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Insurer Poe files for bankruptcy

A former rising star in the state's insurance industry, Poe Financial Group suffered staggering losses after eight hurricanes in two years.

By TOM ZUCCO
Published August 19, 2006

The Poe Financial Group Inc. filed for Chapter 11 bankruptcy reorganization Friday in federal court in Tampa, a bitter epitaph for what once was viewed as a rising star in Florida's turbulent property insurance market.

The action came less than three months after Poe watched as three of its insurance companies were liquidated by the state, marking the largest insurance failure in the state's history.

In addition to the Poe Financial Group, three Poe subsidiaries - Poe Insurance Managers, a managing general agency that underwrote policies; Mariah Claims Services, an insurance adjusting firm; and Poe & Associates, an insurance agency - also filed for Chapter 11 protection.

By itself, the Poe Financial Group, founded by former Tampa Mayor Bill Poe, estimated assets at between $50,000 to $100,000. It estimated debts at between $10-million and $50-million, according to court filings.

Poe Insurance Managers estimated its assets between $10-million and $50-million, and estimated debts in the same range.

Both Mariah Claims and Poe & Associates estimated assets at $500,000 to $1-million, and estimated debts in the same range.

To illustrate how the companies were intertwined, the list of creditors holding the largest unsecured claims against the Poe Financial Group contains just one amount and one name - a $22.3-million loan from Poe Insurance Managers.

In all, the four Poe entities claim thousands of creditors, among them the city of Tampa, the Internal Revenue Service, the Florida Department of Revenue and the Tampa Police Athletic League.

Once the largest privately held property insurer based in Florida, the Poe Group intends to remain in business, the company said, although parts of the business may be sold.

"By taking this step," Poe Group chairman Bill Poe said in a statement Friday, "we now can focus all our efforts on working with the bankruptcy court to develop a plan of reorganization that will allow us to regain our financial strength."

It could also allow the Poe Group to avoid class-action lawsuits by former policyholders.

The decision to file for bankruptcy, made Friday in a meeting of Poe's board of directors, will come as little surprise to those who watched the company in recent months.

Founded in 1996, Poe Financial rocketed to the forefront of the insurance market by aggressively taking high-risk policies out of Citizens Property Insurance, the state-run insurer for homeowners who can't find coverage in Florida. Filling a void left by other insurers, Poe accumulated many condominium policies in coastal areas of Miami-Dade, Broward and Palm Beach counties.

But the move proved fatal. It left the company overexposed when eight hurricanes hit Florida in 2004-05.

Poe paid out more than $2.6-billion in claims, and after reinsurance costs, the company's net loss was $369-million for the eight storms.

Unable to secure financing to pay claims and buy reinsurance, three Poe subsidiaries, Atlantic Preferred Insurance Co., Southern Family Insurance Co. and Florida Preferred Property Insurance, were ordered liquidated in June by a Leon County judge.

The liquidation sent about 320,000 Poe policyholders into Citizens Property, boosting Citizens to the unwanted title of largest property insurer in Florida. Under state law, Citizens is supposed to charge rates higher than those found in the private market.

The liquidation also left behind nearly 20,000 unpaid claims worth about $250-million.

But it's not just former Poe policyholders who were left on the hook.

The outstanding claims became the responsibility of the Florida Insurance Guaranty Association, which in turn tacked on a 2 percent assessment to all property owners in the state to cover the loss.

Poe's downward spiral continued in June, when Citizens hired about 150 former Poe employees and began moving into Poe's Harbour Island headquarters.

Also in June, Poe & Associates sued Citizens in Hillsborough County court over access to as much as $16-million in agent commissions on nearly 80,000 policies.

That suit has yet to be resolved.

Poe representatives did not return calls for further comment, and officials for both Citizens and the Florida Office of Insurance Regulation said they were unaware of the bankruptcy filing late Friday.

Holland and Knight, Poe's attorney, also did not return calls for comment.

Times staff writer Scott Barancik contributed to this report. Tom Zucco can be reached at zucco@sptimes.com or 727 893-8247.

Florida to get $100M grant to fortify homes

Florida will get $100-million in hurricane recovery money from the federal government and use it to help strengthen homes to make them better able to withstand hurricanes, officials said Friday. The U.S. Housing and Urban Development Department is making the money available to Florida. The funds are part of more than $16-billion in federal grant money given to several Gulf Coast states this year to help with long-term recovery from Hurricanes Dennis, Katrina, Rita and Wilma in 2005. State officials have yet to determine how Florida's share will be divided.

Also this week, an economist from the Federal Reserve told a business group that Florida's insurance crisis would be short term. Unfortunately for Tampa Bay area property owners hit with premiums that have doubled or tripled, he defined short term as five to 10 years. Tom Cunningham of the Federal Reserve Bank of Atlanta said the market should require up to a decade to reassess risk from hurricanes. Skyrocketing premiums are caused less by recent storms than by uncertainty about future storms, Cunningham told the board of Enterprise Florida during its quarterly meeting in Jacksonville this week. "This is just a mess," Cunningham said. "There's no way around it."

[Last modified August 18, 2006, 23:24:16]