June 20, 2001
Contact: Lucas Hamilton
State Auditor takes additional step to protect insurance consumers Montana Benefits and Life Co. consents to rehabilitation
Montana State Auditor John Morrison announced Wednesday that a district court judge granted the Insurance Department's request to place health insurer Montana Benefits and Life Co. into rehabilitation, effective immediately. MBLC's board of directors unanimously consented to the rehabilitation, which grants the insurance commissioner the direct authority to preserve the assets of the company and to oversee its financial situation and current operations, while continuing to pay policyholder claims.
The company's insurance policies remain in full force and effect. MBLC has been able to pay claims and will continue to do so, however, the company is prohibited from writing new policies.
"Rehabilitation will enable us to immediately protect and preserve for policyholders all of MBLC's assets," said Morrison, Montana's Insurance Commissioner. "This is the department's top priority in the rehabilitation."
To ensure that the rehabilitation proceeds as effectively as possible, Morrison has appointed Missoula attorney Beth O'Halloran to manage the company.
The insurance department will perform an independent and thorough evaluation of the company's finances. Based upon the review, the department will prepare a rehabilitation plan, which will give priority of payment to policyholder claims.
"Rehabilitation allows the trimming of expenses and streamlining of the company in order to meet the surplus and capital requirements," Morrison said.
Montana-domiciled health insurance companies are required to maintain a minimum capital surplus of $300,000 pursuant to the Montana Code.
In a financial filing earlier this year, MBLC had fallen below that amount. In March, the Auditor's Office moved to place MBLC under supervision to protect the company's insureds and creditors, and to prohibit them from writing new business until its finances improved.
"Although MBLC is making progress, it remains under surplus and we believe rehabilitation is necessary to assure that policyholders and creditors are paid," Morrison said.
Kalispell-based MBLC insures 16,000 Montanans, primarily providing health coverage and a small amount of life insurance.
"In the short term, our goal is to ensure that policyholders are protected and claims are paid properly," Morrison said. "Long term, rehabilitation enhances opportunities for possible infusion of cash into the company through the sale of its holding company. This would allow the company to remain domiciled in Montana, providing good service to policyholders and value to the stockholders who have invested over the years."
If policyholders have questions or concerns about a claim or policy, please call the State Auditor's Office at 1-800-332-6148.
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