Florida Citizens Property Insurance Corp. plans to make up to $350 million available to private insurers willing to assume its policies, offering low-interest, 20-year loans from its surplus to qualifying "take-out companies"—those approved by the state Office of Insurance Regulation to remove policies from Citizens in order to reduce its exposure.

Citizens President & CEO Barry Gilway says as many as 300,000 policies could be removed under the loan program—possibly by the start of 2013. If so, the assessment risk over the heads of nearly all Florida policyholders would be reduced $1.2 billion (for a 1-in-100-year event), he adds. (Citizens says it would have to pay the private reinsurance market $240 million per year to reduce the same amount of probable maximum loss.)

This financial incentive of up to $50 million per insurer is being made available in order to entice the private property-insurance market to assume some of its policies for up to 10 years. Many of Citizens' policies are significantly underpriced, and any insurer willing to participate in the take-out proposal cannot increase rates on any assumed policy by more than 10 percent at renewal.

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