Poolman Places Nodak Under Administrative Supervision
Posted on 9/23/2002
FOR IMMEDIATE RELEASE
Contact: Jim Poolman
September 23, 2002
Bismarck, ND - North Dakota Insurance Commissioner Jim Poolman today ordered Nodak Mutual Insurance Company to be placed into administrative supervision. Administrative supervision puts regulatory controls in place by the North Dakota Insurance Department that will require oversight by the Department of management decisions made by the Board of Directors and management of the company. This action will remain in effect until the Department's investigations can be completed.
The North Dakota Century Code 26.1-06.2 and corresponding administrative code allow the Commissioner broad authority to place a company under administrative supervision.
Poolman emphasized that placement of Nodak under administrative supervision is not related to the financial condition of the company. "Nodak mutual is in a position to pay claims and continue with the normal course of business," he said. "This action is purely related to the instability in management of the company and about the future of Nodak Mutual Insurance" he added.
Poolman received a letter late Friday from all 5 Senior Vice Presidents of the company asking him to place the company under administrative supervision. They stated in their letter that certain membership of the board instructed them to not cooperate with the Insurance Department in their market conduct and targeted financial examinations of the company or they may lose their jobs with the company.
"I am concerned that this type of advice to senior management is not in the best interest of the company nor the policyholders, and may be illegal," Poolman said. "We need the most accurate information possible in our examination, and the cooperation of both the board and senior management is imperative to this process. No employee should fear their job for cooperating with an investigation."
There are several other issues between the board and management that will be part of the market conduct and financial examinations. "These are very serious issues that have been ruminating for months, and our department is going to get to the answers," Poolman said.
"Events that have taken place at Nodak Mutual show that the company's recent management instability warrants supervision by the North Dakota Insurance Department," he added.
"My number one priority is to the policyholders of this company, and the continued viability of Nodak Mutual Insurance," Poolman said.
Under the administrative supervision process, Poolman has required prior approval of transactions of the management of Nodak Mutual including:
Material changes in management
Increasing salaries or benefits to officers or directors, or other preferential payments of bonuses or dividends
Disposal, conveyance or encumbrance of any company assets or business in force
Transfers of Property
New reinsurance contracts or treaties
Incurring debt, obligations or liabilities
Engage in any other activity other than the normal course of business
Commissioner Poolman appointed Deputy Commissioner Doug Holloway as the Administrative Supervisor for approval of these transactions. He, along with department staff will be in communication with the Board of Directors and Senior Management to coordinate approval of business transactions and operations of the company.
Poolman said, "I am confident that this administrative supervision process will ensure the long term success of Nodak Mutual and bring about stability amongst employees, the board of directors, and above all the policyholders. I don't want this firestorm to turn into a major catastrophe for the company."
Commissioner Poolman will also request a Tuesday meeting with Nodak Mutual employees to answer questions and explain the administrative supervision process.