Guardian Insurance Takes Over Troubled Real Legacy Insurance Company

Lt. Gov.-elect Tregenza Roach. (File photo by Barry Leerman for the V.I. Legislature)
Lt. Gov.Tregenza Roach. (File photo by Barry Leerman for the V.I. Legislature)

Troubled insurance company Real Legacy Assurance, the subject of eight V.I. federal lawsuits and subject to regulatory action in Puerto Rico, has been transferred to Guardian General Insurance Company.

Guardian General Insurance is licensed in the U.S. Virgin Islands and operates under the trade name NEMWIL.

“Anyone who currently has a Real Legacy AARP-VI policy, is now covered by NEMWIL and will soon receive an Assumption of Risk endorsement, which will, in writing, change their insurance company from Real Legacy to Guardian General Insurance Company Limited Trading As NEMWIL.” Lt. Gov. Tregenza Roach said in a statement.

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Under V.I. law, the lieutenant governor oversees insurance regulation.

As Real Legacy policies are renewed and as new policies are issued, the policyholder will receive a policy directly from Guardian and any losses, claims or damages that took place after Nov. 15, 2018 are now the responsibility of Guardian, according to Roach. It is not clear from the statement what is happening to claims prior to that date, such as remaining hurricane-related claims. Officials have consistently said all valid claims will be paid. All of the eight V.I. lawsuits complain adjusters undervalued damage. One has been settled.

Real Legacy was domiciled in Puerto Rico and therefore was under the primary regulation of the Puerto Rico Commissioner of Insurance. The Puerto Rico Commissioner of Insurance placed Real Legacy into rehabilitation to try to improve the company’s operations and strengthen the company financially. If the company cannot be rehabilitated, then Real Legacy will be liquidated.

“My office is making every effort to work cooperatively with the Puerto Rico Commissioner of Insurance on behalf of U.S. Virgin Islanders in this matter,” Roach said.

This is the latest in several developments with Real Legacy. In October, then- Lt. Gov. Osbert Potter announced there may be a problem with a foreign insurance company and said the V.I. government may take regulatory action against the company.

Eight separate suits have been filed against Real Legacy Insurance in the U.S. Virgin Islands since the beginning of September, 2018.

In October, Potter said “over 94 percent of this foreign insurance company’s Hurricane Irma and Hurricane Maria claims in the U.S. Virgin Islands have already been paid” and the territory was working with the company’s “primary regulator” to protect V.I. policyholders.

That same month, the Puerto Rico Insurance Commissioner was granted a “Rehabilitation Order” for Real Legacy because of the need to reorganize the operations and restructure the financial condition of the company, without closing the company or placing it in liquidation.

“The Puerto Rico Commissioner of Insurance has taken over the operations of the company to protect the interests of policyholders with claims, creditors of the insurer, and the general public,” then- Lt. Gov. Osbert Potter said at the time.

The Puerto Rico Insurance Code requires that the rehabilitation of an insurer provides fair and equitable treatment in the payment of all claims, subject to a review by the Puerto Rico court in three months to determine if further action is required. Therefore, U.S. Virgin Islanders’ Real Legacy claims will be treated with the same level of priority as those of Puerto Rico residents. Any customer that is holding an outstanding claim can come to the Division of Banking, Insurance and Financial Regulation for assistance,” Potter said.

Potter said this bankruptcy-like action will not impact the U.S. Virgin Islands’ Insurance Guaranty Fund. That fund acts as a kind of government backstop in case private insurance companies fail and fail to pay. The fund is currently funded at $10 million dollars, reduced from $50 million to allow the government to put the rest of its funding into the current year’s budget.

The adjuster improperly omitted and undervalued covered losses from wind damage caused by Maria to the Plaintiff’s Property.

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