Posted on 30 Dec 2009
Florida insurance regulators announced they are moving to take over supervision of Magnolia Insurance, plagued with financial woes and the departure of its president, H. James Irl. Regulators say they will assume supervision of the insurer at least until April 2010.
Says state Insurance Commissioner Kevin McCarty,"The office deemed it to be in the best interests of Magnolia's policyholders and the state of Florida to assume supervision of the company's operation for the near future. The company agreed to the conditions of the administrative supervision."
Demotech, Inc. suspended Magnolia's exceptional financial rating earlier this month after the company failed to file a financial statement due Nov. 15 or inform the rating service if it had met the business goals required to maintain its previous high rating.
Magnolia began doing business in April 2008 with $20 million in capital and 60,000 policies shifted from state-supported Citizens Insurance, which carries policies on nearly 1.1 million Floridians.
It's likely many Magnolia customers are headed back to Citizens Insurance.
"Citizens is more than ready to assist with homeowners having difficulty finding coverage in the private market," said company spokesman John Kuczwanski.
Sam Miller, vice president of the Florida Insurance Council, has frequently said a catastrophic hurricane or series of devastating storms would likely bankrupt a significant number of the newer, less-capitalized companies.
Magnolia is the fourth startup property insurer and third from South Florida to run afoul of state regulators in recent months. Earlier casualties were American Keystone Insurance Co., Coral Insurance Co., and First Commercial Insurance Co.