Chase Manhattan Corporation Closes $1 Billion Credit Facility for Florida Windstorm Underwriting Association

Strategic Insights -

The Chase Manhattan Corporation announced the closure of a $1 billion syndicated credit facility for the Florida Windstorm Underwriting Association (FWUA), a residual market provider of insurance coverage in the State of Florida. The facility will finance loss claims incurred as a result of windstorms, hurricanes, tornadoes, and other covered events. The FWUA, formed by the State Legislature in 1970, writes and issues wind and hail coverage in coastal areas of the state deemed "eligible" by the Department of Insurance.

Key Takeaways:

  • The $1 billion credit facility is the first major step in securing adequate funds to pay claims stemming from a catastrophic hurricane.
  • The facility will provide an immediate source of funds to pay policyholder claims in coastal areas in the event of another devastating storm.
  • The Chase Manhattan Bank, N.A. and Chase Securities Inc. served as Administrative Agent and Arranger of the lending syndicate, which included 27 other banks.
  • The FWUA was created as a long-term structure to write wind and hail coverage in hurricane-prone, coastal areas of the state as a market of last resort.
  • The FWUA only covers the perils of wind and hail, with the remaining risks (i.e. fire, theft, and liability) met by the voluntary market.
  • The facility is a result of the cooperation between the State Treasurer and Insurance Commissioner, Bill Nelson, and the Chase Global Insurance team.
  • The FWUA has a pool of 450 insurance companies and is based in Jacksonville, Florida.

Statistics:

  • $1 billion: the size of the credit facility
  • 450: the number of insurance companies in the FWUA pool
  • 27: the number of banks in the lending syndicate
  • 1970: the year the FWUA was formed by the State Legislature
  • 1994: the year Chase pioneered the use of a credit facility to fund catastrophic insurance claims

Sources:

  • PRNewswire
  • The Chase Manhattan Corporation
  • Florida Windstorm Underwriting Association
  • Burson-Marsteller
  • August 25, 1995