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
The Week in Public Finance: Taxes, Drought and a Nod to the Baha Men2 days ago
States Trying to Figure Out Whether Entertainment Tax Credits Really Work2 days ago
Chris Christie Rails Against Estate Taxes New Jersey Needs2 days ago
Regional Banks Fill Rust Belt Industrial Niche2 days ago
Seattle's Kingdome Debts Finally Paid Off—15 Years After Stadium's Destruction2 days ago
Debate Rages Around Proposed Tax Incentives Rule3 days ago