Print

Email story

Comment

Letter to the editor

Poe can't escape storms of past

Bill Poe's back in business at 76, but his insolvencies' toll lives on.

By TOM ZUCCO, Times Staff Writer
Published December 2, 2007

What Bill Poe says: "We were damn good. Citizens was not. My rates were 30 percent less than Citizens were."
	[Daniel Wallace | Times]

If only he could have gotten his hands on that $20-million from the state. Or if he'd had a little more time to shift everything to another company.

Or if he could've hung on to the hundreds of millions in unused premiums instead of shipping the money off to state-backed Citizens Property Insurance.

Bill Poe Sr., former Tampa mayor and head of a company that went from a model of profitability to the core of the largest insurance insolvency in Florida history, said in a recent interview he could have salvaged his three failed insurance companies.

If so, then this mess - the $747-million in unpaid Poe claims that all Florida policyholders had to repay, the 320,000 Poe policyholders who were dumped into Citizens and the bankruptcy of Poe's three companies - could have been avoided.

"I still hear the noise that I did something wrong," Poe said. "I may have grown too fast. That's certainly a reasonable criticism. But the operating balance and the claims handling were done well."

That's not how state regulators see it.

Even Gov. Charlie Crist has pointed to the Poe companies as Exhibit A of what an insurer shouldn't do.

"We don't want another Poe," Crist said earlier this year, "and we'll do everything we can to make sure it doesn't happen again."

William F. "Bill" Poe Sr., 76, has been selling insurance for most of his life. And despite everything, he's still at it. In Act III, Poe has refocused on selling property insurance through Poe & Associates LLC, an agency not involved in the bankruptcy proceedings.

But this new business comes as Insurance Commissioner Kevin McCarty in late October signed off on a 2 percent assessment to cover Poe's old business - the third such levy in the past 16 months.

Starting in March, every person in Florida who buys homeowners or auto insurance will find an addition to their bill of $20 for every $1,000 in premium. Most of that money will be used to cover the unpaid claims of Poe's three companies: Atlantic Preferred, Southern Family and Florida Preferred.

To Poe, all of this seems an eternity from where he began.

Fifty-one years ago, he set up an agency in what had been a Tampa barbershop and steadily built it, expanding to 10 Florida cities by 1979. Poe & Associates Inc. eventually became the largest property and casualty insurance agency based in Florida and the 12th largest in the United States.

In the meantime, Poe took time off to defeat Bob Martinez and serve as Tampa's 53rd mayor from 1974 to 1979.

Then came Hurricane Andrew in 1992. As larger insurance companies began to abandon the coast and send thousands of policies to Citizens, the state began to look for smaller, private companies to take the policies.

Poe saw an opportunity. Two years after merging with J. Hyatt Brown's company in 1996 (in what is now Brown & Brown), Poe broke away and re-created Poe & Associates. He eventually formed three companies that got most of their business by taking on Citizens policieseven though most were in high-risk areas in Miami-Dade, Palm Beach and Broward counties.

"(The companies) were all risk takers," Poe said. "But they had the capital."

Not when it counted.

Overwhelmed by claims

Overexposed when eight storms hit Florida in 2004-05, the Poe companies were hit with more than $2.5-billion in wind damage claims.

They didn't have the money. After reinsurance, the company's net loss was $369-million.

The three companies were liquidated in May 2006, and the umbrella company, Poe Financial Group, filed for Chapter 11 bankruptcy three months later.

But the story doesn't end there. The number of unpaid or unresolved claims stands at 43,000, with new ones coming in at a rate of 50 to 100 a week.

It didn't have to end this way, Poe said. He wanted to satisfy every claim. But when the state stepped in to take over his companies, claims payments stopped.

"We couldn't issue any checks, couldn't finish anything," he said. "When those three companies left in May, we gave all the money from the carriers over to (the group that pays claims for insolvent insurers).

"So any claims coming in since then have nothing to do with us. We got 110,000 claims, and we were 90 percent finished paying them when we had to stop."

Poe said when regulators sent Citizens about $300-million in unearned premiums - money that had already been paid to Poe - he was in a deeper hole.

"The commissioner (Kevin McCarty) had the right to look at the numbers, and he said our three companies can't go into the next storm season without appropriate capital," Poe said. "We talked to him about it. I tried to get a loan from the state, and I wanted to match it with my own money.

"The state said no: 'We don't want to do business with anybody who's not financially sound.'"

Poe wanted to tap into the state's $250-million Insurance Capital Build-up Program, which offered loans of up to $25-million to insurance companies.

"If I had gotten $20-million of that, I would have been in good shape," Poe said. "I'd gone through 12 storms. We were fine after the 2004 storms. The one that killed us was Wilma (in October 2005).

"It's easy to look back. But we were damn good. Citizens was not. My rates were 30 percent less than Citizens' were.

"We were actually following State Farm's rate structure. But we didn't have a parent or the state to take care of us."

State Farm Florida spokesman Chris Neal said there is a night-and-day difference between the two insurers but they did share one thing - rates too low to cover major losses.

"Bill Poe is a tremendous insurance agent," Neal said.

"But I'm not sure why he chose us (as a model). We've been saying for two years that our rates aren't adequate."

Neal said State Farm Florida remains in business because its Illinois-based parent company has "massive resources" to plow back into the Florida market and State Farm purposefully avoids taking policies from Citizens.

"We know exactly what we're insuring," Neal said. "That's not the case with policies taken out of Citizens."

Neal added that on Oct. 31, State Farm Florida received a bill for $33.7-million to help cover the latest round of unpaid Poe claims, an amount that must be passed on to State Farm policyholders.

An escape plan

Even after it became apparent the Poe companies couldn't pay claims, Poe still tried to salvage them.

"We had 340,000 homeowner polices, and we were going to move them to a third party," Poe said, declining to name the company.

"We told (state officials) we'd handle it. Everybody was trying to keep those policies. Citizens didn't think they could handle 300,000 policies."

Poe, who lives with his wife in a 5,000-square-foot Davis Islands home valued at $3.2-million, said he had more than $20-million.

"I could have thrown in. That's what I wanted to do. I don't know if I would have made money.

"But I do know I lost every dollar of profit I ever made in Wilma."

Poe also argues that if the policies had stayed in Citizens, the state would have suffered the same losses.

"But that's making an excuse," he said, "and I'm not trying to do that. We got killed on wind (claims). That's the way it is."

Bruce Douglas, chairman of Citizens' board of governors, has at times refused to use Poe's name, referring instead to "that Tampa company." Citizens not only had to process 320,000 Poe policies, it had to take over Poe's Tampa office to make sure the transition was smooth.

"The man (Poe) is living in a world of nonreality, and it's a shame," Douglas said. "He has accomplished so much. But apparently, he's not looking at the facts."

Regulators say Poe simply took on more Citizens policies than he could cover, and when the storm claims hit, the companies caved in.

"Doing a postmortem of the rehabilitation proceedings will demonstrate that the facts speak for themselves," said Ed Domansky, a spokesman for the Florida Office of Insurance Regulation.

Starting over

Poe has lost before.

He filed suit in 1996 to stop local tax dollars from being used to fund the construction of Raymond James Stadium. The Florida Supreme Court ruled 7-0 against him. The court battle, he said, cost him $1-million.

Although his latest setback is far bigger in scope, he says he wants to rebuild. A bankruptcy plan should be approved by February, he said, and all creditors will be paid.

If he can just grow his agency one more time.

He already has about 5,000 homeowners and about 3,000 auto policies written through a variety of insurance companies.

"It hurts, but I'm not crying about any of that," Poe said. "Now I'm trying to start again."

Tom Zucco can be reached at zucco@sptimes.com.

Poe Timeline 

1931: Born July 22 in Tampa.

1953: Graduates from University of Florida.

1956: Forms Poe & Associates insurance agency.

1974: Wins mayoral special election to finish term of Dick Greco, who had resigned to work for developer Edward J. DeBartolo.

1975: Re-elected to four-year term as mayor.

1993: Poe & Associates merges with Brown & Brown Inc. of Daytona Beach, to become Poe & Brown, one of the Southeast's largest insurance agencies.

August 1994: Poe steps down as chairman of Poe & Brown.

1996: The Poe Financial Group is founded. Much of its business model was based on taking high-risk policies out of Citizens Property Insurance, the state's insurer of last resort.

October 1996: Poe files a lawsuit to challenge a deal to build a new stadium for the Tampa Bay Buccaneers.

May 1997: The Florida Supreme Court rules unanimously against Poe's stadium challenge.

January 2004: Poe steps down as president and chief executive of Poe Financial Group.

October 2005: Hurricane Wilma makes landfall near Naples.

May-June 2006: Three subsidiaries of Poe Financial Group are liquidated, sending about 324,000 Florida homeowners intostate-run Citizens Property Insurance.

August 2006: The Poe Financial Group Inc. files for Chapter 11 bankruptcy reorganization.

October 2007: State insurance regulators sign off on another 2 percent assessment on liability insurance premiums to continue paying claims for the insolvent Poe Financial Group.

[Last modified November 30, 2007, 22:15:41]