BATON ROUGE, La. (AP) — The financial picture for Louisiana's state-run property insurer of last resort is improving, helped by the state's quiet hurricane season, the company's governing board was told Thursday.
Steve Cottrell, chief financial officer for the Louisiana Citizens Property Insurance Corp., said the company's doing better than projected but is still $15 million in the red, with more money owed than income available.
But he told the Citizens board of directors that the forecast shows the imbalance should shrink by the end of the year and the company's balance sheet should be positive by early 2014.
"As we look at this now, we are ahead of the budget and we will stay there. I believe I can safely say in the absence of any significant storm activity, we will beat our budget for this year, and so that is good news," Cottrell said.
"With some luck in the fourth quarter, we could get close to being positive again," he said.
Despite the shortfall, Citizens has enough cash to continue operations and pay routine claims. Board members praised the financial turnaround for a company that in past years had struggled to keep its budget balanced.
"I think the company is being better run now," said Jim Napper, executive counsel for the state treasury department and a Citizens board member.
Citizens provides property insurance mostly to coastal Louisiana homeowners and businesses unable to get insurance through the private market.
The company's recent money troubles stem from covering claims for Hurricane Isaac and a hail storm earlier this year and for settling class-action lawsuits for improper handling of past claims from hurricanes Katrina and Rita in 2005.
Cottrell said the insurer is saving money by shifting contract services, like claims processing, in-house. The company is estimated to save more than $2 million from the switch, even after hiring new employees to handle the work.
If a sizable storm were to hit Louisiana and the company needed more money than it has on hand to pay claims, Citizens has a $125 million bank line of credit that could work as short-term borrowing for the company.