Regulators Take Reins of Cosmopolitan Life, Cauley Among Creditors

by George Waldon  on Monday, Oct. 12, 2009 12:00 am  

"For at least the next several months, the anticipated cash flow of the company will be negative. If current trends continue, incurred claims will exceed premium income by approximately $100,000 per month.

"The company has not paid premiums due to its reinsurer for at least the last four months, thereby putting its reinsurance coverage in jeopardy. Without any reinsurance, the company would be responsible for all claims up to $1 million per individual. With the reinsurance in place, the company's liability is limited to $200,000 per individual.

"The company has not paid all of its federal or state withholding taxes or unemployment taxes on wages for the years 2007 and 2008. This liability is approximately $100,000 for the company.

"As a result of the described liabilities of the company and the less than adequate current liquid assets to pay them as well as the anticipated negative cash flows of the company, further transaction of business by the company would be financially hazardous to its policyholder, creditor or to the public."

This stark revelation led the insurance department to obtain a permanent injunction and the appointment of a receiver - the Insurance Department's deputy receiver Steve Uhrynowycz - the very next day.

Accompanying the company's money troubles are lawsuits over claim disputes by Hot Springs National Park Hospital Holdings LLC and Indigo LR LLC.

Hot Springs National Park Hospital is suing for more than $600,000 in damages related to unpaid medical services provided to employees of Partee Flooring Mill.

The 2008 case, which is seeking class-action status, was originally filed against Partee Flooring but was moved from Pulaski Circuit Court to U.S. District Court, and Lile, AIGA and Cosmopolitan Life were added as defendants.

The other case, filed this year in federal court in Little Rock, alleges unpaid 2008 claims of $11,992 for an employee of the Indigo store in Park Plaza Mall. Lile, AIGA and Cosmopolitan Life are listed as defendants.

 

Cosmopolitan Life Insurance Co., Little Rock

 

 

 

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