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Illinois' Vanishing Frontier |
Frontier Insurance Group is making headlines once again. Reeling from years of underpricing in the med mal business, Frontier is terminating its medical malpractice underwriting operations nationwide.
Frontier's financial woes are primarily the result of their early-1990's expansion campaign, which included offering unrealistically discounted premiums to Illinois physicians. While some ISMIE insureds were attracted to Frontier's bargain basement rates, a company-wide $187 million net loss forced Frontier to raise med mal rates an average of 30% in 1999. In spite of a sell-off of its ailing subsidiaries, Frontier still suffered a $79 million loss for the third quarter of 2000.
Recently, Frontier's stock has been languishing at less than $.30 per share, and the New York Stock Exchange has initiated a procedure to de-list Frontier for failure to maintain a minimum $1 share price and market capitalization of at least $50 million. In a recent ratings review, A.M. Best company downgraded Frontier Insurance Group to a C++.