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Cat Fund: Over $8 Billion for Liquidity for 2007/2008 |
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11/19/2007 |
From Jack Nicholson, senior officer, Florida Hurricane Catastrophe Fund
We anticipate the year-end cash balance (the cash available to pay 2007 hurricane claims) to be $2.078 billion. This year, premiums should be around $1.326 billion. This is made up of premiums for the mandatory FHCF coverage of $945 million, the optional TICL coverage of $242 million, and premiums of $139.2 million for the $10 million optional coverage.
The Florida Hurricane Catastrophe Fund also has $2.5 billion available for liquidity purposes from the extendable notes that were issued in 2006. Of the original $2.8 billion, about $300 million did not extend/renew. In addition to this, this fall we issued some five-year floating rate notes for $3.5 billion. That puts the total outstanding short term pre-event debt at $6 billion.
If we add the cash balance of $2.078 billion, this totals over $8 billion for liquidity for the 2007/2008 contract year.
Since there have been no losses this year, we should be in great shape next hurricane season with another year of premiums being paid.
The only post-event debt we have outstanding is the $1.35 billion of six-year tax-exempt notes being used to pay for the shortfall in 2005 losses.
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