Citizens Property Insurance Corporations Board of Governors Meeting 3/02/2006

Jan 4, 2007

Citizens Property Insurance Corporation’s (CPIC) recently held a Board of Governors (the “Board”) meeting during which the Board discussed several issues relating to reinsurance and CPIC’s financial status. Bruce Douglas, the Board Chairman, briefly outlined his visits to reinsurers with Bob Ricker, and Mr. Douglas stated that CPIC needs to judge capacity by mid March or April. Mr. Douglas also announced the resignation of Julio Rubull from the Board, and his introduced his replacement Carlos Lacasa. Additionally, Earl Horton was announced as new chair of the Audit Committee. Lastly, Mr. Douglas gave a brief review of the 2005 claims, and he reported that CPIC has settled 90% of the claims settled with a 1.3% complaint ratio.

Susanne Murphy introduced a white paper that contained recommendations to the Legislature. The recommendations included the following:

restricting eligibility of Citizens to homes less than $1million in coverage A or condominiums, and Coverage A&C less than $1 million;

limiting sinkhole coverage with a cap of $10,000 and a buy back to $50,000, and an appeal process;

requiring underlying carriers provide adjusting services for HRA claims (there was no discussion of compensation) .

Mrs. Murphy also stated that CPIC will host a rate hearing in New Port Richey on March 1, 2006, to discuss pricing increases created by the sinkhole problem
Bob Ricker reported that recent take outs total 500,000 policies, including 40,000 policies in 2006. Mr. Ricker stated that CPIC expects significant policy growth for CPIC as new business averages already topping year end.

Terry Slack, CPIC’s new CFO, reported that CPIC has experienced a 40% growth in the personal lines account, a 20% growth in the commercial lines account, and a 10% growth in the high risk account. Mr. Slack also estimated that the actuarial cost of reinsurance in 2005 as $65M and it was raised to $95M for 2006 due to increased exposure. A budget workshop will be held in November or December 2006. Additionally, the procurement policy was defined for the board.

John Forney presented CPIC’s Financial Plan. Mr. Foreny is the Raymond James advisor to the Board. Mr. Forney explained that a Capital Planning Model is being developed and that CPIC has drawn down notes and has estimated $181M left for paying claims. The Citizens’ Capital plan for 2006 will include reinsurance, and the Florida Hurricane Catastrophe Fund will cover 40% of Citizens’ PML.

Finally, Cheryl Herrin and Scott Wallace spoke for the Claims committee, and reported that adjusters will have an invitation to bid by March 15, 2006. The adjusting firms will be approved by April 15, 2006, and these firms will be presented to the Board for approval by April 27, 2006. The presentation to the Board will include payment schedules. The Board expects that adjustment services will be complete up by May 15, 2006.

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