In 2008, Florida’s government-run property insurer paid Warren Buffett $224 million to agree to buy its debt if a major storm struck. Six hurricane-free years later, the state is turning investors away.
With hurricane season set to start June 1, municipal securities sold by Florida’s taxpayer-owned property insurers are rallying, and the state boosted a catastrophe-bond sale last month by almost four times, to $1.5 billion.
Florida, typically the nation’s most hurricane-prone state, is benefiting from a thirst for yield as investors seek higher returns with municipal interest rates close to generational lows. The demand is bolstering state-run Citizens Property Insurance Corp. and the Florida Hurricane Catastrophe Fund Finance Corp., which have record cash reserves.