State Seizes Unlicensed Insurance Company : Consumers: Underwriters Reserve may have sold more than 15,000 bogus policies, regulators say. Firm was insolvent.

An unlicensed insurance company believed to have sold more than 15,000 worthless auto insurance policies was seized this week by the state, Insurance Commissioner John Garamendi announced Thursday.

Underwriters Reserve Ltd., with headquarters in Laguna Beach and other offices in Fountain Valley, Lakeside and Downey, was closed by the state Department of Insurance on Wednesday.

An Orange County Superior Court judge on Thursday named Garamendi conservator of the financially insolvent company, which authorities said had been operating without a license since it opened last summer.

“We stepped in because they were acting in an illegal manner and they were insolvent,” said Garamendi spokeswoman Elena Stern. “We don’t know if they weren’t paying claims, but we may have prevented some abuse before it occurs.”

Stern said the company reported having $7.5 million in assets, but its list of bank accounts, real estate and securities could not be verified. Stern said that, when all questionable assets were subtracted, the company was $1.3 million in debt.

“We are lucky we stepped in when we did,” Stern said. “We now run the company, and we took it over to protect policyholders from any further abuse.”

Stern said that there had not been many complaints filed against the company but that any leftover assets would be returned to policyholders.

“The 15,000 policies is a conservative estimate,” Stern said. “We just got access to all of their records. We believe that, upon closer review, the number is going to be significantly higher.”

Officials for Underwriters ReServe Ltd. could not be reached for comment Thursday. A security guard at the company’s Laguna Beach office said anyone affiliated with the company had been barred from the premises.

The Laguna Beach and Fountain Valley offices operated under the name Antilles Insurance Services Inc.

Stern said 66 unlicensed insurance companies have been barred from the state since 1991.

“These companies leave the victim holding the bag,” Stern said. “Every month they pay into an insurance policy they are told will be there when they need it, and then it’s not. That goes against the definition of what insurance is.”