As Shebel sees it, the endgame - and the payoff for potential investors and AIF itself - is to sell the insurance company to another firm or make a public stock offering. Proceeds from either a sale or a stock offering would go to finance the business group's operations. In part because of Shebel's search for capital, the health of Associated Industries Insurance has been a matter of speculation, particularly among his competitors. Getting information about the company's main program, the Jumbo Retro Rating Plan, has been difficult, however. AIF is required to file quarterly performance reports on the plan to the Department of Insurance. Under the state's public records laws, most such filings to agencies are open to the public. AIF, however, is attempting to block access to the reports on the Jumbo Retro plan - its major source of revenue - by calling the filings "trade secrets.'' Florida Trend is now in court trying to have the reports opened for public inspection.
Associated Industries' "trade secret'' strategy is noteworthy in light of the origins of the Jumbo Retro plan. More than three years ago, the company's top actuary and chief operating officer, Frank T. White, developed a workers' compensation policy that he figured would give the Boca Raton-based company a leg-up in Florida's competitive workers' comp market. The heart of the plan, which became known as Jumbo Retro, was a first-of-its-kind "guaranteed" 8% rebate to all customers who kept their worker accident rates below a certain level. Many workers' comp companies pay refunds to customers with good accident histories, but no workers' comp carrier had ever been allowed to advertise a guaranteed refund, and the plan clearly had marketing appeal. Jumbo Retro needed regulatory approval from the Florida Department of Insurance, however, and Jim Watford, the state's chief workers' comp actuary, had concerns about the actuarial assumptions that the company used in developing the plan.
The deal
Shebel took his case to higher-ups at the Insurance Department. What followed were months of back-and-forth negotiations between Insurance Department officials and Associated Industries executives. Insurance Department regulators worried that if the company's actuarial assumptions were wrong it could suffer big, destabilizing losses. Regulators also questioned whether the plan might benefit larger employers at the expense of smaller firms.
On Nov. 16, 1995, a deal was struck: Insurance Commissioner Bill Nelson allowed Associated Industries to market the Jumbo Retro plan - but with conditions. The Department of Insurance required Associated Industries to file quarterly performance reports, which would include information such as the number of policies written, total premium dollars collected and any losses incurred. The reports would "ensure that the actual makeup of the book of business is consistent with the assumptions used in calculating" the plan, wrote Deputy Insurance Commissioner Susanne K. Murphy in a letter to the company. Officials at Associated Industries expressed concern about submitting information they considered proprietary to a public agency, but agreed to the department's terms. Insurance companies must file company-wide financial statements quarterly and detailed annual reports to the department. Murphy says the special reports required under the consent agreement with Associated Industries Insurance are "unique,'' explaining that no other workers' compensation company is required to file them.
Today, the Jumbo Retro plan represents about 80% of Associated Industries' annual premium volume of about $80 million. Since Associated Industries began its guaranteed refund plan, the Department of Insurance has turned down at least two other applications for guaranteed refund workers' comp programs.
What's unclear without the reports is how well Jumbo Retro is performing. Insurance Department regulators say that Associated Industries Insurance has been operating within the terms of its 1995 consent agreement. But when Eric Prutsman, an attorney who represents a number of insurance companies, asked to look at the quarterly reports on Jumbo Retro, Department of Insurance officials notified AIF, which went to court to block their release. A Tallahassee Circuit Court judge granted AIF a temporary injunction that keeps the records sealed.
At the hearing, no Insurance Department officials argued that the reports should be made public. Nor did Prutsman or any other executives from competing firms appear to seek the release of the reports. Prutsman says his client decided it wasn't worth the trouble of going to court to get the reports.
Associated Industries officials argued that the design of their workers' comp plan amounts to a trade secret akin to Coca-Cola's cherished formula and should be exempt from public records laws. Release of the data would harm the company's competitive edge, the company says in its legal filings. "It's very valuable to us," Shebel says.
The motion
Trend Magazines Inc., publisher of Florida Trend, filed a motion Oct. 23 seeking to have the temporary injunction lifted, and to have the reports made public. A hearing date was set for Nov. 18. After Trend filed the motion, Shebel offered to "walk through'' the reports with a reporter from Trend at AIF's office - as long as the reporter didn't copy them or remove them from the building. Trend declined the offer. "The citizens of this state have the right under our constitution to inspect records in the hands of our government, unless there is some specific exemption in the statutes. The law does not provide for people to make end runs around the public records laws. We cannot allow this to go unchallenged,'' says Alison Steele, Trend's attorney with the St. Petersburg firm of Rahdert, Anderson, McGowan and Steele.
After Florida Trend filed its motion, Shebel and Associated Industries executives declined all comment on the company's finances. Financial statements from the insurance company show a $17 million decline in its cash and investments in the first six months of 1998; Kim Holden, an examiner at the Department of Insurance, raised questions about the decline, but says she is satisfied with the company's explanation. "I have no problems with this company," she says.
Shebel, meanwhile, continues to pursue an investor for his insurance company. His quest for capital hasn't been free of distractions: He acknowledges he has heard rumors that he is to be replaced as AIF's leader, and rumblings of a move to start a new business organization. Shebel says he has heard it all before. "For the last two years, I've heard I was getting fired," he says.
Shebel, AIF's leader for more than 20 years, says Associated Industries of Florida is just as significant and relevant as a business lobbying group as it has been traditionally, noting that it handed out $800,000 in campaign contributions during the 1998 election cycle. To help shore up the day-to-day management of the group's lobbying and legislative efforts in Tallahassee, Shebel recently brought in longtime friend and former Florida Department of Revenue official Randy Miller as chief operating officer. The move allows Shebel to spend more time searching for an investor or investors for the insurance company. "My day is hectic," says Shebel. "I have 200% confidence in Randy. He and I have been like Siamese twins for the last decade." Despite the rumors and uncertainty over capital, Shebel, an ex-Marine who served three tours of duty in Vietnam, says he'll hang tough.