Monday, June 1, 2009


Homeowners in the Low Country counties of Charleston and Beaufort, South Carolina can now access the advanced disaster preparedness and post-hurricane resources of Private Client Group’s Hurricane Protection Unit. Access to the Unit, whose resources have been successfully deployed in coastal Florida and at-risk regions of New Jersey and Long Island, New York, is complimentary for homeowners who purchase insurance policies through Private Client Group, a division of AIU Holdings.

Private Client Group’s Hurricane Protection Unit assists eligible policyholders in disaster preparations and responds in a hurricane’s immediate aftermath with repair resources that often become scarce post-storm.

Prior to hurricane season, which officially starts today, policyholders may request a consultation with a hurricane mitigation specialist who will help devise a personalized plan to maximize the home’s protection. If needed, the plan can also include action steps for moving artwork, automobiles and watercraft to safety.

During hurricane season, the Hurricane Protection Unit closely tracks and monitors the progress and projected landfall of approaching hurricanes. After landfall, catastrophe response units are dispatched automatically to insured residences in the affected areas to assess exterior damage. If there is visible structural damage, pre-approved vendors immediately respond to make short-term repairs such as tarping holes in the roof, and boarding up broken doors, windows and other openings. Simultaneously, the Unit communicates with policyholders who have evacuated to apprise them of any sustained damage. Claims staff follow up with more detailed assessments as needed. Private Client Group’s art collection management professionals also may be engaged to safely remove and transport pieces.

For more information on the Hurricane Protection Unit, contact Todd Triano at (908) 679-3066 or, or visit

  • North Carolina Insurance Commissioner Wayne Goodwin announced that Michael A. Howell, 41, of Indian Trial, has pleaded guilty to 25 counts of embezzlement by an insurance agent. Howell is also charged with first degree murder in the death of Sallie Rohrbach, a Department of Insurance agency examiner. He is currently being held at the Mecklenburg County Jail. His guilty plea comes after nine months of investigation into the Dilworth Insurance Agency in Charlotte.

    Each embezzlement count represents a premium payment that Howell reportedly pocketed instead of forwarding to GMAC Insurance and Discovery Insurance companies. Between March 2004 and May 2008, Howell embezzled more than $150,000 in documented and undocumented premiums.

    Hundreds of the Dilworth Insurance Agency's customers - many of whom were senior citizens and/or minorities - were affected by Howell's actions, but GMAC Insurance and Discovery Insurance companies made good on every policy affected, so no customers lost money or insurance coverage in the end.

  • A Stanton, Kentucky woman has pled guilty to a felony count of mail fraud in United States District Court in Lexington after she, her husband and three Whitesburg area insurance agency employees gave false information to a workers’ comp carrier.

Tena Pennington, 44, will report to prison on June 30 and will serve a 15-month sentence. In addition, she must pay $272,362 in restitution to Kentucky Employers’ Mutual Insurance.

According to court documents, Tena Pennington and John Pennington, her husband, worked with employees of CS&W Insurance to misrepresent the number of employees and the amount of payroll in John Pennington’s company, ZAG Resources Inc., and its connection to another Pennington company, JZ Trucking Inc. This resulted in lower workers’ comp premiums for John Pennington’s company. John Pennington is slated to appear in court in November.

Earlier last month, Thomas J. Childers, 60, of Hazard, and Karen Lynetta Fox-Burns, 56, of Whitesburg, both insurance agents, and Shannon Ranee Hogg, the daughter of Fox-Burns and a CS&W customer services representative, each pled guilty to a count of misprision of a felony (includes the act of concealing a felony), also in United States District Court in Lexington. Childers, Fox-Burns and Hogg each received two-years probation, 100 hours of community service and a fine of $100. Childers was fined an additional $10,000.

  • Based on the recently revised projected claims-paying capacity of the Florida Hurricane Catastrophe Fund (FHCF), A.M. Best has updated its treatment of reinsurance provided to rated entities from this structure.

As previously indicated, A.M. Best remains concerned regarding the ability to fund all obligations associated with the FHCF in the case of a severe hurricane. These concerns are largely based on the contingent capital nature of the FHCF and ability to bond what could potentially be one of the largest public debt offerings. In addition, the potential liquidity and cash flow issues that might arise from such an event create an additional level of uncertainty.

However, A.M. Best is cognizant of the FHCF’s current financial position including cash on hand and previously arranged pre-event bonding. Nevertheless, in the case of a major event, the ability to bond the amount necessary to fund all previous obligations could prove difficult due to current credit market issues. There is also the potential that in such a severe event, the Federal Government will intervene via the purchase of the bonds directly or some other form of support. However, A.M. Best cannot pre-suppose such an action when evaluating an individual carrier’s risk-adjusted capital position.

Based on the revised claims-paying capacity recently released, as well as A.M. Best’s analytical judgment, coverage provided by the FHCF’s mandatory layer will be reduced by 12.5% in A.M. Best’s assessment of risk-adjusted capitalization. Based on the October 2008 estimated claims-paying capacity, this reduction was previously 17%. The improvement largely reflects the increased cash position of the FHCF. Given the lack of funding regarding the Temporary Increase in Coverage Limits (TICL), no credit (100% reduction) will be provided for this layer. A.M. Best believes that reducing the amount of coverage provided via the FHCF and relating it to the projected borrowing capacity represents a more accurate view of overall risk-adjusted capitalization.

In advance of the 2009 hurricane season, those companies with significant potential gaps in reinsurance coverage and correspondingly inadequate risk-adjusted capitalization associated with these adjustments will likely face negative rating pressure.

A.M. Best will continue to assess the amount of credit afforded to reinsurance provided via the FHCF in the context of risk-adjusted capitalization through its proprietary capital model—Best’s Capital Adequacy Ratio (BCAR). This assessment will continue to evolve based on events of the 2009 hurricane season as well as credit market conditions and is subject to change. Given the overall importance of the FHCF to Florida-based companies’ overall reinsurance structures and its contingent capital structure, A.M. Best believes this ongoing evaluation is critical in the assignment of ratings.

No comments: