After posting loss, insurer Citizens buys more offshore reinsurance

After the company posted a $27 million annual loss, state-run Citizens Property Insurance Corp.’s board on Thursday approved buying more offshore reinsurance, though less than last year.

By unanimous vote in a 10-minute telephone meeting, the board approved buying $1.3 billion in coverage for an amount not to exceed $94 million in premiums. Citizens spent $181 million on private reinsurance that covered no claims last year, more than six times its annual operating loss.

Reinsurance is like an insurance policy that insurance companies buy, to help cover claims in the event of rare but catastrophic storms. It is common among private insurance companies, though Citizens has a surplus  of more than $7 billion and the backing of a state catastrophe fund and bought no private reinsurance as recently as five years ago.

Citizens has shrunk from 1.5 million customers to about 450,000 in recent years, mostly through transfers to private insurers. It expects to add customers this year, but the fluctuations in size have affected its risk exposure, or the value of the property it insures.

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