The Florida Office of Insurance Regulation has placed Magnolia Insurance Company under administrative supervision, finding that the company was in an unsound condition. Under terms of a December 14, 2009 consent order, the company will not be able to issue or renew any policies without permission from the regulator. Magnolia’s President, H. James Irl, has resigned and is prohibited from exercising any managerial control. The consent order also required the company to notify policyholders and agents that if they choose to obtain coverage from Magnolia, they do so at their own risk.
Magnolia began operating as a property and casualty insurer in 2008 with approximately 100,000 “take-out” policies that it took over from the state-created Citizens Property Insurance Corp. as part of Citizens’ depopulation efforts.
Under the consent order, most business activities of the company will require the approval of the regulator, but the company has not been placed in receivership or liquidation. Several Florida property-casualty insurers were ordered into liquidation in 2009, including American Keystone Insurance Co., First Commercial Insurance Co., and Coral Insurance Co.
A spokesman for Insurance Commissioner Kevin M. McCarty said that the Office of Insurance Regulation tried to do everything it could to avoid placing the company in administrative supervision, including attempts to find potential buyers for Magnolia. The consent order is scheduled to expire after 120 days and may be extended for an additional 120 days. According to the spokesman, “We will reassess the situation after 120 days and determine the best potential outcome.”