Home insurer Magnolia Insurance Co. has been placed under administrative supervision by Florida insurance regulators who said it is in unsound financial shape and its president, H. James Irl, has resigned.
The Coconut Grove-based insurer voluntarily agreed to the supervision, which is to last 120 days from Dec. 14 but can be extended.
Magnolia will be restricted in the writing and renewing of business under the consent order with the Office of Insurance Regulation. It will also need OIR approval for any major transaction, asset transfer, reinsurance agreement, investment or management change.
The company has agreed to work with OIR to develop a “corrective plan of action” that could include being acquired.
Irl is prohibited from any management role under the order.
The state action comes a few weeks after the insurer lost its rating from an actuarial firm, Demotech, for failure to submit current financials and proof of implementation of promised management changes.
Magnolia is bound by the Florida statutes to appropriately notify insureds of any non-renewals. Policies that are slated to renew now and in the first few weeks of January 2010 could not be properly noticed for non-renewal by Magnolia. Magnolia will renew these policies if the policyholders or agents request renewal. However, the company noted, policyholders and agents should be aware that renewal with Magnolia is at their own risk.
Officials said agents should seek to place any policy slated for renewal with another admitted carrier prior to the policy expiration date. If that fails, agents may try to place the business with the state-backed Citizens Property Insurance Co.
Magnolia began doing business in April, 2008, with $20 million in capital and 100,000 policies shifted from Citizens.