BRADENTON, Fla. — Flush with cash, Florida’s Citizens Property Insurance Corp. has increased the number of outside managers it uses to invest bond proceeds and other funds.

Twenty-eight firms responded to Citizens’ request for proposals in a process that began last spring. The nonprofit, state-run insurer uses outside managers to invest 75% of its assets. The other 25% is managed in-house.

Twelve firms were selected in August, expanding on the previous seven-member pool of investment managers for greater diversity, according to  chief financial officer Sharon Binnun.

The competition to manage a piece of the $9.975 billion in Citizens’ externally managed portfolio was fierce, according to PFM Asset Management LLC, which began investing $627.1 million on Dec. 1.

“We did very well in getting selected and being part of their lineup,” said PFM managing director Steven Alexander, who is responsible for the firm’s southern U.S. asset-management practice and the Citizens’ account.

It was the first time PFM submitted a proposal, he said.

The agency sought to expand the number of asset managers because of rising net operating funds and bond proceeds due partly to the fact that no major hurricanes have hit Florida since multiple storms ravaged the state in 2004 and 2005.

Additionally, Citizens remains the largest property insurer in Florida because many private insurance companies shed policies due to the hurricane risk, especially in coastal areas, though Citizens provides insurance throughout the state.

The company, which typically uses taxable and tax exempt bond proceeds as liquidity in case cash is needed to pay claims, was the largest issuer of debt in the Southeast last year on volume of $2.4 billion, according to Thomson Reuters. In 2009, it sold $1.02 billion of debt for liquidity.

“Operating cash is growing with another year of no storms and I wanted to diversify the money managers we use for tax exempt bond proceeds,” Binnun said. “We underwent a competitive solicitation process and … received a large number of responses.”

Alexander said that asset managers will concentrate on short-term investments to ensure that the insurer has the liquidity it needs.

“Liquidity is [Citizens] number one concern so most investments are within one year so if there is any hurricane damage cash is available,” he said.

A secondary goal is the rate of return commensurate with need for liquidity, he added.

PFM’s portfolio contains a number of securities with the average maturity around one year while some may go up to four years, and is designed to provide flexibility, according to Alexander.

Other companies managing Citizens assets and the amounts each manages: Blackrock Inc., $623.1 million; ­Cutwater Asset Management, $1.6 billion; Federated Investment Counseling, $649.8 billion; General Re-New England Asset Management Inc., 650.3 million; Northern Trust Investments NA, $629.29 million; RBC Global ­Asset Management Inc., $1.15 billion; Standish Mellon Asset Management, $588.67 million; UBS Global Asset Management Inc., $904.46 million; U.S. Bancorp, $774.5 million; ­Wellington Management Co., 884.29 million; and Wells Capital Management Co., $877 million.

Most or all of the property insurer’s outstanding bonds are for its high-risk account, which is largely composed of policies in coastal areas.

Those bonds are rated A2 by Moody’s Investors Service and A-plus by Standard & Poor’s.

Citizens had approximately $7.5 billion of taxable debt and $4.04 billion of tax exempt debt as of Oct. 31.

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