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Citizens' leaders planned own firm

Documents show a board member of the state-run insurer was involved with company executives in a plan to create a private insurance company.

By JONI JAMES
Published September 27, 2005

TALLAHASSEE - Two months before two key executives at Citizens Property Insurance Corp. were asked to resign amid a plan to launch their own insurance firm, the pair had plotted a similar business plan with one of Citizens' own board members.

Documents obtained Monday by the St. Petersburg Times show that Edward London, a wealthy Miami businessman who left the board Aug. 1, lent his name in June to a business plan looking to raise nearly $21-million to form Citrus Insurance Group.

Citrus intended to become a so-called take-out company, which receives financial incentives to assume higher-risk policies from Citizens, which covers property owners who can't find insurance coverage in the open market.

It's the second time in less than a month that details have arisen about plans among a trio of former Citizens executives to join newly created private insurance firms.

One of those executives, former chief operating officer R. Paul Hulsebusch, resigned Sept. 9 amid allegations he was taking kickbacks, including a $28,095 boutique-brand motorcycle, from vendors he hired to adjust claims after the 2004 hurricanes. The two others, former chief financial officer Jessica Buss and controller Corey Neal, resigned in August after Citizens' general counsel discovered they were pursuing an altogether different take-out plan.

A 48-page pro forma for Citrus listed London as the proposed company's chairman and described Buss, Hulsebusch and Neal, but did not name them, as the group's future president, chief operating officer and chief financial officer.

The plan anticipated assuming 138,000 Citizens policies that would qualify for a take-out bonus if the policies are held for three years.

London and others said Monday that in the end, the plan was quickly scuttled. No investors were signed. London said he never considered the plan a conflict of interest because he would be off the Citizens' board before the proposed company was launched. He said he'd tried, in his three years on the board, to curtail the bonus program because he considered it too generous.

"But if you can't beat them, join them," London said by phone from his Miami office. However, he decided not to go forward because "it wasn't something for me to do at that time. I'm what you call a serial entrepreneur. ... Of 10 things I think about, nine go nowhere. This went nowhere."

A spokesman for Florida Chief Financial Officer Tom Gallagher, who appointed London to the Citizens board, said Gallagher learned of the business plan only after it was dropped. The two are longtime friends and share financial interest in an 18-year-old development project in Highlands County.

"He told Ed, "This would have been a conflict,"' said Tami Torres, Gallagher's communications director. "He believes Citizens board members should be held to the same standards as employees."

Justin Glover, spokesman for Citizens, said Monday that Citizens executive director Bob Ricker never knew of London's take-out proposal or that it involved Hulsebusch, Bush and Neal.

After Buss and Neal resigned, they launched HomeWise Insurance Co. The company is still awaiting approval by state insurance regulators.

--Joni James can be reached at 850 224-7263 or jjames@sptimes.com

[Last modified September 27, 2005, 02:45:31]