The GrayRobinson law firm has assisted the Citizens Property Insurance Company in issuing $3.05 billion in municipal bonds, which are earmarked to help pay policyholder claims from hurricane losses. The $3.05 billion bond issue is the largest in Florida history.

Citizens has been under substantial financial pressure ever since it sustained major losses from the eight hurricanes that swept through the state in 2004 and 2005. As a result of those losses, the state's market of last resort racked up a $1.75 billion deficit in its high-risk account. The high-risk account covers losses from wind damage along the state's coast in counties such as Broward, Miami-Dade, Monroe, and Palm Beach. In the 2006 legislative session, lawmakers approved taking $715 million in sales tax dollars to help retire the deficit. The rest of the deficit must be paid off by an assessment on all state policyholders, a process that is expected to take years.

As a result of the 2004 and 2005 losses, Citizens has been looking for ways to address its claims-paying resources. GrayRobinson was called in as the insurer's underwriting counsel to help facilitate a bond deal to guarantee the insurer has access to funds to pay claims. Citizens will invest the $3.05 billion in taxable, action-rate bonds, using the interest first, and then other revenues, to pay deficits. The remaining monies can be used to cover losses going forward.

GrayRobinson is one of Florida's highest-profile and fastest-growing law firms with offices in Tampa, Tallahassee, Orlando, Naples, Melbourne, and other cities. Headed by Public Finance Department Chair Frank Fleischer in the firm's Tampa office, the firm was ranked number one by Thompson Financial among law firms handling bond financing. It also received the 2004 “Deal of the Year” award for its previous work with Citizens. To handle the current bond issue, GrayRobinson called on the expertise of four co-senior managers, 10 co-managers, and four municipal bond insurers to issue 22 separate classes of securities.

“GrayRobinson is extremely gratified that we were able to offer our public finance expertise to help protect fellow Floridians against the threat of future devastating hurricane losses,” said Fleischer, “The sheer size of this bond transaction is a testament to the immense devastation that two extremely active hurricane seasons have inflicted upon our state.”

Special Reports /

GrayRobinson Steers Citizens Bond Issue

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