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MutualAid eXchange has been liquidated by the Kansas Commissioner of Insurance after the District Court of Shawnee County declared the company insolvent.
The court ruled MAX to be insolvent on August 22, two weeks after the company’s board of directors consented to an Order of Rehabilitation. After further evaluation of the company’s solvency, the court determined that liquidation is necessary to pay outstanding liabilities.
The court found that MAX suffered consistent losses in underwriting, lacked reinsurance and had a decreasing surplus, which posed a risk to policyholders and creditors.
MAX was established in Overlard Park, California in 2001. The company focused on insurance for homeowners and farmers and offered products to mutual aid and faith-based organizations. This company has licenses in 28 different states.
MAX is expected to write about $30 million worth of homeowners’ premiums by 2022 and approximately $9.4 millions in farmowners. MAX has approximately 30,000 insurance policies across the country, including 1,390 Kansas-based policies, according to an announcement from Kansas Insurance Department.
MAX’s financials were on shaky ground for several years. In 2019, AM Best withdrew MAX’s ratings at the company’s request while noting company’s operating performance had been volatile, driven mostly by weather-related events.
“Despite expanding into new states in recent years, MAX’s geographic concentration in the Midwest and Mid-Atlantic states exposes its results to weather-related losses,” AM Best wrote at the time.
MAX’s performance improved in 2020 when the company recorded net income of $1.7 million, according to NAIC figures. MAX barely broke even with a $101,000 net profit in 2021, and in 2022 it recorded an operating loss of $804,000.
Kansas Insurance Commissioner Vicki Schmidt said in a statement that the “company fell victim to a very tough reinsurance market and catastrophic storms throughout the nation.”
As Commissioner, Schmidt will serve as MAX’s liquidator. Jodi Adolf, Bruce E. Baty and Bruce M. Baty have been named as special deputy receivers.
According to the liquidator’s order, any policies that are in force at the time an order is issued for liquidation will be cancelled whichever comes first: (1) thirty days after the entry of liquidation orders; (2) when the coverage expires on the policy or (3) once you replace the coverage by another insurance provider or terminate the policy.
MAX policyholders will have until the 23rd of August 2024 to file a claim proof. KID advised that policyholders who have a MAX claim and would like to be covered by an insurance fund or guarantee association should contact the relevant fund to find out if a Proof of Claim is required.
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Kansas
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