Tuesday, September 27, 2005

Ethics Lesson (updated)

Today the Florida Politics blog points the way toward St. Petersburg Times reporter Joni James' revealing investigative report about the Citizens Property scandal-that-almost-was. The lede and follow:
Two months before two key executives at Citizens Property Insurance Corp. were asked to resign amid a plan to launch their own insurance firm, the pair had plotted a similar business plan with one of Citizens' own board members.

Documents obtained Monday by the St. Petersburg Times show that Edward London, a wealthy Miami businessman who left the board Aug. 1, lent his name in June to a business plan looking to raise nearly $21-million to form Citrus Insurance Group.
Citrus likely would have become one of those depopulation dogs we've mentioned before. The template is:
"Start up an insurance company on paper, collect a large 'depopulation' fee from Citizens, pay themselves handsome salaries and bonuses, and leave just enough left in the company coffers to hire a bankruptcy lawyer when a hurricane hits."
One of the more discouraging things to read is that then-board member London "tried, in his three years on the board, to curtail the bonus program because he considered it too generous." In the end, however, the business ethics lesson London says he learned on the Citizens Property Insurance board was "if you can't beat them, join them."

You can read the rest of the Times article here.


The intrepid Paige St. John has been picking through records that show "top executives of Florida's state-run insurer of last resort worked to launch their own company, with a unique proposal to steer business its way." Their 'unique' idea was to "cut in line" ahead of other private insurers, inaugurate a "Keep Out" plan to prevent customers from giving their business back to Citizens Property Insurance, and raking in unusually high compensation, including "projected bonuses of $30 million for assuming 138,000 existing Citizens policies" and "exemption from $7.5 million in ... fees required of other companies that take on Citizens business."

All this is detailed in a "48-page business plan ... written by then-Citizens CFO Jessica Buss, who included slots for herself as president, Citizens controller Corey Neal as CFO, and its new chief operating officer, Paul Hulsebusch, in the same role for Citrus."

St. John adds that "Buss resigned from Citizens in mid-August, after a company official confronted her about conflicts of interest." Incredibly, however, "she remains employed with the insurer as a consultant, working almost full time on financial matters at $75 an hour."

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