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State wants troubled insurers shut down

CFO Tom Gallagher says Poe Financial's three companies should close to protect customers.

By HELEN HUNTLEY
Published May 10, 2006

Florida Chief Financial Officer Tom Gallagher on Tuesday petitioned Leon County Circuit Court to order Tampa-based Poe Financial Group's three troubled insurance companies into liquidation, saying they are insolvent and policyholders need to be protected.

The pending liquidation of three insurers prompted Citizens Property Insurance Corp., the state-run insurer of last resort, to say Tuesday evening that it will open a permanent office in Tampa and hire 300 employees to help process and manage Poe's 300,000-plus home and condo owner policyholders affected by the liquidation. Hurricane season starts in less than three weeks.

"This was a crucial time of the year for this action to occur, and it is physically impossible for any insurer to process 300,000 new applications in a month, which is what we had to do,'' said Susanne Murphy, deputy executive director of Citizens Property.

Liquidation has been the Poe-related companies' expected fate since two of them, Southern Family and Atlantic Preferred, were placed under state-supervised rehabilitation in the past two weeks. The third, Florida Preferred, was to be forced into rehabilitation June 1.

However, the Poe group would not consent to liquidation, forcing the state to take the matter to court. Poe officials could not be reached for comment, but they have been attempting to raise capital in hopes of salvaging the companies. "With a little luck and a continued hard work, we look forward to continuing our partnership with you," says a letter to agents on the Poe Web site.

"These insurance companies have not presented a viable plan to get back on their feet financially," Gallagher said. He said Poe's refusal to cooperate with the liquidation was a drain on company resources that could be used to pay outstanding hurricane claims.

According to Murphy, Citizens Property will honor the policies and the premiums of the former Poe customers up to the date that coverage would normally expire. If private insurance cannot be found at that time, the ex-Poe customers will have to apply for normal Citizens coverage and be subject to Citizens' higher rates.

Murphy said Citizens hopes to hire a large number of Poe employees who will be affected by the liquidation of the three insurance companies.

"We need talented insurance professionals,'' she said, adding that Citizens has not yet picked a site in Tampa for its back-office operation.

Times staff writer Robert Trigaux contributed to this report. Helen Huntley can be reached at huntley@sptimes.com or 727 893-8230.

[Last modified May 10, 2006, 02:17:16]