FINANCIAL SERVICES COMMISSION

NOTICE OF ORDER

NOTICE IS HEREBY GIVEN that the Office of Insurance Regulation has issued the following:

IN THE MATTER OF:

CITIZENS PROPERTY     CASE NO: 95286-08

INSURANCE CORPORATION

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ORDER APPROVING LINE OF CREDIT TRANSACTION FOR CITIZENS PROPERTY INSURANCE CORPORATION’S – PERSONAL LINES ACCOUNT AND COMMERCIAL LINES ACCOUNT

THIS MATTER came before the Office of Insurance Regulation (the “Office”) for consideration and final agency action upon the request of Citizens Property Insurance Corporation (“Citizens”), pursuant to Section 627.351(6), Florida Statutes, as amended (the “Citizens Act”), and Section 19(B) of Citizen’s Plan of Operation, as amended (the “Plan of Operation”), for approval of a revolving line of credit in the principal amount of not exceeding $2,000,000,000 (the “Line of Credit”) for Citizen’s Personal Lines Account and Commercial Lines Account (collectively, the “Accounts”). Citizens’ request is based on the adoption by its Board of Governors (the “Board”) on May 1, 2008, of the resolution (the “Authorizing Resolution”) attached hereto as Exhibit “A”, authorizing and approving the Line of Credit and related documentation.

The purpose of the Line of Credit is to provide the Accounts with needed liquidity in preparation for the 2008 hurricane season. Citizens has determined that the Line of Credit will enable it to efficiently meet its financial obligations and is consistent with the provisions of the Citizens Act.

The Line of Credit will be made available to the Accounts through a 364-Day Revolving Credit Agreement by and among Citizens, JPMorgan Chase Bank, National Association, as Administrative Agent, and the other lenders named therein (the “Credit Agreement”). In connection with the Line of Credit, Citizens will execute certain promissory notes contemplated by the Credit Agreement. The Credit Agreement is to be in substantially the same form as the copy thereof received and reviewed by the Office prior to the entry of this Order.

Citizens is a statutorily-created corporation and a government entity that is an integral part of the State of Florida, established pursuant to the Citizens Act. Citizens, through the Accounts, has become a significant provider of residential property and casualty insurance in the State of Florida and, as such, must have immediate access to funding sources for the Accounts pending receipt of the Accounts’ ordinary and customary revenue and reinsurance and other reimbursement funds, to meet policyholder claims and other obligations resulting from ordinary losses or catastrophic hurricanes or other weather-related events. The Citizens Act authorizes Citizens to borrow funds for the Accounts by incurring indebtedness and to pledge assessments under the Citizens Act and other funds available to the Accounts as the source of security and repayment for such borrowings. Section 627.351(6)(c), (3), Florida Statutes, states that Citizens may issue bonds or incur other indebtedness in the absence of a hurricane or other weather-related event, upon a determination by Citizens, subject to approval by the Office, that such action would enable it to efficiently meet the financial obligations of Citizens and that such financings are reasonably necessary to effectuate the requirements of the Citizens Act.

At a meeting on May 1, 2008, Citizens’ Board adopted the Authorizing Resolution. The Authorizing Resolution contains a finding by Citizens’ Board that in order to provide funds to meet policyholder claims and other obligations of the Accounts pending receipt of the Accounts’ ordinary and customary revenue and reinsurance and other reimbursement funds, it is in the best interests of Citizens to obtain the Line of Credit and to enter into the Credit Agreement. The Authorizing Resolution contains a further determination by Citizens’ Board that the funds derived, or to be derived, from the Line of Credit are reasonably necessary to enable Citizens to efficiently meet the financial obligations of the Accounts and to effectuate the requirements of the Citizens Act.

As required by Section 19(B) of the Plan of Operation, Citizens has filed with the Office a statement of the purpose of the Line of Credit, attached hereto as Exhibit B, and an estimate of the costs to be incurred by Citizens in connection with the Line of Credit, which estimate has been approved by the Citizens’ Board.

The Office, having considered this submission, and being otherwise advised in the premises, hereby finds that:

1.             The Office has jurisdiction over the subject matter of, and the parties to, this proceeding pursuant to the Citizens Act.

2.             The Line of Credit is for the purpose of providing funds to the Accounts for the payment of policyholder claims and expenses attributable to ordinary losses or catastrophic hurricanes or other weather-related events. As a result, the Line of Credit will enable Citizens to efficiently meet its financial obligations and is reasonably necessary to effectuate the requirements of the Citizens Act.

3.             The Credit Agreement is a “loan agreement” within the meaning of, and is approved for purposes of, Section 19(B) of the Plan of Operation and the Citizens Act.

4.             Pursuant to the Citizens Act and Section 19(B) of the Plan of Operation, Citizens has authority to enter into the Credit Agreement, obtain the Line of Credit and issue the promissory notes contemplated by the Credit Agreement.

IT IS THEREFORE ORDERED:

That the revolving Line of Credit, in an aggregate principal amount not exceeding $2 billion, and the Credit Agreement, including the loans to be extended to the Accounts thereunder, the issuance and delivery of the promissory notes contemplated by the Credit Agreement and the pledge by Citizens of the collateral described in the Credit Agreement to secure such loans, are hereby APPROVED.

Citizens shall file with the Office, as a part of its regularly required reports, a quarterly update with respect to the Accounts of the amounts borrowed, amounts used for the payment of claims and related costs, amounts repaid, and the amounts anticipated to be required by assessment for repayment of debt.

DONE and ORDERED this 1st day of May 2008.

                ________________________

                KEVIN M. MCCARTY

                COMMISSIONER

NOTICE OF RIGHTS

Any party to these proceedings adversely affected by this Order is entitled to seek review of this Order pursuant to Section 120.68, Florida Statutes, and Rule 9.110, Fla. R. App. P. Review proceedings must be instituted by filing a petition or notice of appeal with the: General Counsel, acting as the agency clerk, 612 Larson Building, Tallahassee, Florida, and a copy of the same with the appropriate district court of appeal within thirty (30) days of rendition of this Order.