PDF MAKE - Florida Office of Insurance Regulation

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OFFICE OF INSURANCE REGULATIONKEVIN MCCARTY

COMMISSIONER

JAN teat1t

1

1N THE MATTER OF CASE NO 12280812CO

SOUTHERN OAK INSURANCE COMPANY

CONSENT ORDER

THIS CAUSE came on for consideration as a result ofSOUTHERN OAK INSURANCE

COMPANYs hereinafter SOUTHERN OAK proposal to remove selected personal

residential policies from CITIZENS PROPERTY INSURANCE CORPORATION hereinafter

CITIZENS which was submitted to the OFFICE OF INSURANCE REGULATION

hereinafter OFFICE for its review onDecember 13 2011 After acomplete review ofthe

entire record and upon consideration thereof and otherwise being fully advised in the premises

the OFFICE hereby finds as follows

1 The OFFICE has jurisdiction over the subject matter and of the parties herein

2 CITIZENS has been established in accordance with the provisions of Section

6273516Florida Statutes as amended to provide insurance for residential and commercial

property qualified risks under circumstances specified in the Statute

3 The Legislature of the State of Florida has enacted Section 6273511 Florida

Statutes to encourage and provide a means for the depopulation of CITIZENS CITIZENS

submitted and the OFFICE adopted by Oxder No 9453908a plan ofdepopulation attached as

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exhibit A and hereby incorporated by reference the terms and conditions upon which this

proposed consent order is predicated SOUTHERN OAK shall abide by the terms and conditions

ofthe CITIZENS depopulation plan as a condition of issuance of this consent order

4 SOUTHERN OAK is a Florida domiciled property and casualty insurance

company authorized to transact insurance in the State ofFlorida

5 On or about December 13 2011 SOUTHERN OAK submitted a proposal to

remove selected personal residential policies from CITIZENS The plan provides for an

assumption ofup to ten thousand10000multiple peril policies from CITIZENS personal lines

account and high risk multiple peril account SOUTHERN OAK plans to assume the

CITIZENSs policies oyei a period of time subject to the approval by the OFFICE

6 SOUTHERN OAK understands that the selected policies to be removed from

CITIZENS on or about March 6 2012 or at a later date approved by the OFFICE and

CITIZENS will not be subject to any incentive or bonus plan pursuant to Section 6273511

Florida Statutes unless and until the OFFICE approves such a plan for use by CITIZENS

provided such plan would be rehoactive to policies subj ect to this Consent Order If the OFFICE

approves a bonus plan for use by other takeout companies or for other transactions during the

2012 policy year the bonus may be paid to SOUTHERN OAK in accordance with that plan and

agreements between SOUTHERN OAK and CITIZENS SOUTHERN OAK shall enter into

appropriate agreements with CITIZENS to provide the following

a SOUTHERN OAK at its own expense shall give at least thirty 30 days

advance notice to affected policyholders which notice will inform policyholders of the need to

contact SOUTHERN OAK before the removal date if the policyholder desires to stay with

CITIZENS

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b SOUTHERN OAK shall accumulate any objections and shall facilitate the

return of any policyholder who desires to stay in CITIZENS if that policyholder expresses the

desire to stay in CITIZENS within the thirty 30 day notice period prior to the removal ofthe

policy or within thirty 30 days after the date of the policy removal Policyholders shall not be

required to make additional payments nor take any action other than to express the desire to

remain with CITIZENS in writing by electronic mail or by telephone on or before thirty 30

days following the date oftheir policy removal

c All communications with agents and policyholders regarding any policies

to be removed from CITIZENS must be done in accordance with instructions by CITIZENS and

the OFFICE SOUTHERN OAK shall obtain prior approval from the OFFICE ofany letters sent

to policy holders regarding any policies to be removed from CITIZENS

7 SOUTHERN OAK acknowledges neither approval by CITIZENS nor entry into

this Consent Order by the OFFICE constitutes a guarantee the above referenced policies will

ultimatelybe available to SOUTHEItN OAK for removal from CITIZENS as the availability of

policies for removal may vary over time

8 SOUTHERN OAK shall limit its actual removal of policies from CITIZENS to

the number and type ofpoliciesauthorized by the OFFICE The OFFICE will base its review on

SOUTHERN OAKS reinsurance program catastrophe modeling and financial statement

projections as well as the impact on policyholders Such reinsurance program catastrophe

modeling and financial statement profiles shall be based upon SOUTHERNOAKS current in

force book of residential property policies SOUTHERN OAKS projected voluntary market

writings and actual number of policies available in CITIZENS prior to the anticipated

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assumption date identified by SOUTHERN OAK as satisfying its filed and approved

underwriting guidelines

9 SOUTHERN OAK has submitted the proposed reinsurance documentation and

financial projections for assumption of up to ten thousand 10000 multiple peril policies

expected to be assumed on March 6 2012 or on subsequent dates approved by the OFFICE and

CITIZENS Each additional assumption of CITIZENS policies by SOUTHERN OAK shallbe

subject to advance written approval by the OFFICE

10 SOUTHERN OAKS acquisition of adequate reinsurance and maintenance of

executed reinsurance agreements is material to the OFFICES review and analysis of

SOUTHERN OAKS proposal to remove selected policies from CITIZENS and to the OFFICEs

approval of the proposal

11 SOUTHERN OAK expressly waive their rights to any hearing in this matter the

making of findings of fact and conclusions of law by the OFFICE and all other and further

proceedings herein to which the parties may be entitled by law or by rules of the OFFICE

SOUTHERN OAK agrees not to appeal or otherwise contest this Consent Order in any forum

now or in the future available to it including the right to any administrative proceeding circuit

or federal court action or any appeal

12 SOUTHERN OAK represents all explanations and documents made or submitted

to the OFFICE as part ofitsproposal to remove selected policies from CITIZENS including all

attachments and supplements thereto fully describe all transactions agreements and

understandings relating to the removal of policies from CITIZENS by SOUTHERN OAK

However all draft documents and nonexecuted agreements relating to SOUTHERN OAKS

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plan shall not be deemed approved by this Consent Order until such time as executed agreements

or fmal documents are submitted and approved by the OFFICE

13 The parties agree this Consent Order will be deemed executed when the agency

head or his designee has signed a copy ofthis Consent Order hearing signature of SOUTHERN

OAK or its authorized representative notwithstanding the fact the copy was transmitted to the

OFFICE electronically SOUTHERN OAK agrees the signature of their representative as

affixed to this Consent Order shall be under seal ofa Notary Public

14 Each panty to this action shall bear its own costs and attorney fees

IT IS THEREFORE ORDERED that

1 Upon consideration of the proposal to remove selected policies frrom CITIZENS

including its attachments the OFFICE approves the proposal to remove selected policies from

CITIZENS subject to adherence to the terms and conditions of this Consent Order by

SOUTHERN OAK

2 The OFFICE approves the assumption of up to ten thousand 10000 multiple

peril policies consisting of eight thousand five hundred8500 policies from the personal lines

account and one thousand five hundred1500 policies from the high risk multiple peril account

for the initial assumption starting on or about March 6 2012 in accordance with the proposal to

remove selected policies from CITIZENS any agreements between SOUTHERN OAK and

CITIZENS and this Consent Order

3 Regarding all reinsurancematters relating to policies removed from CITIZENS

for a period of three 3 years immediately following the date of entry of this Consent Order

SOUTHERN OAK shall

Page5of13

a Maintain substantially the same reinsurance coverage as evidenced to the

OFFICE in the proposal to remove selected policies from CITIZENS

b Submit to the OFFICE any and all replacement or additional reinsurance

agreements or amendments to reinsurance agreements that materially change the

reinsurance coverage in ci The agreementsamendments or plans shall be submitted to

the OFFICE for review and approval sixty 60 days prior to the date of effectuation of any

such agreements or amendments

c Notify the OFFICE of any termination of any of its reinsurance

agreements The notification shall be made to the OFFICE in writing sixty 60 days prior to the

effective date ofany such termination

d Submit in writing to the OFFICEtheproposed utilization of any substitute

or additional reinsurers for the OEFICEs review and approval sixty 60 days prior to the

companies being utilized within SOUTHERN OAKSreinsurance program SOUTHERN OAK

shall further immediately submit to the OFFICE all information as requested which the OFFICE

deems necessary for the OFFICE to complete its review and

e Cede reinsurance or otherwise contract for reinsurance only with

reinsurers who are authorized andor approved by the OFFICE or such other reinsurers as may

be approved in advance and in writing by the OFFICE SOUTHERN OAK shall comply with

the requirements of Section 624610 Florida Statutes with regard to all of its reinsurance

arrangements

4 For the three 3 years immediately following the date of entry of this Consent

Order SOUTHERN OAK shall file with the OFFICE on an annual basis no later than June 1 of

each year a catastrophe loss model with probable maximum loss estimate amounts from a one

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hundredyear storm based upon the exposure information gathered from all of its policies in

force as ofApril 15 ofeach year which would be affected by a catastrophe SOUTHERN OAK

shall include in this filing an exposure management plan which will identify the companys

ability to provide satisfactory financial capacity to cover the companysexposure to catastrophic

hurricane loss The plan shall identify the reinsurance coverage and surplus levels being utilized

to maintain a satisfactory financial capacity with regard to catastrophe exposure SOUTHERN

OAK shall also include within the plan specific actions intended to limit catastrophic exposures

to the companys financial capacity Based upon the OFFICEsreview of the models and plans

SOUTHERN OAK may be required at the OFFICEs sole discretion to take corrective action to

cure any overexposure identified by the OFFICE Such action may also include obtaining

additional amounts ofreinsurance coverage as directed by the OFFICE or suspend writing ofany

additional business including the CITIZENS policies

5 Any and all policies removed from CITIZENS by SOUTHERN OAK shall

provide coverage substantially equivalent to that afforded by CITIZENS Any and all policies

removed from CITIZENS by SOUTHERN OAK pursuant to its proposal to remove selected

policies from CITIZENS must be renewable by the policyholder at approved rates and upon the

same terms at the first such renewal onto SOUTHERN OAKs policy form unless such policies

are canceled by SOUTHERN OAK for a lawful reason

6 At the time SOUTHERN OAK removes any policy ofinsurance from CITIZENS

SOUTHERN OAK shall either obtain a new policy application from each affected policyholder

or maintain in its files a copy of the policyholders application on file with CITIZENS If

SOUTIERN OAK chooses the latter option SOUTHERN OAK shall nevertheless be required

to obtain a new policy application from each affected policyholder no later than twentyfour 24

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months from the effective date of any policy of insurance removed from CITIZENS

SOUTHERN OAK may not initiate any retrospective increase in rates or the premium or any

retrospective decrease in coverage provided under the assumed CITIZENS policy if applicable

as a result of the information obtained from or through the new policy applications

7 For a period of three 3 years immediately following the date of entry of this

Consent Order SOUTHERN OAK shall abide by the proposal to remove selected policies from

CITIZENS in all material respects Further SOUTHERN OAK shall abide by all terms and

provisions of any agreements entered into with CITIZENS and

8 Regarding required documentation to be maintained by SOUTHERN OAK

relating to policies removed from CITIZENS

a SOUTHERN OAK is required to track all agents as well as the related

policy information who have declined to participate in the takeout process This information

shall be submitted to Citizens by the deadline published in the Citizens Assumption Calendar

Citizens will then mail out notices informing the policyholders of the agents declination This

will allow the affected policyholders the opportunity to address the declination with their agent

and possibly receive their agents approval in time to be included in the current takeout

b SOUTHERN OAK is required to track all agents as well as the related

policy information who after discussing with the policyholder decide to participate in the

takeout process and submit this information to Citizens by the deadline published in the revised

2012 Assumption Calendar

c SOUTHERN OAK is required to keep a record of all agents who decline

participation along with an explanation for the declination

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d When contacting an agent regarding a potential takeout palicy

SOUTHERN OAK is required to provide each agent with the policy form to be used

appointment contract and a copy of SOUTHERN OAKS most currently available financial

statement

9 SOUTHERN OAK is required to comply with the following requirements when

soliciting an agents permission to participate in the assumption process

a SOUTHERN OAK must utilize email and at least one other method for

contactie call fax or regular mail

b SOUTHERN OAK must send out a direct solicitation to the agent of

record and copy the agency principal

c SOUTHERN OAK must provide all agents a minimum of14 days to

review the solicitation This will allow agents adequate time to research the company and make

an informed decision

d SOUTHERN OAK must provide a copy ofthe appointment contract

SOUTHERN OAK may opt to provide the agent a link to its website containing the required

information

e SOUTHERN OAK must provide a copy ofthe policy form SOUTHERN

OAK may opt to provide the agent a link to its website containing the required information

f SOUTHERN OAK must provide a chart identifying any differences in

coverage from Citizens which will help both the agent and the policyholder inmaking an

informed decision

g SOUTHERN OAK must provide a list ofpolicies specific to the agent that

it would like to assume

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h SOUTHERN OAKmust provide a contact number ofqualified staffto

answer agents questions

i SOUTHERN OAK must provide an overview ofits strategy for handling

claims cat and noncat

10 Should the OFFICE determine SOUTHERN OAK has failed to materially comply

with terms ofthis Consent Order the proposal to remove selected policies from CITIZENS

including its attachments and amendments thereto as submitted to the OFFICE or terms ofany

agreementswith CITIZENS SOUTHERN OK shall upon receipt ofnotice ofsuch material

noncompliance have sixty 60 days to cure its materialnoncompliance In the event

SOUTHERN OAK fails to cure any such material noncompliance within the sixty 60 day

period SOUTHERN OAK expressly agrees the OFFICE may enter an order directing it to

immediately cease writing personal lines residential property coverage or other lines ofinsurance

within the State of Florida or imposing such other sanctions authorized by statute rule or

restrictions as may be deemed appropriate by the OFFICE

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WHEREFORE the proposal to remove up to ten thousand 10000 multiple peril policies

consisting ofeight thousand five hundred8500 policies from the personal lines account and

otle thousand five hundred 1500 policies from the high risk multiple peril account for the

initial assumption starting on or about March 6 2012 subject to the terms and conditions ofthis

Order are hereby APPROVED

FURTHER all terms and conditions contained herein are hereby ORDERED

DONE and ORDERED this day of 2012

i

y 2Tevin M McCarty Commissioner

Office of Insurance Regulation

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By execution hereof SOUTHERN OAK INSURANCE COMPANY consents to entry of thisConsent Order agrees without reservation to all ofthe above terms and conditions and shall bebound by all provisions therein The undersigned represents that he has the authority to bindSOUTHERN OAK 1NSURANCE COMPANY to the terms and conditions ofthis ConsentOrder

SOUTHERN OAK INSURANCE COMPANY

Tony Lou an President

Corporate Seal

STATE OFCOUNTY OF

The foregoing instrument was acknowledged before me this day ofr012by Yy as

name o per on type of authority egofficer tntstee ettomey In factforChhvinr

company name

Signa ure the otery

ZPrint Type or Stamp Commissioned Name of Notary

PersonallyKnownORProduced Identification RUBIN L PARKERType ofidentificatonProduced Notary Public Stale of Florida

My comm exp July 21 2012Comm No DD 807996

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COPIES FURNISHED TO

Bobbi Scott Depopulation ManagerCitizens Property Insurance CorporationCorporate Offices101 North Monroe Street Suite 1000

TallahasseeFL32301BobbiScottacitizensflacoin

Mr Tony Loughman PresidentSouthern Oak Insurance Company76 South Laura Street Suite 1702

Jacksonville FL 32202

TonLoulugnancsouthernoakinscom

Carolyn Morgan DirectorPCFinancial Oversight200 East Gaines Sheet

Tallahassee FL 323990329

David Altmaier ChiefAnalystPC Financial Oversight200 East Gaines Street


Jamie Horne Assistant General CounselOffice ofInsurance RegulationLegal Services Office612 Larson Building200 East Gaines Street

Tallahassee FL 323990333JamieHorneufloircom

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30

OFFICE OF INSURANCE REGULATION

1evrNMMcCnxrv DIdIMdCOMMISSIONBR

IN THE MATTER OF Case No9453908

CITIZENS PROPBRTY INSURANCE CORPORATION

QRDER APPROVING CITIZENSk110PERTY INSURANCE CORIORATION5IERONtrRESIENTIAIYD OMMERCIALRE4IAElyALNONIONUS

TAKEOUT IPLANS

T0 Scott Wallace PresidentCitizens Property Inaurance Corporation101 North Monroe Street Suite 1000

Tallahassee Florida 32301

THIS MATTER came before the Office of Insurance Regulation hereinafter referred to

astheOFFICE for consideration upon the filing by Citizens Property Insurance Corporation

hereinafter referred to as CITIZENS for the OFFICESapproval of the Personal Residential

and Commercial Residential NonBonus Takeout Plans hereinafter referred to as the Takeout

Plans The OFFICE having considered the provisions of the Takeout Plans and being fully

advised in the premises hereby finds as follows

1 The OFFICE has jurisdiction over the parties and the subject matter of these

proceedings

2 Pursuant to Section 6273516p3aFlorida Statutes CITIZENS shall adopt

one or more programs for the reduction ofboth new and renewal writings in the corporation The

programs are subject to approval by the OFFICE

EXHIBIT

3 The Hoard of Governors of CITIZENS at its duly noticed and convened meeting

of January 25 2008 approved the Takeout Plans On or about February 10 2008 CITIZENS

submitted to tho OFFICE for approval both the Personal Residential and the Commercial

Residential Takeout Plans

4 The Takeout Plans are attached hereto as Exhibits A and B

5 CITIZENS has developed a takeout process that includes a required notification

to policyholders by the takeout companies at least thirty 30 days in advance ofapersonal lines

takeout so that CITIZENS can continue the effort to remove risk to the voluntary market while

honoring a new statutory requirement that the polioyholder has a right to stay in CIT1Z13N5 for a

specified period of time even if the policyholder receives an offer of coverage from the

voluntary market In furtherance of this effort CITIZENS has been giving notice to takeout

companies to avoid the selection ofpolicies where the agent has categorically disapproved of

policy removals The notification is for the very practical purpose of saving the effort to de

select policies after the agent refuses a takeout Because this process is done prior to policy

selection under current practice the policyholder is unaware that their policy would have been a

potential candidate for an offer ofooverage from a voluntary insurer

6 CITIZENS shall discontinue this notice so thaE the takeout companies will make

their selections without categorically eliminating policies from eligibility for removal takeout

companies will still notify agents as well ea policyholders in advance of the proposed policy

removal date and will seek the approval of the agent for appointment However the agents

should be required to decline appointment in oath instance of a roftisal to allow policies to be

removed and the affected policyholders should be notified by CITIZBNS that a voluntary

insurance company selected theirpolicy for removal but their agent reflased

Page 2 of 6

7 For assumptions occurring after May 1 2008 CITIZENS must send notice to any

policyholder whose policy has been selected for assumption by an assuming insurer but whose

agent is unable or unwilling to be appointed for rho assuming insurer that an offer of coverage

was made which may have saved them premium dollars The notice must also provide the

policyholder with the offering insurers contact information to permit the insured to contact the

company directly to make a determination on their own ofwhether to seek coverage from the

offering insurer

8 Approval of these Takeout Plans shall not constitute the OFFICBsapproval of

any specific insurance company depopulation plans subject to the OFFICESxeview

YT YS TAEAEIFORE ORDERED

Subject to the terms and conditions outlined above the Personal Residential and the

Commercial Residential TakeoutPlans approved by the CITIZENS Board ofGovernors on

January 25 2008are APPROVED

DONS AND ORDERED this day of 2006

Page 3 of 6

wtuiunriuvr

Office ofInsurance Regulation

NTTCFFRIGHTS

pursuant to Sections 120569 and 12057 Florida Statutes and Rule Chapter 28106 Florida

Adminiatiative CodeFAC you may have a right to request aproceeding to contest this action by the

Oftlce of Insurance Regulation hereinafter the Offico You may request a proceeding by filing a

Petition Your Petition for a proceeding must be in writing and must be filed with the General Counsel

soling ae the Agency Clerk Office ofInsuranceRegulation If served byUSMail the Petition aholodaddressed tv the Florida Office of Insurance Regulation at 612 Larson Building Tallahassee

323994206 IfExpress lVlail orhanddelivery is utilized the Petition should bedelivered to 612 Larson

Building 200 Eastt3aines Street Tallahassee Florida 323990300 The written Petition must be i e

by and filed in the Office no later than 500pm on the twentyfirst 21 day after your receipt of this

notice Unless your Petition challenging this action ie received by the Office within twentyoie21 days

from the date ofthe receipt ofthisnotice the right to a proceeding shall be deemed waived Mailing the

response on thetwentyfirstday will not preserve your right to a hearing

Ifa proceeding is requested and thorn is no dispute ofmaterial fact the provisions of Section 120572

Florida Statutes may apply Tn this regard you may submit oral or written evidence in opposition to the

action taken by this agency or a written statement ehallengingthegrounds upon which the agency has

relied While a hearing is normally not required in the absence of a dispute of factlf you feel that a

hearing is neeeseary ono may be conducted in Tallahassee Ftorida orby telephonic conference call upon

your request

Ifyou dispute material fasts which are the basis for this agencysaction you may request a formal

adversarial proceeding pursuant to Sections 120569 and 120571 Florida Statutes Ifyou reyuost this

type of proceeding the request must comply with all of the requirements of Rule Chapter28106201

FACmust demonstrate that your substantial interests have been affected by this agencys action and

contain

a A statement ofail disputed issuesofmaterial fact Ifthere are none the petitionmust

so indicate

b A aoneiae statement ofthe ultimate facts alleged including the specific facts the

petitioner contends warrant reversal ormodification ofthe agencysproposed action

c A statement ofthespeeifiCrules or statutes the petitioner contends require reversal

or modification ofthe agencysproposed action and

d A statement of the relief sought by the petitioner stating precisely the action petitionerwishes the agency to take with respect to the agencysproposed action

Theaeproceedings are held before a State Administrative Law Judge of the Division ofAdministrative

Hearings Unless the majority ofwitnesses are located elsewhere the Office will request that the hearing

be aonducted inTallahassee

In some instances youmay have additional statutory rights than theones described herein

Failure to follow the procedure outlined with regard to your response to this notion may result in the

request being denied Any request for administrative proceeding received prior to the date ofthisnotice

shall be deemed abandoned unless timely renewed incompliance with the guidelines as set out above

Page 4 of 6

CERTIFICATE OF SERVICE

IHEREBY CBRTIFY that a true and corroct copy of flue ORDER was sent by Certified Mail to

Scott Wallace President Citizens PropertyInsuanca Corporation 101 North Monroe StreetSuite1000 Tallahassee Florida 3230 thisMday of irrch 2008

Er1caMayAsalstant General Counsel

Florida Office ofInsurance Regulation200 Bast Gaines Street


850 4134 12

Page S of 6

COPIES FURNISHED TO

5cottWallace President

Cltizcna Property Insurance Corporation101 North Monroe Street Suite 1000


Robin Westcott Director

Property Casualty Financial OversightOffice of InsuranceRegulation200 East Gaines Street


Belinda Miller Deputy Conunissioner

Ofioe ofInsurance RegulationProperty Casualty200 East Gaines Street


Erica May Assistant general CounselOffice ofInsurance RegulationLegs Services Office

200 Bast Gaines Street


Page 6 of b

Citizens Property Insurance Corporationpersonal Resldentia

NonBonusTakeout Plen

GeneralThe contract period to remove polclea from Citizens will be eighteen 18 months High Rfsk

Account HRA and Peraonai lines Account PlA lakeouts are exclusive and may not b

assumed slmuitaneousiyunder a single eighteen 18 month takeoutcontract This document

is provided as an overview of Cltlzens takeoutplan Each assuming carriersassumption

agreement contract will outline specific details and should be carefully rev1ewed for addllionat

the Personal ResldntiaNonBonusTakeoutTlmelinesl and Requbirements eftshad heretoea Exhibit A

PLA or HRA Personal Residential TakeoutPlan

1 During th9 eighteen1month bakeout contract periodihassuming canter must remove

a minimum of eithera 10OA0 policies with wind coverage oR

b Policies vtlth wind coverage that have a cumulative Total Insured Value

coverages A B C D cotnbined of at least two 2 billion dollars

2 Any single assumption in a takeout contract period must ramous a minimum of2ta00

3 Polelse mustberetained byathe sssumang carrier far a min mum ofthree 3 ylearsoilers

Takeouts consisting exclueivery of Mob11a Home policies have the rollowin0 minimums

2600 pollutesTIV requirement dose notapply to MH only Takeooute

Ceding CommissionCeding oommisston is the percentage of unearned prernlum for assumed policies that Citizens

retains to service those policies during the period of lima from the assumption date tv the

policy farm expireibn date Assuming carriers who remove a largernumber of policies or TiV

from the Personal Lines Account ar Hlgh Risk Account may be ellgtbte for a reduoUon In

oedfng commissicn The ceding oommisslon will be reduced for ail potlales removed in an

eighteen 18 month csontraot period if either the minimum number of policies or TIV are

assumed as ouHined In the cables below Ceding commisaton is removed from the unearned

premium payment that is sent to the assuming carrier after each Individual assumption based

upon the number of policies or TIV actually assumed iodate within the contrect period

Number of Minimum Total Ceding

iess then NIA 18

80000

80000 tv74999 11 Bllllon Reduced to

76OOp q4 Hilipn Reduced to 8

89999

90000 and up 17 Bllllon I Reduced to 8

BXHIBtT

A

Citizens Property insurance CorporationPereonai Residential

Nont3onus Takeout Plan

Ceding Commissioncontinued

CAdlna CemrtilalonTabta iHRA1

Numbmr of

policiesinimam Total

Insured slue TICetiingCommtsslon

Less than

ssoooNiA 16

35000 to 49999 f0 gill n Feduoed to

1295

50 00 toa8la9 14 Ollllon Reduced to 8

80000 and up 22Billion Reduced to 890

Gedin Commission Table Mobile Home

Takeouts Consistingtxduslvely of Nbblie Wome

Numbor ofPollclos

Mlhirnum Totalinsured Value 1

CedingCommlaslon

Les8lhan

15000NIA 18

15000 to 18899 NlATY

Reduosd to120

20000 tv 29999 NIA Reduced tv 9 0

30000 end up NIA Reduced to 8

Policy Cancellations

Valfd CanceilatloneAValid Canaeilatlan Reason includes the tollowln9

1 Nonpayment of premium or

2 Insured Initiated canoalladon eg transfer of ownership insured request policyrepleaed etc

Pollolas that cancel Cor a Valid Cancellation Reason will count toward minimum policy TIV

requirements for ceding commission

JnvallCanceilallonsAnInvalid Canoellstlan Reason Includes any insurer initiated canoellatlon other than

described above Pollclet3 that oanoel for an Invalid Cancellation Reason w111 not count towardany minimum policy TIV requirements for ceding commission

xxli3lrA

ateraonal Reeldental NomIosus1ake0yt1lmeRealitrements

Tha pmoess timolinas and roquiromente aro found in the osaumption agroemcrta publishod

assumption calendar Tha Office epn specify additional criteria in the asaurning carriers Consent

order Citizens Dan specify additional criteria in the asaumption ngreoment

At any point in tuna an insurer may request for purposes of depopuletton and subJeot to

an appropriatecontidrmtiality agraemrrtt a data file of policies ftom C1TZfT1SAll

poliaios notearrontly pending cancollation notsot tbrnontenewal or tagged for another

ineuror na desorbedbelow will be included in the data Lilo

Companica may not be allowod to Depopulate polioos in consecutive assumptions This ie

dependent upon the number of participants This detormination is based on resourcesand

solely at Uto discretion of the Depopulation Manager

A e nt n

Tro Insurer must provide a Certifiasto of Authority from the Office anti an prder or

letter from tho Oflioe approving the assumption

Tho Assuming Carrier mustrotum an axeeutod Requirements and t7endline Lotter

Tile insurer moat rotumanexocutod Requirements and Deadlino Letter

AtLust AODavlsnfore initial As9u at on

The AsauminS Carriers potloy selection muse ba submitted to Citizens By submitting

ihapolicy aefecdon file the assuming cnrriec is certifying tiat nil associated have Dither

boon appointed by the company ar agreed to have their policies assumed by the company

under tho provisipns of ConsumerChoice

Citizens must roceive tits AssumingCarriersinfomwtioncompany lettorhead with logo

signature etc to hogln formatting of assumption notices

rav gofore Iaitint Aseumatton

The Assuming Currier must mail notice 35 days befote the Assumption date giving ttte

consutnor the option to chooso not to bo assumed The Natiae must be approved by tha

OIR and Citizens it must be sent to each consumer tte cnrrior intends to assume

The Insurermust return an executed Assumption Agreoment toCITZ1rNS

Ilia the Assuming Carrieraraspouslbiltyto collect the responses from the above aoticts

and retain theso for doeutnentation Ail consumers wlro indicate Choy donot want to be

assumed need to be entered intoen Access data base with tharaasaoiated Citizens policynumber

@IFast 61Dava Before lnittal AssumoNon

The Assuming Carrier must provide adata fits Access format containing each consumer

and essacaced policy numbor that has chosen to not ba assumed Citizens eliminates the

poNcios of consument who do not wish to havo chair policies assumed from the

aompariyspoNcy selection

CXHBITA

teentprocess Ckeares

Reoent changes to FloritW law modititidCitizens statutory eligibility rules The ehang allow

Citizens policyholders to srtet an offer from an nasuming carrier and choose totontain iusared

by Citicwte To comply wil6 the changes to law Citizens mplatnenttxl notification requirementsthat assuming camera must comply with In ardor to remove policies from Citizens

1 At least 35 days b5 day9for commtxufal rtsidetttial prior to a planned assumption the

assumiag ettnier muxt trail uodfioation to aaoh policyholder that gives them the optionnot to parHoipttte in iha assumption sample attached Approximately 39000

policyholders have responded to this notification and chosen to remain withCitizens

2 Tits offiolal notice of assumption sent to the policyholdoragentend lien holder alearty

indicates that thepoicyhodor can reverse the assumption and choosetortmain insured

with Citizens all thewayuntil the expiration of the curnettpolicy sample attaohod To

dart Citizens atsiT has processed approximately 7fi00 poliayhoider requests io remain

withCtlzensaRor they retolved their gfificlal notice df assumption

MMNIlYYYYPolicy Holder Insured location

Stroet

city tato ZIPDearCitiuns PolicyhoMer

On MtvflDDYYYY theFloridatffioo of Ltaurancc itogulation signed a consent enter approving ABC

Iriaurenco Company assumption of Insurancepoticics from Citixans FropeXty IntNrenca CotporatlonCllimns We are ploaYOd tp announce that your policy has been aeloated by ABC Your agent is aware of

thisand will continue to represent you On rho awutnptiondale bf your policy AI3C inaurunetwill

baoomo reaponaiboibr the payment ofanyolaimathnt occur underCitizompollay terms alter

MMlnYYYY Approximately 4S dttysptior to when youreurreeCititers policy renews you wilt be

titfarod apoltay by AtiC Titsttranao thatprovldas you whh a rate that will ba at orbelow what you are

aurrontly paying Cltizpna Under rho new law you as an inauroncoconsuroar luvc a right to thooso to

rojoel this offer from Af3C Insurance and stay with Cititcna Howeverwo beliava you should carafUlly

cnnaider rho ofRr of ABC Hera arcsomeof the Imponant reasons vhy

Ottr rater are lower tban what you arecurrently paying Citizens and you will

benefit front ibis savlnQa when yourpolryrwtowa later lido yearYour currant policy will bo oonti nucd with no change 1n your covctegcor disruption

in ynur paliay oyatcA13C Insurance intends to provide you wtih superior customer sctvios offioictand

feet ptiliay service and expedited atairns handliflgABC nsumncc will ofPerquarterlysetnlannual and annual natallmcnt payment

pions to assist you with budgotingyourprrmiutns

Wo look forward to providing you high revels of atrrvice as your insurance company If you have any

apeoitio covarago and rate questions please sett your insurance agent Far goners questions about ABC

Insurance please tollt8f6A46178 t Monday tluough FridayIom900 to600pm or you can visit Our

vebitoatwwwltotnewisolnsurancocom to loom more about ourcompany and our commitment to yeti

EXHIBIT A

NO ACfON ISRQUIRBD BYYOU4PARICIPATLr HOUVEVLR TO PREVENT THE

ASSUMI170NOF YOURPOICYBY ABC PLEASEIETACFi THL FORM BPLOIY BiGN AND

MAIL TO ADC lnsutanoeBFFORBMNiDDNYYY

Thank youSincorclyPresident and ChiefExecutive O1icer

ONLYItRTURN1itI1SFoRM 1F YOU AAERFlECTING THE OFFER

Plcanc moll to A13C Insurance or Fax to77777777777777 B 81vdTampa PL 777777777

7 wlsb to stay wllh ClHtsns and reJect thtr alterPrinted Namo

Sign4turaAddtasslCltyStatc2ipCiliunslnsuranca Policy Number DayImo PhoneNumbor

NOTICE OIr AS9UNPTION AND NQN RENENUAI

zse read aansfully tIs theonlvnollae you erUggslvo

Dear Policyholder

Un May 17 20D7 611201AM ABC Insurence Company assumed full reeponalblllly for your property Insuranoe policypreviously issued by the Cllhrens Property Inaurenoe Corpoteaon Clpzene T1ra assumption utyour p011oy by ABC Insurance

Company Ispart of a program txeeted by ih8 Florida 6eglsialure to reduce Ure number of properties Insured by ClGzena Yaur

agent coneenle0 to lhla atuumpllon and you did not requeatexcluslon as provided In the Inlllal nollce ptven io you by A9C

InauranCe Company Your current CNlzena policy Ie now opnsldered to be dlrecey Issued by ABC Insurance Companyand wttl remain to aMsCt unlll theexplra0on date shown above This also le nolloe that Ihis policy is nonronewed on the exptrnllondRe end any renewal or repleoement pd1Cywill be leaned by ABC InsuranceCompany

For claims on lessee on or afler1201AM MaO 17 2007 CallABC Ctalms Department at077123A007

For claims on loe6as prior td 1201AM May 17 2007 Coll the ClUzens Cialms Reporting Cenlerel088 9899999

jQ REQUEjPIjIC ANA FOR 47HER QUESTIONS

For policy service Including coverage changes oroanrellatlon requests Contact yourClizenaagent 0190fi0988888

For quesllona regardtn8 this notice tafl your Clllzena agent at3038888888

wABC IN9UftANCH COMPANY3987 B A6SUMPTtON LANECORAL BPRINt38 F134t 12

Polkyholdar Copy MiD203321AID200331F1D 8

THIS NOTICEANO THE ENICL08E0 CERTIFICATti OF A89UMPTKIN CONTAIN IMPORTANT INFORMATION

ABOUT CHANpHa AFFECTIND YOUR POLIOY 1NiTH CITIZENS

Citizens Property lnsuranca CorporationCommercial ResldentlalNonSonusTakeoutplan

GneralThe contrast period to remove oommerolal restdentlel poilcies from Citizens will beelghtetan 18 months HIBh Risk Account HRA and Commercial Lines AooountCLA takeouts are exolusive and may not be assumed simultaneously under a

eingle 18 month takeoutcontact Thls dooument Is provided as an overview ofCitizens takeout plan Bach assuming carriersassumption agreement contractwill outline specific details and should be carefully reviewed for additionalrequirements and speatfications In addition all assumptions mutt be done incompliance with the Commerolal Resldenttal NonBonus TakeOut Timelines andRequirements attached hereto as Exhibit A

CLA or HRA Commercial ResidentialitakoptPlan1 During the eighteen 18 month takeout contract period the assuming terrier

must remove a minimum if eithera St0poilcies with wind coverage ORb Policies with wind coverage that have a cumulative Total Insured

Value building Contents 5peciel Class Items Coverages A 6G combined of35billion dollars

2 Any eingte assumption In s lakeout contract period must removeaminimumof 100 pnllces or Total Insured Value Bulktln0 Contents Spedal ClassItems CoveragesA B C combined of seven 7 hundred mlllldn doNan3

3 poilcies must be retained by the assurning carrier for a minimum of three 3years

Cedlnp CommlelionCeding commission Is the percentage of unearned premium flrassumed policies thatClilzens retains to service lhos poilcies during the period of time from lifeassumption data to the policy term expiration date Assuming carriers who remove w

larger number of pailclas or TIV from the Commercial Lines Account or High RlkAccount may be eligible for a reduction in ceding commission The cedingcommission will be reduced for all poilcies removed In an eighteen 9t3 monthcontract period If etchrthe minimum number of policies or TIV are assumed as

outlined in the table below Ceding commission is removed from the unearnedpremium payment that is sent to the assuming carrier after each individualassumption based upon the number of policies or TIV actually assumed to datewithin the contract period

EXHIBIT

Cwdlnn nminlalen Tebin fCemmerelel Resldantiel

Number ofPoficla

MMlmumfotalInsured VelueYI

CsdingCommisslon

Less than 698 NIA 16

800 to 999 5 t31111on Reduce to12

1000 to 1999 t0 t3111fon Reduced to 9

2000 and up 95 Qllllon Reduoed to 8

Policy Cancellatlonaz

AValid Canoelletlon Reason Includes the following

1 Nonpayment of premium or

2 Insured inlUeted canceAatlon eg trensfer of ownership Insured requestpolicy replaced etc

Policies that cancel for a Valid Canoellation Reason will count toward minimum

polloy TIV requirements for ceding commission

An Invalid Cenoellation Reason nctudes any insurer Initiated cancellation ocherthan described atova Pollotes that cancel for an Invalid Cancellation ReaeonwNi

not count toward any minimum policy TIV requirements for ceding commiealon

Carefully review the easumptlon agreement es there are other requirements and

apeclttcatlons Assuming oanlers are also required io adhere to all requirements ofthe Florida Ofiloe of insurance Regulation

2

EXHI131IA

CopprgliResidentialNobonusTakeutCitielinesEiuemetetsThe procbss titnelinca and requirements erafattd in the assumption agreements publishedassumption calendar 77re Officecan apeeify additoval criteria in the assuming carriers Consent

order Citizens ann spatstfy additional criteria h the ossumptlonagteoment Citizens reserves the

right to modify those deadlines

At ony point in limo an lnsuror may request for purposes of depopulation and subject to

an appropriate contldentiality agroament a data fileof policies from CiTILEN3 All

policies notcurrently pending cancellation not sot for nonrenewal or tagged for another

inaurec as described below will bo inaluded in the dale Lila

Cotnpanioe may not bo allowed to Depopulate lrolices inconsecutive assumptions This is

dependent uponthcnumber of participants This determination is based on resourcesand

is at rho dieorotion ot the Depopulation ManagerAtiegsi 7lpyetoronINalAssumasimt

The Insmarmust return art exoculad Assumption Agreement to CITIZENFi

Tho lnautxrr must provide a Ctartioaia of Authority Ilrotn rho Oflieo and an Order or

fatten from rile Oflico approving the resumptionT1te Assuming Carrier rnuat return an executed Reyuirementa and Deadline Latter

PAtIIE141axlrRSRFFlpliiglpttmndon77ta Assuming Carrierspolicy selection must bo submitted to Citizens Qy submittingthispolioy selection file the assuming corriar is certifying first all associated agents have

agreed to allow their policies to be assumed by thetompnny under the provisions of

ConsumerChoice

Citizens must receive the Assuming Carriersirrfotmation company letterhead wiQr logosignature etc to begftttottnalting of aesumpticn notices

t IRgt65Dxva1efntrc InlilalAlsumatlanTho Assuming Carrion mual mail a notlou fi5 days bctbra the aeaumpllon date giving fire

consumer the option to choose not to be assumed Tho Notice must be approved by the

Office and Citizens It must be seat to cosh nnrned insuvcd the carrier intends to assume

Before aetdirtg any corrospondcricelo Ilra named insured iho associated aganl of recordmoat agree to a11ow polieies to bo assumed per wnsumer clioioe The assuming carrier

must bo Able to provide documentation that dte agent has aillrmative agreed to allow

polices to be assumed upon dentund

It is rhoAssutnirtg Carriers reeponslbility to collect the roaponsaa from lira above noticesad retain thcgo fur dacumentatiorr Ail aonsantors who indieota they da not want to boassumed need to ba entered into an Access data base with their aaaaaiated Cidzens policynumber

The personal naeidontial program requires JS days Tlta commercial residertlial praccse

rnquitud additional Limo so condominium assirciations could respond

@taLlSt914Xi1l4lmo rn

The Assuming Carreimast lirovide a dale fileAccess formatcontaining cash consumer

and asaociatcd policy number that has chosen to not be assumed Citizonti eliminates rite

policies of consumers who do not wish to Nava their policies aasurned from the

eotnpanyapolicy eeleotlon

EXHIBIT A

fhcae deadlines mny cluuige depending upon tha number of participating compnniex Ttlc

Uepapulation menagcr will notify ifmodiltaution ie naaessry

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