A spokesman for troubled American Mutual Group seems to dispute claims by Massachusetts insurance regulators that the company's one remaining profitable subsidiary is for sale.
But without the sale of American Policyholders' Insurance Co., a stock firm, American Mutual's continued corporate existence could be in jeopardy, said Peter Rice, deputy state insurance commissioner. He reiterated a statement by Insurance Commissioner Roger Singer that National Grange Mutual Insurance Co. of New Hampshire is considering a purchase of all API stock.''They need to infuse capital into the situation," Mr. Rice said. ''Whether this (funds raised from a sale of the subsidiary) is enough is what we're going to be taking a hard look at over the next 30 days."
Thomas Snyder, American Mutual vice president, said, "nothing is definitely on the block." He said the company is examining its options and will make a decision within the next two weeks.
The state Supreme Judicial Court Tuesday gave Mr. Singer 30 days to determine if two American Mutual subsidiaries have enough funds to pay long- tail claims stemming from commercial policies - mainly asbestos and medical malpractice insurance - sold years ago. American Mutual Liability Insurance Co. and American Mutual Insurance Co., the two subsidiaries, were ordered to cease writing or renewing commercial and personal lines policies.
A new management team put $263 million into reserves to cover those long-tail risks, but Mr. Singer and the company are concerned that is not enough. The company currently writes about $375 million in annual premiums, 60 percent of it in workers compensation.
Mr. Snyder said the company is now talking to three underwriters for its personal lines business. Arbella Mutual Insurance Co., a Kemper Group spinoff in another of Massachusetts' unusual automobile insurance episodes, is said to be one of those companies.
John Mooney, president and chief operating officer of Arbella, confirmed that Arbella wants to take over all of American Mutual personal lines business in Massachusetts. "We think it's good for Arbella . . . when we look at all the financial data," he said.
He added that the transfer could be completed within a week.
Mr. Snyder said American Mutual would reform the two troubled firms into agencies to continue selling insurance. The two mutuals and API had been selling similar lines of commercial and personal lines insurance, but the two troubled firm's commercial clients can not be transferred to API, Mr. Snyder said.
API had also reinsured risks taken by the other two subsidiaries, so there is no problem with claims on policies written since Jan. 1, 1988. One quarter of that risk each was reinsured with Aetna Insurance and American Re, Mr. Snyder said.
Mr. Rice said the 20 percent of American Mutual's which is personal lines - 13,000 homeowners and 30,000 automobile policies - should be picked up by another company. But if they are not, he said, replacing the auto coverage could put strains on the state's already troubled auto market.
''We're confident that can be avoided, he said.