Only the hum of central air-conditioning broke the silence when Doug Symons recently led a quick tour of the Indianapolis office where his Superior Insurance Group once employed about 180 people.
Rows of gray cubicles sat empty. Boxes filled with old claims and underwriting files lined the aisles.
"This," Symons said as he waved his arms around, "is what an empty office looks like waiting to be filled."
Those bare cubicles could fill up with dozens of new employees and provide an economic boost to the Keystone Avenue corridor if some of Superior's insurance companies defy long odds and emerge from court-ordered rehabilitation that began in 2003.
New York-based ICM Insurance Co. plans to buy high-risk auto insurers Pafco General Insurance Co. and Superior Insurance Co. from Symons' group and start writing new business by the end of this year, according to Symons. Officials with ICM, a shell insurer backed by a group of investors, could not be reached for comment.
Symons said ICM plans to base operations out of Superior's headquarters, which sit off Keystone north of 46th Street. But before ICM can gear up to expand the companies, they must complete a rehabilitation spurred in part by a dangerous mix of higher-than-normal losses and low cash levels.
Rehabilitation normally means death to the insurer.
Under the process, insurance regulators ask a court to step in to protect the interests of policyholders. The company stops writing new business, and regulators take over management.
In Pafco's case, the state Department of Insurance contracted with the private, not-for-profit Indiana Insolvency Inc. to run the company.
Rehabilitation buys time to determine whether a company can be saved or should be liquidated, said Liz Lovette, Indiana Insolvency's executive director.
About 90 percent of the time, the insurer that goes into rehabilitation liquidates, according to Tom Kleinschmidt, an Indiana Insolvency investment manager. Generally, these companies have piled up too many liabilities, and have too few assets.
In those cases, the company's assets are sold, policies are canceled, and the company dissolves.
Pafco may buck this trend. The company was struggling when it entered rehabilitation, Kleinschmidt said, but was not a lost cause.
"Things were salvageable when we got there," said Kleinschmidt, who has worked at Superior Insurance Group headquarters since Pafco entered rehabilitation.
Superior's situation is murkier, although Symons is optimistic it can successfully complete rehabilitation.
Pafco and Superior Insurance Co. both sell non-standard auto insurance, policies meant for people who cannot buy insurance in the conventional market because of their driving record, credit score or other problems.
At their peak around 1998, the companies brought in $330 million in premiums annually and worked with more than 6,000 independent agents in 20 states, said Symons, whose Superior Insurance Group is a subsidiary of Indianapolisbased insurance holding company Symons International Group Inc.
Soon thereafter, Symons International started posting multimillion-dollar losses. The company reported an $88 million loss for 2000, including a $37 million loss in its non-standard auto business.
The higher-than-normal losses ate away at Pafco's surplus, according to Mike Venezia, a financial analyst for the New Jersey-based ratings firm A.M. Best Co.
That surplus, the cash cushion used to pay claims, dropped to a level that concerned regulators, Kleinschmidt said. Worse, some of that surplus was tied up in real estate and not liquid.
Florida insurance regulators placed Superior Insurance Co. in rehabilitation in August 2003. Indiana did the same with Pafco and a sister company, crop insurer IGF Insurance Co., a couple of months later.
While Pafco and Superior remain in rehabilitation, IGF was liquidated in late 2003.
"It was very clear from the start that IGF would be liquidated," Lovette said. "Pafco, on the other hand, was questionable."
Pafco survived for a number of reasons. In addition to being in better shape to start with, the company over the past two years has cut costs and carefully monitored expenses, Kleinschmidt said.
"For the most part, things have fallen into place," he said. "The investments have stayed stable, the claims have been paid off in a timely fashion and for good values, and some of the collections that may have been problematic have worked out."
A skeleton staff of 15 people currently works at Superior Insurance Group's headquarters. Some process claims for Indiana Insolvency. About five people are working for ICM, preparing to resume operations, Symons said.
Pafco has a hearing before a Marion Superior Court judge late next month, during which the judge will decide whether the company is ready to emerge from rehabilitation. If that hearing unfolds as Kleinschmidt expects, he thinks Pafco will have enough money to pay all policyholders and creditors.
"Once we pay everyone off and there's a dollar left over, then we've done our job and that goes back to the owner," he said.
Florida regulators have given no indication when Superior Insurance Co. might leave rehabilitation, but Symons thinks it's ready.
"We believe it should come to a conclusion sooner rather than later," he said.
Symons expects ICM to file paperwork in the next few weeks with insurance regulators to begin the process of buying Pafco and Superior.
ICM has no other insurance companies, he said. A group of investors bought the company a few years ago, ran off the old business, and kept the licenses to sell insurance, Symons said. He declined to identify the investors.
"It's got capital it's not using, and it wants to get into writing new business," said Symons, who does not plan to become an employee of the buyer.
If the deal goes through, Superior Insurance Group will sell the insurance companies to ICM in exchange for ICM stock.
Symons said ICM wants to hire back some of Superior's employees.
The rebirth, he said, could generate about 100 jobs over the next two years, most of them at the Superior office on Keystone. The deal could create jobs in customer service, marketing and management and for claims adjustors.
He said the company wants to locate in Indianapolis to use the office space and operating systems already available.
If ICM succeeds in acquiring the insurers, it will have licenses in about 35 states, Symons said.
Lovette says suitors like ICM rarely emerge to buy insurers in rehabilitation. But she said the Superior companies appear fortunate to have found a white knight.
"ICM ... truly appears to be legitimately interested," she said. "We've had several meetings with them ... and it looks very promising."