Rebuffed by the Commonwealth Court, Pennsylvania insurance regulators will now ask a state superior court to rule whether Kingsway Financial violated state law through its disposition of a failing subsidiary.
Last month, the Commonwealth Court sided with Kingsway Financial, and its subsidiary Kingsway America, rejecting regulators’ claims that it improperly divested in Lincoln General Insurance Co. of York, Pa. With the commercial insurer for the trucking industry facing financial troubles, Toronto-based Kingsway and the Pennsylvania Insurance Department were negotiating ways to wind down the company.
Kingsway then donated 100% of the company’s stock to 20 different charitable organizations, along with a $20,000 check to each charity, in a move Pennsylvania Insurance Commissioner Joel Ario dubbed “sham transactions.” Ario subsequently accused the insurer of violating state insurance law.
With the Commonwealth Court absolving Kingsway of any wrongdoing, the PID has now appealed that ruling to The Pennsylvania Supreme Court.
Kingsway, in a statement, announced the appeal, saying it would “oppose” the action by state regulators.
A request for comment by the PID on the appeal was not immediately returned to IFAwebnews.com.
With Lincoln General no longer a member of Kingsway Financial, A.M. Best said it will no longer recognize the insurer. It recently affirmed the financial strength rating of D (Poor) and issuer credit rating of “c” to the company, with a negative outlook on both ratings.
The rating service said it was unaware of the PID’s appeal of the Commonwealth Court decision, but if the original decision was overturned, it would again evaluate Lincoln General as a member of Kingsway Financial.
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