The Resolution Trust Corp. may be on the hook for some repair costs on its $348 million real estate portfolio in the South Florida area battered by Hurricane Andrew last month.

In a cost-cutting move, the RTC ordered the cancellation of all hazard insurance policies on its properties in the Southeast, effective June 1.

Hoping to save an estimated $240 million in insurance costs over six years, the agency is phasing in self-insurance nationally on most of its $13 billion of foreclosed real estate, as well as on the properties backing a $23.1 billion portfolio of nonperforming loans.

600 Florida Properties

The cost of the hurricane damage remains to be assessed, but an RTC spokesman in Washington said the agency owns about 600 properties in the affected area in Florida and a much smaller Louisiana portfolio.

Richard J. Mullen, risk-management coordinator at the RTC office in Atlanta, where Florida insurance claims would be processed, said many properties may still be insured because some RTC asset managers failed to comply with the order.

One real estate industry source said that about half the policies on property handled through the agency's Florida office had been canceled.

The Federal Deposit Insurance Corp., which continues to insure its real estate through a private carrier, has estimated damage to its 20 properties in Florida's Broward and Dade counties at $2.6 million. The Florida properties have been valued at $40.8 million.

An FDIC spokesman said officials were still assessing the damage to 40 properties, worth about $8 million, in the hardest-hit sections of Louisiana.

|Big Hole' in Self-Insurance

"When you have a catastrophe like [Andrew], it can put a big hole in a self-insuring policy," said one real estate industry source.

A cost and risk analysis of the RTC's insurance, provided last year by a unit of the management consultant Towers Perrin, did not anticipate a disaster of the magnitude of Hurricane Andrew, a congressional staff member said.

The disaster will cost private insurers a record $7.8 billion, according to industry estimates.

"It's a big mistake for lots of reasons, not just the hurricane," one RTC asset manager said.

He said that, by trying to save a few thousand dollars in premiums per property, the agency was leaving taxpayers open to multimillion-dollar losses every time a property is seriously damaged.

Early Claims for $200,000

Mr. Mullen said his office in Atlanta has received only three hurricane-related claims, totaling less than $200,000, so far. But some of the affected properties may be administered out of other RTC offices, and the agency is gathering data from field offices across the nation

In explaining the move toward self-insurance, Mr. Mullen said it made no sense to pay for an insurance company's overhead and profit, which represent about half the cost of premiums.

The size of its portfolio gives the RTC a diversity of risk similar to what an insurance company might hold, he said.

But even a prominent critic of the insurance industry, Eugene R. Anderson of the Anderson Kill Olick & Oshinsky law firm in New York, said studies that encourage big companies to self-insure tend to overlook the value of experienced insurance administrators.Damage ReportProperty exposed to HurricaneAndrew in FloridaRTCNumber of properties 600Property value: $348 millionEstimated damage: UnknownInsurance status: UnknownFDICNumber of properties: 20Property value: $40.8 millionEstimated damage: $2.6 millionInsurance status: Fully insuredSources: RTC, FDIC

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