By Matt Youngfrau
ROCK HILL — August 28, 2001 – The downward spiral of Frontier Insurance Company continued yesterday as the New York State Insurance Department took control of their company.
The purpose of the takeover is for the state to come in, conduct Frontier's business, and take steps to fix their problems. Frontier's Board of Directors approved this action, so it has been termed a voluntary rehabilitation.
This is just the latest in what has been a series of setbacks suffered by Frontier over the last few years. In 1999, Frontier lost $233 million due to insufficient reserves to pay out claims. Last year, they lost $297 million.
At one time, Frontier employed over 700 people, ranking it as one of the county’s top employers. That number is now down to about 300.
In March, Frontier agreed to stop writing new insurance policies. They have been in runoff ever since, which means no new policies can be written but old ones are still honored. All those policies expire next March.
In June, their stock was removed from the OTC Bulletin Board. The stock now trades via pink slip and sells for about three cents a share.
The state's takeover means Frontier staff will no longer make the financial decisions, although current Frontier employees will keep their jobs while the state reviews the operations.
The Order of Rehabilitation must be approved by the State Supreme Court, but that is a formality, as Frontier has already agreed.