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NEW YORK--Assurant Inc. has placed five top executives--including the insurer's chief executive officer--on "administrative leave" amid federal officials' expanding investigation into the company's finite reinsurance-related practices.
The move by New York-based Assurant's board of directors comes after the company learned that the Securities and Exchange Commission could levy civil fraud charges against the executives as part of the agency's ongoing probe of finite risk products.
In a statement Tuesday, Assurant said Robert B. Pollock, president and CEO; Philip Bruce Camacho, executive vp and chief financial officer; and Adam Lamnin, executive vp and CFO of the Assurant Solutions/Assurant Specialty Property unit, have received so-called "Wells notices" from the SEC related to "certain loss-mitigation insurance products."
Wells notices indicate the SEC staff plans to recommend that the agency bring a civil enforcement action for violations of federal securities laws.
Earlier this month, similar Wells notices were issued to two Miami-based Assurant Solutions/Assurant Specialty Property unit executives: Michael Steinman, senior vp and chief actuary, and Dan Folse, vp-risk management. (BI, July 9).
"After careful consideration, the board has decided to place all five employees who have received Wells notices on administrative leave, pending further review of the matter," Assurant said in its statement. The board plans to meet on Wednesday to appoint interim successors for Messrs. Pollock and Camacho, Assurant said.
According to a company spokesman, federal officials are centering upon a catastrophe reinsurance contract that expired in 2004 and was not renewed. He could not provide the reinsurer's name.
"Over the past two years, Assurant has cooperated fully with the SEC's industrywide investigation and will continue to do so," John Palms, chairman of Assurant's board, said in the statement.
Following the announcement Tuesday, New York-based Standard & Poor's Corp. placed Assurant Inc. and its subsidiaries under review with negative implications.
"The uncertainty surrounding the aftermath of the recent announcement and the distraction of management highlight serious corporate governance concerns," said S&P credit analyst Shellie Stoddard. "Furthermore, it remains uncertain whether growing reputational issues could impair large credit-partner/client relationships, which could affect Assurant's competitive position and cut future revenue and earnings," she said.