Goran Florida sub faces possible suspension

Florida’s Office of Insurance Regulation is considering the suspension of one of Toronto-based Goran Capital Inc.’s subsidiaries. An administrative law judge in Florida has said the regulator can suspend Superior Insurance Company’s (Superior Insurance) authority to write business for up to two years.
In 2002, Superior wrote about US$45 million gross written premium in the Florida non-standard market. The Florida regulators took exception to the fact that the Florida company was paying “finance and service fees” to immediate parent Superior Insurance Group (Superior Group). The regulator had ordered to have Superior Group pay back US$15 million in fees to Superior Insurance, in August, 2001.
In its annual report of 2002, Goran notes that Superior Insurance ceased making the payments to its parent, but that it will jeopardize Superior Group’s financial position if it pays back the funds from previous years. The company states that the regulator has ordered immediate repayment of the US$15 million for 1997-1999, and requested repayment of US$20 million in fees for the years after 1999.
Currently, both sides are awaiting the decision of a circuit court on the regulator’s motion to have Superior Insurance held in contempt for not complying with the order to get the funds back from its parent.
While the Florida regulator has 90 days to decide if it will suspend Superior Insurance’s authority to write business, the administrative law judge’s decision was welcomed.
“The companies that are authorized to transact business in this state are made aware of their obligations to maintain adequate reserves and Superior Insurance Company certainly has been no exception,” says director Kevin McCarty. “The financial shenanigans they have engaged in have put policyholders at risk, and we will not tolerate it.”