Executive Summary History of the Division
 Accounting Section Administrative Services Section Asset Recovery and Management Section Claims Section Estate Management Section Legal Services Section Information Technology Services Section Legislative Update 2007 Appendices

Division Overview

Structure and Activities

The Division of Rehabilitation and Liquidation is one of 13 divisions within the Florida Department of Financial Services.  The Division performs its duties under the supervision of the General Counsel who, in turn, reports directly to the Chief Financial Officer.  The current Division Director is R.J. Castellanos.  Figure 7 illustrates a portion of the structure of the Florida Department of Financial Services.  The Division of Rehabilitation and Liquidation is indicated in red.  

 

Figure 7
Partial View of DFS Organizational Chart
Including the Division of Rehabilitation and Liquidation

The Division is divided into seven functional areas (see Figure 8), each headed by a manager who reports to the Division Director or to the Assistant Division Director.  Division staff includes 126 managerial, professional, and clerical personnel.  Nine state positions and 98 receivership positions are headquartered in the Tallahassee Office located in the Alexander Building.  The remaining 19 receivership positions are at the Miami Office that primarily performs an auxiliary collections function as part of the Asset Recovery and Management Section.  Miami Office employees also assist staff from Tallahassee on-site during the initial stages of a receivership.

 

Figure 8
Division of Rehabilitation and Liquidation Organizational Structure

Tasks

The core processes of the Division acting as a Receiver, under the direction of the Receivership Court, are illustrated in Figure 9.  The process starts when the Receivership Court places an insurance company in receivership for purposes of conservation, rehabilitation, or liquidation.  In the “company takeover” stage, the Division moves to take physical possession of the company’s assets, offices, records, and other property.  The Division then immediately attempts to determine the true financial status of the company.

Figure 9
Division’s Core Processes

Under an order of rehabilitation, the Division seeks to remedy the problems that resulted in the company’s financial impairment or insolvency.  Every effort is made to assist the company in developing a financial plan for acquiring new funds, merging with other companies, selling parts of the business, hiring new management or other remedial options.  All such activities are subject to close scrutiny and final approval by the Receivership Court.

If rehabilitation is unsuccessful, the Receiver will petition the Receivership Court for an order of liquidation.  At that time, the Division starts the “company asset recovery” phase, which involves marshaling all available assets and determining all liabilities of the company in an attempt to ascertain the net value of the estate.  During this phase, the Division will control and process all of the business functions of the company in receivership and will recover company assets.

The asset recovery stage will sometimes overlap with the “claims processing stage.” The “claims processing stage” begins when notification of the company’s liquidation is provided to all those with interest in the estate, including policyholders, creditors, and guaranty associations.  Claims against the estate are received by the Division and evaluated by the Claims Section.  Distribution of payment to legitimate claimants is dependent upon the recommendation of the Receiver regarding the claims, as approved by the Receivership Court, and the availability of funds in the estate.  Insurance guaranty associations may be intricately involved in this claims processing stage by paying some of the policyholder and third-party claims of the insurance company that failed.  A great deal of communication and cooperation is required between the Receiver and these associations. 

Following the distribution of money to claimants, legal pleadings are filed that ultimately lead to the discharge of the company from receivership status.  It is during this “company discharge” phase that abandoned property reporting and the final financial reporting for the estate is performed.  The “company discharge” phase is primarily completed when the Receivership Court issues an order discharging the Receiver from all duties, obligations and liabilities in the administration of the receivership.

Next