BILLS ON HOLD AS TX DEMS WALKOUT:
When 53 Democratic representatives from the Texas House went missing in action on May 12 they not only eliminated the possibility of a vote on the controversial redistricting bill they were protesting, they also placed on hold all other bills in line for House action. Among them was Senate Bill 14, the comprehensive insurance regulation bill that passed the Senate in April and was sent to the House for consideration. The House Insurance Committee published its report on a committee substitute for SB 14 and sent it to the Calendars Committee on May 11. Two days earlier the House refused to consider SB 5, the Senate's school finance plan that would have increased and expanded the state sales tax in exchange for lower local school property taxes. The expanded sales tax structure would have included a tax on the commissions received by independent insurance agents, which have not previously been subject to sales tax in Texas.
INVESTOR GROUP TO BUY REPUBLIC:
The Republic Group of Insurance Companies (Republic), of Dallas, announced that a private investor group has agreed to purchase Republic from Winterthur U.S. Holdings Inc. and certain other subsidiaries of Credit Suisse Group (Winterthur) for $127 million in cash. Founded in 1903, Republic is a medium-sized provider of property and auto insurance for individuals and commercial insurance for main-street businesses in Texas, Louisiana, New Mexico and Oklahoma. Republic has been owned by Winterthur since 1982. Fully endorsed by Republic's management, the acquisition was facilitated by Wand Partners, a private equity firm that specializes in insurance investments. The other sponsoring investors include Banc of America Capital Investors, Greenhill Capital Partners, Brazos Private Equity Partners, 21st Century Group LLC, and Norwest Equity Partners. Stating that Republic expects the sale to allow the company to continue growing the business lines it already participates in, Republic CEO Bruce Milligan added the company plans to explore other niche product or service ideas, including excess and surplus lines, in the future. Milligan expressed the company's commitment to independent agents, commenting that Republic distributes all its products through independent agents. "I am very excited about this transaction," Milligan said. "I think having an investor group that's focused solely on Republic and the uniqueness that the Texas insurance market presents should allow us to reach our full potential as a company." He continued, "I think this is great news for our independent agents because a growing and vibrant Republic will be able to provide more products and services in the future than what we're providing them today." Republic had net written premiums of about $255 million dollars last year. About 51 percent of its business was in personal lines, 31 percent in commercial lines and the remainder of its writings were in specialty lines. The company's personal lines are split "pretty evenly" between auto and property, according to Milligan. "The commercial lines was primarily directed to small and medium size businesses and it really included all commercial lines, property, auto, liability and workers' comp," he said. The specialty lines writings came through professional managed programs. The transaction, which is subject to regulatory approval, is expected to be completed in the third quarter of 2003.
LA. AGENTS SHUT DOWN:
The Louisiana Department of Insurance closed the operations of a Metairie insurance agent on accusations of forgery and misappropriation of insurance premiums. It was the third such shutdown of an agent's insurance operation in four days, according to Insurance Commissioner Robert Wooley. Department of Insurance Fraud Unit investigators served Mario Guillermo Amaya with a cease and desist order and a summary suspension of all insurance licenses. The order states that Amaya allegedly misappropriated insurance premiums of several thousand dollars and committed forgery by cashing a stolen government check. The DOI order prohibits him from engaging in any activity relating to the business of insurance, effective immediately. DOI records show that Amaya was first issued a life and health license on May 1, 1999, and a property and casualty insurance license a month later. Both licenses were in force until the suspension. Previously, the department investigators pulled the license of a Gonzales agent, and took the same action against a Shreveport agent, Janet Hart Musick. The DOI alleges that Melissa Guillot Robert of Gonzales misappropriated funds and/or issued bogus written statements of insurance coverage on at least four separate occasions in a two-year period. Musick, of Shreveport, was booked into the Caddo Parish Prison for alleged felony theft in excess of $500 and misappropriation of insurance premiums. The order alleges that Musick misappropriated funds and/or issued bogus written statements of insurance coverage on a dozen separate occasions.
