Commissioner Donelon Says Standard & Poor�s A- Rating of Citizens Corp.
Bonds Positive for Louisiana
Released: March 30, 2006
One of the worlds top providers of credit ratings has given the Louisiana
Citizens Property Insurance Corporation (Citizens) bond issue an A-minus rating,
signifying the success of recent meetings held with bond rating agencies and Citizens
representatives, led by Commissioner of Insurance Jim Donelon.
Citizens officials asked Commissioner Donelon to participate in the series of seven
meetings March 8-10 in New York, citing his involvement as vital in helping the
state secure the lowest possible rates and cost for the bonds that will be bought
by the bonding agencies. Citizens is issuing the bonds to pay $825 million in policyholder
claims resulting from the two hurricanes.
Commissioner Donelon says the Standard & Poors A-minus rating is significant
because it demonstrates the underlying strength of the Citizens Corporation. This
favorable rating is good news and a positive for Citizens and the state of Louisiana,
says Donelon. The better the rating, the lower the interest rate will be on
the bond issue.
Citizens, Louisianas third largest provider of property insurance, was created
by the Legislature in 2003 to oversee the states high risk property insurance
pools and markets of last resort, the FAIR and Coastal Plans. As a result of Hurricanes
Katrina and Rita, the Corporations reserves were wiped out when the FAIR Plan
incurred hurricane losses of $1.07 billion.
Also recognizing the importance of the meetings were Governor Kathleen Blanco and
Citizens Governing Board member, State Treasurer John Kennedy, both of whom participated
in a conference call with the rating agencies during the early March meetings at
the request of Commissioner Donelon.
Our state officials recognize the importance of this financing in providing
sufficient funds to pay policyholder claims as expeditiously as possible. So together,
Governor Blanco, Treasurer Kennedy and I all helped show the nations top credit
review agencies that Louisiana is serious about helping its policyholders recover
from the hurricanes as quickly as possible, Commissioner Donelon adds.
The Commissioner says the bonds are expected to be sold on April 4.