Insurer Liquidated, Probed

Georgia insurance regulators are investigating the financial practices of Southeastern United Insurance Co., which sold workers’ compensation insurance coverage to 53 municipalities and hundreds of companies before being liquidated, according to a story by Georgia Public Broadcasting on Monday.

The broadcast said municipalities, some cash-strapped, paid between $19,000 and more than $200,000 for coverage their employees may never ­receive.

The company’s problems began after the Georgia Department of Insurance began looking into a $10 million loan the company’s chief executive officer, Clark Fain, allegedly received from the insurer. The loan was not approved by the DOI as required by law, GPB reported.

The questionable loan led the department to discover that Southeastern United was overstating assets and understating liabilities, insurance commissioner John Oxendine told GPB.

In September, the insurer was placed into an administrative supervision order by consent giving the DOI oversight. Customers will lose coverage on Nov. 25 due to the liquidation of the company. It was not clear if any of the municipalities that obtained coverage from Southeastern United would suffer financial problems as a result of the liquidation.

For reprint and licensing requests for this article, click here.
MORE FROM BOND BUYER