Commissioner Donelon Works to Help State
Secure Funds for LA Policyholders Hit Hard by Hurricanes
Released: March 22, 2006
Commissioner of Insurance Jim Donelon was invited to meet with the nations
largest bond insurers and bond rating agencies in New York earlier this month in
a continued effort to help with Louisianas recovery efforts following Hurricanes
Katrina and Rita.
The meetings were held for the Louisiana Citizens Property Insurance Corporation
(Citizens) to sell an $825 million bond issue to pay policyholder claims resulting
from the two hurricanes.
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.
Representatives of Citizens asked Commissioner Donelon to participate in the series
of seven meetings, 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 New York
bonding agencies. This is the first significant Louisiana bond transaction
post-Katrina and Rita and potentially the largest bond issue in the states
history, Commissioner Donelon says. Its success is important to restoring
investor confidence in Louisiana. The Commissioner adds that the states
rebuilding effort will also depend upon confidence in Louisianas insurance
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 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, the Commissioner contends.
Donelon says he is encouraged by the response the state received during the meetings.
These agencies we met with are the groups who actually assign the bond ratings.
These ratings show the potential bond buyers the financial strength of these bonds,
and the rating we receive will send a strong message to the rest of the nation that
Louisianas economy is rebounding from the hurricanes, Donelon contends.
The Commissioner says the bonds will actually be sold later this month or in early