Florida Hurricane Catastrophe Fund Advisory Council Approves 2013-2014 Claims-Paying Capacity Report

May 17, 2013


The Florida Hurricane Catastrophe Fund (“FHCF”) Advisory Council met yesterday, May 16, 2013. 

As part of the agenda, the FHCF’s independent financial advisor gave an overview of the FHCF’s pre-event financing of $2 billion, which was priced and closed in April 2013.  The true interest cost of the pre-event financing is 2.61 percent.  The independent financial advisor noted that an outreach program made this transaction successful, yielding 139 investors-132 of which were new.  

The independent financial advisor then reported on the FHCF’s claims-paying capacity for the 2013-2014 FHCF Contract Year, which is $19.070 billion–amounting to $2.057 billion more than the FHCF’s $17 billion claims-paying obligation, along with the $12.5 million for the Temporary Increase in Coverage Level.  The additional $2.057 billion will be used to fund the subsequent hurricane season. 

The FHCF’s estimated claims-paying capacity includes $7.213 billion industry retention, $9.77 billion projected 2013 year-end cash balance and $2 billion in pre-event financing.

The Advisory Council adopted the May 16, 2013 Estimated Claims-Paying Capacity Report.

Dr. Jack Nicholson, FHCF Chief Operating Officer, then introduced Lamar Taylor, who is the Deputy Executive Director of the State Board of Administration (“SBA”).  Mr. Taylor provided an overview of the SBA, including its governing structure, oversight and primary responsibilities.  He noted that $169 billion is managed by the SBA-an amount that includes the Florida Retirement System, as well as the FHCF. 

Leonard Schulte, FHCF’s Director of Legal Analysis and Risk Evaluation, gave a quick overview of the recently concluded 2013 Florida Legislative Session, noting that efforts to reduce the FHCF’s claims-paying capacity did not pass this year. 

He briefly outlined the property insurance package, CS/SB 1770, which did pass, but has not yet been enacted.

FHCF Director of Examinations Gina Wilson presented the FHCF’s exposure examination program update.  The FHCF is in the process of examining 2012 insurers, she related.  In 2012 there were 163 companies participating in the FHCF, 97 of which have been scheduled for examination.  Those 97 companies represent 99.14 percent of all FHCF premium. 

Dr. Nicholson noted that the Florida Commission on Hurricane Loss Projection Methodology will begin meeting in August to develop its 2013 Standards of Acceptability.

It was also announced that the FHCF’s annual Participating Insurer’s Workshop will be held June 13-14, 2013 in Orlando. 

The May 2013 Estimated Claims-Paying Capacity Report is attached for review.


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