Y-Mutual Winds Up On A Solvent Basis
The final general meeting of Y-Mutual Insurance Ltd. was held in Bermuda on November 9, at which time the captive reinsurer — owned by member YMCA organisations throughout the United States — was liquidated on a solvent basis.
Y-Mutual was able to satisfy all of its reinsurance obligations in just four and a half years since it terminated active underwriting and entered “run off.”
Andrew Rothseid designed the run off plan for Y-Mutual and, as principal of RunOff Re.Solve LLC, was responsible for executing and concluding the run off.
According to Mr. Rothseid, “This is the best result possible for all involved. Y-Mutual has satisfied all of its obligations to the front carriers it reinsured so that the individual YMCA’s and their claimants will continue to be protected.”
Y-Mutual was incorporated in Bermuda in 1986 as a captive reinsurer “owned” by member Young Men’s Christian Association operations throughout the United States. At its height, over 450 separate YMCA organisations were members of Y-Mutual.
From 1986 through 2007, Y-Mutual provided reinsurance protection to five “fronting companies” that insured the individual YMCA’s.
The individual member YMCAs and, by extension, the front carriers and Y-Mutual, were subject to numerous auto and property liability, general liability and workers compensation claims.
Y-Mutual discontinued active underwriting and went into “run off” in February 2007, at which time there were over one thousand pending claims subject to its reinsurance protection.
“Y-Mutual was a non-assessable mutual,” said a spokesman for Mr. Rothseid. “It could not ask its members for further capital contributions and had to manage the run off with limited financial resources.
“Its challenge in run off was to maintain solvency as it honoured its reinsurance obligations to the front carriers for the many potentially dangerous general liability claims.”
At the outset of the run off, it was anticipated that, if an orderly wind down of the company was possible on a solvent basis, it would take at least nine years to eliminate all of Y-Mutual’s reinsurance obligations.
Y-Mutual honoured all claims to the front companies in less than half the anticipated time.
After it had concluded all of its reinsurance obligations to each of the fronting companies, Y-Mutual was deregistered as a licensed Bermudian reinsurer and closed through a solvent members’ liquidation process.
