Ambassador Insurance Company case update

Peter F. Young, Assistant General Counsel, 802-828-3301
Tue, 02/03/2009

Editorial note: In recent months BISHCA has issued a series of press advisories relating to the Ambassador Insurance Company case which covered a court judgment against Ambassador’s auditors in favor of BISHCA, as well as an advisory concerning proposed distributions to claimants, and other details. This release concerns actual distribution of money to claimants, with some additional details regarding guaranty fund protections available to Vermonters. Prior press releases can be found on the BISHCA website: (click on PressReleases).

State Approves $105 Million Distribution to Claimants of Ambassador Insurance Company in Receivership Montpelier, Vermont—

Banking, Insurance, Securities and Health Care Administration (BISHCA), announced today that the process of distributing an additional $105 million to claimants insured by Ambassador Insurance Company began last week. Ambassador was a Vermont domiciled insurance company with its headquarters in New Jersey when it was seized by the Department as insolvent. While Vermont claimants were generally protected by the Vermont Insurance Guaranty Fund and were paid years ago, many of the Ambassador claimants in other states have only received partial payment over the years and had to wait until now for final payment from the company. “It is great news,” said Commissioner Thabault, “that after all this time those who relied upon Ambassador for insurance are being paid in full and with interest.” More than five thousand checks were issued last week to policyholders, according to George Bernstein who has administered the company since it was seized in 1983. "It’s been a long hard road,” said Bernstein, “and I share Commissioner Thabault’s gratitude that we’ve reached the point where the approved claims of policyholders and claimants can be paid in full, with interest to help make up for the long wait for payment. Not only is it exceedingly rare for a liquidator of a casualty insurer to be able to pay such claims in full, but I believe that Vermont is the only state where claimants in an insurance liquidation are paid such interest." The payment is made possible in large part due to the Department’s pursuit of Ambassador’s former accountants for damages related to negligent accounting, confirmed Department attorney Peter Young. In the accounting malpractice lawsuit, Price Waterhouse Coopers had to pay $205 million after it was judged liable for negligent audits of Ambassador’s financial statements that concealed the insurer’s true financial weakness, money now available to pay Ambassador’s debts.

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Paulette J. Thabault, Commissioner of the Vermont Department of Banking, Insurance, Securities and Health Care Administration