Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, October 17, 1994 TAG: 9410170075
SECTION: VIRGINIA PAGE: C-3 EDITION: METRO
SOURCE: Associated Press
DATELINE: RICHMOND LENGTH: Medium
Richmond Circuit Judge Melvin R. Hughes Jr. signed an order Friday making the State Corporation Commission the permanent receiver for HOW Insurance Co., which insures the warranties of nearly 1 million homes for a total of $110 billion.
The company agreed to the order, averting a hearing that had been scheduled for Friday in Hughes' court.
``We feel that with all the circumstances that existed, this was the most appropriate resolution,'' said James C. Roberts, attorney for the Arlington-based insurance company.
``It's not a question of winning or losing,'' said Patrick Cantilo of Austin, Texas, a lawyer and receivership specialist hired by the SCC's Bureau of Insurance to help run HOW. ``It's a matter of protecting policyholders and the home builders.''
The SCC obtained a temporary injunction allowing it to seize the company Oct. 7. The hearing set for Friday was to determine if the insurer was insolvent and whether the order should be made permanent.
Private negotiations made the hearing unnecessary.
``There was no determination of insolvency,'' Roberts said. ``We just agreed to a finding that the company is in hazardous financial condition.''
The company reported a capital and surplus base of $4.2 million, just above the $4 million required by state regulators.
However, a consultant hired by the state estimated that HOW's liabilities, including its obligation to pay claims in the future, exceeded its assets by $47.9 million as of June 30.
HOW, which is owned by about 6,000 member home builders, controls about half of the national market. About 30 percent of new homes nationwide are covered by warranties.
by CNB