Amy Resnick's Bond Bits: Foul Winds and Foresight
In response to a dozen insurance failures following the 1992 Hurricane Andrew disaster, Florida in 2002 created the Citizens Property Insurance Corp.
In response to a dozen insurance failures following the 1992 Hurricane Andrew disaster, Florida in 2002 created the Citizens Property Insurance Corp. CPIC was meant to provide property and casualty insurance in high-risk, largely coastal areas of the state where it was not available from the private sector.
Last May, CPIC, one of only a handful of state-operated plans, sold $750 million in taxable, auction-rate securities to bolster its claims-paying ability. Short-term taxable securities enabled CPIC to take advantage of the lower interest rates in the auction market, while the taxable muni debt gave it the flexibility to invest the proceeds without tax restrictions.
The deal and a standby agreement to raise another $750 million should CPIC need it were in place just before four hurricanes raged across Florida in August and September.
At the time the hurricanes hit, Citizens was insuring more than 880,000 policies. While critics have charged CPIC's customer service as lacking and its growth too fast, only one insurer failed in Florida following the 2004 hurricanes.
Join the Discussion
After you comment, click Post. You can enter an anonymous Display Name or connect to a social profile.
LATEST FINANCE HEADLINES
States Trying to Tax E-Cigarettes1 day ago
The Week in Public Finance: Puerto Rico Update, a Comeback for Cities and Calls for Transparency1 day ago
Colorado GOP Cuts Funding for Immigrant Driver's Licenses2 days ago
Maryland's New GOP Governor Calls for Cutting State Worker Pay, School Aid2 days ago
New Jersey to Take Over Atlantic City2 days ago
New York Governor Proposes Big Education Reforms in Annual Address3 days ago