Florida sues Allianz over actions that led to insolvency
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The Florida Department of Financial Services filed civil suit against Allianz SE and some of its subsidiaries last week, alleging that Allianz's actions led to the insolvency of now defunct Magnolia Insurance Company.
The $20 million suit, filed in Leon County court, accuses Munich, Germany-based Allianz of willfully constructing “fraudulent transactions” that ultimately forced Coconut Grove, Fla.-based Magnolia, a seller of homeowners' policies, into receivership.
At issue in the complaint are a $23.8 million loan made to Magnolia's parent company, Irl Financial Group, by New York-based Allianz Risk Transfer in 2008, as well as a subsequent managing general agency agreement and other service agreements signed by subsidiaries of both firms.
“The Allianz Defendants knowingly engaged in an elaborate scheme to drain and divert the assets of the Insurance Company by exerting excessive fees and control over the business affairs of Magnolia for the sole purpose of prolonging the life of the Insurance Company to divert funds to continue to collect excessive fees from loans, managing general agency, reinsurance and other agreements and to secure their interest in the loan at the expense of the Insurance Company, policyholders, creditors and the people of the State of Florida,” the complaint states.
A spokesman for Allianz Risk Transfer was unavailable for comment as of press time.
