The CAT fund sells lower-cost back-up insurance to insurers working in Florida.
The reinsurance, as it's called in the insurance business, helps insurers cover some of the losses they would have to pay on claims from home and business policyholders.
The CAT fund was set up as a self-funding vehicle. If it must issue debt to reimburse insurers that buy its coverage, it sells bonds. The bonds are paid back from customer premiums and through assessments. State dollars aren't pledged to cover the CAT fund if it runs out of money.
The CAT fund might not be able to raise between $10 billion and $15 billion if it had to meet all its obligations after a big storm. That estimate was provided by financial advisors at a meeting Tuesday of the Advisory Council of the Florida Hurricane Catastrophe Fund.
Besides the lack of appetite among investors to buy bonds from any issuer -- even one with a high rating like the Florida CAT fund -- the CAT fund has been hurt by rising interest rates and the cost of an agreement with Berkshire Hathaway to buy CAT fund bonds in the future.
The fund also suffered investment losses. It held bonds from some troubled financial services companies, including Lehman Brothers and American International Group, in its portfolio.
Right now, the CAT fund has approximately $10.3 billion in cash, proceeds from bonds already sold and an obligation from Berkshire Hathway to buy up to $4 billion of its bonds that could be sold down the road.
"We're in a pretty solid position right now," said Jack Nicholson, the CAT fund's chief operating officer.
The fund wouldn't have to make payments to insurers all at once after a storm, so it wouldn't need all the funds at once.