After a year of two hurricanes hitting Florida, state lawmakers have scheduled a special session on the state’s troubled property insurance market.
“The Florida Legislature will meet in special session next month to address the challenges still facing our state’s insurance market and provide property tax relief to residents whose homes are uninhabitable,” said State Senate President Kathleen Passidomo, state of Naples. november. “Recovery from the storm is just one of many challenges we must address in the coming weeks and months.”
Bloomberg News
The session is scheduled for December 12-16.
Among the instructions of the special session: “Improve the financial stability of the Citizens’ Property Insurance Corporation, reduce the likelihood of assessments associated with the Citizens’ Property Insurance Corporation, and facilitate the transition of Citizens’ Property Insurance Corporation policies to the private property insurance market.”
Citizens is a government-created insurance company of last resort, insuring the property of clients that the private insurance market will not cover, since the high probability of loss makes such a business unprofitable.
Following the November rampage of Hurricane Ian, a senior state bond official said that Citizen and Florida’s other public insurance organization, the Florida Hurricane Disaster Fund, remains on sound financial footing.
Both organizations are major players in the municipal bond market.
“They are both in very strong financial positions and will be able to easily pay or recover their insured losses,” Ben Watkins, director of Florida Bond Finance, told The Bond Buyer in November.
The stated objectives of the special session include changing the practice of handling insurance claims and reducing claims litigation costs.
He will also consider tax credits for those affected by the hurricane.
The next legislative session of Florida begins in March, although organizational meetings have already begun.
Republicans, who control the vast majority of the legislature, are preparing to emulate the efforts of GOP Governor Ron DeSantis, re-elected in November, to limit the information available to investors in government securities, in line with the emerging GOP national party line opposing independent assessment of environmental, social and management issues.
In his speech at the organizational caucus, Speaker of the House Paul Renner said he had written letters to three credit rating agencies that assess Florida’s debt demanding that they “get out of politics and return to the objective financial criteria generally accepted for measuring a state’s credit rating.” “
Renner stated that the same ideologies that “pushed indoctrination at the expense of education” also co-opted Wall Street with political demands put forward under the auspices of the ESG.
The letters were addressed to Michael Rowan, Head of Global Project, Public and Infrastructure Finance at Moody’s Investors Service, Robin Prunty, Managing Director of S&P Global Ratings, and Laura Porter, Head of the Fitch Ratings Global Group.
Florida general obligation bonds are rated three A by Moody’s, S&P and Fitch.
“Just last year, credit rating agencies began requiring our state to provide data to measure our compliance with ESG policy dogma,” Renner said. “ESG score will soon become a factor in our state’s credit score, meaning that financially irresponsible states like California could get a higher credit score than Florida simply because they support the ESG political agenda. We won’t let that happen in Florida!”
The ESG requires companies to adopt “radical environmental and diversity goals,” he said, and uses a points system to reward or punish companies based on their compliance.
“These radical goals are causing a politically induced energy crisis, higher gas station prices and our electricity bills,” Renner said after a year of high world prices for crude oil, fossil fuels and gasoline, fueled in part by Russia’s war against Ukraine. .
Renner wants to prevent public pension systems from taking climate change risks into account when choosing investments.
“People in the Florida pension system need to be confident that we are protecting their money. I want those with state pensions to know that we will never allow your savings to be compromised by ESG political meddling! We will expose ESG. for being an “ideological scam” that hurts all of us,” he said.
Florida CFO Jimmy Patronis this month joined a crowd of investment redmen from the state defending BlackRock from financing its investment approach to environmental, social and governance issues.
“Obviously there is a tug of war going on around these issues, but when it was called ‘corporate social responsibility’ many years ago, there was little hesitation,” Natalie Cohen, founder of The Public Purse and National Municipal Research, told The Bond Buyer.
“One academic study from about 10 years ago found that companies with strong corporate social responsibility tend to get higher ratings from rating agencies (and therefore lower borrowing costs),” she said. “The authors defined it as ‘community relations, diversity, employee relations, environmental performance and product performance’.”
She noted that politics comes into play.
“There are also a lot of law firms who believe that accounting for ESG or CSR when investing does not violate fiduciary responsibility,” Cohen said. “Most of the protests come from oil and gas producers, and the letters come from governors and other elected officials they support.”
State legislators will also have to deal with the upcoming dissolution of the Reedy Creek beautification district, which is scheduled for June 1st.
The Legislature approved a bill in April that would result in the dissolution of all independent special districts created before 1968.
The bill’s sponsors and DeSantis have made it clear that it is intended to punish the Walt Disney Co., which Reedy Creek was created to serve, for its opposition to the Parental Rights in Education Act, which bans public school education on sexual orientation until the age of 3. th class. or gender identity.
In October, Fitch said it maintained a negative rating on Reedy Creek’s outstanding $686 million ad valorem tax bond and issuer default ratings. In April, Fitch placed the ratings AA-minus on the negative list.
“The continued negative rating reflects a lack of clarity regarding the allocation of RCID’s assets and liabilities, including the management of yields pledged on the issued bonds and debt service in the event of a dissolution,” Fitch said.
In May, S&P changed its outlook for Reedy Creek from stable to developing due to uncertainty over the area’s fate. Moody’s also changed the forecast for the area from stable to developing.
“We understand our responsibility to bondholders and investors and take it seriously,” Watkins said on the Bond Buyer podcast in August.
The state legislator who sponsored the Reedy Creek dissolution bill is poised to revisit it now that Disney is under new management, according to a report released.
This would have a secondary effect, as legislators were unable to determine exactly how to replace Reedy Creek, given the district’s scheduled dissolution on June 1 and the lack of an existing plan to fund its operations.
“At the end of the day, I see it as a lot of ado about nothing,” said John Musso, President and CEO of Cumberland Advisors, The Bond Buyer.
“The governor looks like he’s taken over a corporation. Helps his politics. He doesn’t want them to leave. They don’t want to go back to making money,” he said.
Beginning in 2021, Disney planned to move its Imagineering group, which creates its theme park and other live entertainment, from Glendale, California to central Florida.
“The move has now been delayed until 2026, and at least one Florida legislator believes the delay is related to the RCID controversy,” Cohen said.
“Some face-saving measures may be needed to maintain the status quo — perhaps the old approach of postponing the dissolution and setting up a special commission to evaluate the costs and benefits of the law,” Cohen said. “The law was passed in 72 hours, and there was no thorough analysis of the financial implications in the first place.”
Musso said that now that the gubernatorial race is over, DeSantis can look forward to 2024 and a possible presidential race.
“Now that the election is over, like most politicians, I think the governor will move a little closer to the center, hoping to get a bigger prize in two years.” He said.
