• Citizens Property Insurance Corp. CEO Tim Cerio addressed concerns regarding the company’s financial stability and claims-paying ability during its Wednesday Board of Governors meeting.
• The comments follow a U.S. Senate Budget Committee inquiry, which suggested a potential need for a federal bailout for Citizens.
• Cerio emphasized that the company has never needed such assistance, even during major disasters like the 2004 and 2005 hurricanes.

During the Citizens Property Insurance Corp. Board of Governors meeting on Wednesday, company CEO Tim Cerio alleviated concerns over the company’s financial stability and claims-paying ability following a U.S. Senate Budget Committee inquiry.

Following a CNN report and a letter from the Senate committee suggesting a potential federal bailout for Citizens, Cerio stated that the insurer has never required such assistance, even in the face of major disasters like the 2004 and 2005 hurricanes.

In the briefing, which led the meeting’s agenda, Cerio pointed to the Senate’s inquiry as a significant misunderstanding of Citizens’ operational model and its ability to pay claims. The CEO reassured stakeholders and Floridians that the organization has ample reserves and reinsurance to cover potential losses.

“I cannot overemphasize that the assumptions in the budget committees letter suggest a fundamental misunderstanding of how citizens property insurance operates,” Cerio said. “It underestimates our claims-paying ability and I’m speaking now, and I need to speak to our policyholders so they hear us. Citizens is structured so that it will always be able to protect its policyholders and pay claims.”

Cerio further drew attention to Citizens’ structured preparedness for disaster scenarios, noting the statutory surcharge and assessment mandate as a backstop if reserves are depleted. Such measures have never been deployed, he said, and serve as a representation of the company’s current strong financial condition.

“At no time in citizens history has it sought a federal bailout to pay its hurricane loss claim,” stated Cerio. “I have never heard of anyone suggesting the idea of a federal bailout until the Senate Budget Committees letter was published.”

Moreover, the CEO contended that most Citizens policyholders pay below-market rates, potentially creating an imbalance in the broader insurance market, and acknowledged that his team is preparing a formal response to the Senate Committee to clarify Citizens’ position and operational strategies. Upon outreach to the company, representatives could not confirm when the response would be made public.

Notably, Cerio stated that his office was only informed of the Senate Committee’s letter following a call from a CNN reporter, who sought comment on the matter. Cerio also claimed that at the time of the reporter’s call, Citizens had not received any such letter and that the reporter initially provided them with an unsigned, undated draft document, which was not on official U.S. Senate letterhead, which demanded a response from Citizens by October 31, 2023, a date already passed.

The reporter later recognized the error and sent the correct letter, dated November 30, and signed by the Budget Committee Chairman, though Cerio told board members that to his knowledge, Citizens has yet to receive a hard copy of the letter as of Wednesday.

Last week, the U.S. Senate Budget Committee, led by Sen. Sheldon Whitehouse, probed Citizens amid concerns over its financial resilience in the face of escalating climate risks. The inquiry, outlined in a letter published last Thursday, is part of an effort to assess the impact of climate change on the broader insurance industry.

The committee has requested Citizens to provide data on its exposure to extreme hurricane scenarios, which Cerio claims was fulfilled, its future market share projections, assets, and its ability to pay out claims. The letter also inquires about any discussions regarding the company’s solvency and the possibility of a federal bailout.