SACRAMENTO — State insurance regulators have seized control of Golden State Mutual Life Insurance Co., a financially struggling company that has primarily served the African American community for the last 84 years.
The Los Angeles company, which has been losing money for six consecutive years, has agreed to immediately stop selling any new policies, state officials said Wednesday.
The state takeover shocked African American political leaders. "Golden State Mutual is a revered community institution," state Assembly Speaker Karen Bass (D-Los Angeles) said. "My grandfather worked there." At the time, she said, it was "probably the only company in the Los Angeles area that would provide insurance to African Americans."
Bass vowed "to do whatever we can to restore this institution to the control of the community."
Larkin Teasley, Golden State Mutual's chairman and president, was not available for comment, and a company spokeswoman said no statement would be forthcoming from management.
Regulators stepped in after convincing a Los Angeles County Superior Court judge that the insurer's reserves had run dangerously low. By law, the state insurance commissioner has the power to reorganize and revitalize the company -- much as with a bankruptcy for corporations -- or he or she can liquidate it.
"For the protection of its policyholders, the company has been seized to prevent continuing financial deterioration," state Insurance Commissioner Steve Poizner said. As Golden State Mutual's legal "conservator," Poizner has sole authority under state law over all company business activities and assets.
State Department of Insurance examiners, who said they had been monitoring Golden State Mutual closely for a number of years, reported that the insurer was losing about $200,000 a month and was expected to run out of money by year's end.
According to court documents, state law requires that Golden State Mutual have at least $5 million in capital and surplus funds to pay claims and operating expenses. But as of June 30, the company had only $909,443, insurance examiners said.
Golden State Mutual, which started in a cubicle-size office on Central Avenue with $17,800 in capital in 1925, now offers a wide variety of financial products, including life, burial, disability and mortgage protection insurance.
The loss of Golden State Mutual is a sad event for Los Angeles' black community, said Cecil Fergerson, a retired curator of modern art at the Los Angeles County Museum of Art.
