Citizens Finance & Investment Committee Meeting Recap

The Finance and Investment Committee (“Committee”) of Citizens Property Insurance Corporation (“Citizens”) met on August 2, 2007 to discuss the status of Citizens’ liquidity financing and investment reports.

To view the agenda, click here.

Liquidity Financing

John Forney from Raymond James led this portion of the discussion.  Raymond James is a diversified financial services holding company with subsidiaries engaged primarily in investment and financial planning, in addition to investment banking and asset management.

Mr. Forney reported that Citizens’ investment portfolio is in great shape, due in large part to the transfer of funds to the State Board of Administration (“SBA”) from all outside investment managers.  He further stated that Citizens’ financing through floating auction rate bonds and bank lines of credit has to date proven quite successful.
 
Chairman Douglas recommended that Citizens’ High Risk Account (“HRA”) investments be moved to either the Personal Lines Account (“PLA”) or divided between the PLA and the Commercial Lines Account.  The Chairman feels strongly that eliminating the HRA investment account will provide considerably more surplus for Citizens to work with.  No action was taken on this matter.

Investment Reports

Committee Member Sharon Binnun presented Citizens’ investment reports.  Ms. Binnun noted that going forward, these reports will reflect the SBA’s status as Citizens’ sole investment manager.  This transition occurred on July 1, 2007.

Ms. Binnun reported that Citizens has a strong investment portfolio, with highly liquid assets.  With regard to the 2006 Auction Rate Securities, the winning rate is below LIBOR, creating a positive arbitrage.  Further, Citizens’ investments total $10 billion and the company has about $2 billion in surplus reserves.

Links to the Finance and Investment Committee meeting agenda items are included below:

01A: 01A_DRAFT FIC Minutes 6_27_07.pdf

02A: 02A_Status of Liquidity placeholder.pdf

03A: 03A_ 06_07 Manager Returns_Ranking.pdf

03B: 03B_Winning Rate v Libor 2004.pdf

03C: 03C_Winning Rate v Libor06 weekly.pdf

03D: 03D_Winning Rate v Libor06 monthly.pdf

03E: 03E_Winning Rate v Libor06 combined.pdf

Should you have any questions or comments regarding the above, please feel free to contact our office.