Office of Insurance Regulation re Reinsurance Renewals 5/31/06

Today, as a result of issues raised at the meeting of the Financial Services Commission held today, in which Insurance Commissioner Kevin McCarty provided a briefing regarding the state of the market, the Office will be requiring all insurers with June 1st reinsurance renewals who have not otherwise provided evidence of adequate reinsurance up to a 1 in 100 year event (using at least one model) to provide that evidence by the end of tomorrow in the form of a letter from the insurer’s reinsurance broker. If this evidence is not provided by the end of tomorrow to the Office, the insurer will be required to consent to administrative supervision by the Office pursuant to section of the Florida Statutes. If any delinquent insurers do not consent to administrative supervision, the Office intends to file petitions with the Court against such insurers to place them in administrative supervision this Monday, June 5, 2006.

The Office may exercise some latitude with regard to the level of reinsurance coverage they will require. In certain scenarios, a resolution with the Office may be available short of administrative supervision. In any event, if an appropriate reinsurance program cannot be verified by an insurer, we expect the Office to push quickly for either an immediate resolution or administrative supervision. Any insurer which resists administrative supervision may face possible liquidation proceedings.

Should you have any questions, please do not hesitate to contact this office.

Regards,

Richard J. Fidei