Highlands Insurance Company (UK) Limited - In Administration

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Background

The Company is a wholly owned subsidiary of Highlands Holdings (UK) Limited, which in turn is wholly owned by Highlands Insurance Group, Inc. (“HIGI”), a corporation organised under the laws of the State of Delaware, USA. On 31 October 2002, HIGI (together with several subsidiaries) filed a petition for relief under Chapter 11 of the United States Bankruptcy Code. HIGI’s Bankruptcy Plan became effective on 31 March 2003.

The Company has extensive reinsurance arrangements with Highlands Insurance Company, an insurance company organised under the laws of the State of Texas, USA (“HIC”), which is also a subsidiary of HIGI. In February 2002 the Texas Department of Insurance placed HIC under a supervisory order due to its financial condition. On 6 November 2003, HIC was placed under a Rehabilitation Order by the Judicial District Court of Travis County, Texas (the “Texas Court”) and a Receiver, the then Texas Commissioner of Insurance, was appointed to oversee the management of HIC. On 30 January 2004, the Permanent Receiver appointed Prime Tempus, Inc. as Special Deputy Receiver (“SDR”) to oversee the management of HIC. On 24 July 2006, a proposed rehabilitation plan (the “HIC Plan”) was filed in the Texas Court by the SDR.

Summary of business written in the London Market

A summary of the business written by Highlands group companies in the London market is as follows:

  Period Description
1 1972-1975 HIC, through its unincorporated London branch, wrote business as part of an underwriting pool known as “Tower X” with London & Edinburgh Insurance Company Limited and American Home Assurance Company. Tower X was the successor to the old underwriting agent Tower Underwriting Management Limited (“TUM”). The Tower X pool wrote all classes or marine, aviation and non-marine business. HIC’s London branch also wrote similar business through Highlands Underwriting Agents Limited (“HUAL”), a new underwriting agency organised by HIC.
2 1975-1977 In 1975 the capacities of Tower X and HUAL were combined to form a new underwriting pool known as the “HUA Pool Account”. This pool continued writing business until the end of 1977.
3 1978-1982 HUAL underwrote excess of loss business on behalf of HIC only. This business became known as “HUA P A/C”
4 1982-1994 The Company, which was incorporated on 18 November 1974, began writing business in 1983 and between that date and 1994 the Company predominantly wrote London Market and international excess of loss business.
5 9 October 1986 The business written by HIC’s London branch between 1978 and 1982 (reference 3 above) through HUAL was, as a matter of English law, transferred to the Company pursuant to section 51 of the Insurance Companies Act 1982 (the “1986 Transfer”). In return for the transfer, HIC entered into a 34% quota share reinsurance treaty in relation to the run off of these HUA P A/C liabilities.
6 29 December 1988 The business written by HIC’s London branch between 1972 and 1977 (reference 1 & 2 above) through Tower X and HUAL was, as a matter of English law, transferred to the Company pursuant to section 51 of the Insurance Companies Act 1982 (the “1988 Transfer”, together with the 1986 Transfer, the “Section 51 Transfers”). In return for the transfer, HIC entered into two quota share reinsurance treaties pursuant to which HIC reinsured the Company in respect of 100% of the transferred business.
7 January 1994 The Company ceased underwriting new and renewal business and has since then been primarily involved in the agreement of claims and reinsurance collections.
8 1 November 2003 PRO was appointed to manage the run-off of the Company’s business.
9 25 October 2007 The directors of the Company applied to the High Court of Justice in the United Kingdom for an Administration Order
10 1 November 2007 By Court order the Company was put into Administration and Dan Schwarzmann and Mark Batten were appointed Joint Administrators of the Company.

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Highlands Insurance Company (UK) Limited - In Administration
Bruton Court
Bruton Way
Gloucester
GL1 1DA
Registered No: 1190948