BRADENTON, Fla. -Florida's Citizens Property Insurance Corp. board of governors yesterday added four co-managers to their upcoming sale of between $1.5 billion and $2 billion of fixed-rate debt, but pricing the deal is not expected to occur until after MBIA Inc. releases its earnings report on May 12.

The four co-managers added yesterday are Banc of America Securities LLC, JPMorgan, Merrill Lynch& Co., and Wachovia Capital Markets. Senior underwriters, selected for the deal previously, are Citi, Goldman, Sachs & Co., Morgan Stanley, and UBS Securities LLC.

The tax-exempt offering will replace some of the $4.75 billion of taxable auction-rate securities that Citizens was forced to buy back during that market's meltdown. Proceeds will provide liquidity if needed to pay claims. The deal may be wrapped by multiple bond insurers.

State-run Citizens is Florida's largest property insurer, with 1.22 million policies.

The sale date is not firm because market conditions aren't favorable and could be influenced by MBIA's earnings release, John Forney, Citizens' financial adviser with Raymond James & Associates Inc., told Citizens' finance committee in a meeting separately from the board late Wednesday.

The market has been beset by technical factors, including a lot of supply brought about by issuers restructuring debt, so interest rates are not advantageous, Forney said.

Insurers that wrapped Citizens auction-rate securities agreed to transfer their coverage at no additional issuance costs, said Forney, who estimated the agency spent more than $35 million on bond insurance for the ARS. Citizens also is preparing to use bank lines of credit and possibly variable-rate demand notes to replace some of the auction-rate securities, in addition to the upcoming fixed-rate transaction.

"We're just waiting for the right market conditions" to sell the fixed-rate debt, Forney said. "MBIA is about to report its earnings for the first quarter, [so that] will be important to the market."

Forney said the value of bond insurance was making a comeback, but got "torpedoed" when Ambac Financial Group Inc. last week reported a $1.66 billion loss for the first quarter, calling into question whether Ambac Assurance Corp. would be able to keep its two triple-A ratings without raising more capital.

Sharon Binnun, Citizens' chief financial officer, said the agency likely won't make a final decision whether to insure the new bonds until after insurer earnings are posted.

Citizens' board of governors yesterday also expressed concern about how the agency's ratings might be affected by a bill being considered by the Florida Legislature that would appropriate $250 million from Citizens' surplus to assist with capitalizing start-up private insurance companies that take policies from Citizens. The same bill also proposes freezing Citizens' premiums for a second year. The legislative session ends today.


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