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State Seal Insurance, Office of
In the matter of: AIK COMP  f/k/a ASSOCIATED INDUSTRIES OF KENTUCKY                                       SELECTIVE SELF-INSURANCE FUND
Press Release Date:  August 3, 2004
Contact: 
 

In the matter of:

 

AIK COMP 

f/k/a ASSOCIATED INDUSTRIES OF KENTUCKY                                      

SELECTIVE SELF-INSURANCE FUND

9400 Bunsen Parkway

Louisville, Kentucky 40220-3720

 

 

*     *     *     *     *     *     *

 

 

Whereas, Martin J. Koetters is the Executive Director (the “Director”) of the Kentucky Office of Insurance (the “Office”) and is required by KRS 304.2-100 to enforce the provisions of the Kentucky Insurance Code, KRS Chapter 304, and all other applicable law;

Whereas, the Director is granted authority to regulate the financial solvency of workers’ compensation group self-insurance funds, pursuant to Executive Order 2004-835 dated August 3, 2004;

            Whereas, AIK Comp is an unincorporated association formed in the Commonwealth of Kentucky for the purpose of operating as a group workers’ compensation self-insurance fund;

            Whereas, in 1977, enabling legislation was enacted in the Commonwealth of Kentucky to accommodate qualified employers, permitting them to band together to self-insure their workers’ compensation liability coverage;

            Whereas, on June 1, 1979, AIK Comp was established as Associated Industries of Kentucky Selective Self-Insurance Fund;

            Whereas, AIK Comp is sponsored by Associated Industries of Kentucky, a statewide trade association of Kentucky employers (the “Association”).

Whereas, AIK Comp is a group self-insurance fund authorized under KRS 342.350(4) and organized under 803 KAR 25:026;

            Whereas, 803 KAR 25:026 Section 11 grants the Director the power to direct remedial actions regarding a group self-insurance fund;

            Whereas, the Director has reasonable cause to believe that there has been a material decrease in AIK Comp's assets, surplus, and operating capital in amounts threatening the solvency and on-going viability of AIK Comp;

            Whereas, it is a matter of public record that AIK Comp has had serious deficits to the extent that the Office of Worker’s Claims ordered it to submit a remedial plan by June 1, 2004;

Whereas, AIK Comp has experienced losses since 1997 in excess of those projected in establishing its existing reserves to pay the claims of injured employees of AIK Comp’s employer members.

            Whereas, AIK Comp has a self-reported $35.55 Million Dollar deficient in net worth, after discounting case reserves by $14 Million Dollars.

            Whereas, AIK Comp’s deficit is estimated to grow to be at least $48 Million Dollars by the end of 2004 as a result of additional auditing and actuarial-based reserving and continued adverse loss development;

            Whereas, the Director may order remedial action if (a) the group self-insurance fund is operating significantly in contravention of the basic organizing documents of the group self-insurance fund or is in material violation of this administrative regulation or KRS Chapter 342; (b) The group self-insurance fund is no longer financially responsible and may reasonably be expected to be unable to meet its current obligation to participants or employees of participants for the payment of workers' compensation medical and indemnity benefits; or (c) There has been a significant and adverse change in the administration of the group self-insurance fund;

THEREFORE, pursuant to KRS 342.0011(7), KRS 342.260(1), 342.340, 342.345, 342.347, 342.350, 803 KAR 25:026, Executive Order 2004-835, and all other applicable law, IT IS HEREBY ORDERED that:

1.                  AIK Comp, its officers, directors, trustees, managers, agents and employees shall not dispose or transfer any of the property or assets of AIK Comp or enter into any transactions that are not in the ordinary course of its business, without the prior written consent of the Director.

2.                  AIK Corp, its officers, directors, trustees, managers, agents and employees shall not make any cash, or other, distributions, in excess of FIVE THOUSAND DOLLARS ($5,000) without the prior written consent of the Director.

3.                  AIK Comp, its officers, directors, trustees, managers, agents and employees shall not destroy, remove, or materially alter any records or documents, without the prior written consent of the Director.

4.                  AIK Comp, its officers, directors, trustees, managers, agents and employees shall not release any information regarding its books and records to any person, partnership, corporation or other entity, or any other party, for any use whatsoever, without the prior written consent of the Director.

 

Pursuant to 803 KAR 25:026, Section 11(3)(a), AIK Comp has the right to request a hearing if it is aggrieved by this Order. Such request shall be filed within thirty (30) days after the date of this Order, and shall state the grounds upon which the aggrieved party is relying and the basis for the relief sought.

As of August 3, 2004.

 

 

 

 

Martin J. Koetters, Executive Director

Office of Insurance

 

 


 

 

 

Certificate of Service

 

            I hereby certify that I have mailed and had hand delivered by James York an exact copy of the foregoing to Maurice Turner, CEO, AIK Comp Comp; 9400 Bunsen Parkway, Louisville, Kentucky 40220-3720; and Richard Spears, Chairman, AIK Comp Board of Trustees, Hanover Towers, 101 South Hanover, Lexington, Kentucky 40502, this 3rd day of August, 2004.

 

 

 

 

 

 

Russell Coy II, Counsel

Kentucky Office of Insurance

 

 

 

 

 






 

Last updated: Wednesday, August 04, 2004