State regulators are taking legal steps to place the troubled Oklahoma City-based insurance company BancInsure into receivership because of its poor financial health.
However, BancInsure president and CEO Lisa Bays said Tuesday that the company is taking steps to shore up its finances under new ownership and is confident the state will not have to take over the company.
“The long-range plans of BancInsure are to recapitalize and move forward with new business and rebuild the insurance company,” Bays said.
An Oklahoma County District Court judge on Monday granted the Oklahoma Insurance Department an injunction barring BancInsure from disposing of any of its assets. A court hearing is scheduled for May 14 to determine whether to place BancInsure into receivership.
In court documents, Oklahoma Insurance Commissioner John Doak claims BancInsure is insolvent and its continued operation would be hazardous to the public, policyholders and to its creditors.
Doak has asked BancInsure to show cause to the court why the company should not be placed into a state receivership.
“As Insurance Commissioner, it is my job to protect policyholders,” Doak said in a statement. “I will use whatever means necessary, including litigation, to enforce my regulatory responsibilities and make sure that insurance companies operating in the state of Oklahoma are financially sound.”
The New York-based financial services company Foster Jennings Inc. purchased BancInsure in February from the Oklahoma City-based holding company BMSI Holdings Inc. for $1. The company had been struggling for the past several years with losses related to the 2008 financial crisis and was under orders from state regulators to strengthen its capital position or be placed into receivership.
BMSI Holdings filed for chapter 7 bankruptcy last week, reporting $59.7 million in liabilities against roughly $7,800 in assets.
Foster Jennings submitted financial instruments worth $30 million to boost BancInsure's capital and stave off a state takeover, but the Insurance Department claims in court documents that the company has not presented adequate proof of the assets' value.
Calls to Foster Jenning's offices in New York City were not returned.
Founded in Oklahoma in 1985, BancInsure provided fidelity bonds and officers' liability insurance to community banks and other financial institutions across the U.S. The company sold off the renewal rights to most of its business for financial institutions to AmTrust Financial Services Inc. last year, but remains licensed to write property and casualty polices in 49 jurisdictions, Bays said.
The company has 15 employees in Oklahoma City.
The long-range plans of BancInsure are to recapitalize and move forward with new business and rebuild the insurance company.”
BancInsure president and CEO