Florida Hurricane Catastrophe Fund Issues Estimated Borrowing Capacity, Estimated Claims-Paying Capacity, Projected Balance As Of December 31, 2012

In a notice issued today, October 16, 2012, the Florida State Board of Administration (“SBA”) advised of the estimated borrowing capacity, estimated claims-paying capacity and projected balance of the Florida Hurricane Catastrophe Fund (“FHCF”) as of December 31, 2012, in compliance with the requirements of Section 215.555(4)(c)2., Florida Statutes. 

These estimates relate to the 2012-2013 FHCF Reimbursement Contract Year.  The Fund’s projected post-event borrowing capacity estimate is $7 billion for October 2012. 

Given the current state of the financial markets, the borrowing capacity estimate is dependent on many factors, such as: the size of an event or events, the limitations or constraints of the financial markets to absorb potential debt issuances, the time necessary to access such markets, and the existing level of interest rates at the time of issuance. The estimated borrowing capacity and projected available year-end cash balance provide the Fund with a total estimated claims-paying capacity of $15.503 billion over the next twelve months.  Greater detail can be obtained in the “October 9, 2012 Claims-Paying Capacity Estimates” Report, a copy of which can be accessed by clicking here. 

The obligation of the SBA for the payment of reimbursable losses is limited in Section 215.555(4)(c)1., Florida Statutes, and shall not exceed the actual claims-paying capacity of the FHCF. 

The projected year-end balance on December 31, 2012, is estimated to be $8.503 billion, which represents the amount of assets available to pay claims, not including any bond proceeds, resulting from Covered Events which may occur during the June 1, 2012 through May 31, 2013 Contract Year. 

The SBA recognizes that its good faith estimate is being made while highly volatile global financial market conditions exist; therefore, changing market conditions can dramatically impact the FHCF’s actual claims-paying capacity either positively or negatively.  Current conditions may or may not be the same if and when the SBA determines that it is necessary to issue revenue bonds.

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