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Union Mutual declared insolvent, placed into receivership and rehabilitation

©2014 Piedmont-Surrey Gazette
By Matt Montgomery

Piedmont-based Union Mutual Insurance Company has been declared insolvent by Oklahoma Insurance Commissioner John Doak, and placed into receivership and rehabilitation.

John Doak

Documents filed in Oklahoma County District Court   View PDF   show Doak was appointed receiver for Union Mutual after he filed for a permanent injunction in Oklahoma County District Court on Jan. 24. Terry Smith was appointed assistant receiver by the Oklahoma Insurance Department.

Doak determined that “Union Mutual is financially impaired and/or insolvent in that the company’s surplus as regards to policyholders has fallen below the statutory required capital and surplus of $150,000,” the injunction reads.

From a quarterly financial statement, filed with the Oklahoma Insurance Department on Nov. 30, 2013, the company’s net capital and surplus was a (-$1,534,486).

“Insurance companies file statutory financial statements with the insurance department,” Doak said. “Periodically, examinations on companies are conducted on behalf of the insurance department to verify accuracy of the statements.

In 2013, Union Mutual was examined and a number of adjustments were made to their statement resulting in the company’s not having the required statutory capital.”

The order, filed in district court decreed the receiver, Oklahoma Insurance Department, to take possession of the property of Union Mutual; vested by operation of the law with the title to all of the property, accounts, assets, contracts, rights of action and all of the books and records of Union Mutual.

Doak said the Oklahoma Insurance Department is working with Union Mutual to return them to a solid financial condition.

“As insurance commissioner, I am responsible for the financial solvency of domestic insurers,” Doak said. “I am also dedicated to protecting consumers, which state law allows me to do in this case. My staff has been working with Union Mutual for some time. I’m hopeful the company can be returned to solid financial condition.”

He said when a company is in hazardous condition, the insurance commissioner can petition the courts to place the company into receivership and order the commissioner as receiver to take possession of and operate the company.

“In this case, the district court ordered the receiver and the assistant receiver to rehabilitate Union Mutual,” Doak said. “The Oklahoma Insurance Department will monitor the company’s progress and offer recommendations to the commissioner as receiver and the assistant receiver as they believe appropriate.”

Doak said that while this is a civil proceeding and not a criminal proceeding, many factors contributed to the current financial condition of Union Mutual and the exact causes are still under review.

Appointed assistant receiver Terry Smith said Union Mutual has made significant progress since supervisory action was taken late last year.

“Progress includes the implementation of a number of different cost-control initiatives and administrative changes to restore Union Mutual to profitability to position it for long-term success,” Smith said. “The staff of the Oklahoma Insurance Department, including the commissioner, has provided Union a significant amount of assistance in improving the operations. Union’s employees are working hard as well to maintain the level of service that policyholders and agents are accustomed to receiving. Working through the court-supervised rehabilitation process, we are doing everything possible to enable an Oklahoma company that has been in business since 1938 to endure for many years to come.”

Documents show that any and all officers of Union Mutual are prohibited from transacting any further business of Union Mutual.

Piedmont City Councilman and Union Mutual Claims Manager Donnie Robinson said his brother, Jack Robinson, who had served as an officer with Union Mutual and his nephew, Jackie Robinson, had left the company and were pursuing other business interests.

Donnie Robinson

“Jack has retired from the company,” Robinson said. “Jackie has left and is wanting to do something else for a living.”

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