CFO Sink criticizes hurricane bond deal listen07/03/08 Seán Kinane
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Last year, Florida shifted much of the financial risks associated with hurricanes from private insurance companies to the state’s government, in an effort to reduce property insurance rates. Yesterday the state’s Board of Administration voted to take a gamble to spend nearly a quarter-billion dollars in exchange for up to $4 billion in bonds in the event that the state endures a catastrophic hurricane season this year.
One member of the Board of Administration, the state’s Chief Financial Officer Alex Sink, called the deal with Warren Buffett’s Berkshire Hathaway company a “stinky pig” on Wednesday, after she voted for it. Sink spoke today in Pinellas Park.
The other two members of the Board of Administration are Gov. Charlie Crist and state Attorney General Bill McCollum. They both voted with CFO Sink for the deal.
The state’s catastrophe fund would still be required to pay back the bonds in the event of a major hurricane year. Such a strong season is a 3 percent likelihood, according to the state’s financial advisors. If that happens, Floridians will probably be assessed additional payments on its insurance policies. But Sink said her vote was better than the alternatives.
Asked what she thought about the public in Florida continuing to take financial risks that private insurance companies used to take, Sink said, "It’s terrible policy."
Photo by Seán Kinane/WMNF