Estimated Capacity
NOTICE IS HEREBY GIVEN by the State Board of Administration of Florida (the “Board”) of the estimated borrowing capacity, estimated claims-paying capacity, and projected balance of the Florida Hurricane Catastrophe Fund (the “Fund”) as of December 31, 2018, in compliance with the requirements of subparagraph 215.555(4)(c)2., Florida Statutes. These estimates relate to the 2018-2019 Reimbursement Contract Year. For October 2018, based on an estimated borrowing capacity of $8.0 billion, $13.0 billion projected year-end cash balance, and $1.0 billion of reinsurance, the Fund’s total estimated claims-paying capacity over the next 12 months is $22.0 billion, which amount exceeds the $17 billion limit on the Fund’s single-season obligations as specified by subparagraph 215.555(4)(c)1., Florida Statutes, for the contract year. The borrowing capacity estimate is dependent on many factors, such as the credit rating of the debt, the amount of emergency assessments available for funding the debt, the limitations or constraints of the financial markets to absorb potential debt issuances, the time necessary to access such markets, and the existing level of interest rates at the time of issuance. The projected year-end balance available for reimbursement of participating insurers on December 31, 2018, is estimated to be $13.0 billion, which represents the amount of assets available to pay claims resulting from Covered Events which may occur during the June 1, 2018 through May 31, 2019 Contract Year, not including any bond proceeds. The estimated claims-paying capacity consists of the estimated borrowing capacity, the projected year-end cash balance, and reinsurance. Additional liquidity is provided by $2.2 billion from Series 2013A and Series 2016A pre-event bonds. The projected year-end fund balance of $13.0 billion reflects losses and loss reserves from Hurricane Irma (2017), which the FHCF’s consulting actuary has estimated to be $3.2 billion. The estimates above do not take into account any potential losses from Hurricane Michael, which made landfall in Florida on October 10, 2018. Greater detail may be obtained in the October 9, 2018 Claims-Paying Capacity Estimates Report, which can be found on the Fund’s website at www.sbafla.com/fhcf/ under “Bonding Program.” The Board recognizes that its good faith estimates are being made while volatile global financial market conditions exist, and therefore, changing market conditions can dramatically impact the Fund’s actual claims-paying capacity either positively or negatively. Current conditions may or may not be the same if and when the Board determines that it is necessary to issue revenue bonds. Participating insurers who rely on these estimates should recognize the potential impact the financial market can have on the Board’s claims-paying ability and plan accordingly.
