COVINGTON - Builders Insurance Group is fighting back against an attempted takeover by the Home Builders Association of Georgia, mailing proxy cards to its 13,000 policyholders in an effort to keep its board of directors and charter in place.
Included in the mailouts is a letter urging policyholders to discard any materials sent to them by HBAG and discounting HBAG's accusations of wrongdoing, among them that the board of directors withheld dividends from policyholders while padding their own pockets.
A leading underwriter of worker's compensation and general liability insurance in the home building industry throughout the Southeast, Builder's Insurance is a mutual captive company, meaning it is owned by policyholders.
HBAG is alleging that board members are being paid excessive salaries, fees and indirect compensation, some of which have not been reported; that premiums have skyrocketed while dividends to policyholders have plummeted; that the board has changed the charter bylaws to increase its control of the company and has attempted to reorganize the company to make it financially favorable to the directors.
The Newton County Home Builders Association is backing the state association in the fight.
HBAG sent out its own proxy cards to policyholders last week and is attempting to call a special meeting to oust the company's current board of directors. HBAG needs 51 percent of policyholders on its side to take over the company.
In retaliation, on Monday, Builders Insurance slammed HBAG in its mailout, saying the association has "used misrepresentations and distortions of the truth to confuse policyholders."
Builders Insurance claims the real reason behind HBAG's attempted takeover is to continue its monopoly as the sole sponsor of the company.
In the past, only members of HBAG could obtain a Builders Insurance policy, but in April, Builders Insurance ended its exclusive arrangement with HBAG, and Contractors Benefit Association became a new sponsor.
The decision was made in response to the economic downturn, to give policyholders the option of a lower-cost membership association, according to Builders Insurance, which claims Contractors Benefit charges as much as 90 percent less for annual dues than HBAG.
Builders Insurance is claiming that HBAG has launched a "disruptive and self-serving proxy campaign" to protect its former monopoly.
As for HBAG's claims that directors have received exorbitant compensation, that totaled more than $1.9 million in 2006 and 2007, Builders Insurance says directors were not paid at all during the company's first five years of operation.
"Given Builders' record of consistent revenue growth and exceptional service to our policyholders, we believe your directors received fair compensation for their hard work," the letter to policyholders states.
The letter goes on to say that in 2007, the board changed its pay structure to a flat retainer fee not tied to the company's performance and terminated incentive pay and deferred compensation plans.
Builders Insurance discloses the board's compensation in annual filings with the Georgia Department of Insurance and in mailouts to policyholders, the letter states.
Builders Insurance also claims HBAG mischaracterized proposed legislation that would create a mutual holding company, but would require policyholder approval.
Crystal Tatum can be reached at firstname.lastname@example.org.