State sues bankrupt insurer

Poe's bankruptcy left Floridians on the hook to pay the companies' claims.

The state has filed a lawsuit to recover some of the hundreds of millions of dollars it has spent to pay claims for a bankrupt insurer.

The Department of Financial Services filed the suit against directors, officers and affiliates of Atlantic Preferred Insurance, Florida Preferred Property Insurance and Southern Family Insurance on Friday in the Second Judicial Circuit Court, seeking to recover more than $100 million.

The three companies, collectively known as the Poe companies, filed for Chapter 11 bankruptcy in 2006, claiming thousands of creditors and prompting state-backed Citizens Property Insurance to absorb more than 200,000 Poe policyholders and become the state's largest homeowners-insurance company.

Poe's bankruptcy also left Floridians on the hook -- a 2 percent surcharge on property-insurance premiums -- to pay the companies' outstanding claims from the devastating 2004 and 2005 hurricane seasons.

That surcharge has been a sore spot for consumers already upset by rising insurance costs in the United States' most hurricane-prone state.

State officials have sought to respond to policyholders' complaints with increased attention to property-insurance rates and promises to reduce costs for homeowners.

It is unclear, however, if any money the state recoups would be refunded to consumers who paid the surcharge.

The Florida Insurance Guaranty Association, established by the state Legislature to pay claims of bankrupt insurers, had paid $1.2 billion for the Poe companies' claims as of Jan. 31 of this year. More than 46,000 claims have been filed, and FIGA expects to pay an additional $123.5 million for additional claims.

The lawsuit is an attempt to gather "pockets of money" that should have been designated to pay those claims, said Tara Klimek, a spokeswoman for the Department of Financial Services.

"This company fought the state's efforts to accomplish an orderly transition at every turn," said Bob Lotane, a spokesman for the Florida Association of Insurance and Financial Advisors.

Poe officials were unavailable for comment.

In its 94-page complaint, the financial-services department describes a fraudulent scheme to distribute millions of dollars of dividends to the officers, directors and affiliates of the Poe companies as well as unearned commissions and loans directed toward the companies' affiliates before the court-ordered liquidation.

As a unit, the Poe companies, founded by former Tampa Mayor Bill Poe, once held more residential property-insurance policies than any other entity in the state.




Anika Myers Palm can be reached at apalm@orlandosentinel.com or 407-420-5022.