Allianz disputes lawsuit alleging liability for another insurer's failureReprints
Allianz S.E. on Thursday said it will vigorously push back against a lawsuit filed last week in Florida that asserts the company is responsible for the demise of Magnolia Insurance Co.
“These claims are wholly unfounded,” said Hugo Kidston, global head of communications for Allianz Global Corporate & Specialty. “Allianz will robustly defend itself.”
The lawsuit, brought on behalf of the Florida Department of Financial Services, alleges that a $23.8 million loan made in 2008 to Magnolia's parent company, Irl Financial Group Inc., by New York-based Allianz Risk Transfer, as well as fees and payments resulting from a subsequent managing general agency agreement and other service agreements signed by subsidiaries of both firms, were the cause of Magnolia's demise.
Mr. Kidston said Allianz took issue with the suit's contention that Allianz “looted” Coconut Grove, Fla.-based Magnolia, a seller of homeowners' policies, prior to Magnolia going into receivership. Allianz never exercised management control over Magnolia, he said.
“Allianz Risk Transfer's transactions with Magnolia were always at an arm's length basis,” he said. “We have a hard-earned reputation as an ethical and responsible business, and were not in a position to loot the company nor would we want to.”
Moreover, the transactions at the center of the dispute were approved by the same regulators now bringing suit, Mr. Kidston noted.
“All of our transactions with Magnolia have always been fully transparent to the regulators in Florida,” he said. “In fact, the Florida Department of Financial Services granted Magnolia its license with full knowledge of the all fees and payments Allianz Risk Transfer was to receive.”