Press Release|Public Finance
KBRA Affirms AA Rating for State of Florida State Board of Administration Finance Corporation Revenue Bonds, Series 2024A
21 Mar 2025 | New York
KBRA affirms the long-term rating of AA with a Stable Outlook for the State of Florida State Board of Administration Finance Corporation Revenue Bonds, Series 2024A.
Key Credit Considerations
The rating action reflects the following key credit considerations:
Credit Positives
- Assessments may be levied on a broad, diverse, and growing statewide property and casualty policy base for payment of debt service on pre-event and post-event parity obligations.
- The low-cost reinsurance provided by the FHCF is vital to the healthy functioning of the State’s residential property insurance market, and thus to Florida’s economy. FHCF’s strong governance ties and the oversight provided by the State Board of Administration are credit strengths.
- Strong non-impairment covenants under the Act restrict the State from repealing or revoking the SBA’s power to direct assessment levies by the OIR and to collect the pledged collateral if debt is outstanding.
- Recent legislative reforms continue to to improve conditions for private insurers operating in Florida.
Credit Challenges
- FHCF’s liquid resources are presently well below its statutory maximum, potentially requiring significant post-event borrowing in the event of one or more catastrophic events.
- Potential post-event bonding needs are large by municipal market standards. Post-event bond capacity and market access are inherently uncertain and subject to market conditions.
- In the aftermath of a catastrophic event, the potential exists for FHCF, Citizens and FIGA to levy overlapping assessments on largely the same property and casualty insurers and their policyholders , and to simultaneously seek market access for post-event debt supported by such assessments.
- While the State has a proven record of collecting assessments in the wake of a catastrophic event, the potential exists for assessments to be delayed.
Rating Sensitivities
For Upgrade
- A consistent increase in FHCF’s projected fund balance (liquidity) through increased reimbursement premium collections and/or decreased loss reimbursements, that reduces the need for pre-event and post-event bonding and related assessments.
For Downgrade
- An increase in loss reimbursements due to more frequent or severe storm events, and/or a reduction in reinsurance premiums, that results in reduced liquidity and an increased need for assessments and bonding.
To access ratings and relevant documents, click here.