HIG sale by state awaits approval
By Greg Wiles
Advertiser Staff Writer
By Greg Wiles
The state agreed to sell Hawaiian Insurance & Guaranty Co. to a Mainland buyer yesterday, narrowly avoiding a shutdown of the insurer and cancellation of more than 20,000 hurricane insurance policies locally.
The new buyer will take over Hawaiian Insurance pending the fulfillment of several conditions and court approval, state Insurance Commissioner J.P. Schmidt said. The Mainland insurance company buying HIG requested its name not be disclosed until it notifies regulators in other states where it does business, Schmidt said.
"I have no doubt the court will see this is in the best interest of policyholders and approve the sale," he said.
The sale is good news for policyholders and the state, which faced the possibility of having to help homeowners find new hurricane coverage in an already tight market. Local homeowners with older single-wall construction homes have reported difficulty finding coverage and have faced increases in hurricane insurance costs. HIG is the state's fourth-largest hurricane insurer.
The state came close to a shutdown of HIG, which it took over in late June because of worries about the deteriorating finances of its parent company, Alabama-based Vesta Insurance Group.
Schmidt at that time said he would try to find a new owner for HIG. The state negotiated extensively with a Michigan-based company and had filed to take HIG into liquidation, an action the state said was needed to sell the company.
But the potential deal with the Michigan insurer fell apart last week after attorneys for Vesta raised legal questions about whether the liquidation filing was done correctly.
It also forced Schmidt into a last-gasp effort to sell HIG while making contingencies for a possible closing of the Honolulu-based firm. He said a company that originally expressed interest in a purchase of HIG came forward to agree to a purchase.
Schmidt said the state was able to expedite certification and rates for three insurers who were interested in coming to Hawai'i if HIG had been shut down.
Reach Greg Wiles at email@example.com.