Martha C. Roach, a high-ranking state official until she became president of Agency Insurance Co. of Maryland in April 1993, is seeking more than $5 million in damages from the Linthicum company after being fired last October.
Ms. Roach, who headed the Maryland Automobile Insurance Fund from 1988 to 1993 and also was a former acting insurance commissioner, filed the lawsuit in Baltimore County Circuit Court against Agency Insurance (AIC). The suit also names eight company officials, including Chairman Henry H. Stansbury.
The company sells automobile insurance, specializing in customers who have difficulty qualifying for insurance from other firms.
Ms. Roach charged that she was fired from her $125,000-a-year post because she would not approve an "improper" and "illegal merger" of AIC with another company Mr. Stansbury controls, Agency Services Inc. Agency Services loans money to consumers so they can pay their insurance premiums.
According to the lawsuit, these two companies could not be merged legally without first obtaining approval from the state insurance commissioner -- a step that Ms. Roach said the companies planned to skip.
An attorney for Mr. Stansbury, Bryson F. Popham, said he had not seen the lawsuit and could not comment specifically on it. But he said AIC did not merge with Agency Services, adding, "It is the company's practice to conduct its business in a lawful manner."
Ilona Klasons, associate state insurance commissioner, said she would review the lawsuit, particularly to determine whether the damages Ms. Roach seeks could affect the company's solvency.
The most recent financial statement filed by AIC with the insurance commissioner shows that the company had net income of $1.37 million in 1993, based on $9.7 million in net earned premiums. The company lost $299,000 in 1992 and $916,000 in 1991.
Ms. Roach alleged in the suit, filed last week, that AIC was in "financial need" and required someone of her stature as president in order to attract a potential investor and "appease the insurance commissioner, who strongly encouraged the company to hire an expert in the insurance field."
The state automobile insurance fund, which Ms. Roach headed for five years, insures Marylanders who can't get coverage from private companies.
But Ms. Roach said Mr. Stansbury deceived her into thinking she would not merely be a "figurehead." Although AIC's finances improved during her tenure, she said, Mr. Stansbury increasingly undercut her authority. She was fired Oct. 31 after 19 months as president.