• Florida's Citizens Property Insurance Closes on $250 Million Catastrophe Bond Deal
  • April 3, 2013
  • Law Firm: Colodny Fass Talenfeld Karlinsky Abate Webb P.A. - Fort Lauderdale Office
  • Citizens Again Taps Capital Market for Risk Transfer

    Citizens Property Insurance Corporation ("Citizens") announced today, March 29, 2013, that it has closed on a $250 million, three-year capital market risk transfer program through Everglades Re Ltd.

    The issuance, finalized yesterday, is the second such placement and continues efforts by Citizens to complement its traditional reinsurance program.

    Citizens' Chairman Carlos Lacasa said the State-run insurer's groundbreaking $750 million, two-year placement with Everglades Re last year paved the way for the latest deal, which sparked new interest among investors and came at a much lower cost than the previous tranche.

    "This action continues Citizens' goal of transferring risk to the private sector by working closely with nontraditional capital markets, and further protecting our policyholders and all taxpayers in Florida," Chairman Lacasa said.  "Citizens has emerged as an international leader in risk transference and our achievements are being recognized by financial markets around the world."

    The bonds were sold at a cost to Citizens of 11.08 percent-a 40-percent reduction from the 19.07 percent rate offered last year.  The improved pricing will translate into savings of nearly $60 million over the life of the program.  A total of 32 investors took part in the 2013 offering, which was nearly two times oversubscribed.

    Citizens' Chief Financial Officer Sharon Binnun recognized the team of partners, particularly Goldman Sachs as lead underwriter, for making the sale a success. 

    "This transaction both lowered Citizens' retention from last year and was completed at a cost savings of approximately 40 percent," she said.  "We were also able to accomplish this while increasing the term of the coverage to three years."

    Citizens plans to complete its traditional reinsurance buy within the next 10 days as part of an estimated $1.75 billion in risk transfer for the Atlantic hurricane season that begins June 1.