http://www.news-press.com/apps/pbcs.dll ... 14003/1075
Allstate to ax 120,000 policies
Insurer hands Florida homeowners to select rivals
By Paige St. John
news-press.com Tallahassee Bureau
Originally posted on July 14, 2006
TALLAHASSEE — Allstate has plans to drop 120,000 more home policies beginning in November, whittling what was once Florida's second-largest insurer to less than half its 2004 size.
When it's done with the process next year, Allstate will have dropped 350,000 policies. It held 667,000 two years ago.
At the same time the company is cutting customers, it's placing that business with friendly competitors that agree to use Allstate agents to service the policies — making it easier for the “Good Hands” company to retain its profitable automotive insurance sales in Florida.
“We're doing what we can to be able to better manage our risk and to place homeowners into financially strong private carriers,” Allstate Floridian spokesman Ryan Priest said Thursday in confirming the intent to drop more home policies.
Allstate Floridian regrouped following the costly 2004 hurricane season, taking a $375 million infusion of cash from its national parent, dropping commercial lines, and announcing its agents could switch customers to select competitors.
The first was Universal Insurance Co. of North America, which agreed to pick up the first 95,000 policies shed by Allstate starting August 2005.
In May, Allstate announced Royal Palm Insurance would take over 120,000 policies to be dropped as they come up for renewal, starting November 2006.
Another round of cancellations is set to begin in November, with Royal Palm proposed to take those over as well, according to Locke Burt, president of Royal Palm.
Taxpayers could lend a hand to Royal Palm's efforts.
Burt, a former state senator, has asked for a $25 million taxpayer-backed loan to help finance Royal Palm’s assumption of Allstate policies, matching $25 million of private capital he has raised.
Burt is taking advantage of a program he helped create.
The Ormond Beach insurance executive earlier this year wrote the first draft of Florida's $250 million insurer loan program, at the request of Sen. J.D. Alexander.
Burt, who had already raised $65 million to assume the first round of Allstate cancellations, said he knew at the time he might be an applicant for more.
“I thought it was an interesting idea,” he said.
In its loan application, Royal Palm states an additional round of 120,000 Allstate non-renewals starts in November.
Priest said Thursday that Allstate Floridian, which once held 10 percent of the private market in Florida, was being “extremely transparent” about its intentions to shed a large amount of business.
“Over the past couple of years, Florida has become a very difficult market for property insurance,” Priest said. “We have to be able to put into place an appropriate business plan ... to follow through on the commitment we make to customers, with what capital we have.”
Regulators said Allstate had not advised the state of its cancellation schedule.
“We have not been made aware of any plans by Allstate, nor are they required to,” said Bob Lotane, a spokesman for the state’s Office of Insurance Regulation.
Burt said Allstate is committed to dropping the additional policies, even if Royal Palm does not get the $25 million loan it says it needs from the State Board of Administration.
“They made the decision to cancel 240,000 policies. We agreed to accept 120,000 of them. The remaining 120,000 policies do not have a home, other than Citizens,” Burt said.
“I am sure Allstate is going to do what it said it was going to do, which is start canceling them, after wind season.”
Florida’s state-run insurer of last resort, Citizens Property Insurance, already is absorbing the castoffs of other insurers as they retrench or collapse. Citizens expects to soon have nearly 1 million policies, backed by Florida’s homeowners.
And nobody even try to defend this greed - didn't the biggest companies (the ones taking their ball and running away) post record profits - even after the '04 season? 
