In the midst of two hours of questioning this morning over Citizen’s Property Insurance assets in the troubled SBA investment fund, Citizens Vice President Sharon Binnun told the House Insurance Committee that maybe the state-run insurer —- the largest participant in the pool —- should have bailed along with hundreds of other local governments. She also said investments policies for the insurer are under review.

“I certainly did not anticipate the run on the pool, the fact that the pool would be frozen and that the amount that is now (isolated) is such a large dollar amount,” Binnun said. “In hindsight, I might have made a different decision.”

She said Citizen’s kept $2 billion in the pool to because the largest insurer in Florida didn’t want to participate in a “run on the bank and further exacerbate the problems.” She said Citizens would not have liquidity issues until hurricane season.

But that didn’t satisfy Rep. Carl Domino, R-Jupiter.

“Where’s your fiduciary responsibilities in this thing?” Domino said. “Certainly those who got out didn’t care too much about your money.”

Citizen’s did withdrawal $800 million after concerns about the fund’s exposure to the sub-prime mortgage meltdown set off a wild two-week, $13.5 billion run on the bank. But those withdrawals from Citizens were mostly to stay aligned with the agency’s policy of accounting for no more than 10 percent of the total value of the fund.

When Gov. Charlie Crist and other SBA trustees stopped the run and agreed to impose restrictions on future redemptions, it meant that Citizens could only freely access $254 million its $1.97 billion balance.

Of the remaining $1.7 billion, $1.4 billion is now subject to a 2 percent withdrawal fee, which would total $29 million, that could be in place through at least March.

The other $276 million is off limits: It represents questionable investments that BlackRock, Inc, recently hired to take over management of the fund, has deemed a credit risk. That portion of the pool cannot be redeemed and it’s unlikely those funds could be accessed before hurricane season starts in July.

Binnun told the insurance committee that Citizens officials are reviewing the agency’s investment policies.

“It is a lesson learned for us,” she said.

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