The Louisiana Department of Insurance reported that Commissioner of Insurance Jim Donelon was invited to meet with the nation’s largest bond insurers and bond rating agencies in New York recently in a continued effort to help with Louisiana’s recovery efforts following Hurricanes Katrina and Rita.
The meetings were held for the Louisiana Citizens Property Insurance Corporation (Citizens) to sell an $825 million bond issue to pay policyholder claims resulting from the two hurricanes.
Citizens, Louisiana’s third largest provider of property insurance, was created by the legislature in 2003 to oversee the state’s high risk property insurance pools and markets of last resort, the FAIR and Coastal Plans. As a result of Hurricanes Katrina and Rita, the corporation’s reserves were wiped out when the FAIR Plan incurred hurricane losses of $1.07 billion.
Representatives of Citizens asked Donelon to participate in the series of seven meetings, citing his involvement as vital in helping the state secure the lowest possible rates and cost for the bonds that will be bought by the New York bonding agencies.
“This is the first significant Louisiana bond transaction post-Katrina and Rita and potentially the largest bond issue in the state’s history,” Donelon said. “Its success is important to restoring investor confidence in Louisiana.” He added that the state’s rebuilding effort will also depend upon confidence in Louisiana’s insurance market.
Also recognizing the importance of the meetings were Governor Kathleen Blanco and Citizens Governing Board member, State Treasurer John Kennedy, both of whom participated in a conference call with the rating agencies during the meetings at the request of Commissioner Donelon.
“Our state officials recognize the importance of this financing in providing sufficient funds to pay policyholder claims as expeditiously as possible. So together, Governor Blanco, Treasurer Kennedy and I all helped show the nation’s top credit review agencies that Louisiana is serious about helping its policyholders recover from the hurricanes as quickly as possible,” Donelon said.
Donelon said he is encouraged by the response the state received during the meetings. “These agencies we met with are the groups who actually assign the bond ratings. These ratings show the potential bond buyers the financial strength of these bonds, and the rating we receive will send a strong message to the rest of the nation that Louisiana’s economy is rebounding from the hurricanes,” Donelon contends.
Donelon noted that the bonds will be sold in late March or in early April.
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