Apetrop USA reinsurance expert joins with VT commissioner to create new insurance market, jobs and revenue
BRATTLEBORO, VT, FEBRUARY 19, 2014 – Once again, Vermont is showing itself to be an innovator and leader in the insurance and financial sectors as Gov. Peter Shumlin has signed the Legacy Insurance Management Act (LIMA) following its passage by Vermont’s legislature last month.
LIMA represents the first instance of US legislation enabling the transfer of closed blocks of commercial insurance and reinsurance policies, creating for the first time a legal and regulatory framework and marketplace for such transfers. The act augments an already progressive insurance environment in Vermont, which has long been known as the pioneer and leader in facilitating the creation of captive insurance companies, with more that 1000 such entities currently registered in the state.
In addition to fulfilling a need in the global insurance market and creating new investment opportunities, LIMA will also lead to the creation of new public and private sector jobs and revenue to the state. LIMA was the brainchild of Anna Petropoulos, an expert in the global insurance/reinsurance industry and President of Apetrop USA, and Susan L. Donegan, Commissioner of the Vermont Department of Financial Regulation (DFR).
“A European insurer approached me wanting to divest itself of its portfolio of legacy US liabilities. I looked for a solution that benefitted everyone and LIMA was the result,” said Ms. Petropoulos, of ApetropUSA. “Then it was just a matter of turning this vision into a reality. The legislators and business community in Vermont are innovators in the insurance and financial sectors, so it made perfect sense to work with them to fulfill this need in the global insurance/reinsurance industry. For their efforts, the state will benefit through the creation of new jobs and revenue.”
LIMA enables a non-admitted insurer from any part of the world to transfer closed blocks of business — commercial insurance policies and/or reinsurance agreements protecting underlying American liabilities that have continued exposure to claims — to an admitted insurer or other entity domiciled in Vermont which then takes over the obligations to policyholders. No personal insurance, such as life, health, auto or homeowners, or workers’ compensation, is involved. The Act provides regulatory oversight of both the transaction and claims management of the transferred business, where previously there had been none. In fact, the DFR will examine each transaction as a unit, not as part of a much larger company, developing a set of oversight regulations that take into account the specific conditions of each transaction.
Inherent in the creation of this type of transaction was the concern to protect American policyholders. LIMA accomplishes this goal by specifying that any transfer approved by the Commissioner has the effect of a statutory novation, meaning that the legal responsibility for a policy changes hands.
Colleen Murphy, an attorney with the law firm Goldberg Segalla who worked closely with Ms. Petropoulos on the development and passage of LIMA, explains the process. “Let’s say there’s a German insurer with an old book of policies covering US asbestos liabilities. Although the policies may be decades old they might still have long-tail or legacy claims. The insurer doesn’t want to employ specialists in US liability claims and wants to close its books. They simply don’t want that US business anymore. Before LIMA, there was no way for them to transfer this business out of Europe. Now, under LIMA an Arizona company that’s interested in buying those claims could establish an entity in Vermont and proceed with the transfer of that business.”
Ms. Murphy, who worked closely with her colleagues Jim Wrynn, the former Superintendant of Insurance for the State of New York and Clive O’Connell, who heads the London office of Goldberg Segalla, said further, “The benefits for investors can be significant. Companies wishing to transfer business are willing to pay a premium for the finality that a transfer brings. Transferred reserves can be invested and efficient claims handling by Vermont-based experts can bring additional savings. Policy holders benefit also — instead of having to trek around the world to collect from ancient policies, they can recover from a U.S. based and regulated entity and will have their clams handled by proficient U.S. claims adjusters, again overseen by Vermont’s regulators.”
“Along the way,” Ms. Murphy continued, “there are people working on this transaction in the DFR, and in the private sector as actuaries, accountants, lawyers, and others who are all needed to get the deal done.”
Ms. Murphy brings a unique perspective to the development of LIMA calling on 20 years of experience handling regulatory and contractual matters in the insurance/reinsurance industries, as part of Goldberg Segalla’s leading global insurance practice. Ms. Murphy counsels and defends clients including major insurers and reinsurers, insurance agencies and brokers through regulatory investigations, licensing matters and compliance issues.
About Apetrop USA
Apetrop USA, Inc., founded in 2010 by Anna Petropoulos, is a consulting and advisory service counseling insurers, reinsurers and other investors in the insurance/reinsurance sectors on acquiring or selling blocks of insurance business under the recently-passed Vermont Legacy Insurance Management Act (LIMA).
Apetrop USA can assist clients in all aspects of the LIMA transfer process, including special-purpose entity organization, regulatory compliance, transfer plan negotiation and documentation, identification and notification of affected parties and post-transfer claims management.
In addition to LIMA-related advisory and consulting services, Apetrop USA offers claims and portfolio management services and reinsurance collections services to clients in the United States, UK and Europe. Apetrop USA also provides other professional services to clients in the insurance and reinsurance sectors, including run-off, trapped cash recovery and technical audit services. For more information, visit www.apetropusa.com.
About Anna Petropoulos
Anna Petropoulos founded Apetrop Ltd., a service provider to the insurance and reinsurance industry based in the UK, in 1999 and has more than 30 years’ experience in the London and international markets gained with risk carriers and brokers. Apetrop Ltd. was at the forefront in the successful management of portfolio loss transfers, discontinued lines and accelerated closure. Anna founded Apetrop USA in Brattleboro, Vermont in 2010 and is now a permanent resident of the United States with a primary focus on Apetrop USA.
Due to her extensive knowledge of the successful management of portfolio loss transfers and other types of accelerated closure, Anna Petropoulos has spearheaded the introduction of LIMA as an economic catalyst for Vermont.
About Goldberg Segalla
Goldberg Segalla is a law firm 180 lawyers strong, with 12 offices in the United States (spanning New York, Illinois, New Jersey, Pennsylvania, and Connecticut) and in Europe (in London, where the firm operates as Goldberg Segalla Global LLP). It counsels and protects the interests of regional, national, and international clients, including a number of Fortune 100 companies, in a wide range of industries. Goldberg Segalla handles all forms of dispute resolution and provides proactive legal and regulatory counsel that helps clients minimize and manage risk in a broad array of areas.
Founded in 2001, the firm is proud to have grown completely organically to be ranked on the National Law Journal’s NLJ 350 list of the largest law firms in the United States. In addition, Goldberg Segalla has been recognized by its clients and peers — as well as by the National Law Journal, LexisNexis, Reinsurance magazine, the Minority Corporate Counsel Association, and others — in areas such as reliability, innovation, commitment to diversity, and prominence in key practices and industries. To learn more, visit www.GoldbergSegalla.com.