Citizens Closes Record $750 Million Reinsurance Transfer

On Tuesday, Citizens Property Insurance, which has made it a goal to reduce exposure and reliance on assessments, announced closing on a $750 million, two-year collateralized reinsurance transfer using catastrophe bonds issued by Everglades Re Ltd.

The transaction was given a "B+" rating by Standard & Poors, as the notes cover losses from Florida hurricanes on a per-occurrence basis, with the cover coming for Citizens coastal accounts.

State leaders have been pushing for months to shrink the Florida Hurricane Catastrophe Fund -- the state-run provider of low-cost reinsurance that serves as a safety net for insurance companies -- along with the state's involvement in selling insurance products.

Citizens has targeted $1 billion in risk transfer for the 2012 Atlantic hurricane season which begins June 1.

This brings to Citizens a significant increase in the diversification and capacity of risk transfer resources, while not adversely affecting the availability of risk transfer for the private Florida insurers, Citizens' chief financial officer Sharon Binnun stated in a release.

Carlos A. Lacasa, Citizens' board chairman, declared in the release that the deal was a historic day for the state of Florida in reducing the potential for assessments on all Florida policyholders after a catastrophic event.