State takes over Mutual Fire Insurance of Carroll County

Reserves fall below limit

policyholders unaffected

April 13, 2004|By Athima Chansanchai | Athima Chansanchai,SUN STAFF

The state insurance commissioner's office took over the day-to-day operations of a Carroll County insurer yesterday after financial reserves fell below legal standards for the underwriter of homeowner's insurance.

The Maryland Insurance Administration took the action to help Mutual Fire Insurance Co. of Carroll County increase its reserves, said Insurance Commissioner Alfred W. Redmer Jr. He said the company's 15,000 policyholders would not be affected.

"We took corrective action to protect policyholders and employees," Redmer said. "Long-term success is our objective."

Baltimore Circuit Judge Stuart R. Berger signed a consent order yesterday giving the state insurance agency authority to take possession of the company's assets and to conduct its day-to-day business.

Such a takeover has been undertaken twice in a decade, the commissioner's office said.

William B. Dulany, chairman of Mutual Fire Insurance's board of directors, said Tropical Storm Isabel in the fall and an ice storm in early spring last year forced the company to pay twice as many claims as usual. He also said its rates were too low and that after they were raised, the company's financial situation was still dire.

The company, which began selling policies in 1869, underwrites homeowners' insurance policies through 200 independent agents and has policyholders in Baltimore and in Carroll, Harford, Frederick and Baltimore counties.

Mutual Fire Insurance was required to maintain a surplus of $1.1 million, according to court documents. In 1998, the company's surplus funds began to decline, sinking from $9.2 million to $2.3 million by 2002. The company's annual statement last year showed a surplus of $300,000.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.