Private Company Takes Over La. Citizens Property Corp.

April 5, 2007

Reported by: Associated Press

Private consultants will take over management of Louisiana's state-controlled insurer of last resort after the firm's outgoing chief collapsed and its chief financial officer resigned.

Terry Lisotta, secretary of Louisiana Citizens Property Insurance Corporation, collapsed at the company's Metairie offices yesterday and was hospitalized. Chad Brown, chairman of the firm's board, says Lisotta apparently has a blood pressure problem. He later added: "I think he's doing OK."

Board members yesterday voted unanimously to give daily management duties of the company to Bostick/Crawford Consulting Group -- the firm that has been investigating Citizens'  accounting troubles. Lisotta had previously told the board he was leaving the post.

Citizens insures homeowners who can't find policies on the open market. The company has been beset with troubles over the past year. Since the 2005 hurricanes it has become Louisiana's fastest-growing property insurer, as private firms stopped writing new policies.

The company does not know how much money it has, because of bookkeeping troubles. Citizens also has an unrelated software problem that so far has made it impossible to audit its records.

Caryl Mathes, the chief financial officer, has said she'll cooperate with the consultants' investigation but has resigned her duties.

If the bookkeeping troubles aren't fixed soon, they could interfere with the company's ability to buy necessary reinsurance before the start of the six-month hurricane season that starts June 1.

Billy Bostick, of Bostick/Crawford, said he will be able to report to the board within a week on how serious the problems are and what can be done to balance the books.