Judge Rules CA Insurer Insolvent Because Of Camp Fire; $64M In Paradise Liabilities, $23M In Assets [View all]

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Millions of dollars in potential losses from the Camp Fire have ruined a small Merced County insurance company, providing another element of uncertainty for homeowners following the deadliest and most destructive wildfire in California’s history.

A judge declared Merced Property & Casualty Co. of Atwater insolvent during a brief court hearing Monday afternoon in Merced County Superior Court. The ruling by Judge Brian McCabe allows the state Department of Insurance to seize control of the busted company.

Merced Property is facing about $64 million in potential liabilities in Paradise, the state agency said in court papers. The monetary pain could go even higher: A financial statement the company filed with regulators said it had sold a total of $141 million worth of coverage in the area affected by the Camp Fire, although reinsurance policies will cover some of its losses. Reinsurance is coverage purchased by insurers to handle major disasters.

Policyholder claims will surely dwarf the company’s finances, listed as more than $23 million in stocks and other financial assets. “Merced incurred significant losses as a result of the Camp Fire,” Insurance Commissioner Dave Jones’ office announced. “Based upon preliminary confirmation of multiple total losses and mounting claims, the financial condition of Merced deteriorated rapidly.”

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https://www.sacbee.com/news/state/california/fires/article222563185.html