REPUBLICANS NOT TIPPED TO SEIZURE : PARTY DROPPED INSURANCE FIRM DAY BEFORE GOVERNMENT TAKEOVER.

Byline: Paul Hefner Daily News Staff Writer

The California Republican Party dropped its policies with a troubled San Carlos insurance company the day before state Insurance Commissioner Chuck Quackenbush seized control of the firm.

GOP officials acknowledged Friday that they stopped doing business with Golden Eagle Insurance Co. on Jan. 30, but said they had no inkling that state regulators would move in the very next day.

``It's true, but it's purely coincidence that it happened the day before,'' said party Vice Chairman Michael Schroeder, a licensed insurance broker. ``I was as surprised as anyone - surprised and relieved.''

Schroeder said once he learned of the seizure, he felt relieved for sidestepping embarrassment even though the takeover did not prevent any customers from canceling their policies.

``I felt as if a bullet had gone right by my head, an inch away,'' he said.

Asked about the appearance of the transaction, Schroeder said: ``I understand that people might be suspicious, but what matters is, it's not true. It's not that important to me what other people think.''

Quackenbush, a Republican, obtained a court order taking control of Golden Eagle on Jan. 31, saying at the time that business practices by the company's management had put the company and policyholders at risk.

He said through a spokeswoman Friday that no one from his department disclosed that the takeover was coming. Revealing confidential information about a department investigation would violate the law, officials said.

``He said there was absolutely no conflict and no one called the Republican Party,'' said department spokeswoman Dana Spurrier.

Proposition 103 Enforcement Project director Harvey Rosenfield, who has often sparred with Quackenbush, said the timing of the party's move should be scrutinized.

``There ought to be an investigation to be sure no one in the Insurance Department is tipping off people in the private sector before the department takes a public action,'' Rosenfield said.

The department's takeover came after months of public wrangling with the Golden Eagle, which had captured a sizeable share of the state's market for workers' compensation insurance.

The state ordered the company last September to shore up its reserves. Golden Eagle owner John Mabee challenged the order in court. An appeals court rejected the company's efforts shortly before the takeover.

Schroeder, a Santa Ana attorney as well as broker, said he decided to take the party's business elsewhere in November, after the department posted a notice that Golden Eagle's reserves were short by more than $100 million.

``You don't move around insurance coverage as large as ours on a whim,'' he said.

Schroeder said that a broker retained by the party spent more than a month shopping for new liability and property casualty coverage. He would not identify the new carrier, nor would he provide documentation that confirmed when the move to change companies began.

But Schroeder, who will take over as state chairman next week, emphasized that there were no discussions with anyone connected with the state Department of Insurance.

``I'm absolutely positive, we had no hint whatsoever. I had no idea what they were doing,'' he said.

The company is continuing to operate under a conservatorship. Officials are seeking to transfer ownership to a partnership based in Switzerland.

Los Angeles attorney Karl Rubenstein, the court-appointed conservator now operating Golden Eagle, said he didn't know about the party's switch. He said the issue had no bearing on his work developing a plan to keep the business operating.

``That's got nothing to do with my job,'' Rubenstein said. ``That's completely out of my orbit.''