Court finds New Century insolvent
A Texas property and casualty insurance company, New Century Insurance Co., was placed in liquidation and found insolvent following a September 3 decision by a Travis County District Court. The court named Texas Insurance Commissioner Cassie Brown as liquidator, who named FitzGibbons and Co. Inc. as special deputy receiver to manage the process.
The Texas Department of Insurance (TDI) determined that New Century no longer had adequate admitted assets to meet its liabilities and fell below the state’s minimum capital requirements. The court thus ordered that all New Century policies be cancelled effective 11:59 p.m. on October 3, 2025.
Until then, policyholders must continue paying premiums, which the liquidator will collect.
Safety net for policyholders
The Texas Property and Casualty Guaranty Association (TPCGA) will step in to pay claims that otherwise would be paid by New Century. Under state law, the guarantee fund is a safety net for eligible policyholders when an insurer fails.
Normally, the guarantee fund pays a maximum of $300,000 on a claim, though not all claims are paid. Over-limit balances, punitive damages, and reinsurance liabilities are excluded. Policyowners are encouraged to stay in touch with the guarantee association for notices, as the claims process will be separate from New Century’s prior business.
Financial troubles are years in the making
Regulatory reports indicate that New Century had been facing a deterioration in its finances for several years. In the first half of 2025, the company recorded a net loss of $279,000 and a policyholder deficit of minus $6.35 million, according to Best’s Financial Report.
These losses came on the heels of a difficult 2024, during which the insurer incurred an $11.4 million loss, making its surplus in the red even deeper. The loss followed a sharp plunge in 2023, when the company’s surplus fell from $6.04 million to negative $6.07 million.
New Century only wrote in Texas and had not previously been rated by AM Best since 2014, when its parent, RVOS Farm Mutual Insurance Co., had requested withdrawal after its financial strength was diminished due to higher underwriting losses caused by extreme weather and fire exposures.
Broader effect on the insurance industry
The New Century liquidation testifies to mounting stress on domestic insurers that are subject to natural disasters. A previous Best’s Special Report indicated that 20 insurers between 2019 and 2024 were impaired, with the majority of failures occurring in Florida and Louisiana due to hurricanes and flooding.
Texas, however, is also seeing similar challenges in increasing numbers. Hailstorms, windstorms, and wildfires are piling up expenses for carriers with few diversifications. Small insurers like New Century with a modest broad capital base of national companies are even more vulnerable.
What policyholders should know
For current policyholders, the key date is October 3, when all insurance will be cancelled. Current New Century policyholders must purchase a new policy before the cutoff date to avoid a lapse in coverage.
Policyholders who have claims outstanding can expect them to be taken over by the Texas Property and Casualty Guarantee Association, which will verify eligibility and pay out. Due to limitations on the guarantee fund, some clients, similar to those relying on the fund, will not be reimbursed in full, especially for claims above $300,000.
The TDI advises that the affected customers continue paying premiums until the cancellation is effective and seek advice from the guarantee association and insurance agents regarding replacement coverage.
Warning signs for the future
Experts warn New Century’s failure may not be an isolated case. As disasters driven by climate become more frequent and severe, other small- and mid-sized insurers may be at risk too. Texas, which is already vulnerable to hail and wildfire losses, is facing the same kind of strain that unnerved insurers in Florida and Louisiana.
Industry experts opine that there are likely to be more consolidations, liquidations, or withdrawals from riskier markets if weather-related losses keep pacing at this rate. For homeowners and business owners in Texas, this could mean fewer choices and higher premiums in the future.
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