Citizens leaves deficit to new board

[Aquawind]

Citizens leaves deficit to new board

Delays decision on $516 million charge

By PAIGE ST. JOHN,
THE NEWS-PRESS TALLAHASSEE BUREAU
Published by news-press.com on June 9, 2005

TALLAHASSEE — Despite a half-billion dollar deficit from 2004 hurricane losses, Florida's insurer of last resort isn't ready to levy a statewide assessment against policyholders.

Citizens Property Insurance opted Wednesday to wait until a new executive board is seated in August to take up the pending $516 million charge.

Once instituted, it would add an average 6.8 percent charge on property insurance premiums in Florida. That would pay off the deficit caused by $1.8 billion in hurricane claims against Citizens' high-risk account.

"It seems the consensus that since it's something the new board will have to live with, they should deal with it," said William O'Neil, chairman of the board.

House Banking Chairman Dennis Ross, R-Lakeland, called the decision incredible.

"I think it's indicative of why we needed to change the makeup of the board, if they're not going to assume responsibility for their own actions. Their inability to decide is deciding for them," Ross said.

State Chief Financial Officer Tom Gallagher appointed the current seven-member Citizens board.

Legislation passed in the spring spreads appointments to the governor, House speaker, Senate president and CFO. A new eight-member board must be named by Aug. 1.

Citizens CFO Jessica Buss said the delay was proposed in conversations with Gallagher's office.

"Timing is an important factor to consider," said Citizens' spokesman Justin Glover. "If you do it during hurricane season, you could be taking capital companies need to pay claims."

Citizens has its own cash problems.

The company has used incoming premiums to pay 2004 claims. That leaves only $200 million in cash reserves with another $360 million in claims still due for 2004.

Ouch!

http://www.news-press.com/apps/pbcs.dll ... 90442/1053


Paul