California Insurance Commissioner Steve Poizner says he is in the process of putting a life insurer under the supervision of the Commissioner’s Conservation and Liquidation Office.
Poizner has served an order of conservation on Golden State Mutual Life Insurance Company, Los Angeles, a life insurer organized in 1925 that has been operating in 12 states.
Golden State Mutual has repeatedly reported operating losses, and the California Department of Insurance has warned the company that “continued to sell assets to cover losses was hazardous to its policyholders and would eventually lead to conservation,” Poizner says in a statement. “Unfortunately, that day has now come.”
Golden State Mutual has told the California department that it “will not oppose the conservation,” Poizner says.
The conservation office will oversee the payment of claims and the receipt of premiums while developing a wind-down plan to protect the policy holders, Poizner says.
Most Golden State Mutual policyholders are in California, Illinois, Louisiana, Michigan, North Carolina and Texas, California department officials say.
Golden State Mutual has focused on selling individual term and whole life products, with annuity riders attached on a participating basis, through general agents.
State law requires Golden State Mutual to have at least $5 million in capital and surplus, but the company ended June with just $1.65 million in capital and surplus, officials say.
The company is expecting to report about $600,000 in losses for the third quarter, officials say.
Representatives from Golden State Mutual were not immediately available to comment on Poizner’s announcement.