Citizens Audit Committee Meeting Report: April 2

The Citizens Property Insurance Corporation (“Citizens”) Audit Committee (“Committee”) met on April 2, 2009, during which the Citizens Chief Financial Officer (“CFO”) and Citizens’ Office of the Internal Auditor (“OIA”) provided reports.  To view the meeting agenda, click here.

Chairman Jim Malone called the meeting to order with Committee members Earl Horton Jr., Sherrill Hudson and Joyce Bellows, Citizens’ Chief of Internal Audit in attendance.  Also in attendance were Citizens’ CFO Sharon Binnun and Phyllis Ingram from Citizens’ external auditing firm, Carr, Riggs and Ingram.

Ms. Bellows briefly reviewed suggested changes to the Committee and OIA Charters and 2009 Audit Plan, which are required to be reviewed and approved annually for approval. 

While the Committee Charter was left unchanged, two changes to the OIA charter were recommended and unanimously approved by the Committee:

• The addition of a description of “consulting services” to the Charter’s provisions; and
• Removal of a reference to the Institute of Internal Auditors (“IIA”) standards and practices, since the OIA cannot state that it meets IIA standards until it has been reviewed by that organization.

The 2009 Audit Plan was reviewed and also approved by the Committee. 

CFO Binnun briefly reviewed Citizens’ unaudited 2008 financial report.  Findings in the report included:

• Citizens’ surplus grew from $2.6 billion in 2007 to $3.2 billion in 2008, and is expected to reach $4 billion in 2009.
• As of December 31, 2008, Citizens had more than $7 billion in operating cash, of which over $1.75 billion was comprised of bond proceeds.
• Direct written premium is down 25 percent and policy count is down 17 percent from 2007.
• Loss ratios are rising (from 23 percent in 2007, to 63 percent in 2008) because the amount of premium dollars written has decreased, while non-catastrophe claims have risen for the Personal Lines Account (water and fire claims), Commercial Lines Account (condominium sinkhole claims), and High-Risk Account (claims from Tropical Storm Fay).
• Citizens’ policy count and total exposure amounts have decreased, and its probable maximum loss has decreased from $25 billion in 2007 to $23 billion in 2008.

Ms. Ingram gave an update on the external review of Citizens’ statutory financial statements, adding that this report will be completed within the next two weeks.   So far, review of the statements has not generated any significant comment.

The meeting was then adjourned.

Should you have any questions or comments, please contact Colodny Fass.

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