Serio on Bickford

 

Steve:

 

The large pile of reading material that accompanied me on my summer encampment to Block Island included the May 12th edition of the Insurance Advocate (among a number of other editions in my quest to get up to date). I especially like to read Peter Bickford’s Insight columns when I do pick up the Advocate; somehow, though, I seem to get more out of it when I am reading it while sitting on a deck overlooking the Atlantic.

I enjoyed both the Block Island sunrise on one particular morning and my discovery of the rather coincidental placement of Peter’s commentary on the ineffectiveness of the Department of Financial Services’ management of the state Liquidation Bureau–and particularly his complaint that “the idea of actually managing a business is simply alien to [New York’s] liquidators”–next to an advertisement for Interboro Insurance Group.

Those responsible for laying out the Insurance Advocate can be excused if they could not appreciate the sheer artistry of their work, but regular readers would definitely “get the joke” of having a searing indictment of the Bureau followed by an advertisement for one of its greatest successes.

For those who may not remember, Interboro was once a troubled company which landed in the hands of the Insurance Department (as the predecessor to the DFS). Contrary to Peter’s assertion of the “Bureau’s continuing inability to understand the basics of the statutory charge to the receiver, particularly regarding the receiver’s statutory role as rehabilitator,” the Liquidation Bureau has always understood its mission and oftentimes has even exercised the kind of intestinal fortitude necessary to try rehabilitations, or try rehabilitations at the location of the company rather than at the Bureau, or work out reinsurance deals to promote and foster rehabilitations, among other seemingly novel ideas. Not all rehabilitations work out as well as that in Interboro: some are necessary steps towards inevitable liquidation, and some start with good intentions but lose the battle against time. Still other rehabilitations, like Interboro, serve as catalysts for achieving the priceless amalgam of protecting policyholders or claimants and returning, under its own power or with the assistance of outside capital, an insurer to the marketplace.

The context of Peter’s criticism is “historical” as in the Bureau has never been able to appreciate the difference between rehabilitation and liquidation, and has always done a poor job in managing both functions. You don’t have to take my word for it that such is not and has not been the case: just read the advertisement on page 9 of the May 12th edition, or think of Empire Mutual, or consider the stability that came with the “soft landing” of Frontier rather than the “scorched earth” (his words) approach that the Bureau allegedly applied to each and every rehabilitation.

Don’t think about Executive Life of New York, brought into rehabilitation under very unique circumstances, whose proverbial tires were kicked more often than the used car that looked good outside but had issues underneath, only to be discarded by those who may have shown an initial interest. It is, at best, very much an anomaly in the rehabilitation or liquidation worlds and certainly not the example of how these transactions have been “historically” managed by NYSID/NYSDFS.

Peter Bickford’s contributions to the Insurance Advocate are very valuable and his insurance expertise is held in the highest regard by the many of us who have been fortunate enough to work, or even argue, with Peter, and have certainly derived benefit from both of them. Sometimes, though, even the best of us and our passion for a subject or view of an issue can get tripped up by something as simple as the placement of an ad in a magazine. I just found that irony to be as sweet and enjoyable as my surroundings when I saw it.

Gregory V. Serio Superintendent of Insurance State of New York 2001-2005