Ohio Becomes Second State to Bar Centennial Insurance

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May 19, 2010 Wednesday 04:24 PM EST

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Ohio Becomes Second State to Bar Centennial Insurance

Dennis Gorski

COLUMBUS, Ohio

New York-based property/casualty insurer Centennial Insurance Co. has been barred from doing business by a second state due to inadequate financial reserves.

Mary Jo Hudson, Ohio's state insurance director, revoked Centennial's license after the company filed an annual financial statement for 2009 showing a negative capital and surplus of $2,029,752. Centennial's financial position is an alleged violation of state insurance law, Hudson said in a statement.

In order to write P/C insurance in Ohio, companies must maintain a minimum capital and surplus of $5 million, she noted.

The announcement comes two months after Arkansas suspended Centennial's license as well as that of an affiliated company, Atlantic Mutual Insurance Co., for maintaining inadequate levels of capital and surplus. Arkansas Insurance Commissioner Jay Bradford said at the time that Atlantic Mutual had a negative surplus for 2009 of $25.1 million. He cited Centennial's $2 million shortfall as well (BestWire, March 15, 2010).

A spokeswoman for Atlantic and Centennial, Nancy Hahon, declined comment.

Jarrett Dunbar, public information officer for the Ohio insurance department, said the state first took action against Centennial in 2008. "They reported a net loss of $20 million at the end of 2007, which was greater than 50% of the $15 million (the company held) in surplus at the end of 2007," Dunbar said.

At that point, Hudson entered a consent order against Centennial, signed April 8, 2008, in which the company agreed to continue servicing its existing Ohio clients but could not write or assume any new business there.

Ohio did not include Atlantic Mutual in its announcement regarding Centennial.

Centennial reported $3.7 million in direct premiums in 2008, down from $4.1 million in 2007 and $25.7 million in 2006, according to BestLink, which provides online access to A.M. Best's Global Insurance & Banking Database. Net premiums written were $149,000 in 2008, down from $6.9 million in 2007 and $20.1 million the year before.

Atlantic Mutual had $5.5 million in direct premiums written in 2008, down from $28.1 million in 2007 and $134 million in 2006, according to BestLink data. Net premiums written were $447,000 in 2008, down from $20.7 million in 2007 and $60.3 million the year before.

In 2007, Atlantic Mutual sold its high-net worth personal lines business to Ace Ltd. That business included coverage options for homeowners, automobile, umbrella liability and personal property insurance for affluent individuals and families (BestWire, Dec. 20, 2007).

Centennial and Atlantic Mutual currently have a Best's Financial Strength Rating of NR-1 (Insufficient Data), as A.M. Best does not have sufficient financial information required to assign a rating opinion.

(Dennis Gorski, Best's Review managing editor)

May 20, 2010

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