FOURTH QUARTER 2013 | ISSUE 1
By Nicholas Leighton
Group Managing Director
Atlas Insurance Management
Each year a small number of insurance companies fail.* Since most of these have no captive
involvement these failures are barely noticed by the captive community. However on 11th
March 2013 Ullico Casualty Company was placed into rehabilitation by the Delaware
Insurance Commissioner. By 30th May 2103 they were in bankruptcy. (Ullico Casualty
Company is a subsidiary of Ullico, Inc., and the parent and other subsidiaries were not
subject to the proceeding).
As Ullico fronted for an Atlas
managed captive client, I have
spent a considerable amount of time
dealing with the fallout from this
particular bankruptcy. This article
deals with some of the lessons learnt
over the prior eight months and
also includes comments by Peter
Mackay, Chairman, of Global Captive
Management, who was Chairman of
Mutual Risk Management in Cayman
at the time of the Legion failure
in 2003.
How Did We Get Here?
Ullico wrote workers’ compensation,
fidelity/surety, fiduciary liability,
professional liability, commercial
automobile and commercial multiperil
insurance.
The
workers’
compensation programmes were
both large deductible and guaranteed
cost. For the Atlas client, Ullico
fronted their excess layers over a
SIR of $1million and their large
deductible program. The majority
of Ullico’s business was written
through managing general agents and
over 90% was administered by
third party administrators.
The process for an insurance company
liquidation goes something like