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
The Week in Public Finance: The Trump Budget Edition2 days ago
Single-Payer Health Care Would Cost California More Than Triple Its Budget4 days ago
An Oregon Lawmaker's Strange Crusade to Save an Iowa Town With Chinese Money4 days ago
How Much Do States Rely on Federal Funding?6 days ago
The Week in Public Finance: Recalculating Pension Debt, Hartford Discusses the 'B' Word and Prudent Rainy Day Policies1 week ago
Fresh Off Another Downgrade, Connecticut Has a Plan to Lower Borrowing Costs1 week ago