IN THE MATTER OF:
CASE NO.: 102880-09
CITIZENS PROPERTY
INSURANCE CORPORATION
_____________________________________/
ORDER APPROVING CITIZENS HIGH-RICK ACCOUNT BOND INSURANCE AND RELATED DOCUMENTS
THIS MATTER came before the Office of Insurance Regulation (the Office) for consideration and final agency action upon the request of Citizens Property Insurance Corporation (Citizens), pursuant to Section 627.351(6), Florida Statutes, as amended (the Citizens Act), and Sections 19(B) and 20 of Citizens Plan of Operation (the Plan of Operation), for approval of the issuance by Citizens of its High-Risk Account Senior Secured Bonds, Series 2009, in the aggregate principal amount of not exceeding $2,500,000,000 (the Series 2009 Bonds) and related documentation. Citizens proposes to issue the Series 2009 Bonds from time to time, in one or more series; provided that no Series 2009 Bonds shall be issued after October 31, 2009. Citizens request is based on the adoption by its Board of Governors (the Board) of the resolution (the Authorizing Resolution), attached hereto as Exhibit A, authorizing the issuance of the Series 2009 Bonds and related documentation.
Citizens expects that the Series 2009 Bonds may be issued in one or more series from time to time; provided that no Series 2009 Bonds shall be issued after October 31, 2009. Each separate series of Series 2009 Bonds shall be differentiated from other series of Series 2009 Bonds by a letter designation, starting with the letter A, so that the first series of Series 2009 Bonds shall be designated as Series 2009A Bonds, the second series of Series 2009 Bonds shall be designated as Series 2009B Bonds, and so on.
The Series 2009 Bonds are to be issued pursuant to that certain Trust Indenture dated as of August 6, 1997 (the 1997 Indenture), as amended, and for purposes of the first series (which may be multiple series issued concurrently) of Series 2009 Bonds issued, as further amended by that certain Seventh Supplemental Indenture (the Seventh Supplemental Indenture and, together with the 1997 Indenture as amended, the Indenture). The Seventh Supplemental Indenture is to be in substantially the same form as the copy received and reviewed by the Office prior to the entry of this Order.
Subsequent series of Series 2009 Bonds issued under the authorization of the Authorizing Resolution and the approval of this Order, but after the issuance of the Series 2009 Bonds issued pursuant to the Seventh Supplemental Indenture, shall be issued pursuant to one or more supplemental indentures substantially in the form of the Seventh Supplemental Indenture, with such changes as are necessary to reflect the details of the bonds (i.e., whether the bonds may bear interest at fixed or variable rates; be issued as tax-exempt, taxable or tax credit bonds; have the benefit of any credit enhancement or liquidity facility; and the manner in which they may be sold, including public offering, private placement or in exchange for currently outstanding bonds) of such subsequent series of Series 2009 Bonds. The final maturity of any Series 2009 Bonds issued as fixed rate bonds shall be no later than December 31, 2019, and the final maturity of any Series 2009 Bonds issued as variable rate bonds shall be no later than December 31, 2029.
For purposes of this Order, any reference to the Indenture shall include any such supplemental indenture, together with the 1997 Indenture. Prior to issuing the first series of Series 2009 Bonds, Citizens shall appoint an entity qualified to exercise trust powers in the State of Florida as successor Indenture Trustee to act in such capacity for all purposes under the Indenture. Citizens is also entering into or will utilize, as applicable, other related documents and agreements in connection with the issuance of the Series 2009 Bonds as described in the Authorizing Resolution.
Citizens is a statutorily-created corporation and government entity that is an integral part of the State of Florida, established pursuant to the Citizens Act. Citizens, through its High-Risk Account, has become a significant provider of residential and commercial windstorm insurance in the State of Florida, and must have access to sufficient funds to meet its policyholder claims and other obligations in the event of a catastrophic hurricane or other weather-related event.
The Citizens Act authorizes Citizens to borrow funds for the High-Risk Account by issuing bonds or by incurring other indebtedness and to pledge assessments under the Act and other funds available to Citizens High-Risk Account as the source of security and repayment for such borrowings. Section 627.351(6)(c)3., Florida Statutes, states that Citizens may issue bonds or incur other indebtedness in the absence of a hurricane or other weather-related event, upon a determination by Citizens, subject to approval by the Office, that such action would enable it to efficiently meet the financial obligations of Citizens and that such financings are reasonably necessary to effectuate the requirements of the Citizens Act.
The Citizens Act and the Plan of Operation authorize Citizens to issue bonds in the absence of a hurricane or other weather-related event and the Plan of Operation, in Section 20(D), contains a determination by the Board that such advance financings constitute financing mechanisms under the Act that will allow Citizens to efficiently meet the financial obligations of the High-Risk Account and that such financings are reasonably necessary to effectuate the requirements of the Act.
On March 10, 2009, Citizens Board adopted the Authorizing Resolution authorizing the issuance of the Series 2009 Bonds from time to time, in one or more series, in the aggregate principal amount of not exceeding $2,500,000,000, to pay policyholder claims and other obligations of the High-Risk Account as a result of a catastrophic hurricane or other weather-related event. As reflected in the attached Exhibit A, the Authorizing Resolution contains a finding by Citizens Board that, in order to provide funds to meet policyholder claims and other obligations of the High-Risk Account, it is in the best interests of Citizens to issue the Series 2009 Bonds. As further reflected in the attached Exhibit A, the Authorizing Resolution contains a determination by Citizens Board that the proceeds derived from the Series 2009 Bonds are reasonably necessary to enable Citizens to efficiently meet the financial obligations of the High-Risk Account and to effectuate the requirements of the Citizens Act.
As required by Section 19(B) of the Plan of Operation, Citizens has filed with the Office a statement of the purpose of the Series 2009 Bonds, a copy of the Seventh Supplemental Indenture in substantially final form, and an estimate of the costs to be incurred by Citizens in connection with the issuance of the entire aggregate principal amount (i.e., $2,500,000,000) of the Series 2009 Bonds.
The Office, having considered this submission, and being otherwise advised in the premises, hereby finds that:
1. The Office has jurisdiction over the subject matter of, and the parties to, this proceeding pursuant to the Citizens Act.
2. The Series 2009 Bonds are being issued for the purpose of providing additional resources to assist Citizens in covering policyholders claims and expenses in the High-Risk Account and are hereby determined to be for a valid purpose under the Citizens Act. The Series 2009 Bonds will enable Citizens to efficiently meet its financial obligations and are reasonably necessary to effectuate the requirements of the Citizens Act.
3. The Indenture is hereby deemed to be a trust indenture within the meaning of, and is approved for purposes of, Section 19(B) of the Plan of Operation.
4. Pursuant to the Citizens Act, and Sections 19(B) and 20 of the Plan of Operation, Citizens has authority to enter into the Seventh Supplemental Indenture and one or more additional supplemental indentures substantially in the form of the Seventh Supplemental Indenture in connection with the issuance from time to time of the Series 2009 Bonds, to issue the Series 2009 Bonds under the Indenture from time to time, in one or more series and with the details and characteristics described herein and in the Authorizing Resolution, and to make the Series 2009 Bonds payable and secured as provided in the Indenture.
IT IS THEREFORE ORDERED:
That the Office of Insurance Regulation hereby APPROVES:
A. The Seventh Supplemental Indenture and such additional supplemental indentures substantially in the form of the Seventh Supplemental Indenture as are required to issue the Series 2009 Bonds in the manner described herein and in the Authorizing Resolution.
B. The issuance of the Series 2009 Bonds under the Indenture in one or more series, from time to time, with the details and characteristics described herein and in the Authorizing Resolution; provided, however, that no Series 2009 Bonds shall be issued after October 31, 2009.
C. The pledge by Citizens of the Pledged Revenues (as defined in the Indenture) to secure the Series 2009 Bonds.
DONE and ORDERED this __10th__ day of March, 2009.
______________________
KEVIN M. MCCARTY
COMMISSIONER
NOTICE OF RIGHTS
Any party to these proceedings adversely affected by this Order is entitled to seek review of this Order pursuant to Section 120.68, Florida Statutes, and Rule 9.110, Fla. R. App. P. Review proceedings must be instituted by filing a petition or notice of appeal with Steven H. Parton, General Counsel of the Office of Insurance Regulation, acting as the: Agency Clerk, 612 Larson Building, Tallahassee, Florida 32399-4206, and a copy of the same with the appropriate district court of appeal, within thirty (30) days of rendition of this Order.
Exhibit A
AUTHORIZING RESOLUTION ADOPTED ON MARCH 10, 2009
BY CITIZENS BOARD OF GOVERNORS
