Stewart Title Guaranty Co., Houston, has become the latest target of California Insurance Commissioner John Garamendi, who has filed an accusation against the company alleging that it was engaged in an illegal captive reinsurance scheme between 1999 and 2005.Mr. Garamendi is alleging that the reinsurance companies created by homebuilders and lenders were sham firms with no offices and no employees. The premiums involved totaled more than $443,000 and involved 3,650 California homeowners. Last year, Mr. Garamendi went after First American, Fidelity National Financial, and LandAmerica over their captive title reinsurance programs. According to a statement from Stewart, each of those programs was dissimilar to the captive business conducted by Stewart. The company said the Department of Insurance is seeking almost $47 million in damages and penalties. "Stewart believes that such penalties are erroneous and that its reinsurance purchases complied with all federal and California requirements," the title insurer said. "Stewart intends to vigorously defend the propriety of its reinsurance purchases and is providing information to differentiate them markedly from concerns the commissioner has raised in his previous reviews of reinsurance programs conducted by its competitors."
