Credit rating agency A.M. Best Co. raised a warning about Florida's Hurricane Catastrophe Fund on Wednesday, saying the fund would run into difficulty raising new capital in the event of a major hurricane hitting the state.
On the plus side, the agency noted several factors working in favor of the fund: Most of this year's storm season has passed, not all claims would have to be paid at once, and the federal government might bail out the fund by buying its bonds directly.
But those factors aren't guaranteed, the agency said, and the agency noted that big storms do happen late in the system, such as Hurricane Wilma in 2005.
Last year, the fund's risk exposure rose by $12 billion to $28 billion because of in rules regarding its operation. The agency said the primary concern was difficult conditions in credit markets that could prevent the fund from raising new capital after a storm to pay claims.
Richard Mullins
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