House Jobs & Entrepreneurship Council Hears Citizens Presentation

On Thursday, January 10, 2008, a member of this firm attended the Florida House of Representatives Jobs and Entrepreneurship Council meeting in Tallahassee, Florida.  Council Chairman, Representative Ron Reagan, opened the meeting and immediately recognized the first presenter, Bruce Gillander (Director of Treasury) with the Department of Financial Services (“DFS”). 

Mr. Gillander reported on sources of the $18 billion in investments Treasury oversees.  He reported the sub-prime mortgage market comprises 0.8 percent of the Treasury and 98.45 percent are AAA rated.  He also assured the Council the Treasury liquidity position is strong and their investments have not been negatively affected by the current credit crunch.  Mr. Gillander would not answer questions related to the Local Government Investment Pool because the Treasury is not related to the Pool.

Next, Burton Marshall (CPA, Chief Bureau of Local Government) and Justin Young (Financial Administrator) with DFS provided a report on the newly created electronic Annual Financial Reporting System for Local Governments.

Finally, Christine Turner (Director of Communications and Legislative Affairs) with Citizens Property Insurance Corporation provided a report and update on Citizens.  She noted Citizens had net growth in 2007 of 6,027 policies, due in large part to take-outs based on the Capital Incentive Build Up Program.  She also stated Citizens would continue to slow its growth if no storms hit in 2008

She also reviewed noteworthy events of 2007 including: expansion of the assessment base; expansion of the Florida Hurricane Catastrophe Fund (FHCF); the shift towards an alternative market rather than a market of last resort; rate roll backs and refunds.  Ms. Turner also discussed “projected claims paying resources” and noted that Citizens would not have to assess their policyholders for a single event unless a greater than 1 in 62 year event occurred.  

Representative Brown asked if Citizens has filed for any rate changes.  Ms. Turner noted they requested a 300 percent rate increase for non-residential commercial policies and received approval for a 15 percent increase.  Representative Brown expressed some concern that they were approved for 15 percent.  He also asked about future possible assessments and noted those assessments isolate the risk to Floridians rather than worldwide, which would occur with the purchasing of adequate reinsurance in the private market.

Ms. Turner noted a possible reason for not approving the 300 percent request is that OIR does not typically approve rate increases for Citizens based on its purchase of additional reinsurance in the private market.  Chairman Reagan asked if that practice is due to a statutory charge, OIR rule, or other rationale.  Ms. Turner noted that she did not feel it was statutory, but would not comment on OIR’s practice. 

Ms. Turner also discussed the method that Citizens’ deficits would be paid including policyholder surcharges and assessments.  Representative Brown commented that Citizens has $3.9 billion in surplus that they have accumulated in the last two years.  He stated that following the logic of the Governor, money should be returned to the people.  Ms. Turner noted additional surplus is good for Citizens’ business. 

Following Ms. Turner’s presentation, the meeting concluded.

 

Should you have any questions or comments, please do not hesitate to contact this office.

 

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