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SOUTHERN TITLE INSURANCE CORPORATION FREQUENTLY ASKED QUESTIONS |
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| Question 1: |
WHAT IS THE STATUS OF SOUTHERN? |
| Answer: |
On December 20, 2011, Southern Title Insurance Corporation (“Southern”) was placed in Receivership for rehabilitation or liquidation by Order of the Circuit Court of the City of Richmond (“Circuit Court”). In its Order, the Circuit Court appointed the State Corporation Commission of the Commonwealth of Virginia (“Commission”) as Receiver for Southern. Also on December 20, 2011, the Commission entered its Order appointing Jacqueline K. Cunningham, Commissioner of Insurance, as Deputy Receiver to act on behalf of the Commission in the rehabilitation or liquidation of Southern. The receivership provides for oversight of Southern for the protection of policyholders. |
| Question 2: | WHY WAS IT NECESSARY TO PLACE SOUTHERN IN RECEIVERSHIP? |
| Answer: | The Circuit Court found Southern to be in a hazardous financial condition such that any further transaction of its business would have been hazardous to Southern insureds, policyholders, creditors, and the public. |
| Question 3: |
WHAT DOES RECEIVERSHIP MEAN? |
| Answer: | Receivership is a protective measure established under Virginia insurance law whereby regulatory officials seize control of the company for the protection of its policyholders and creditors. The Commissioner of Insurance, as Deputy Receiver for rehabilitation or liquidation, is given the power to run the affairs of the company in compliance with applicable Circuit Court and Commission orders |
| Question 4: | ARE RECEIVERSHIP AND LIQUIDATION THE SAME THING? |
| Answer: |
No. When a company is placed in liquidation, the State Corporation Commission directs the Commissioner as Liquidator to wind down the company’s affairs and distribute its assets to its policyholders and creditors. When the decision is made to liquidate an insurer, its policies and contracts are typically canceled or transferred to other insurers, and it eventually ceases doing business. Southern is not now in liquidation. |
| Question 5: |
IS SOUTHERN GOING TO BE PLACED IN LIQUIDATION? |
| Answer: |
Concerted efforts are being made to rehabilitate the company so that such action is not necessary. However, it is too early for the Bureau of Insurance or the Deputy Receiver to provide any assurances as to eventual outcomes. |
| Question 6: | WHAT IS BEING DONE TO REHABILITATE SOUTHERN? |
| Answer: |
The Deputy Receiver cannot at this time disclose the details, but a number of rehabilitation measures and options are under serious consideration or are being implemented. |
| Question 7: | HOW WILL I KNOW IF SOUTHERN IS PLACED IN LIQUIDATION? |
| Answer: | In the event that action is taken, notice will be provided to all known policyholders and claimants as required by law and may also be published in one or more newspapers of general circulation. |
| Question 8: |
IS THERE ANY APPLICABLE GUARANTY ASSOCIATION COVERAGE FOR THE POLICYHOLDERS OR INSUREDS OF SOUTHERN? |
| Answer: |
The relevant statutes providing for guaranty fund coverage of Southern policyholders and insureds in applicable states are being reviewed to determine the requirements and procedures necessary for triggering guaranty fund coverage. |
| Question 9: |
WHEN WILL YOU KNOW MORE ABOUT WHETHER SOUTHERN WILL BE REHABILITATED OR LIQUIDATED? |
| Answer: | It is too early for us to speculate about that. We will provide more information on the direction of the receivership as it becomes available. |
| Question 10: | IS SOUTHERN ISSUING NEW INSURANCE POLICIES? |
| Answer: | No. The Circuit Court Order placing Southern in receivership permanently enjoins Southern from writing any new business. |
| Question 11: | WHAT IS THE STATUS OF MY PENDING CLAIM FILED WITH SOUTHERN? |
| Answer: | Southern continues to accept and process all claims filed with the company; however, no claim payments are being made while the Deputy Receiver conducts an evaluation of the company’s financial status. Claimants will be notified when this moratorium is lifted and advised as to the extent to which claim payments may resume. Although no claim payments can be made at this time, the company continues to take corrective or curative actions regarding certain title defects. |
| Question 12: | HOW DO I PRESENT CLAIMS THAT I HAVE UNDER A SOUTHERN POLICY? |
| Answer: |
Claims for coverage may be submitted to Southern by e-mail, fax, or postal mail using the following:
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| Question 13: | DOES THE RECEIVER INTEND TO CANCEL ALL OF SOUTHERN’S TITLE POLICIES? |
| Answer: | No. At this time, there is no plan to cancel all of the policies issued by Southern. |