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.
We invite you to discuss and comment on this article using social media.
LATEST FINANCE HEADLINES
New Jersey Finds a Bipartisan Way to Boost Transportation Funding20 hours ago
A Look at What's Driving (or Stunting) Income Growth in the States1 day ago
Sanctuary Cities Get Another Funding Warning From the White House1 day ago
New Jersey's Credit Surpasses Its Own Worst Record in U.S.1 day ago
Not Just the NCAA Game: Transgender Bathroom Law Will Cost North Carolina $3.76 Billion1 day ago
Transportation Advocates to Trump: Where's the Money?2 days ago
Intro to Commercial Surety Bonds