Florida’s State Board of Administration Finance Corporation issued $1 billion in taxable bonds to finance reimbursements to property insurers.
The bonds mature on July 1, 2034, and yield 5.526%. They received a rating of Aa3 from Moody’s Investors Service, AA from S&P Global Ratings, AA from Fitch Ratings, and AA from Kroll Bond Rating Agency.
The rating “reflects access to special tax-like emergency assessments and a large and growing assessable base,” Fitch analysts wrote.
The bond proceeds will fund reimbursements issued by the Florida Hurricane Catastrophe Fund, which pools state funds to reimburse insurers for losses caused by hurricanes.
The issuance comes amid turbulence in the property insurance sector caused by increasingly common—and severe—hurricanes. In 2023, Hurricane Ian became the costliest hurricane in state history, causing more than $112 billion in damage after making landfall in southwest Florida, according to the National Oceanic and Atmospheric Administration. More than 30 home insurers have left Florida in the past three years, and eleven have liquidated, according to a report by Bankrate.
That has put pressure on the state to plug the insurance gap, including through the Florida Hurricane Catastrophe Fund.
The State Board of Administration Finance Corporation is an instrument of the state of Florida that acts primarily as an asset manager in charge of state and local government assets. The board managed more than $228 billion in assets as of July 2022, according to Florida’s Office of Program Policy Analysis and Government Accountability, the research arm of the state legislature.
The bonds are special obligations of the corporation, payable by reimbursement premiums and emergency assessments on almost all property and casualty insurance policies in the state, according to Fitch.
Morgan Stanley & Co LLC served as lead underwriter on the issuance. Raymond James & Associates, Inc acted as financial advisor.