Notice: Passwords are now case-sensitive

Remember Me
Register a new account
Forgot your password?



Community Requests

The WCC website will be down for scheduled maintenance on Sunday, July 22, from 3:30 PM to 4:30 PM

FLOIR Orders Guarantee Insurance to Stop Writing Business

By Elaine Goodman (medical/business Reporter)

Thursday, August 31, 2017 | 2031 | 0 | 0 min read

Guarantee Insurance Co. has been placed under administrative supervision by the Florida Office of Insurance Regulation and must stop writing new business, after FLOIR became concerned about the workers’ comp insurer’s finances.

Thomas Shields

Thomas Shields

Under a consent order filed on Aug. 18, Guarantee must file a corrective action plan with FLOIR by Friday. That could involve a significant restructuring of Guarantee’s business as well as an infusion of capital, the order said.

Guarantee Insurance “has agreed to be placed into administrative supervision in order to implement a plan of reorganization for Guarantee and its affiliates, including Patriot National,” FLOIR said in a statement.

Guarantee Insurance Co. is owned by Guarantee Insurance Group, which is 96% owned by Patriot National founder Steven M. Mariano.

Patriot National is a public company sold as PN on the New York Stock Exchange. On Aug. 17, Patriot announced that Chief Financial Officer Thomas Shields had "agreed to resign," effective Sept. 15.

Patriot National disclosed in a filing with the Securities and Exchange Commission that it would pay Shields a $920,000 severance payment, in addition to $35,000 for any month in which he provides consulting services.

The SEC filing does not say whether Shields had any role in Guarantee's finances.

Patriot National's stock, which sold at one point for more than $18 a share, was selling at $1.83 per share on Wednesday, up from $1.51 the day before.

Guarantee is not owned by Patriot National, but is a client of the company, which provides technology services to the insurance industry. Guarantee accounts for more than half of Patriot National’s revenue, a FLOIR spokeswoman said. As such, FLOIR has required Guarantee to notify any buyer or potential buyer of Patriot National about the consent order.

Guarantee Insurance provides guaranteed-cost workers’ comp policies, as well as alternative market products such as high-deductible policies. Guarantee, which is domiciled in Florida, is licensed in 40 states and the District of Columbia.

According to a financial statement prepared by independent auditor BDO, Guarantee Insurance suffered a $23.2 million underwriting loss and $38.7 million net loss overall in 2016, compared to a net income of $9.1 million in 2015.

Net premiums written were $103 million last year, up from $64.8 million in 2015.

In an audit opinion, BDO said Guarantee’s finances “raise substantial doubt about its ability to continue as a going concern.” BDO said that if the company's financial statements are modified to include several adjustments that weren’t included, the company’s capital would dip below a statutory minimum.

Although Guarantee plans to replenish its surplus through a contribution from Patriot Underwriters, the contribution had not occurred as of Aug. 4, BDO said.

Guarantee’s corrective action plan must show FLOIR that the company can maintain enough capital to run its business, and sufficient reserves to pay claims. It must also describe internal controls and management changes that will address financial weaknesses FLOIR has identified. A timeline must be provided for a re-audit of the company’s 2016 financial statements.

Michael Sluka, president and chief executive officer of Guarantee Insurance Co., didn’t respond to a request for comment on Wednesday, nor did a Patriot National spokeswoman.

In addition to not writing any new business as of the date of the consent order, Guarantee must stop renewing business on Dec. 31.

The administrative supervision is set to last 120 days, but may be extended.

FLOIR may consider lifting the restriction on writing business after reviewing Guarantee’s action plan and how well it is complying with the consent order, a spokeswoman said. On the other hand, if Guarantee doesn’t comply with the consent order, the company has agreed that the department may place it into receivership and could potentially apply for an order of rehabilitation or liquidation.


Be the first to comment.

Related Articles