Fitch Upgrades Citizens’ Coastal Account, Outlook Stable

Fitch Ratings has assigned an ‘AA-‘ rating to the following senior secured bonds of the Citizens Property Insurance Corp., Coastal Account (formerly known as the High Risk Account): $750 million series 2015A-1; $250 million series 2015A-2 (SIFMA FRN).

The bonds are being sold negotiation on May 20, 2015.

Fitch Ratings has also upgraded the outstanding senior secured bonds to ‘AA-‘ from ‘A+’ as follows: $746.585 million series 2009A-1; $1.24 billion series 2010A-1; $645 million series 2011A-1. The rating outlook is stable.

The senior secured bonds are payable from pledged revenues, including: (1) net premiums and surcharges, (2) emergency assessments, (3) regular assessments, (4) Florida Hurricane Catastrophe Fund (FHCF or CAT fund) reimbursements. The primary security, and the rating, is derived from Citizens’ ability to levy emergency assessments on nearly every insurance policyholder in the state for an unlimited duration and in an unlimited cumulative amount to pay debt service on the bonds.

The upgrade to ‘AA-‘ from ‘A+’ on the senior secured bonds reflects Citizens’ successful efforts to lower and transfer risk, reducing its exposure to claims and reducing the magnitude of potential future borrowing. The rating continues to reflect the security derived from Citizens’ ability to levy emergency assessments of up to 10 percent for the Coastal Account on nearly every insurance policy holder in the state for an unlimited duration and in an unlimited cumulative amount to pay debt service on its bonds.

With no hurricane losses in nine years, Citizens’ financial position is much improved with strong growth in claims paying resources. Citizens would draw on these expanded claims-paying resources before issuing post-event bonds to pay storm-related claims.

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