Admitted Assets: Liabilities and policyholder surplus:

Transcription

1 COASTAL ACCOUNT (Formerly the High Risk Account or HRA) SELECTED FINANCIAL INFORMATION STATUTORY ACCOUNTING PRINCIPLES As of December 31, (in thousands) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Statements of Admitted Assets, Liabilities and Accumulated Surplus: Admitted Assets: Cash and short term investments $950,852 $1,126,621 $1,106,473 $934,528 $1,020,160 Bonds 5,276,036 5,994,873 6,095,816 6,538,417 6,887,398 Investment income due and accrued 40,573 46,112 44,462 51,351 57,543 Interaccount receivable (payable) (16,712) (22,324) (176,743) (28,171) (71,608) Due from investment broker Assessments receivable (782) , ,532 Reinsurance recoverable 49 (102) 367 6,212 2,043 Electric data processing equipment (at cost) Deferred income taxes Other assets (1) 42,074 57,422 82,102 76,637 79,240 Total admitted assets $6,292,090 $7,202,848 $7,153,042 $7,743,438 $8,309,308 Liabilities and policyholder surplus: Liabilities: Loss reserves $97,528 $82,686 $92,103 $121,774 $153,121 Loss adjustment expenses 48,094 37,169 50,573 47,855 37,636 Unearned premiums (net of unearned ceded) 201, , , , ,667 Unearned assessment income 19,326 43,602 85,051 Due to investment broker 5,975 Accounts payable and other liabilities (2) 252, , , , ,305 Interest payable 9,002 12,332 17,756 21,059 24,333 Notes payable (net of discount) 2,422,608 3,239,727 3,048,189 3,603,495 4,298,600 Taxes and fees (receivable) payable (595) (630) (1,618) (154) 683 Federal income taxes payable Total liabilities 3,030,554 3,927,450 3,816,011 4,540,975 5,366,396 Accumulated surplus Restricted 8,237 20,950 25,348 15,339 11,112 Unrestricted 3,253,299 3,254,448 3,311,683 3,187,124 2,931,800 Total accumulated surplus 3,261,536 3,275,398 3,337,031 3,202,463 2,942,912 Total liabilities and accumulated surplus $6,292,090 $7,202,848 $7,153,042 $7,743,438 $8,309,308 (1) in 2016, consists of premiums receivable, other receivables under reinsurance contracts, and other admitted assets. (2) In 2016, consists of advance premium and suspended cash, reinsurance payable, other liabilities, reserve for future assessments, and provision for reinsurance Source: Citizens Property Insurance Corporation The amounts reported above should be read in conjunction with Citizensʹ Audited Financial Statements Citizens Property Insurance Corporation COASTAL ACCOUNT (Formerly the High Risk Account or HRA) SELECTED FINANCIAL INFORMATION STATUTORY ACCOUNTING PRINCIPLES Years ended December 31 (in thousands) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Statements of Operations: PREMIUMS Premiums earned $551,056 $817,730 $1,066,643 $1,180,761 $1,187,577 Reinsurance ceded (363,578) (583,261) (590,407) (604,906) (548,744) Premiums earned, net 187, , , , ,833 LOSSES AND EXPENSES INCURRED: Losses incurred, net of reinsurance 87,215 82,768 74,902 73, ,247 Loss adjustment expenses income 51,074 27,273 48,789 51,880 49,860 Other underwriting expenses incurred (3) 115, , , , ,335 Total losses and expenses incurred 254, , , , ,442 UNDERWRITING INCOME (LOSS) (66,786) (16,700) 179, , ,391 Net investment income 119,942 74,404 96,366 70, ,591 Interest expense, net (106,085) (125,038) (142,549) (161,338) (176,260) LOC fees & notes issued cost (5,292) Assessment income 19,326 (19,020) 26,166 42,352 Takeout bonus expense (net) and other income (expenses) 758 (1,136) 2,498 28,040 2,587 Gain before federal income taxes (52,171) (54,436) 116, , ,661 Federal income tax benefit NET INCOME (LOSS): ($52,171) ($54,436) $116,942 $223,116 $223,661 Surplus, beginning of period 3,275,398 3,337,031 3,202,463 2,942,912 2,686,222 Prior period adjustment 15,283 Assessments (net of distributions) Change in net deferred income tax Additional pension liability 302 (24) (397) (337) Change in other comprehensive income (77) , Change in non admitted assets 38,084 (7,185) 18,009 20,118 33,221 Surplus, end of period $3,261,536 $3,275,398 $3,337,031 $3,202,463 $2,942,912 (3) Includes producer commissions (net), taxes and fees, administrative expenses, and other underwriting expenses. Source: Citizens Property Insurance Corporation The amounts reported above should be read in conjunction with Citizensʹ Audited Financial Statements

2 COASTAL ACCOUNT (Formerly the High Risk Account or HRA) SELECTED FINANCIAL INFORMATION GENERALLY ACCEPTED ACCOUNTING PRINCIPLES As of December 31, (in thousands) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) ASSETS: Cash and cash equivalents $115,444 $938,045 $7,469 $698,100 $829,711 Short and long term investments 6,063,836 6,252,089 7,257,869 6,904,008 7,252,996 Investment income due and accrued 40,573 46,112 44,462 51,350 57,543 Deferred policy acquisition costs 53,115 58,482 Deferred financing costs 62,341 83,785 Income taxes receivable Premiums receivable and other assets (1) 24,562 87,281 57, , ,400 Total assets $6,244,415 $7,323,527 $7,366,866 $8,026,261 $8,691,917 LIABILITIES AND NET ASSETS Loss reserves $97,528 $82,569 $92,003 $121,657 $153,121 Loss adjustment expense reserves 48,094 37,169 50,572 47,855 37,636 Unearned premiums 201, , , , ,549 Unearned assessment income 19,326 67, ,709 Long term debt 2,422,609 3,239,727 3,048,189 3,603,495 4,298,600 Other Liabilities (2) 250, , , , ,201 Taxes and fees (receivable) payable (1,618) (154) 683 Interest payable 9,002 12,332 17,756 21,059 24,333 Federal income taxes payable Deferred tax liability Total liabilities 3,029,215 3,979,425 3,942,650 4,606,752 5,464,832 NET ASSETS: Restricted 8,237 20,950 25,348 15,339 11,112 Unrestricted net assets 3,206,963 3,323,152 3,398,868 3,404,170 3,215,973 Total net assets 3,215,200 3,344,102 3,424,216 3,419,509 3,227,085 Total liabilities and net assets $6,244,415 $7,323,527 $7,366,866 $8,026,261 $8,691,917 (1) In 2016, consists of premiums receivable from assuming companies, reinsurance recoverable, other assets, and inter account receivable (payable). (2) In 2016, consists of reinsurance premiums payable, advance premiums and suspended cash, and other liabilities. Source: Citizens Property Insurance Corporation The amounts reported above should be read in conjunction with Citizensʹ Audited Financial Statements

3 COASTAL ACCOUNT (Formerly the High Risk Account or HRA) Adjusted GAAP Surplus As of December 31, (in thousands) Retained surplus GAAP basis $3,215,200 $3,344,102 $3,424,216 $3,419,509 $3,227,085 Deferred financing costs (62,341) (83,785) Restricted cash FSLSO account (8,237) (20,950) (25,348) (15,339) (11,112) Unamortized take out bonuses Net assets related to pre event notes (153,491) (229,367) (309,382) (105,614) Adjusted Surplus $3,053,472 $3,093,785 $3,089,486 $3,236,215 $3,132,188

4 Citizensʹ Coastal Lines Account Liquidity Sources 2017 Liquidity Sources (in millions) Year End 2016 Statutory Surplus $3,262 Projected 2017 Net Income (based on 2017 Budget) 68 Total Internally Funded Liquidity Sources $3,330 Series 2011A Pre Event Bonds Externally Funded Liquidity $475 Series 2015A Pre Event Bonds Externally Funded Liquidity $1,000 Total Liquidity Resources $4,805

5 COASTAL ACCOUNT (Formerly the High Risk Account or HRA) SAP to GAAP Reconciliation As of December 31, (in thousands) Net income (loss) Statutory basis ($52,171) ($54,436) $116,942 $223,116 $223,661 Adjustments: Change in policy acquisition costs (5,367) 1,209 Change in line of credit fees & note issuance costs (4,723) (6,074) Change in other financing costs (16,721) (16,721) Takeout bonuses Change in allowance for doubtful accounts and other income 8 1,114 (1,152) 1,139 (980) Change in unearned assessment income 14,230 17,218 Change in 2012 FIGA Assessment income 1, ,675 6,785 (10,690) Change in unrealized gain (loss) on investments (78,063) (27,751) (21,617) (26,994) 53,916 Change in net assets GAAP basis ($129,198) ($80,089) $96,848 $191,465 $261,539 Accumulated surplus Statutory basis $3,261,536 $3,275,398 $3,337,031 $3,202,463 $2,942,912 Adjustments: Policy acquisition costs 53,115 58,482 Nonadmitted assets, net ,555 30,254 49,416 68,400 Line of credit fee and note issuance costs 9,391 14,115 Takeout bonuses Other financing costs 52,950 69,668 Change in unearned assessment income (23,712) (22,658) GAAP 2012 FIGA assessment receivable 782 (246) (1,230) (3,905) (10,690) Provision for reinsurance Accumulated unrealized gain on investments (47,608) 30,384 58,142 79, ,751 Total net assets GAAP basis $3,215,200 $3,344,102 $3,424,216 $3,419,509 $3,227,085

6 Adjusted GAAP for Coastal (in thousands) 31 Dec Dec Dec Dec Dec 12 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) Retained surplus GAAP basis $3,215,200 $3,344,102 $3,424,216 $3,419,509 $3,227,085 Deferred financing costs 62,341 83,785 Restricted cash FSLSO account 8,237 20,950 25,348 15,339 11,112 Unamortized take out bonuses Net assets related to pre event notes 153, , , ,614 Adjusted Surplus 3,053,472 3,093,786 3,089,486 3,236,215 $3,132,188

7 Coastal Investments As of Amounts Investments (in millions) Bond Proceeds Tax Exempt Money Market Funds $ 721 Tax Exempt Fixed Rate Municipal Bonds 1,495 Tax Exempt VRDNʹs Municipal Bonds 40 Total Pre Event Bond Proceeds (1) $ 2,256 Operating Funds Money Market Funds $ 208 Corporates Bonds, Commercial Paper and CDʹs 2,340 Treasury & Agency Securities 1,265 Municipals 117 Legacy Assets 45 Asset Backed Auto Loans 44 Total Operating Funds $ 4,019 Total Invested Assets $ 6,275 (1) On June 1st 2017 the Series 2009A and 2010A bonds matured in the amount of $868.5 million.

8 As of May 31, 2017, the in force policies and exposure for each category of business are as follows: Policies Account Product Line Inforce COASTAL Personal Residential Wind Only (PR W) 80,458 COASTAL Personal Residential Multi Peril (PR M) 61,947 COASTAL Commercial Residential Wind Only (CR W) 3,702 COASTAL Commercial Residential Multi Peril (CR M) 264 COASTAL Commercial Non Residential Wind Only (CNR W) 7,476 COASTAL Commercial Non Residential Multi Peril (CNR M) 80 Total 153,927

9 Coastal Account Total Policies In Force and Total Insured Value Total Insured Date Total Policies In Force Value (millions) 12/31/2016 (3) 160,834 $59,805 12/31/2015 (2),(3) 200,842 $82,261 12/31/2014 (2) 282,863 $115,615 12/31/2013 (2) 386,688 $166, Dec ,163 $205, Dec ,161 $228, Dec ,679 $231, Dec ,436 $232, Dec ,200 $239, Dec ,184 $243,788 December 31, 2006 (1) 403,509 $178,314 December 31, 2005 (1) 399,417 $139,106 (1) Total Insured Value increased despite a reduction or marginal increase in total Policies in force due to rate increases implemented in spring of 2005 and spring of 2006 and due to the increase in large commercial residential accounts in Builderʹs risk and commercial residential policies typically have a significantly higher average exposure per policy than a personal residential policy. (2) The total policies in force and insured value declined in 2013, 2014 and 2015 largely due to depopulation efforts. (3) Total Insured Value declined in part due to Commercial Residential and Commercial Non Residential policies leaving Citizens outside of the depopulation process.

10 Total Coastal Policies in Force, DWP and Total Insured Value Period Ending DWP Total Insured Value 31 Dec Total Policies in Force (in thousands) (in millions) ,834 $466,124 $59, ,842 $650,948 $82, ,863 $1,003,191 $115, ,688 $1,174,669 $166, ,163 $1,230,985 $205, ,161 $1,187,803 $228, ,679 $1,115,368 $231, (2) 410,436 $1,031,378 $232, (2) 445,200 $1,169,969 $239, (1) 446,184 $1,219,300 $243, (1) 403,509 $1,274,742 $178,314 (1) DWP and Total Insured Value increased despite a reduction or marginal increase in total Policies in force due to rate increases implemented in spring of 2005 and spring of 2006 and due to the increase in large commercial residential accounts in Builderʹs risk and commercial residential policies typically have a significantly higher average exposure per policy than a personal residential policy. (2) As of December 31, 2008, Citizens had approximately 68,114 multi peril policies in force in the HRA with approximately $164.2 million in direct written premium and total insured value of approximately $24.1 billion.

11 Market Share (1) of Citizens Property Insurance Corporation For Residential Policies that Include Wind Coverage Market Share Based on Total Insured Value 21% 24% 20% 15% 9% 6% 5% Based on Premium 27% 30% 26% 20% 13% 9% 8% Notes: (1) Market share calculations are based on residential property exposure and premium for policies that include wind coverage for admitted carriers as reported to the Florida Office of Insurance Regulation via QUASR in a data extract provided to CPIC as of March 14, Any submissions/changes made to QUASR after this date are not reflected in these numbers. Surplus lines carriers are not included in this calculation. QUASR data cannot be separated by CPIC account. (2) The decrease in Citizensʹ Market Share in 2013 through 2016 is consistent with reductions in exposure due to depopulation, Clearinghouse, and Coastal Commercial Residential policies moving to the private/surplus lines markets outside the depopulation process. (3) State Farm Florida filed QUASR data as ʺtrade secretʺ with the Florida Office of Insurance Regulation beginning first quarter In this analysis, State Farm Floridaʹs 4th quarter 2013 reported data was used as a proxy for 4th quarter 2014, 2015, and 2016 values.

12 Market Share (1) of Citizens Property Insurance Corporation Relative to Other Florida Insurers (2) For Policies that Include Wind Coverage Company Name (2) Market Share as of Dec. 31, 2016 by Total Insured Value by Premium State Farm Florida Insurance Company (3) 7% 6% Universal Property & Casualty Insurance Company 6% 8% Citizens Property Insurance Corporation 5% 8% Federated National Insurance Company 5% 5% Heritage Property & Casualty Insurance Company 4% 5% Notes: (1) Market share calculations are based on residential property exposure and premium for policies that include wind coverage for admitted carriers as reported to the Florida Office of Insurance Regulation via QUASR in a data extract provided to CPIC as of March 14, Any submissions/changes made to QUASR after this date are not reflected in these numbers. Surplus lines carriers are not included in this calculation. QUASR data cannot be separated by CPIC account. (2) Companyʹs listed are the top five based on total insured value (3) State Farm Florida filed QUASR data as ʺtrade secretʺ with the Florida Office of Insurance Regulation beginning first quarter In this analysis, State Farm Floridaʹs 4th quarter 2013 reported data was used as a proxy for 4th quarter 2016 values.

13 Number of Policies Tagged for Depopulation (1) Year Coastal Account , , , , , , , , ,519 (1) Tagged for Depopulation counts do not account for any opt out policies reported after the assumption date

14 Coastal Probable Maximum Losses as of December 31, 2016 (1) Estimated Average Single Event ʺPMLʺ Return Period (billions) 250 years $ years $ years $ years $ years $0.525 (1) PMLs are based on modeled losses as of December 31, 2016 per AIR Touchstone, Version 4.0 reflecting the Standard Sea Surface Temperature (SSST) Event Catalog including Demand Surge, excluding Storm Surge

15 Coastal Regular Assessment Base Regular Assessment Base Year (millions) 2016 Regular Assessment Base/2015 DWP $42, Regular Assessment Base/2014 DWP $40, Regular Assessment Base/2013 DWP $37, Regular Assessment Base/2012 DWP $35, Regular Assessment Base/2011 DWP $32, Regular Assessment Base/2010 DWP $30, Regular Assessment Base/2009DWP $30, Regular Assessment Base/2008 DWP $31, Regular Assessment Base/2007 DWP $33, Regular Assessment Base/2006 DWP $34, Regular Assessment Base/2005 DWP $9, Regular Assessment Base/2004 DWP $7,863

16 Coastal Emergency Assessment Base Emergency Assessment Base Year (millions) 2016 Emergency Assessment Base/2015 DWP $43, Emergency Assessment Base/2014 DWP $41, Emergency Assessment Base/2013 DWP $39, Emergency Assessment Base/2012 DWP $37, Emergency Assessment Base/2011 DWP $36, Emergency Assessment Base/2010 DWP $32, Emergency Assessment Base/2009 DWP $33, Emergency Assessment Base/2008 DWP $34, Emergency Assessment Base/2007 DWP $36, Emergency Assessment Base/2006 DWP $37, Emergency Assessment Base/2005 DWP $11, Emergency Assessment Base/2004 DWP $9, from SBA bonding capacity report 2017, pg 53 and whole dollar amounts provided by Citizens Financial Advisor Raymond James