-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TDyEErNYcYlyACLkxEOpvd42bc/0TwqoIcK2+eLwTUahQi4cBVmsUgTUUidhbQCc RsjedYI/1DihwpXyikK3MA== 0000912057-01-524329.txt : 20010719 0000912057-01-524329.hdr.sgml : 20010719 ACCESSION NUMBER: 0000912057-01-524329 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010711 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010718 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MOTOR CLUB OF AMERICA CENTRAL INDEX KEY: 0000068480 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 220747730 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-00671 FILM NUMBER: 1684060 BUSINESS ADDRESS: STREET 1: 95 ROUTE 17 SOUTH CITY: PARAMUS STATE: NJ ZIP: 07653 BUSINESS PHONE: 2012912000 MAIL ADDRESS: STREET 1: 95 ROUTE 17 SOUTH CITY: PARAMUS STATE: NJ ZIP: 07653-0931 8-K 1 a2054036z8-k.txt 8-K - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): July 18, 2001 Preserver Group, Inc. (Exact name of registrant as specified in its charter) New Jersey 0-671 22-0747730 (State or other jurisdiction (Commission (IRS Employer of incorporation or organization) File Number) Identification No.) 95 Route 17 South Paramus, New Jersey 07653 (Address of principal executive offices) Registrant's telephone number, including area code: (201) 291-2000 (Former name or former address, if changed since last report) Motor Club of America - -------------------------------------------------------------------------------- ITEM 7 - FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (c) Exhibits The following Exhibit is filed as part of this report: 99.1- Preserver Group, Inc. Press Release (July 18, 2001). 99.2- Consent Order No. C01-111 between the New Jersey Department of Banking and Insurance and Motor Club of America Insurance Company. ITEM 9 - REGULATION FD DISCLOSURE On July 18, 2001, the Company issued the press release attached hereto as Exhibit 99.1 and entered into the Consent Order attached hereto as Exhibit 99.2. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereto duly authorized. Dated: July 18, 2001 MOTOR CLUB OF AMERICA By: /s/ Patrick J. Haveron ----------------------- Patrick J. Haveron, Executive Vice President , Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer EX-99.1 2 a2054036zex-99_1.txt EX-99.1 EXHIBIT 99.1 FOR IMMEDIATE RELEASE Patrick J. Haveron, CPA Executive Vice President - Chief Executive Officer Preserver Group, Inc. 95 Route 17 South Paramus, NJ 07653 201-291-2112 E-mail: phaveron@preserver.com PRESERVER GROUP ANNOUNCES ADDITIONAL DEVELOPMENTS IN NEW JERSEY PRIVATE PASSENGER AUTOMOBILE PARAMUS, NEW JERSEY, July 18, 2001 - Preserver Group, Inc. (NASDAQ: PRES) today reported that its Motor Club of America Insurance Company ("Motor Club") unit had been granted certain relief by the New Jersey Department of Banking and Insurance with regard to its private passenger automobile operations, designed to improve Motor Club's deteriorating financial condition. Motor Club's premium to surplus ratio no longer meets industry standards, its share of urban enterprise zone ("UEZ") business (where it writes double its required amount) is disproportionately high, and A.M. Best recently downgraded the Motor Club unit. The relief includes the immediate cessation of accepting new business in UEZ's, the non-renewal of a number of UEZ risks and relief from assigned risk business. FORWARD-LOOKING STATEMENT DISCLAIMER. This press release contains statements that are not historical facts and are considered "forward-looking statements" (as defined in the Private Securities Litigation Reform Act of 1995), which can be identified by terms such as "believes", "expects", "may", "will", "should", "anticipates", the negatives thereof, or by discussions of strategy. Certain statements are forward-looking statements that involve risks, uncertainties, opinions and predictions, and no assurance can be given that the future results will be achieved since events or results may differ materially as a result of risks facing the Company. These include, but are not limited to, the cyclical nature of the property casualty insurance industry, the impact of competition, product demand and pricing, claims development and the process of estimating reserves, the level of the Company's retentions, catastrophe and storm losses, legislative and regulatory developments, changes in the ratings assigned to the Company by rating agencies, investment results, availability of reinsurance, availability of dividends from our insurance company subsidiaries, investing substantial amounts in our information systems and technology, the ability of our reinsurers to pay reinsurance recoverables owed to us, our entry into new markets, our acquisition of North East Insurance Company on September 24, 1999, our acquisition of Mountain Valley Indemnity Company on March 1, 2000, our successful integration of these acquisitions, potential future tax liabilities related to an insolvent subsidiary and state regulatory and legislative actions which can affect the profitability of certain lines of business and impede our ability to charge adequate rates, and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. EX-99.2 3 a2054036zex-99_2.txt EX-99.2 Consent Order No. C01-111 STATE OF NEW JERSEY DEPARTMENT OF BANKING AND INSURANCE DIVISION OF INSURANCE IN THE MATTER OF MOTOR CLUB OF ) DECISION AND AMERICA INSURANCE COMPANY ) CONSENT ORDER Motor Club of America Insurance Company (Motor Club) is a New Jersey domiciled property casualty insurer which has been licensed to transact insurance business in New Jersey since February 8, 1990. It is a wholly owned subsidiary of Preserver Group, Inc. (formerly known as Motor Club of America), a publicly traded corporation. Motor Club writes only automobile insurance in New Jersey. By Order No. C91-106, in 1991 Motor Club assumed the New Jersey private passenger automobile insurance of MCA Insurance Company. Its business has historically been concentrated in the northern urbanized areas of the State, including many areas now included in the municipalities designated as insurance urban enterprise zones (UEZs), pursuant to N.J.S.A. 17:33C-1 ET SEQ. and Department rules at N.J.A.C. 11:3-46. By Order No. A92-114 issued February 25, 1992, certain of Motor Club's obligations under New Jersey automobile insurance statutes were suspended upon a finding that continued compliance would result in its financial condition becoming unsafe and unsound. In 1995, because of Motor Club's improved financial condition, pursuant to Order No. A95-106, this relief was determined no longer to be necessary and Motor Club again began to write new personal automobile insurance business, which it has continued to do to date. As noted above, Motor Club's business has historically been concentrated in the densely populated urban areas of New Jersey, including a substantial amount of business from areas now designated as "insurance urban enterprise zones," which generally describe areas where rates are subject to territorial rating restrictions pursuant to N.J.S.A. 17:29A-36. In 1997, the Legislature enacted N.J.S.A. 17:33C-1, ET SEQ., providing for an automobile insurance urban enterprise zone program in order to distribute more equitably the financial burden of writing this higher risk automobile insurance business. Pursuant to that Act and the implementing regulations, all insurers are required to seek to maintain a share of business in these designated areas reasonably proportionate to its business statewide. While the UEZ program has resulted in a more equitable distribution of risks among all issuers, Motor Club's historic concentration in these areas has resulted in its continuing to provide coverage to a disproportionately high percentage compared to its market share in the rest of the State. As of June 30, 2001 it provided coverage for 9036 automobiles in the UEZs, out of a total of 40,288 statewide. This amount is about twice its equitable proportionate share. Moreover, since 1997, its UEZ business has grown 43%, while its business statewide has grown only 3%. The continuation of these circumstances affects its financial condition. 2 While Motor Club's net premiums written have increased 44% from 1995 until year end 2000, its surplus as to policyholders (the capital required to support its business writing) has increased only 12% during the same time period, actually declining somewhat in 1999 and 2000. Motor Club's first quarter 2001 financial statement indicated further deterioration that if continued threatens its ability to continue to fulfill its obligations to policyholders. N.J.S.A. 17:51A-1 ET SEQ., the administrative supervision statute, authorizes the Commissioner to order and direct that corrective action be taken to ameliorate conditions that threaten an insurer's financial health and protect the interests of the insurer's policyholders and the public. Pursuant to that statute, proceedings are confidential, except upon a determination that it is in the best interests of the public or the insurer, its insureds or creditors that the proceedings be opened. Because the actions provided by this Decision and Order are based primarily upon documents that are already a matter of public record, including documents filed by Motor Club's parent as a publicly held company, and because the remedial actions required are primarily those which directly affect the company's agents and policyholders, it is in the best interests of the public that these proceedings not be maintained as confidential. It is clear that remedial action pursuant to N.J.S.A. 17:51A-1 ET SEQ. is required to address the conditions that strain Motor Club's capital and threaten its financial health. If these trends were to continue, Motor Club would continue to experience operating losses, the loss of capital, and a deterioration of its financial condition. Therefore, the actions set forth below are plainly warranted as the 3 best method to address the specific conditions that threaten Motor Club's financial condition while minimizing the impact on the majority of its policyholders and the market. In order to determine the effect of these actions, however, continued close monitoring of the company's financial condition is warranted. Therefore, I am also directing that Motor Club provide the Department with financial statements on a monthly basis, as well as information about the number of automobiles it insures overall and within the areas designated as UEZs. The Department will continue to monitor Motor Club closely so that the actions directed below do not continue any longer than necessary. NOW, THEREFORE, IT IS on this 18th day of July, 2001; ORDERED that: 1. Effective immediately, Motor Club is placed under administrative supervision pursuant to N.J.S.A 17:51A-1 and is directed to take the following actions to abate the conditions giving rise to this determination. 2. Except as provided in paragraphs 3, 4, and 5 of this Order, Motor Club shall continue to accept applications and provide coverage pursuant to N.J.S.A. 17:33B-15. 3. Commencing immediately, Motor Club shall cease accepting applications for new business in the municipalities designated as insurance urban enterprise zones by N.J.A.C. 11:3-46. 4 4. Motor Club shall nonrenew automobile insurance policies that include a maximum of 4518 automobiles in the municipalities designated as insurance urban enterprise zones by N.J.A.C. 11:3-46. In determining the policies chosen for nonrenewal, Motor Club shall use fair and nondiscriminatory criteria, which shall be submitted to the Department for approval. In establishing these criteria, in order to avoid disruption of long-standing agency and policyholder relationships, Motor Club may use the length of time that a policyholder has been insured with Motor Club. Motor Club shall commence notice of these nonrenewals 15 days from the date of this Order, during which time it shall work with the Department to find one or more auto insurers to make offers of replacement coverage to nonrenewed insureds contemporaneously with Motor Club's notice of nonrenewal. 5. Motor Club shall cease immediately accepting applications for new business from the Personal Automobile Insurance Program (PAIP). A copy of the Order shall be transmitted to the PAIP administrative offices by the Department. 6. Motor Club shall review its operations, including its marketing system, and develop proposals to reduce unnecessary costs and expenses. 7. Motor Club shall provide the Department with monthly financial statements no later than the 30th day after the close of each month, and shall report in-force private passenger automobile exposures no later than the 30th day following the close of each month. 5 Except for Paragraph 4, this Order shall continue in effect until December 31, 2001 unless modified or vacated after notice and an opportunity to the company to be heard by the Commissioner. Either the Department of Banking and Insurance or Motor Club may request a continuation of these provisions of this Order prior to that date. Paragraph 4 of this Order shall continue in effect during the Company's full renewal cycle, commencing upon implementation, unless modified or vacated, in whole or in part, on 30 days prior written notice to the Company. /s/ Karen L. Suter -------------------------------------- Karen L. Suter Commissioner Consented to as to form and entry. /s/ Stephen A. Gilbert - --------------------------------------- Motor Club of America Insurance Company By: Stephen A. Gilbert President 6 -----END PRIVACY-ENHANCED MESSAGE-----