With Louisiana’s state-run homeowners insurance company quickly running out of money to pay claims, a banking group is trying to put a loan in place to keep it afloat.
Citizen’s Property Insurance has been paying about $5 million a day in claims and has about $64 million available, said company secretary Terry Lisotta. But Lisotta said that the payments have slowed down and the plan should be able to keep paying claims without a break.
The plan’s board authorized bankers to seek interim financing that is expected to be in place no later than Feb. 12. The board authorized investment bankers at JP Morgan Chase to put together a loan syndicate until the plan is able to sell bonds.
JP Morgan Chase agreed to provide a $125 million loans and will seek to bring in at least $75 million more by bringing other banks into the deal.
The Citizens plan, the fourth largest property and casualty insurer in the state, has been plagued by payment problems since the storms hit and is the subject of at least one lawsuit claiming it failed to adhere to its own 30-day limit on paying claims.
The plan, considered the insurer of last resort in Louisiana for those who cannot get traditional homeowners insurance, has about 65,000 claims valued at more than $1 billion to pay out following the storm, officials said.
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