Citizens Board Meeting Report: December 12

Dec 16, 2008

On Friday, December 12, 2008, the Citizens Property Insurance Corporation (“Citizens”) Board of Governors (“Board”) held a meeting in Jacksonville, Florida. 

Following is a brief summary of discussions and activities that took place during the meeting.  To view the complete agenda, click here.

Chairman Malone called the meeting to order and gave the Chairman’s Report, which the following committee reports:


Finance and Investment Committee/2009 Budget

To view a summary of the most recent Finance and Investment Committee meeting and 2009 Budget, click here.

Citizens’ Chief Financial Officer (“CFO”) Sharon Binnun noted that the 2009 Budget includes the possibility of purchasing private reinsurance, but that a decision to do so, which has not yet been made, will require Board approval.  

The Board approved the 2009 Budget, Finance and Investment Committee Charter and allocation of additional assets to Citizens’ existing investment manager, MBIA.


Audit Committee

Citizens’ Manager of Internal Audit John Fox gave an update on the Audit Committee.  To view the update, click here.

Mr. Fox noted that the Florida Office of Insurance Regulation (“OIR”) currently is conducting a statutory market conduct exam of Citizens.


President’s Report

Citizens’ President Scott Wallace gave the President’s Report.  Citizens is meeting its benchmarks for all key performance indicators (“KPIs”).  To view the KPI Graph, click here.

In an effort to continue meeting performance goals, Citizens’ Staff has conducted research and examined other businesses to determine best practice ideas.  A Request for Proposal for consulting services on this effort is being completed as scheduled.

Mr. Wallace discussed the completion of the Employee Engagement Survey, noting that 82 percent of all Citizens employees responded.  The Survey showed a positive level of senior management involvement, which was described as critical to the success of any business.


Citizens Mission Review Task Force

Citizens’ Executive Vice President of Corporate Operations Susanne Murphy provided an update on the Citizens Mission Review Task Force (“Task Force”).  At the December 10 meeting, the Task Force received proposals and recommendations for its final report to the Florida Legislature.  To view a summary of the most recent Task Force meeting, click here.


Actuarial and Underwriting Committee

Citizens’ Senior Vice President of Underwriting Paul Palumbo gave an update on the Actuarial and Underwriting Committee.  To view the update summary, click here.

Mr. Palumbo noted that the underwriting criteria used for policies are currently being restructured, but that the number of products available and changes to those products cannot go into effect until 2010 because Citizens’ rates are frozen.  


Claims Committee

Board Member Earl Horton reported on the Claims Committee, noting that the Independent Adjuster for Non-Catastrophe and Catastrophe Request for Proposal Re-Bid is ongoing.  From the 58 firms that responded, two have been eliminated for consideration.  The Board approved Staff recommendations on contract awards to respondents.

Appointment of Lance Malcom as Claims Department Director of Operations was approved as well. 

To view a summary of the Claims Committee’s most recent meeting and Staff recommendations, click here


CFO’s Report

Ms. Binnun gave a brief CFO’s Report.  To view Citizens’ September 30, 2008 Financial Statement, click here.

Citizens is in the process of updating its investment portfolio to maintain a conservative approach and currently has a $3.3 billion surplus. 

Ms. Binnun noted that Citizens is required by law to re-evaluate its emergency assessments resulting from Hurricane Wilma claims.  The assessment is currently set at 1.4 percent of written premium on property policies only.  The Board determined that the current assessment level is appropriate, and approved its continuation.


Consumer Services Committee

Christine Turner from Citizens reported on the December 11 Consumer Services Committee meeting.  To view a summary of the meeting, click here.  No Board action was required.


Depopulation Committee

A report on the Depopulation Committee’s December 11 meeting was given by Board Member Jay Odom.  To view a summary of this meeting, click here.

Mr. Odom noted that policies continue to be removed from Citizens, and that the Florida Market Assistance Program is working and its information will continue to be used.  Nearly 400,000 policies have been removed from Citizens in 2008, most of which are Personal Lines Accounts. 

Board Member Carlos Lacasa indicated that a more balanced depopulation approach would be preferred.  However, this will be difficult to accomplish, because the main purpose of Citizens is to cover high-risk properties.


Market Accountability Advisory Committee

An update was given on the Market Accountability Advisory Committee, which is comprised of agent, bank and insurance representatives.  To view a summary of the last Committee meeting, click here.  No action by the Board was requested.


General Counsel’s Report

Amendments to the Plan of Operations were adopted by the Board.  To view the Plan of Operations amendments, click here.  To view the Plan of Operations, click here.

The Board discussed a June 24, 2008 subpoena issued by the Securities & Exchange Commission seeking documents on Citizens’ buyback of its own debt instruments earlier during 2008.  It was indicated that the subpoena concerns all internal and external e-mails concerning bids, all documents on Citizens’ disclosure of its intention to bid for its own securities and documents identifying the authorized auction broker dealers that placed the bids.

The Board approved all consent agenda items.  To view the Consent Agenda Index, click here.  The following Consent Agenda items were approved:

The next Board Meeting is scheduled to be held on February 20, 2009, in Tampa, Florida.


Depopulation Committee–December 12 Report

Following the Board meeting, the Citizens Depopulation Committee met briefly and discussed updates on the Florida Market Assistance Program (“FMAP”).  To view the complete meeting agenda, click here.

Joseph Bouthillier of Citizens reported that between January and November 2008, 14 insurance companies removed a total of 361,324 policies, reducing Citizens’ exposure by almost $100 billion.  The top three Florida counties from where the most depopulations have taken place are Miami-Dade, Broward and Pinellas. 

Mr. Bouthillier also reported that the volume of customers using FMAP is increasing and is projected to continue growing.  To view the Depopulation Report, click here.

It was reported that Citizens is planning to hold meetings with potential takeout companies and the Florida Office of Insurance Regulation with the goal of facilitating the depopulation process.

The meeting was then adjourned.


Should you have any questions or comments, please do not hesitate to contact Colodny Fass.


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