The Louisiana Department of Insurance reported that the rating agency Standard & Poor’s has given the Louisiana Citizens Property Insurance Corporation (Citizens) bond issue an ‘A’-minus rating, signifying the success of recent meetings held with bond rating agencies and Citizens representatives, led by Commissioner of Insurance Jim Donelon.
Citizens officials asked Commissioner Donelon to participate in the series of seven meetings March 8-10 in New York, 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 bonding agencies. Citizens is issuing the bonds to pay $825 million in policyholder claims resulting from the two hurricanes.
Donelon says the Standard & Poor’s ‘A’-minus rating is significant because it demonstrates the underlying strength of the Citizens Corporation. “This favorable rating is good news and a positive for Citizens and the state of Louisiana,” says Donelon. “The better the rating, the lower the interest rate will be on the bond issue.”
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.
Governor Kathleen Blanco and Citizens Governing Board member State Treasurer John Kennedy both participated in a conference call with the rating agencies during the early March 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,” Commissioner Donelon adds.
The Commissioner says the bonds are expected to be sold on April 4.
Source: Louisiana Department of Insurance
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