DEPARTMENT OF FINANCIAL SERVICES
OIR – Insurance RegulationOffice of Insurance Regulation-Order Approving Citizens' High Risk Bond Issuance
IN THE MATTER OF:
Case No.: 94698-08
CITIZENS PROPERTY
INSURANCE CORPORATION
_________________________________/
ORDER APPROVING CITIZENS’ HIGH-RISK ACCOUNT
BOND ISSUANCE AND RELATED DOCUMENTS
THIS MATTER came before the Office of Insurance Regulation 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 2008A, in the aggregate principal amount of not exceeding $2,000,000,000 (the “Series 2008A Bonds”) and related documentation. Citizens’ request is based on the adoption by its Board of Governors (the “Board”), on March 25, 2008, of the resolution (the “Authorizing Resolution”) attached hereto as Exhibit “A” authorizing the issuance of the Series 2008A Bonds and related documentation.
The Series 2008A Bonds are to be issued pursuant to that certain Trust Indenture dated as of August 6, 1997 (the “1997 Indenture”), as amended, and as further amended by that certain Sixth Supplemental Indenture (the “Sixth Supplemental Indenture” and, together with the 1997 Indenture as amended, the “Indenture”), by and between Citizens and Regions Bank, as successor Indenture Trustee. The Sixth Supplemental Indenture is to be in substantially the same form as the copy received and reviewed by the Office of Insurance Regulation prior to the entry of this Order. Citizens is also entering into or will utilize, as applicable, other related documents and agreements in connection with the issuance of the Series 2008A Bonds.
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 of Insurance Regulation, 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 25, 2008, Citizens’ Board adopted the Authorizing Resolution authorizing the issuance of the Series 2008A Bonds, in one or more series, in the aggregate principal amount of not exceeding $2,000,000,000, to pay policyholder claims and other obligations of the High-Risk Account as a result of a catastrophic hurricane or other weather-related event. 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 2008A Bonds. The Authorizing Resolution contains a further determination by Citizens’ Board that the proceeds derived from the Series 2008A 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 of Insurance Regulation a statement of the purpose of the Series 2008A Bonds, a copy of the Sixth Supplemental Indenture in substantially final form, and an estimate of the costs to be incurred by Citizens in connection with the issuance of the Series 2008A Bonds, which estimate has been approved by the Citizens’ Board.
The Office of Insurance Regulation, having considered this submission, and being otherwise advised in the premises, hereby finds that:
1.The Office of Insurance Regulation, by and through the Insurance Commissioner, has jurisdiction over the subject matter of, and the parties to, this proceeding pursuant to the Citizens Act.
2.The Series 2008A 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 2008A 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 Sixth Supplemental Indenture, to issue the Series 2008A Bonds under the Indenture and to make the same payable and secured as provided in the Indenture.
IT IS THEREFORE ORDERED:
That the Office of Insurance Regulation hereby APPROVES, the Sixth Supplemental Indenture, the issuance of the Series 2008A Bonds under the Indenture and the pledge by Citizens of the Pledged Revenues (as defined in the Indenture) to secure the Series 2008A Bonds.
DONE and ORDERED this______day of March, 2008.
_________________
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 the 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.
