Financial institutions, including Insurers, are considering the potential impact of the Silicon Valley Bank’s (“SVB’s”) insolvency. SVB and its parent holding company have provided funding and debt financing to InsurTech Insurers and other venture investment firms. Some of those Insurers have already publicly announced the extent to which the SVB Insolvency has had an impact. The full impact likely will continue to unfold in the coming weeks and months.
How and why was SVB seized by State Bank Regulators?
On Friday, March 10, 2023, pursuant to California Financial Code section 603, SVB, located in Santa Clara, California, was placed into Liquidation by its state regulator, Clothilde V. Hewlett, the California Commissioner of Financial Protection and Innovation (“California Bank Regulator”). The Liquidation Order stated that the Bank cannot be reasonably rehabilitated and that it “would be contrary to safe and sound banking for the Bank to resume business.” The California Bank Regulator also entered an Order Taking Possession of Property and Business finding that the Bank is insolvent (the “Taking Order”). As a result, the California Bank Regulator appointed the Federal Deposit Insurance Corporation (“FDIC”) as the receiver of SVB.
