DEPARTMENT OF FINANCIAL SERVICES
OIR – Insurance RegulationOffice of Insurance Regulation - Notice of Order
NOTICE IS HEREBY GIVEN that the Office of Insurance Regulation has issued the following:
IN THE MATTER OF:
CITIZENS PROPERTYCASE NO: 90247-07
INSURANCE CORPORATION
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ORDER APPROVING CITIZENS’ PERSONAL LINES ACCOUNT AND COMMERCIAL LINES ACCOUNT BONDS 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 Personal Lines Account and Commercial Lines Account (“PLA/CLA”) Senior Secured Bonds, Series 2007, in the aggregate principal amount of not exceeding $950,000,000 (the “Series 2007 Bonds”) and related documentation. Citizens’ request is based on the anticipated adoption by its Board of Governors (the “Board”) of the resolution (the “Authorizing Resolution”) attached hereto as Exhibit “A”.
The purpose of this bond issuance for the PLA/CLA Accounts is to provide Citizens with needed liquidity in preparation for the 2007 hurricane season and beyond. Citizens has determined that issuing these bonds will enable it to efficiently meet its financial obligations and is consistent with the provisions of the Citizens Act.
The Series 2007 Bonds are to be issued pursuant to that certain Master Trust Indenture to be dated as of July 1, 2007 (the “Master Indenture”), as supplemented by that certain First Supplemental Indenture to be dated as of July 1, 2007 (the “First Supplemental Indenture” and, together with the Master Indenture, the “Indenture”), by and between Citizens and the Master Trustee named therein. The Master Indenture and the First Supplemental Indenture are to be in substantially the same forms as the respective copies thereof received and reviewed by the Office of Insurance Regulation (“Office”) 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 2007 Bonds as described in the Authorizing Resolution.
Citizens is a statutorily-created corporation, established pursuant to the Citizens Act. Citizens, through its Personal Lines Account and its Commercial Lines Account, has become a significant provider of residential and commercial property insurance in the State of Florida. Pursuant to the Citizens Act, and particularly Section 627.351(6)(c)3., Florida Statutes, Citizens has the power to borrow funds, by issuing bonds or by incurring other indebtedness, and shall have other powers reasonably necessary to effectuate the requirements of the Citizens Act, including without limitation, the power to issue bonds and incur other indebtedness in order to refinance outstanding bonds or other indebtedness. Citizens may also 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 its financial obligations and that such financings are reasonably necessary to effectuate the requirements of the Citizens Act. The Citizens Act authorizes Citizens to borrow funds for the Personal Lines Account and the Commercial Lines Account by issuing bonds or by incurring other indebtedness and to pledge assessments under the Act and other funds available to Citizens’ Personal Lines Account and the Commercial Lines Account as the source of security and repayment for such borrowings.
On or about May 24, 2007, Citizens’ Board is expected to adopt the Authorizing Resolution authorizing the issuance of Personal Lines Account/Commercial Lines Account Senior Secured Bonds, Series 2007, in one or more series, in the aggregate principal amount of not exceeding $950,000,000, to pay policyholder claims and other obligations of the Personal Lines Account and the Commercial Lines Account.
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 2007 Bonds, attached as Exhibit B, and an estimate of the costs, not including the cost of bond insurance which is still to be determined, attached as Exhibit C, to be incurred by Citizens in connection with the issuance of the Series 2007 Bonds.
The Office, having considered this submission, and being otherwise advised in the premises, hereby finds that:
1.The Office, 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 2007 Bonds are being issued for the primary purpose of providing additional resources to assist Citizens to cover policyholder claims and expenses within the Personal Lines Account and the Commercial Lines Account. 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.
3.Pursuant to the Citizens Act, and Sections 19(B) and 20 of the Plan of Operation, Citizens has authority to enter into the Indenture, to issue the Series 2007 Bonds under the Indenture and to make the same payable and secured as provided in the Indenture.
IT IS THEREFORE ORDERED:
That the Office hereby APPROVES, the Indenture, the issuance of the Series 2007 Bonds under the Indenture, and the pledge by Citizens of the Pledged Revenues (as defined in the Indenture) to secure the Series 2007 Bonds; provided that, the approvals granted in this Order are subject to the Board’s adoption of the Authorizing Resolution.
DONE and ORDERED this_____day of May 2007.
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KEVIN M. MCCARTY
COMMISSIONER
