A water tower, a Florida City landmark, stands over the ruins of the Florida coastal community that was hit by the force of Hurricane Andrew. (AP Photo)

In a positive sign for the economy and Florida property owners, state financial officials said they could find twice as much money in the bond market to cover hurricane losses as they estimated six months ago.

“The picture is definitely better than it was,” said Ash Williams, head of the State Board of Administration, which manages Florida’s investments. “The bond market is loosening up a little bit.”

Williams said the state could expect to finance $8 billion in residential losses – up from an October estimate of $3 billion – and potentially cover losses if a Hurricane Andrew-type storm hits the state this year.

The announcement convinced Gov. Charlie Crist and the Florida Cabinet to abandon plans for extra financing for the state Hurricane Catastrophe Fund. Last year, Crist and the Cabinet paid Warren Buffett’s company, Berkshire Hathaway, $224 million in return for a promise of up to $4 billion in potential loans.

The state is still seeking a federal line of credit in case credit markets dry up after a storm.

The catastrophe fund, created after Andrew in 1992 to pay insurance companies for disastrous losses, is on the hook for about $28 billion in possible hurricane losses this year.

Lawmakers increased the size of the fund from $16 billion in 2007 as a way to suppress insurance rates that Crist and others said were crushing Florida property owners.

The state offered private companies coverage from the expanded fund at below-market rates and required insurers to pass along the savings to their customers.

But state officials have wrung their hands for three years since, trying to figure out how to pay for those potential losses. The state’s budget has been in decline for three years and a worldwide credit crisis has diminished Florida’s access to the bond market

In an example of the recovering credit market, Williams noted that California recently secured $6 billion in tax-exempt bonds while it has the lowest credit rating in the nation.

“That tells you something,” Williams said.

The new estimate means the catastrophe fund could cover about $16 billion in losses through bonds and cash on hand.

While that would cover an Andrew-type storm, it leaves about $12 billion in uncovered losses in the event of an even more catastrophic storm season.

Lawmakers this year could eliminate about $3 billion from that coverage with a bill expected to pass its second of three House committees this afternoon. That bill (HB 1495) would also increase rates from the state-run Citizens Property Insurance by a statewide average of 10 percent this year.

Tags: Alex Sink, Bill McCollum, Charlie Crist, Hurricane Catastrophe Fund, Property Insurance

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