樱花视频

This matter comes before the Commissioner of the 樱花视频 Department of Banking and Insurance, Division of Insurance ("Commissioner" or "Department"), upon the filing of a plan of withdrawal (the "Withdrawal Plan") by American International Insurance Company of 樱花视频 ("AIICNJ" or the "Company") for approval to withdraw from writing private passenger automobile insurance in 樱花视频 pursuant to N.J.S.A.17:17-10 and N.J.A.C. 11:2-29.1 et seq. ; and

IT APPEARING that AIICNJ is a 樱花视频 domiciled property and casualty insurer authorized to transact private passenger automobile insurance business in 樱花视频 since January 1997. AIICNJ is a member of the American International Group, Inc. holding company structure ("AIG") and is part of the Personal Lines Property and Casualty Mass Marketing Division; and

IT FURTHER APPEARING that AIICNJ currently insures approximately 213,000 automobiles, constituting about three percent of the 樱花视频 private passenger automobile insurance market with approximately $160 million in annual premiums; and

IT FURTHER APPEARING that AIICNJ filed a withdrawal application with the Department on June 15, 2001 seeking permission to withdraw from writing private passenger automobile insurance in 樱花视频. The Department responded to the Company on July 16, 2001, requesting additional information. AIICNJ supplied part of the requested information on August 16, 2001 and additional requested parts on October 2, 2001. The Commissioner has not issued a decision on the Withdrawal Plan and discussions between the Company and the Department have been ongoing; and

IT FURTHER APPEARING that since AIICNJ was admitted on January 30, 1997 and filed its withdrawal application within five years of admission, proceedings on AIICNJ's application are subject to the provisions of N.J.A.C.11:1-10.8(c), limiting the maximum time that it must seek a replacement carrier pursuant to N.J.A.C.11:2-29.5(a)1(i) to three years. AIICNJ asserts that since it has been in the market for less than six years, that a market disruption will not occur if its Withdrawal Plan is approved as submitted; and

IT FURTHER APPEARING that on August 1, 2001, AIICNJ applied to the Department for exemption from and suspension of certain statutory obligations of private passenger auto insurers, including the obligation to provide coverage to all eligible person applicants and such application for an immediate exemption was denied on August 14, 2001, by the Department, and AIICNJ's request for discretionary relief remains pending under separate consideration by the Department; and

IT FURTHER APPEARING that on September 20, 2000, the Company filed for a 20.1 percent overall rate increase for private passenger automobile business in 樱花视频, based upon data through June 30, 2000, which filing was, on November 2, 2000, transmitted for a hearing to the Office of Administrative Law; and

IT FURTHER APPEARING that on June 29, 2001, an Administrative Law Judge, (the "ALJ") issued an initial Decision on AIICNJ's Rate filing which recommended that AIICNJ be granted rate relief. On August 30, 2001, the Commissioner issued Final Decision and Order A01-148, which modified the findings of the ALJ and determined, based on the hearing record, that AIICNJ's request for a private passenger automobile insurance rate increase be denied; and

IT FURTHER APPEARING that on August 31, 2001, AIICNJ appealed the Commissioner's Final Decision and Order A01-148, to the 樱花视频 Superior Court Appellate Division as Docket Number A-71-01T3 where such appeal remains pending; and

IT FURTHER APPEARING that since the issuance of Final Decision and Order A01-148, AIICNJ has provided the Department updated financial information through September 30, 2001 demonstrating continued deterioration of its loss experience from that set forth in the rate filing. The Department's actuarial staff reviewed the information submitted by AIICNJ and determined that the additional information was sufficient to allow the Department to review it appropriately. The information shows that the loss and loss adjustment expense ratio, based upon calendar year data, has deteriorated by almost nine points from 1999 to 2000, resulting in a current loss and loss adjustment expense ratio of over 85 percent, as a result of writing newer and higher risk business, and demonstrating the need for an increase in private passenger automobile insurance rates, in light of the recent administrative rate hearing and the pending appeal; and

IT FURTHER APPEARING that, as an alternative to proceeding to withdraw from the 樱花视频 private passenger automobile insurance market, or as an alternative to AIICNJ making a new rate filing, or as an alternative to the Commissioner granting a rate increase which would affect the rates of all AIICNJ policyholders, including good drivers, AIICNJ could restructure its business in such a manner as to provide the opportunity for it to operate successfully in 樱花视频 in the future; and

IT FURTHER APPEARING that such a restructuring would include utilizing another AIICNJ affiliated insurer with a different rating structure to write new business and certain higher-risk business, which have heretofore generated operating losses; and

IT FURTHER APPEARING that American International Insurance Company of Delaware ("AIIC Delaware") is a Delaware domiciled property and casualty insurer and a member of the AIG holding company structure, which has applied for admission to 樱花视频 and has developed a complete business plan and which seeks authorization to write private passenger automobile insurance in 樱花视频; and

IT FURTHER APPEARING that it is in the best interests of the citizens of this State and the policyholders of AIICNJ to maintain a healthy and competitive automobile insurance market, and that the withdrawal of AIICNJ would reduce the choices for coverage currently available to 樱花视频 automobile insurance consumers, diminish the capacity of the market generally and create the potential of unnecessary market disruption; and

IT FURTHER APPEARING that restructuring AIICNJ's 樱花视频 private passenger automobile insurance business as provided herein would provide AIICNJ the opportunity to operate successfully and would be a preferable alternative to continuing proceedings that would inevitably result in the withdrawal of AIICNJ from the market, and is in the best interest of the public;

NOW THEREFORE, IT IS on this 17^th day of December 2001;

ORDERED AND AGREED that:

1. AIICNJ's Withdrawal Plan is deemed complete, but proceedings thereon are suspended for a period of two years from the date of this Consent Order. AIICNJ in its sole discretion may reactivate the Withdrawal Plan by advising the Commissioner of its intention to do so on or before the expiration of this two-year period. If AIICNJ seeks to proceed to withdraw, it shall amend its withdrawal application to update the information previously provided, where necessary and appropriate as determined by the Department. Any amendment or supplement to its withdrawal plan not withstanding, the date of this Order shall remain as the date AIICNJ (and AIIC Delaware, pursuant to paragraph 2 below) have filed a complete plan of orderly withdrawal for the purpose of computation of time including the computation required by N.J.A.C. 11:2-29.5(a).
2. AIIC Delaware is deemed a party to the Withdrawal Plan with the same rights and obligations as AIICNJ. In the event that AIICNJ reactivates the Withdrawal Plan, neither AIIC Delaware's entry into the 樱花视频 private passenger automobile insurance market nor the suspension of the Withdrawal Plan shall be used as a basis to find that the exit of either company after the suspension of the proceedings as provided herein shall cause any greater market disruption than may be found at present, or to require the surrender(s) of the certificates of authority of affiliated insurers pursuant to N.J.S.A. 17:33B-30 and N.J.A.C. 11:2-29.3(c).
3. AIIC Delaware shall be provided with total capital and surplus of $23,107,000, including the monies already on account with AIIC Delaware, to support the transfer of business as outlined in this Order, since this amount is sufficient to satisfy any obligations of the Companies and the surplus protections set forth in N.J.A.C. 11:2-29.5(b), and further because of the suspension of action on the Withdrawal Plan as described above, any other applicable capital, guarantee or special deposit requirements are waived. The Department will issue a Certificate of Authority, consistent with N.J.S.A. 17:17-10 upon confirmation that the capital has been deposited. Upon receipt of the Certificate of Authority, AIIC Delaware shall be authorized and admitted to write private passenger automobile insurance in this State pursuant to the rules, rates and forms filing accompanying its admissions package, which are hereby approved.

4. AIICNJ and AIIC Delaware shall file mutually exclusive underwriting rules, which will provide that AIIC Delaware shall write all new business and a maximum of 25 percent by premium of AIICNJ's existing private passenger automobile insurance book of business, comprised of insureds with policies that meet at least one of the following criteria: (1) policies covering households with two or more moving violations and less than four drivers; (2) policies that provide liability only coverages for all insured cars; and (3) policies that provide bodily injury coverage limits of 50/100 and below for all insured cars. All AIICNJ Insureds shall be offered renewal policies with AIICNJ or AIIC Delaware in accordance with their respective approved rules, rates and forms. Nothing in this paragraph shall prevent AIICNJ and AIIC Delaware from submitting filings to the Department from time to time to amend their mutually exclusive underwriting rules, including but not limited to provide that AIICNJ shall write specifically defined new business.

5. The restructured companies of AIICNJ and AIIC Delaware shall submit a qualified insurer plan to the Department, which sets forth how they intend jointly to meet their calendar year 2002 UEZ goal by September 30, 2002, through voluntary market channels. The parties acknowledge that any new business required to be written by the group to meet its 2002 UEZ goal will be written by AIIC Delaware, and that no UEZ assignments will be made to the group prior to its filing of the UEZ in-force exposure report as of September 30, 2002.
6. Based on the Rate Filing, hearing record and supplemental information reviewed by the Department, AIICNJ is hereby authorized to file manual rates that provide an 8.9percent increase in its private passenger automobile insurance rates, to be comprised of a 15.9 percent liability coverages and a 2.4 percent physical damage coverages rate adjustment as set forth in Rate Filing #002082 and the Department's Recommended Rate Revision dated October 31, 2001, which filing is hereby approved.

7. Nothing in this Order shall prohibit AIICNJ or AIIC Delaware from filing in 2002 an application for a rate change pursuant to N.J.S.A. 17:29A-46.6 and N.J.A.C. 11:1-2 et al., provided however that the effective date of any such changes shall apply to the first renewal of AIICNJ or AIIC Delaware business after the implementation of the rate changes for AIICNJ set forth in paragraph 6 above or the rates approved for AIIC Delaware in paragraph 3 above.

8. Within 15 days of the entry of this Decision and Consent Order, AIICNJ and the Department shall execute and file a stipulation of Dismissal of AIICNJ's appeal of Final Decision and Order A01-148.

Consented to by the Parties as to form and entry.