Mike Colodny: Florida Regulators Found a White Knight in Ascendant Insurance

 The rise of Ascendant, an insurer funded by the Cejas family

BY BEATRICE E. GARCIA
bgarcia@MiamiHerald.com

CARL JUSTE / MIAMI HERALD STAFF

PLC Investments, has started a new insurance company to provide coverage to businesses whose policies are being canceled as state insurance regulators liquidate two failed companies.

Picking up where an ailing insurance company left off may not sound like an immediate recipe for success. But Pablo Cejas is hoping Ascendant Commercial Insurance will thrive where two Hialeah-based insurers failed.

Ascendant was formed in August to provide coverage to businesses whose policies are being canceled as state insurance regulators liquidate two other companies, First Commercial Insurance and First Commercial Transportation and Property Insurance. Those two firms didn’t have enough money to pay claims and hadn’t bought sufficient reinsurance to cover some of their losses.

At the time the First Commercial firms were shut down, they had about 18,000 policies on their books.

Ascendant is starting out with an initial $6 million in capital — all cash invested by the Cejas family. The firm will offer coverage to First Commercial policyholders, including writing policies for taxi, towncar and limo fleets.

“We were attracted to the core focus of this business. It’s a very viable niche,” says Pablo Cejas, 39, who will serve as president and chief executive of the new firm.

Ascendant also will write workers compensation and liability coverage for small- and medium-sized businesses.

“These business make up the backbone of the economy in the State of Florida and the country. They have specific insurance needs. That’s a fundamental premise that won’t go away no matter what the condition of the economy is.”

However, Ascendant won’t write property coverage because of the high exposure to hurricane risk in Florida.

“I don’t want to say we’ll never do it. But the risks in [property insurance] can be large. We might consider it down the road,” says Cejas.

Cejas, who serves as vice president of PLC Investments, which manages the family’s real estate properties as well as investments in small- and medium-sized private firms, says the family has been considering an insurer as a potential investment for some time.

“We believe this to be an ideal opportunity for us based on our knowledge of the insurance business, experience owning and operating regulated businesses, and knowledge of the geographic markets in which Ascendant is doing business,” he says.

SPEEDY APPROVAL

Ascendant won quick approval to take over the First Commercial policies in part because the Cejas family had the cash ready to invest and it also had industry experience.

Michael Colodny, an attorney with Colodny Fass, which represented Ascendant as it was going through the approval process in Tallahassee, says regulators were swayed in Ascendant’s favor because of the family’s experience in the insurance business.

“The receiver was looking for a white knight to provide coverage for the policies that were about to be dropped,” says Colodny.

Cejas raised his hand.

The Office of Insurance Regulation says it gave quick approval to Cejas’ application to start a new insurer because of the family’s knowledge of the insurance industry.

Cejas’ father, Paul, has a track record in turning around an ailing insurer — though not a property-casualty company.

With a group of investors, Paul Cejas purchased a health maintenance organization that had been taken over by regulators. Over five ears, they turned it into CareFlorida Health Systems — by the late 1990s, the country’s largest Hispanic-owned healthcare company. It was sold to Foundation Health of California in 1994 for $250 million in a stock swap.

At Ascendant, Paul Cejas serves as chairman of the board of directors. Pablo’s sister, Helene Christianne Cejas, an attorney, is a director of the new company.

But Pablo owns 100 percent of the holding company for the new insurer as well as Ascendant Underwriters, the managing general agent for the insurance company, a claims adjusting firm and a commercial brokerage agency. He put in a stint at CareFlorida when his father was running the company, working on the operations side.

Though father and son have experience turning faltering companies around, none of these have property/casualty insurers.

Cejas recognizes it.

“Our model of execution calls for the hiring of a senior management team with specific and substantive p/c experience.”

To build up Ascendant’s customer base, Cejas plans to improve customer service both for clients and insurance agents and brokers.

“It will be up to the agent and the policyholder to decide if Ascendant is providing the right coverage,” says Jeff Grady, president of the Florida Insurance Agents Association.

First Commercial’s former policyholders aren’t required to take what Ascendant offers them. They can work with their agents to find other commercial insurers offering similar coverage.

RISK MANAGEMENT

To keep Ascendant’s risk exposure low, Cejas is purchasing a substantial amount of reinsurance. In the past year, First Commercial hadn’t bought sufficient back-up insurance coverage. Without the reinsurance, First Commercial’s capital was zapped.

For the workers’ comp business, Ascendant will keep no more than the first $500,000 in losses per claim. For the commercial auto lines, it will buy reinsurance to cover beyond $250,000 in losses per claim.

That’s a far more conservative reinsurance program than First Commercial had in place.

“That’s very conservative,” says Colodny. “These guys aren’t gunslingers.”

Cejas says he’s not worried about what some other insurance executives describe as a harsh regulatory environment for insurers in Florida.

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