A Pennsylvania insurance company’s financial reports – noting a 71% decrease in its policyholder surplus in the last year and nearly $111 million in net losses for the second quarter – have raised “substantial doubt about its ability to continue” to operate, according to Virginia insurance regulators.

Lincoln General Insurance Co., based in York, Pa., reported in its June quarterly statement to Virginia regulators that it had a net loss of $110,966,613.

The company also reported that its policyholder surplus decreased from $142.9 million July 1, 2008, to $41.7 million last July.

The Virginia State Corporation Commission Bureau of Insurance intends to suspend the company’s license to operate in Virginia after Nov. 14 if the insurer cannot resolve the potentially hazardous condition to policyholders, according to Virginia insurance records, filed Aug. 31.

The Order to Take Notice calls the situation “a growing concern.”

This story originally appeared in the November 2009 print edition of Insurance & Financial Advisor.