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
Georgia Towns Are Getting Rich off Speeding Tickets19 hours ago
North Dakota Fights over How to Spend Huge Oil Revenues21 hours ago
For the First Time in 8 Years, Austin Gives Housing Vouchers to a Lucky Few23 hours ago
Bank Regulators Getting Over Opposition to Marijuana Businesses1 day ago
States Ease Laws That Protected Poor Borrowers1 day ago
Tax Breaks for Gas Companies Face Scrutiny in Texas1 day ago