FLORIDA OFFICIALS TARGET PROMINENT HISPANIC INSURANCE
COMPANY AND OWNERS FOR POLITICAL REASONS
Miami, May 22, 2007
Keeping insurance healthy in Florida is the stated purpose of the
Florida Department of Insurance and the Florida Department of Financial
Services. Yet, their appointed receiver, his consultants, and his scores of
attorneys failed to do just that. They failed to collect re-insurance money
contractually owed to a South Florida insurance company in the aftermath
of September 11. Sadly, an immigrant Hispanic family was forced to watch
as their American Dream and the private insurance company they had built
over twenty years were brought to financial ruin by those very Departments
that were duty-bound to create an atmosphere in which the company could
thrive.
Aries Insurance Company (a Florida domestic insurance company)
served the South Florida Hispanic business community for more than 20
years, during a time that national insurance companies refused to insure
the Hispanic community. Aries Insurance Company was the American
Dream of the Fraynd Family. This Hispanic family emigrated from Latin
America to follow the American Dream. In 1981, Marcos Fraynd, patriarch
of the family, invested $2 million to establish Orion Insurance Company,
later Aries Insurance Company. Their dream thrived until shortly after
September 11, 2001, when it became another casualty of that horrible day.
After September 11, 2001, General Reinsurance Corporation
(“GenRe”), the main Aries re-insurer, made a decision to stop paying the
re-insurance receivables it owed to The Aries Insurance Company, solely
for its own financial benefit. Outraged by GenRe’s actions, the Fraynd
family contacted Insurance Commissioner Tom Gallagher to assist the
Fraynd family and The Aries Insurance Company to collect the reinsurance
receivables from GenRe.
On May 9, 2002, the Aries Insurance Company and the Fraynd
Family voluntarily invited the Florida Department of Insurance to work with
the Aries management team together to collect the re-insurance money
from General Re. As of March 31, 2002, GenRe owed Aries $21M. The
Florida Department of Insurance appointed an overpaid and under qualified
receiver team to collect those overdue funds and collect premiums, settle
bills, pay claims, collect re-insurance receivables, and rehabilitate The
Aries Insurance Company.
After the Receiver paid over $650,000.00 to re-insurance consultants
who were hired as a result of their political connections, millions to the
other consultants and several influential law firms, the reinsurance bills
were never even prepared or sent to GenRe. More than $30M is still
pending, but has not been billed by Florida’s receiver to GenRe.
At an arbitration held in October 2002, the receiver’s only demand for
payment of monies owed by GenRe were those bills prepared by Aries’
management before March 31, 2002, prior to the receiver’s appointment by
the Florida Department of Insurance. That arbitration panel ruled in
November 2002 that Aries owed GenRe $3.7 million, but directed GenRe to
pay all unpaid reinsurance receivables owed to Aries after the receiver
prepared and presented those bills. Prompt action by the Florida receiver
would have enabled Aries and its policyholders to survive. Even then, the
Florida receiver took no action to collect these millions of dollars owed by
GenRe, preferring instead to vilify Aries management for the Receiver’s
own inaction.
Located on the same premises with The Aries Insurance Company
was Onyx Underwriters, Inc., another Fraynd Family business. Onyx was
the general agency for Aries and all Onyx Underwriters, Inc. affiliates. To
bolster Aries’ rehabilitation, the Fraynds voluntarily turned over more than
$20 million dollars from Onyx Underwriters to the receiver and assigned all
rights to collect all funds due from finance companies, agents, policy
holders, and others. Upon receiving that money and those rights to collect,
the Florida Department of Insurance receiver inexplicably ordered the
management team that ran both Aries Insurance Company and Onyx
Insurance Group of Companies to leave the premises.
Instead of working together with the Fraynds and Aries as agreed on
May 2002, the receiver and the Florida Department of Insurance turned
voluntary rehabilitation into an expensive legal battle. The Fraynd Family
had no other option to protect their policyholders but to hire a team of
attorneys to preserve their legal rights under the U.S. Constitution and to
fight this abuse of power by both receiver and the Florida Department of
Insurance. Failed candidate for governor of Florida, Insurance
Commissioner Tom Gallagher, took umbrage when the Fraynd Family
decided to fight back.
In 2004, the Florida Statewide Prosecutor turned what should have
been an insurance dispute into criminal charges against some Fraynd
family members. After more than three years of litigation in the criminal
courts, the Statewide Prosecutor was forced to drop the most serious
charges in return for technical violations of the insurance laws, extracting a
promise that the Fraynd Family would not participate in the Florida
insurance business ever again. The Fraynd family, brought to the brink of
financial ruin by the State’s overly aggressive actions, reluctantly settled
the criminal charges in order to bring their ordeal to an end. The result of
this debacle is that Florida’s regulators have saddled Florida’s taxpayers
with millions of dollars in excessive fees and costs billed by the Florida
receiver.
The Florida receivership failed the Fraynd Family, Aries, Onyx, the
South Florida Hispanic community, the 600 people previously employed by
the Fraynd family, the 3000 statewide agents of Aries and Onyx , and the
hundreds of thousands of Aries policyholders. The Fraynd Family watched
as their successful, Hispanic-American owned company was destroyed
because its receiver and the highly paid consultants and attorneys refused
to work with them as a team to rehabilitate a company that insured and
provided jobs to the South Florida Hispanic community.
