Citizens to Obtain $3.05B; Largest Single Bond Issue in Florida’s History

June 23, 2006

A $3.05 billion bond issue, believed to be the largest single bond issue in Florida’s history, according to Terri Slack, Citizen’s CFO, will be finalized June 29 in Miami.

Slack said the bonds will be taxable, auction-rate bonds that will be sold with maturity dates ranging from 2017 to 2026. Issuance costs will be about $47 million.She said Citizens had a similar sale in 2004, when it sold $715 million in bonds.

She also said the money from the Legislature helped Citizens raise its bond rating from “A” to “A-plus” with Standard & Poor’s, a bond rating company.

The bond issue will more than double the money available to pay claims this hurricane season, Bruce Douglas, chairman of the Citizens Board of Governors said.

“If you add it all together, we have about $5 billion in liquidity to face the hurricane season,” Douglas said. “This puts us in a very strong financial position this year.”

Investor bids for the bond issue will be taken June 27 and the note will be finalized June 29 in Miami, said Bob Ricker, Citizens president and executive director.

Ricker said he was especially pleased the money was being made available at a time when Citizens is set to provide coverage for 320,000 customers from the failed Poe insurance companies starting July 1.

“This money will give us a very strong base for future claims payment,” Ricker said. “The new money will be used, if needed, to pay claims in Citizens’ “high-risk” account.”

In addition to the bond money, Citizens also will receive about $715 million from the Legislature shortly after July 1.

The money was appropriated this year to help Citizens deal with a $1.7 billion deficit it has incurred after eight hurricanes struck Florida in the past two years.

The appropriation also prompted Fitch, another rating company, to raise its rating of the Citizens high-risk account from “negative” to “stable” and assign an “A-minus” rating to next week’s sale.

Citizens has paid more than $5 billion in claims as a result of hurricanes that hit the state in 2004 and 2005.

Source: Citizens Property Insurance Corp.

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