The state's largest property insurer — Citizens Property Insurance Corp. — has found itself on the defensive once again in the last few months. Questions about its contracts and finances have sparked criticism from elected officials and divided the board that runs the company that has more than 1 million policyholders. The grumbling comes at a time when Citizens has raised its rates for the first time in three years.
The divisions came close to derailing a plan by Citizens to borrow up to $2.4 billion to shore up its high risk account for the upcoming 2010 hurricane season. The Board of Governors of Citizens only approved the plan after the first vote on the proposal resulted in a tie vote. The board was also forced to agree to rebid a contract that sparked news articles and public scolding.
The composition of the borrowing will not be finalized until later this spring because the bond issuance is subject to approval from the Office of Insurance Regulation. However, financial advisors told Citizens' board members that they would likely seek up to $2 billion in fixed-rate, tax-exempt bonds that would come due during the next three to seven years. The maximum interest rate would be six percent. An additional $400 million bank line of credit would be pursued at the same time that the bonds are issued.
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