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, 2015, in compliance with the requirements of Section 215.555(4)(c)2., Florida Statutes. These estimates relate to the 2015-2016 Reimbursement Contract Year. For October 2015, based on an estimated borrowing capacity of $7.6 billion, $12.7 billion projected year-end cash balance, $1 billion of reinsurance, and $2 billion of Series 2013A pre-event bonds, the Fund’s total estimated claims-paying capacity over the next 12 months, without the $17 billion statutory limitation, is $23.3 billion. The issuance of $1.2 billion of pre-event bonds, authorized by resolution of the Board on April 14, 2015, would use part of the estimated post-event borrowing capacity and potentially reduce the remaining post-event borrowing capacity available to $6.4 billion. 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, 2015, is estimated to be $12.7 billion, which represents the amount of assets available to pay claims resulting from Covered Events which may occur during the June 1, 2015 through May 31, 2016 Contract Year, not including any bond proceeds. The obligation of the Board for the payment of reimbursable losses is limited in Section 215.555(4)(c)1., Florida Statutes, and shall not exceed the actual claims-paying capacity of the Fund, up to the statutory maximum of $17 billion for this Contract Year. The estimated claims-paying capacity consists of the estimated borrowing capacity, the projected year-end cash balance, reinsurance, and pre-event bonds which can be used for liquidity. Greater detail may be obtained in the October 15, 2015, 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.
