"My experience would say that any organization that has 1.4 million customers, that has a premium revenue stream of close to $3 billion a year and a nice chunk of liquidity sitting on its balance sheet, potentially has some value to the private world," Malone added. "We owe it to the state to see if it's a viable option."

The state—in the form of Gov. Rick Scott—quickly jumped in. Asked for comments on Malone's statements by reporters in Tallahassee, Scott said, "If looking at things like privatizing Citizens is something that would help drive down the cost of insurance in our state, then I want to look at it very closely."

The governor has long been accused of trying to shutter the state-created insurer. He has repeatedly brushed off those accusations while conceding that he does want to drastically reduce Citizen's footprint in the state's insurance market.

Republican Sen. Garrett Richter, chair of the chamber's insurance committee (who, like Scott and Malone, owns a home in Naples), also says he "would be absolutely open to the discussion.

"One would think a company that is growing and has that many policyholders, would be attractive to somebody to come in and take it over, but you'd have to be able to charge an actuarially sound premium," Richter added. "It's been my objective and desire to return Citizens to the insurer of last resort, but as long as we have artificial premiums that continues to be a huge challenge."

Richter was the chief architect of a massive property insurance bill (SB 408) passed in the 2011 legislative session and signed by Scott. A recipient of the Florida Insurance Council's Harry G. Landrum Outstanding Legislative Leadership and Distinguished Service Award in both 2009 and 2011, Richter's support is seen as crucial for Malone's idea to gain momentum.

Growth and Challenges

CEO Wallace told the board that Citizens is experiencing an average weekly growth rate of 4,200 additional policies. "Certainly from Citizens' perspective, the Florida marketplace is not improving," he said. He predicted that the fast-paced growth will not stop "in the foreseeable future" without significant changes in the insurance market.

Citizens' Chief Insurance Officer Yong Gilroy told the board that least four categories of policies will likely not be depopulated anytime soon: Coastal Account policies (formerly the High-Risk), sinkhole, older mobile homes, and buildings 50 years or older.

While advocates of the sell-off concede that up to 900,000 Citizens' policies may be uninsurable in the private market, they contend that the other policies are marketable. However, if Citizens depopulates and the voluntary market elects not to capture the those policies, they presumably would end up in the surplus lines market.

Now the Good News

According to a report from Citizens' CFO Sharon Binnun at the same meeting, in the last three years Citizens' net assets have grown from $3.1 billion at the end of 2008 to $5.4 billion at end of the first quarter of 2011. She added that Citizens has an additional $575 million to reduce assessments in the event of a hurricane this year, thanks to its recent purchase of private reinsurance in addition to its coverage from the Florida Hurricane Catastrophe Fund.

In other favorable news—this coming two days after the board meeting—Spokeswoman Christine Turner Ashburn announced that Citizens had closed on a $900 million pre-event bond financing for the Coastal Account and "is better prepared financially to pay policyholder claims in the event of a hurricane or hurricanes that impact the state."

According to the media release, Citizens now has over $16 billion in claims-paying ability for the 2011 hurricane season. Additionally, Standard & Poor's has revised its outlook from negative to stable for Citizens' Coastal Account and confirmed its A+ rating on outstanding Citizens bonds.

Past and Future

Citizens became operational in August 2002 following approval at that year's legislative session. The brainchild of then-Treasurer & Insurance Commissioner Tom Gallagher, it merged the Florida Windstorm Underwriting Association, which provided wind-only coverage to nearly 410,000 coastal residents, with the Florida Residential Property and Casualty Joint Underwriting Association, which covered approximately 110,000 consumers in need of residential or commercial property coverage.

Intended as an insurer-of-last-resort, critics have increasingly bemoaned its growth (it is now the largest private homeowners' coverage insurer in Florida, with 1.39 million policyholders) and its rates (kept low by legislative fiat). Citizens is required by statute to annually increase rates by no more than 10 percent per policyholder until rates are determined to be actuarially sound. A move backed by Gov. Scott to increase Citizens' ability to raise premiums by more than 10 percent a year did not pass legislative muster this past session.

Some see Malone's idea as a "last hurrah" as he and his seven fellow fellow board members all reach the ends of their current terms on July 31. Board members are appointed by the governor, the CFO, the Senate President, and the House Speaker. Each person appoints two board members, (one serves a 3-year term, the other a 2-year term). From those eight members, the CFO appoints the chair. The officials have until Aug. 1 to either reappoint current members or appoint new ones, Ashburn says.

Is Malone's idea indeed a "last hurrah," or a bid to remain on the board and see his idea to fruition? Ashburn says that no board appointments have yet been received by her office. When asked today about his appointment plans, Scott's office did not respond.