Citizens Property Insurance Corp.’s Board of Governors has approved the issuance of up to $1 billion in pre-event bonds to provide Citizens with readily available cash flow for the 2015 hurricane season and beyond.
By unanimous vote on Tuesday, board members approved a recommendation by Citizens Chief Financial Officer Jennifer Montero to continue Citizens’ ongoing liquidity financing program and replace coverage from similar bonds that begin to expire in June.
The vote allows Montero to pursue such pre-event financing, which bolsters Citizens’ immediate claims-paying resources even in the event of a 1-in-100 year scenario or a second or subsequent relatively smaller events, similar to the 2004 and 2005 events.
Citizens now has access to approximately $2.6 billion from such pre-event bonds, but most of that will mature over the next three years, with $490 million expiring in June 2015, and $1.7 billion expiring over the next two years.
“This financing program provides a necessary cash ‘bridge’ to certain claims-paying resources, especially reimbursements from the Florida Hurricane Catastrophe Fund,” Montero said.
Over the last three years, Citizens has dramatically reduced its exposure and policy count. Citizens’ policy count has fallen from nearly 1.5 million in October 2012, to fewer than 600,000 as of March 2015. Exposure has fallen from a peak of more than half a trillion dollars in 2011 to less than $200 billion.
“We will continue to take advantage of cost-effective ways to protect our policyholders,” said Barry Gilway, Citizens’ president/CEO and executive director. “We owe it to them to ensure we are in the best financial shape possible.”
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