Case Study 4

Eagle Insurance Company Settlement with AIG and $780 Million Claims Runoff

The New Jersey Department of Banking and Insurance retained AIM in 2000 as Confidential Administrative Supervisor of Eagle and its three New Jersey subsidiaries, owned by the Robert Plan Corporation, (RPC). Eagle, a niche insurer, purchased and managed non-standard automobile assignments from other insurers.

From 2000 to 2001, Eagle/RPC was in arbitration with AIG, its primary reinsurer. The insurance department interceded to facilitate resolution and avert Eagle’s insolvency.  AIM facilitated the complex negotiations involving multiple issues. The global settlement finally reached was in excess of $600 million, including the projected runoff of Eagle. The settlement included AIG contributing a non-recourse $150 million surplus note to Eagle with other financial support and a $148 million commutation of reserves back to Eagle. AIM pursued liquidity with the sale/leaseback of Eagle’s home office, sale of other locations, sale of non-admitted assets, favorable commutations with managed reinsurance pools and recovery of other reinsurance owed.

Overseeing the runoff and resolving many subsequent issues, AIM successfully guided the payment of over $780 million of claims with a final deficit of only $20 million. AIM also assisted in negotiating Eagle’s court directed voluntary entry into rehabilitation and subsequently securing the eventual order of liquidation.

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