Florida cat fund approved for $1bn reinsurance cover
Florida Hurricane Cat Fund (FHCF) has secured approval from Florida’s State Board of Administration (SBA) to buy $1 billion of reinsurance coverage.
In March, the fund was given approval to transfer up to $2.2 billion in risk to the private reinsurance and capital markets. The chief executive officer of FHCF, Jack Nicholson, was given the green light to assess options for private risk transfer.
According to a memo to SBA trustees, which include Governor Rick Scott, attorney General Pam Bondi, and chief financial officer Jeff Atwater, the FHCF should seek to obtain $1 billion of risk-transfer at a rate-on-line not to exceed 6.8 percent and up to $1.2 billion pre-event debt financing.
Aon Benfield was directed to canvas the relevant markets and report back expected pricing for reinsurance options of $1 billion and $2.2 billion of coverage in excess of $12.5 billion in claims.
“Conditions in the market for risk transfer and pre-event debt have continued to trend toward lower cost. As a result, the FHCF is in a position to consider cost-effective strategies to become fully-funded for its statutory maximum single-season liability this year, in lieu of reliance on post-event financing in the future,” said the memo.
