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To the editor: In his July 7 letter to the editor, Karl Rubinstein was quite upset by your "inaccurate and irresponsible" editorial relating to Golden Eagle Insurance Co., which he now heads as deputy conservator of the company. His letter includes a list of accomplishments intended to rebut your suspicions about his takeover of the company. Unfortunately, however, every item on his list is false.
Here is a list of true facts that may, appropriately enough, stoke your suspicions:
The California Insurance Department early last year told John Mabee, owner of Golden Eagle, that the $232 million surplus he reported in the company's 1995 annual statement was overstated by about a half-billion dollars and that his company was insolvent. John Mabee said, loudly and publicly, that the Insurance Department was wrong.
The Insurance Department had a consulting actuary study the company's 1995 reserves and changed its half-billion dollar reserve shortage allegation to $138 million. John Mabee still said, loudly and publicly, that the department was wrong.
Karl Rubinstein took over Golden Eagle as deputy conservator, in spite of the fact that statutory surplus was approximately $100 million, not to mention about one-quarter billion dollars of unrecognized reserve discount.
The 1996 runoff of the 1995 reserves was favorable, according to the Insurance Department's consulting actuary, relative to the reserves used for the conservation order.
John Mabee, an innovative if outspoken entrepreneur, has been driven out of the insurance business, but his investment in Golden Eagle has been protected in a judicial rebuke of the Insurance Department.
The Golden Eagle story is not about a failed insurance company, but rather about abuse of power by public officials. If this is untrue, why are so many insurance companies fighting so hard to take over Golden Eagle?
Frederick W. Kilbourne
The Kilbourne Co.