Donelon announces Louisiana Citizens rating upgrade
Louisiana Insurance Commissioner Jim Donelon announced today that Moody’s Investors Service has upgraded the Louisiana Citizens Property Insurance Corporation (Citizens) Assessment Revenue Bonds to Baa1 from Baa2. The outlook for the company has changed from stable to positive. The rating change affects Citizens $894 million of outstanding Assessment Revenue Bonds.
Moody’s rating rationale points to a healthy property insurance market in Louisiana. Among credit strengths cited for the upgrade are improved management and administrative processes, the successful depopulation program, and demonstrated success at levying and collecting emergency assessments. The state support through the enactment of a tax credit mechanism for those paying emergency assessments, and strong reserves that total two years debt service are also credited for the upgrade.
Citizens is the homeowners insurer of last resort in Louisiana, which saw a significant rise in written premiums in the aftermath of Hurricanes Katrina and Rita with its policy count spiking to 174,000 policies in September of 2008. With the recent removal of 13,500 policies in the fourth round of depopulation, Citizens total will drop to 119,000 and is predicted to have dropped to below a 6% market share and rank 5th or 6th in size of market share in our state by the end of this year.
Commissioner Donelon said, “I am very pleased with this upgrade, which evidences that Moody’s recognizes all of the positive strides that Citizens has made in recent years. The leadership at Citizens, including former CEO John Wortman, CEO Richard Robertson, CFO Steve Cottrell, and their employees are to be commended. This announcement, particularly in light of the difficult economic challenges facing the entire country, is great news for Citizens and for the insurance market in Louisiana.” Contact the Louisiana Department of Insurance at 1-800-259-5300 or www.ldi.state.la.us with questions or comments regarding the recent Citizens rating upgrade.