Selective Withdraws Bid For Seibels

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By Mark E. Ruquet

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NU Online News Service, Oct. 3, 10:50 a.m.EST?Selective Insurance Group Inc. will not purchase theflood insurance business of the financially troubled Seibels BruceGroup Inc., of Columbia, S.C., the firm announced yesterday.

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The Branchville, N.J.-based company said it "mutuallyterminated" its bid for Seibels business "due to lack of regulatoryapproval."

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Sharon Cooper, a spokeswoman for Selective, said the FederalEmergency Management Agency, which runs the federal program, didnot grant regulatory approval. She said the agency did not disclosewhy.

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Howard Leikin, deputy administrator for insurance with FEMA,declined to discuss why the agency turned down theSelective-Seibels deal other than to say it did not meet theagency's criteria for a sale.

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Seibels said it is seeking the sale of its flood insuranceprogram because it did receive a financial assistance-subsidyarrangement with the Federal Insurance and MitigationAdministration.

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The company said the action was taken by FEMA in light ofsupervisory restrictions placed on the company by the SouthCarolina Department of Insurance and the North Carolina Departmentof Insurance. The restrictions prevent the company from writing newand renewal business.

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The company must seek authority before writing renewal business,it said in a statement. The company is also restricted from doingbusiness in Arizona and California.

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The cause stems from litigation between the company, itssubsidiaries, and Human Dynamics Corp. in Arizona and California.Seibels is accused of writing a workers' compensation policy forHDC without first seeking approval from state regulators.

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The company has been under orders by regulators to seek approvalbefore taking on any new business due to the deterioration of itfinancial condition.

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Mr. Leikin said policyholders are in no jeopardy of losing theirpolicies under Seibels. He said current policies will be renewed,but the company can not write new business. Seibels hasapproximately 100,000 policyholders in 46 states, Mr. Leikinestimated.

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Seibels said it wrote $44.7 million in flood insurance in 2001and $22.5 million in 2002.

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Susan Kenney, vice president, marketing and sales for Seibels,said in an e-mail reply to questions, that the company iscontinuing to look for a buyer of its flood insurance business. Shesaid the departments of insurance continue their administrativesupervision. The HDC litigation continues, she added.

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Selective was looking to purchase the book of flood insuranceservice for $4 million cash, and another $1 million in subsequentpayments if certain undisclosed conditions were met. Selectivewould not disclose the number of policies and premium amount itexpected to garner from the deal.

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Last year, Selective purchased the flood book of Union AmericanInsurance, in Miami, and Highlands Insurance Group, ofLawrenceville, N.J. The two combined covered more than 20,200policyholders and $6.6 million in premium.

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Selective said it currently services more than 126,000 floodpolicies at close to $50 million in premium under the NationalFlood Insurance Program.

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Selective plans to continue to pursue expansion of its book onflood insurance, Ms. Cooper added.

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