Florida is moving forward with a plan to borrow up to $3.8 billion to bolster a state-operated fund that reimburses property insurers for hurricane-related losses.
A report by Bloomberg revealed that the Florida State Board of Administration has made a securities filing indicating its intention to generate a minimum of $1.5 billion through the sale of municipal bonds.
The funds raised through this sale will be allocated to the Florida Hurricane Catastrophe Fund, which is part of the state’s ongoing strategy to provide a safety net for its struggling insurance sector.
Last June, the Florida Insurance Guaranty Association decided to issue bonds for the first time in 30 years after seeing increased costs resulting from Hurricane Ian in 2022 and the subsequent closure of several property insurers due to a high number of lawsuits.
In this latest sale, Florida aims to replenish the funds from previous bonds set to mature in 2025, according to Blomberg.
Gina Wilson, chief operating officer of the Florida Hurricane Catastrophe Fund, said in a statement that the sale will provide the fund with “additional capital at an established interest rate and the ability to access funds quickly in the event of a significant storm event.”
Ben Watkins, director of bond finance for Florida, additionally stated that the move is a proactive measure rather than an immediate necessity, noting that it would not impose any assessments on member insurers.
The filing made by the Florida State Board of Administration identified Morgan Stanley as the lead underwriter for the forthcoming sale, which is anticipated to be priced as early as March.
Since Hurricane Ian in 2022, Florida’s catastrophe fund has issued $1.9 billion in reimbursements to insurers and anticipates additional payments amounting to $8.1 billion by 2028. The fund also continues to make payments related to Hurricanes Irma and Michael, which struck in 2017 and 2018, respectively.
What are your thoughts on this story? Feel free to share your comments below.
