Glacier General Board Ousted; Dividend Cited

The official overseer of insolvent Glacier General Assurance said Friday that he had removed the firm’s directors after learning that they approved a $1.1-million dividend payment.

The Montana company has figured prominently in a number of lawsuits related to huge losses in allegedly fraudulent mortgage transactions. Bank of America, which lost $95 million in the mortgage deals, said $89 million in bad loans that it handled were insured by bonds written by Glacier’s California representative.

Glacier’s directors are founder and President John Hayden, his three children and Chief Financial Officer Mervin Selle.

Benjamin Neff, a Los Angeles insurance attorney whom Montana authorities named rehabilitator for Glacier, said: “I became a little concerned they paid over $1 million when they knew or should have known they were in financial difficulties.”

The company’s year-end financial statements indicated serious problems that should have precluded any dividend, he said.

Neff said Glacier was paying all “legitimate” claims but is not honoring more than $200 million in financial guarantee bonds like those backing the Bank of America mortgages. He said he doubted their validity.

Scores of investors stand to lose millions of dollars on defaulted loans backed by the Glacier bonds.

Hayden, reached at Glacier’s California office in Tustin, would not say who Glacier’s shareholders are and declined to discuss Neff’s action.

In Missoula, Mont., where the company is headquartered, his daughter, Deborah Hayden, said the dividend was used to pay a longstanding debt to former stockholders.

California insurance authorities in February permanently barred Glacier from doing business in the state. Last month, an Orange County court declared the firm insolvent and ordered its assets seized by the state.