A frequently asked questions page on the receiver's website indicates that Guarantee's policies will be canceled effective Dec. 27 unless they are due to expire sooner. It noted that state guaranty associations in the markets where the workers' compensation insurer wrote business have been activated to help pay outstanding claims.
Guarantee Insurance had been the primary customer of Patriot National Inc., and that company warned Nov. 22 that the insurer's liquidation would cause "a major portion" of its revenues and cash flows to cease.
A holding company 49.8% owned by Guarantee ultimate controlling person Steven Mariano announced an agreement for that includes the sale of Ashmere Insurance Co. to Bedrock Insurance Group Holdings LLC, an entity that seeks to work with underserved, local independent agents who target small to mid-size insurance markets. Terms of the deal were not disclosed.
The Florida petition alleged, among other things, that at least $15.7 million had been diverted to Mariano from Guarantee for no documented business purpose or discernible benefits.
