“Because banks were failing at a very high rate here, Oklahoma was not a very attractive place for an insurance company to do business at the time,” Beverage said.
BancInsure was chartered by the Oklahoma Bankers Association and five other state bankers associations. Eventually, 15 state bankers associations held equal ownership interest. The Oklahoma Bankers Association maintained an ownership interest in the company until 2003, when it sold its interest to a group of investors led by the late Rod Frates, an Oklahoma City businessman.
The company had struggled in recent years after the onset of the financial crisis in 2008, Beverage said.
“We could see that it kind of snowballed,” Beverage said. “Their credit was downgraded, and that put more pressure on them to raise more capital; they had some losses, and it was a pretty rapid decline.”
The liabilities of BMSI, BancInsure's former parent company, included a $49 million damage claim dating to 2009 from the Dallas-based company Breckenridge Enterprises Inc., according to the company's bankruptcy filing. The nature of the claim was not immediately clear, and a call to Breckenridge's corporate offices was not returned Tuesday.
The company's liabilities also included about $14.3 million in trust preferred securities and former BancInsure CEO Rodney Sargent's unpaid $300,000 bonus from 2010, according to court documents.
Calls to BancInsure's Oklahoma City office and BMSI's attorney were not returned Tuesday.