In this delinquency action instituted pursuant to the Uniform Insurers Liquidation Act, N.J.S.A. 17:30C-1 et seq., the Commissioner of Insurance of New Jersey has been appointed ancillary receiver of Ambassador Insurance Company. His application for possession of Ambassador's New Jersey assets of approximately $100,000,000 is opposed by the domiciliary receiver appointed by the court of the state in which Ambassador was incorporated.
Ambassador is wholly owned by the Ambassador Group, Inc., a Delaware corporation, which also owns Budget Payment Plan Inc., a premium finance company, and Surplus Lines Associates, a surplus line insurance broker. Ambassador was incorporated in the State of Vermont on March 16, 1965 as a stock property and liability insurer. It qualified as an eligible surplus lines' insurer in New Jersey on December 14, 1967 in
accordance with N.J.S.A. 17:22-6.45. At that time Ambassador was required, among other things, to maintain a deposit of $100,000 with the Commissioner ". . . in trust for all United States policyholders . . . ." In 1983 this deposit was increased to $600,000.
For the calendar year ending December 31, 1982 Ambassador wrote $48,630,987 in direct premiums throughout the United States. Of this amount, approximately $11.8 was written in New Jersey, almost three times as much as it wrote in any other state. For the period ending September 30, 1983 Ambassador wrote approximately $48,000,000 in direct premiums throughout the United States. Of this amount $8.3 million was written in New Jersey, almost $3,000,000 more than it wrote in any other state.
As of April 19, 1984, 1,779 claims had been filed and 1,270 cases were pending in New Jersey against Ambassador's insureds. Seven thousand ninety four (7,094) claims had been filed and 4,852 cases were pending throughout the United States against Ambassador's insureds.
Substantially all of Ambassador's assets are located in New Jersey. These consist primarily of low yield, long term bonds with a statutory (or book) value of $100,000,000 and a market value of $80,000,000.
Commissioner Murphy's action to be appointed ancillary receiver was based upon delinquency proceedings instituted on November 10, 1983 in Vermont by its Insurance Commissioner, George A. Chaffee. On that date Chaffee was appointed "Receiver for the purposes of rehabilitation."
In pertinent part this order provided:
(1) The Commissioner of Banking and Insurance of the State of Vermont (hereafter called the 'Commissioner') shall be appointed Receiver by this Court to take possession of the property of Ambassador, wherever situated, and conduct the affairs of Ambassador, subject to the supervision of this Court, for the purpose of the rehabilitation of Ambassador.
Commissioner Chaffee selected George K. Bernstein as his agent to function as Ambassador's chief executive officer.
Bernstein assembled a rehabilitation team and took possession and control of Ambassador's New Jersey assets and its administrative offices in North Bergen, New Jersey, on November 10 or 11, 1983. Since that date the rehabilitation team has operated the insurance company after having effectuated a series of layoffs and economies.
The evaluation process of whether Commissioner Chaffee would recommend that Ambassador be rehabilitated or liquidated was hampered by the general disorganization and, in some cases, non-existence of Ambassador's records and the intricate relationship between Ambassador and its affiliates. Until the rehabilitation proceeding was commenced, operation of Ambassador's various corporate entities was intermingled. The relationship between the Ambassador Group and Horizon Insurance Company, a New York domiciled insurer wholly owned by the Group, provided an additional complexity because the New York Insurance Department has applied for an order of rehabilitation against Horizon. In addition, ancillary receivers have been appointed in Arizona and Florida.
The November 10, 1983 order of the Vermont Superior Court called for Commissioner Chaffee to submit a plan for rehabilitation or liquidation by March 9, 1984. This date was extended and on March 30, 1984, Commissioner Chaffee submitted a detailed report to the Vermont Superior Court recommending liquidation. Using conservative calculations, he concluded that as of November 30, 1983 Ambassador's liabilities exceeded its assets by $43,107,198. Commissioner Chaffee recommended that Ambassador be liquidated because it cannot be successfully rehabilitated and is unsafe to remain in business. The Vermont Superior Court has scheduled a hearing for May 14, 1984 on this plan.
Ambassador's liquidation will have a particularly devastating impact on New Jersey claimants and policyholders because the New Jersey Property Liability Guarantee Association Act, N.J.S.A. 17:30A-1 ...