Florida's American Keystone Insurance to Be Liquidated

Leon County Circuit Court Judge John C. Cooper has granted a request by state insurance officials to place American Keystone Insurance Co. in Ponte Vedra Beach into state receivership to be liquidated.

American Keystone (AKIC), a Florida insurer licensed in 2007, primarily wrote homeowners, condominium unit owners, personal inland marine, and residential condominium association policies in the state. The company has approximately 7,800 policies in force, including homeowners, commercial, residential and wind policies. It sold through independent agents.

In August, the company had only about $3.7 million in surplus-- which is below the minimum of $4 million required under Florida law, according to the Office of Insurance Regulation (OIR).

In addition, the company was found to lack sufficient cash flow to meet $8.8 million in obligations to the state hurricane fund and private reinsurers.

The insurer's management consented to the liquidation.

The insolvency will trigger the state's guaranty association to pay claims the company can't.

OIR said it has been monitoring the company for a year. It even explored transferring the firm's book of business to another insurer but came up empty.

"We worked with the company to resolve the outstanding issues," said Insurance Commissioner Kevin McCarty. "However, when it became evident the issues could not be remedied, I had to take action to protect their policyholders."

The Florida Department of Financial Services has been appointed receiver.

Floridians who have homeowners insurance with American Keystone should immediately contact their insurance agent to secure coverage with a new company. All policies will be cancelled effective 11:59 p.m. on Nov. 8, 2009, unless otherwise terminated prior to that date.

"Given that this liquidation order comes during hurricane season, it is imperative that homeowners who have coverage with American Keystone immediately contact their agents to secure new coverage," said Florida CFO Alex Sink. "We will continue working diligently to help make the transition as smooth as possible for policyholders."

Consumers with questions relating to American Keystone policy and coverage issues should call the company's customer service department at 1-877-350-9777 until Nov. 8. Questions relating to claims should be directed to the Florida Insurance Guaranty Association (FIGA) at 1-866-928-4310 or the policyholder's agent.

AKIC was one of the two dozen property insurers started in the state since 2006. The company was capitalized with $9 million and received its license in February, 2007. It wrote an estimated $2 million in premium in 2007; $30 million in 2008; and $20 million as of June, 2009.

In June 2008, American Keystone got a boost to its business when it received approval from the OIR and Citizens Property Insurance Corp. to assume as many as 718 commercial residential policies from state-backed Citizens. The premium on these policies averaged $20,000 each, the company said at the time.

AKIC President Bruce K. Howson hailed the 2008 Citizens agreement as a "major step in the full development of our company as a private sector solution to the growth and recovery of the property insurance market in Florida."

According to its Web site, AKIC's targeted homes with up to $2 million of dwelling coverage including personal liability coverage up to $500,000.

Its condominium program wrote buildings up to $10 million per building.

The liquidation of AKIC is the second in as many months in Florida. In August, Miami-based First Commercial Insurance Co. and its subsidiary were declared insolvent and ordered liquidated about six weeks after being placed under state control.

All policies written by FCIC and its subsidiary, First Commercial Transportation and Property Insurance Co., have been cancelled.

FCIC wrote workers' compensation, commercial auto, general liability and commercial multi-peril insurance policies in Florida and Georgia. FCTPIC wrote commercial auto insurance coverage in Florida. Together, the companies had approximately 18,000 in-force policies.