Sunday, January 13, 2013

0 Millers First lays off 12, continues restructuring

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Posted: Saturday, January 12, 2013 6:45 am | Updated: 7:09 am, Sat Jan 12, 2013.

ALTON - A longtime fixture on top of an Alton hillside laid off 12 employees Friday as it continues working through court-ordered rehabilitation and restructuring.

"It is a continuation of our need to reduce expenses and exposures as the rehabilitation is under way," said George Milnor, president and chief executive officer of Millers First Insurance Co., 111 E. Fourth St. "We're holding our own; we're doing what we can. Our claims activities are proceeding in a normal, orderly manner."

Friday's layoffs leave about 30 workers to handle claims and other operational duties, down from a staff of 55 last July. Over recent years, the company has decreased its workforce as its use of automation grew.

Milnor said the company was hit hard by $17 million to $18 million in catastrophic claims on damage caused by 18 severe storms in the Midwest in 2011 and 2012. Just the devastating storm of April 28, 2012, alone prompted $7.5 million in claims to Millers. There also were six other significant storms in 2012, just through July of last year, Milnor said last summer.

"The historically low interest rates took its toll" on Millers' investments, as a double hit, he said.

In light of last year's drought, the company fortunately has not insured crops in more than 10 years, he said previously.

The company's website (http://www.millersfirst.com) says it insures "tens of thousands of Midwestern policyholders for their personal risk of property and liability losses. Personal auto, homeowners, personal umbrella liability and dwelling fire property and casualty coverage are issued for Millers policyholders in Illinois, Missouri, Wisconsin, and Iowa."

Formerly called Millers Mutual Insurance Association, the company dates to 1877, when a successful flour miller, Capt. David R. Sparks, engaged 12 other millers to found the company. Milnor is Sparks' great-great-grandson, who has been with the company since 1973.

Milnor said the laid-off workers got notices more than a month ago about impending termination of their positions. The company has tried finding positions for the people at other area firms.

Despite the layoffs, the Millers building, once distinguished by its old, neon windmill sign on the hill facing the Mississippi River, is not empty. For years, Millers has housed various tenants, but "prime space with a river view" remains for lease, Milnor said.

A July 2012 order from the Circuit Court of Cook County/Illinois County Department/Chancery Division prohibits Millers from renewing or writing new policies until it restructures and once again is profitable.

Millers' partner, Egisure Insurance of Alton, has about 35 workers and is acting as a broker to offer quotes for replacement life, health and business coverage to customers whose policies are not being renewed in Illinois and Missouri. Egisure is working with Electric Insurance for Illinois, Missouri and Wisconsin customers; and Selective Insurance for Iowa customers, its website says.

Another Miller subsidiary, Millers Classified Insurance Co., is not part of the court order.

"It is holding its own and reducing expenses," Milnor said.

Director Andrew Boron, of the Illinois Department of Insurance, is serving as rehabilitator for Millers, controlling its operations.

Milnor said the state has been helpful in guiding Millers' rehabilitation and restructuring.

"Our relationship with the state of Illinois has been a good and constructive one," he said. "From the beginning, it has had a light footprint in assisting us with their guidance. They have been very gracious in letting us guide our way through the reorganization."

The IDOI had issued an order of conservation for Millers on June 11, 2012, in anticipation of the rehabilitation order. Consequently, insurance rater A.M. Best Co. downgraded Millers financial strength from C++ (Marginal) rating to "E" (Under Regulatory Supervision). It also downgraded Millers Classified Insurance Co., from C++ to C- (Weak).

"The (conservation) order follows the company's severe catastrophe loss activity throughout 2010 into the current quarter, which has severely depleted the capital position," an A.M. Best news release said.

On June 22, Millers' board of directors agreed to start the rehabilitation proceedings and entry of an order of rehabilitation, an IDOI news release said. Boron asked for the entry of an agreed order of rehabilitation in his verified complaint filed by Illinois Attorney General Lisa Madigan.

The resulting order is 10 pages long, and creates an estate of Millers' liabilities and assets. It puts the company's property, contracts and rights of action in Boron's control. He also may remove whatever records or property from Alton headquarters as needed to administrate the rehabilitation.

The rehabilitator can sell or dispose of real or personal property and sell or compromise debts or claims owing to Millers of $25,000 or less; he would need court approval for amounts more than $25,000. He also may sue or defend on behalf of Millers. The company is responsible for paying legal fees related to the rehabilitation process.

Officers and staff cannot transact Millers' "business or disposing of any company property or assets, including books, records and computer and other electronic data" without Boron's written consent. Banks, brokerage houses, financial institutions and other companies are restrained from disbursing or disposing of Millers' accounts or assets.

lweller@civitasmedia.com

Posted in Local on Saturday, January 12, 2013 6:45 am. Updated: 7:09 am.

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