St. Johns began writing homeowners policies in the beginning of 2004 and was quickly hit with losses from two years of record hurricane events. “While not a desirable start for any business, we were very proud of our claims response in each season,” Mr. McCahill said.

In order to secure a state loan, participants like St. John's must promise to write more homeowners policies in the state and match the loan with new capital investment.

Mr. McCahill estimates that his company will write up to 140,000 policies by the end of this year and expects the number to rise to 200,000 at the end of 2007.

The company can now go into counties such as Brevard, the so-called “Space Coast,” where they had to stop writing because of too much concentration of risk.

Without the capital infusion the insurer could only have written about 110,000 policies this year, the company said.

“The legislative effort, while not a quick fix, will help stabilize Florida insurers' long-term growth and stability,” Mr. McCahill noted.

In addition, it will help attract investor capital. “Florida property insurance is considered the ultimate in high risk investment,” he said.

Most of the $20 million St. Johns had to raise came from private equity. “It was difficult, but we managed to put it together,” Mr. McCahill said.

While permitted rates just about meet the adequate status, Mr. McCahill said he feels confident that if the 2006 storm season has relatively normal loss activity, he can make a profit.