Despite the efforts of founder Bill Poe Sr., his sons Bill and Charles and numerous company executives, back-to-back multiple-storm hurricane seasons have blown down the house of Poe Financial Group. The company went into liquidation at the end of May, giving up the struggle to overcome more than $2 billion gross losses (and a reported net loss of some $300 million) from 125,000 claims over the past two years.
Executives of the old-name Tampa company, built and re-molded over the years into the third largest private homeowners' insurance writer in the state, apparently resisted state takeover till the end. Two of the three Poe companies, Southern Family Insurance and Atlantic Preferred, with more than 185,000 policies, had already gone into receivership on April 25 and May 1, respectively, after having been under administrative supervision by the Office of Insurance Regulation starting near the end of January.
Poe attempted to raise capital to salvage some of the 140,000 policies in the remaining company, Florida Preferred Insurance Co. However, the company fell short, which resulted in the state also taking control of the carrier. Leon County Circuit Judge Janet Ferris signed liquidation orders for all three carriers as of May 31. It was also reported in a Tampa area newspaper that Poe officials had attempted to broker a deal before the liquidation that would have given the company millions in annual commissions to act as an agent for Poe policyholders transferred to Citizens Property Insurance Corp.
In early June, following the liquidation, Poe filed suit in Hillsborough Circuit Court to secure commissions for Poe agents who had sold the policies that were taken over from the company and transferred into Citizens. There was no public reaction to the suit by Citizens as this article was written, but the board and its chair, Bruce Douglas, had reacted strongly in rejecting Poe's attempt to negotiate commissions as the liquidation was becoming official.
Policyholders and Employees Protected
Ironically, it was from Citizens that many of Poe's policies came originally when in 1996 the company took the high-risk gamble to build the group with take-outs from Citizens. Most of the policies were in the state's highest risk areas in lower southeast coastal communities in Miami-Dade, Broward, and Palm Beach counties, and on the lower west coast around Naples. When it went into liquidation, Poe had about 320,000 policies. Florida Chief Financial Officer Tom Gallagher had set up an automatic transfer into Citizens on July 1 of any policyholders unable to find replacement insurance in the market.
"My priority is to ensure policyholders have continuous coverage this hurricane season and we've achieved that," Gallagher said. "Now our focus is resolving outstanding hurricane claims." Gallagher noted that as of April 25, the state has already overseen the payment of more than $76 million in hurricane-related claims.
Many of Poe's workforce of some 300, facing their last paycheck the day before Florida Preferred was liquidated, were offered jobs with Citizens to facilitate the enormous task of transferring the policies all at once. By early June, more than half were employed by Citizens and operating from their same locations in Tampa.
Any unpaid claims will be covered up to $500,000 by the assessment-funded Florida Insurance Guaranty Association (FIGA), based in Jacksonville. It is authorized to issue bonds in the event its liabilities exceed what can be covered through maximum annual assessments. The impact on FIGA from the Poe Group insolvencies in either the size of any future assessments or a potential need for bonding wasn't known as this was written. Poe was the second major insurer taken down by liabilities from the eight hurricanes that hit Florida in 2004 and 2005. Plantation-based American Superior succumbed after the 2004 storms; 11 insurers failed after Hurricane Andrew in 1992.
In its weakened position from previous hurricanes, Poe quickly went into a death spiral when Hurricane Wilma struck South Florida in late October 2005. Southern Family and Atlantic Preferred had stopped writing new policies by this past March, and began canceling existing policies. Florida Preferred continued to renew, but stopped writing new business. In a policyholder notification release in early April, Poe President and CEO Jim Wurdeman wrote: ". . . It should be no surprise that the activity from the 2004 and 2005 hurricane seasons has been substantial. Through it all, our reinsurance and agent partners have been incredibly supportive. Our associates have worked long and hard, six to seven days a week, 10 to 12 hours per day for the better part of two hurricane seasons. Their dedication has been and continues to be remarkable. . ."
But after Wilma, the Department of Financial Services (DFS) began receiving hundreds of complaints, many from policyholders claiming they were dropped before repairs to their homes were completed.
Long, Proud History of Industry and Civic Involvement
Patriarch William Poe Sr., 74, founded W.F. Poe Insurance Agency in Tampa after serving in the Air Force in the mid-1950s. From 1979 until he retired in 1993 he led the hugely successful Poe and Associates, reported to be the most profitable NASDAQ Company in the country in 1991 (based on percentage of return on capital). In a merger, this became Poe and Brown. The holding company comprising the three separate companies of the Poe Financial Group emerged in 1996, and until two years ago the empire had been a recognized leader in Florida insurance, praised by industry officials. The senior Poe had served as mayor of Tampa from 1974-1979. Son William Jr. served as vice chairman of the company; son Charles as treasurer. Three daughters served on the board of directors.
In these early months of another potentially threatening hurricane season, the demise of the Poe Financial Group stands as a stark reality check of the force of nature in a state struggling to find the right mix of national, state, and private protection against the inevitable.
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