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BATON ROUGE, La. (AP) — Treasurer John Kennedy urged rejection Friday of a proposed $50,000 pay raise for the top executive of Louisiana's state-run property insurance company, which is $56 million short of the cash it needs to cover expenses.
Kennedy said he's asking Insurance Commissioner Jim Donelon to refuse the raise for Richard Robertson, CEO of the Louisiana Citizens Property Insurance Corp. The salary hike requires Donelon's approval before it can take effect.
The Citizens board of directors backed the pay bump, which would boost Robertson's annual salary from $240,000 to $290,000. Kennedy, a member of the board, said if Donelon supports the pay hike, he'll ask the Citizens board to reconsider its decision.
"Our CEO is a good man and has been doing the best he can to keep this company afloat, so this is not a personal criticism of him," Kennedy said in a statement. "It's just that the timing and circumstances of this vote are horrible in light of the serious financial straits the company is in."
It wasn't immediately clear Friday whether Donelon will support the raise.
Approval of the salary boost came at the end of the Citizens' board meeting Thursday though the item hadn't originally been listed on the board agenda. The discussion followed board notification that the state-run insurance company has a $56 million deficit.
"I am aghast that the Citizens Insurance board made this decision without letting the public know in advance and in the midst of some of the worst financial circumstances the company has ever faced," Kennedy said.
The company provides property insurance mostly to coastal Louisiana homeowners and businesses that can't get insurance through the private market.
Citizens' chief financial officer, Steve Cottrell, said the company is in the red after it covers claims for Hurricane Isaac and settles class-action lawsuits for improper handling of past storm claims after hurricanes Katrina and Rita.
No decision was made Thursday about how to close the deficit, but it could cost insurance customers around the state. Cottrell said Citizens officials will present options at the next board meeting.
Among the options available to Citizens: charging an assessment on private insurance companies around the state for each property policy. The private insurers would pass that cost on to customers. Another possibility could involve borrowing money through a bond sale.