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California takes the reins at Fremont Indemnity Co.
The California Department of Insurance (DOI) will appoint a special deputy examiner to oversee the operations of Fremont Indemnity Co. The workers comp insurer found itself in financial trouble after more than a year of losses, including a net loss of $247 million for the first three quarters of 2000.
In a Nov. 27, 2000, letter to Fremont, California Insurance Commissioner Harry W. Low confirmed that a DOI investigation found "unfavorable operating trends" and "deterioration in the statutory surpluses" at Fremont and its subsidiaries.
A subsequent agreement between the DOI and Fremont places the special deputy examiner, to be appointed by the DOI, in a supervisory role over Fremont's operations and business. Fremont may not make any financial decision without permission from the DOI. Those decisions include borrowing money, entering into agreements with subsidiaries or reinsurers, or hiring new management staff.
Under the agreement, Fremont also will limit new business writing to less than $400 million for 2001. It will increase workers comp rates by 35 percent in California and 18 percent in Illinois, the two states in which it does most of its workers comp business.