FOR IMMEDIATE RELEASE

December 20, 2011

Donelon Disagrees with Louisiana Supreme Court Judgment Regarding Louisiana Citizens Case

On last Friday, December 16, the Louisiana Supreme Court issued a judgment that reinstated the $92,685,000 judgment, plus an estimated $11,007,046 in interest, in the class action law suit Oubre vs. Louisiana Citizens. The Supreme Court’s 4‐3 opinion says 24th Judicial District Court Judge Henry Sullivan ruled correctly in 2009 that Louisiana Citizens Property Insurance Corporation failed to begin adjusting some 18,000 claims in a timely fashion after Hurricane Katrina.

The penalties involved are not for insufficient claim payment, but rather as a penalty for not initiating claim adjustment within 30 days from the most horrific storm to strike the state. Citizens did send out advance Additional Living Expense checks to its policyholders within 30 days to help them offset the expenses of evacuation, or finding other living accommodations, yet the court viewed this as not being enough to satisfy the requirement.

“Ultimately, all property insurance policyholders in Louisiana will bear the cost of these class action lawsuits if Citizens has to implement an assessment to pay them or not,” Commissioner Donelon said.

Citizens currently has $140 million cash on hand. In addition, Citizens has $70 million in excess assessments that can be used to offset the 2005 plan year deficit if approved by the board and access to a $50 million line of credit that was negotiated to fill any cash shortfalls from a major storm.

Expenses in Citizens’ 2012 budget include $70 million in reinsurance premiums, $20 million in operating expenses and $6.5 million in service provider fees.

Because Citizens is domiciled in Louisiana and only writes insurance in Louisiana, they did not have access to the Federal Court system in New Orleans which has rejected the notion of class actions for these penalties resulting from failure to comply with the same statutory time limits to adjust claims from Hurricanes Katrina and Rita.

The number of claimants currently is 18,573 but there is potential for much more.

There is another pending class action lawsuit in Orleans Parish titled Orrill vs. Louisiana Citizens of similar nature. Citizens attempted to settle that lawsuit for $35 million and the money was placed in the registry of the court. The 4th Circuit ruled the settlement inadequate and the settlement reversed and the monies returned to Citizens. Last settlement demand from plaintiff attorneys was for $50 million.

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