Real Legacy Assurance, an insurance firm based in Puerto Rico has been taken over by the Puerto Rico government on concerns the company was struggling with liquidity issues.
Already, this has sent shock-waves through neighboring United States Virgin Islands, where Lieutenant Governor Osbert Potter sought to reassure residents that their claims will be paid.
Real Legacy has been a BVI-regulated insurance company since 2015, but regulatory officials here have not provided information about the recent developments with the company.
Caribbean Insurers Ltd (CIL), BVI has been identified as the agent for Real Legacy.
When contacted yesterday, November 5, Simone Monsanto, Marketing Director of CIL said that the company could not offer an immediate comment on the developments at this point, but assured that one would be forthcoming.
Her immediate assessment was that claims here would be paid.
There has been public outcry over the manner in which insurance companies in the BVI were conducting business post Hurricanes Irma and Maria. This led to government setting up an Insurance Tribunal, but complaints continue to mount.
According to the USVI Daily News, Puerto Rico Insurance Commissioner, Javier Rivera Ríos placed Real Legacy Assurance Company of Puerto Rico under rehabilitation on September 28. The company, according to the Daily News, has numerous claims in the Virgin Islands stemming from the 2017 hurricanes — 82 remain outstanding, according to figures presented.
Mr. Potter said the territory’s insurance fund, which currently has $10 million, would not be affected by the Real Legacy problems. Nonetheless, he urged the Legislature to restore the fund’s balance to $50 million so that residents would be protected if an insurance firm becomes insolvent.
In Puerto Rico, the exact number of government agencies insured by this company was not clear, but there is pressure to have several buildings restored.
The court accepted a request from the Puerto Rico Office of the Commissioner of Insurance (OCI) to intervene in Real Legacy Assurance due to the liquidity problem that the company faced. The measure came after OCI auditors determined that the company did not have the capital to cover the claims pending.
This process will enable the company to work on its recovery that will be headed by lawyer Juan Moldes. There are other options such as the possibility for another insurance company to buy the assets of Real Legacy Assurance or undertake a liquidation process. However, this last one would be a last resort.
According to reports from Puerto Rico, after last year's hurricanes, Real Legacy received about 12,730 claims from some 9,000 clients.
Until September 25, the insurance company had paid about $814 million and processed 86 percent of the claims received.
However, the volume of claims received was such that the company´s assets, as well as its capital and reinsurance contract were insufficient and resulted in the intervention.
According to sources, Real Legacy still has to attend to 1,782 outstanding claims totaling about $70 million.