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Florida's financial community committed to Florida,

defying

hurricanes

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Fund managers weigh lower taxes against insurance costs

and

rebuilding

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Concerns rise over hiring and insurance costs in

hurricane-prone

Florida

By Suzanne McGee, Svea Herbst-Bayliss

Oct 9 (Reuters) - Florida's sun and low taxes enticed

many hedge funds and other financial professionals to move

south. Now another massive hurricane is putting that love affair

to the test, but many big-name managers are committed to

remaining in "Wall Street South" for the foreseeable future.

The state, facing the approaching Category 3 Hurricane Milton on

Wednesday, has lured investors for years but its attractiveness

only increased during the pandemic. Billionaire Carl Icahn

uprooted his firm from New York to an office near Miami in 2020.

Paul Singer's Elliott Investment Management followed later that

year with an announcement that it was opening a West Palm Beach

office. And Ken Griffin's Citadel said in 2022 that it was

moving to Miami from Chicago.

Hurricane Milton is on course to pound Florida's Gulf Coast late

on Wednesday night or early on Thursday, threatening communities

still recovering from Hurricane Helene last month. Milton was

expected to stay at hurricane strength across the Florida

peninsula, posing storm-surge danger on the state's Atlantic

Coast.

"We took the plunge with our eyes wide open," said Jack

Ablin, chief investment officer at $52 billion Chicago-based

Cresset Asset Management, about his move to Palm Beach on

Florida's east coast in 2015. His principal residence will stay

in Palm Beach even though he plans to ride out this storm from

his other home in the Blue Ridge Mountains of South Carolina.

For many other fund managers, the tradeoff between lower

taxes and a favorable business climate versus the specter of

insurance payments and the cost of rebuilding potentially

annihilated real estate, still works in favor of Florida,

according to people familiar with their thinking.

The big hedge funds that moved to Florida remain committed

to maintaining their operations there, those people said.

Similarly, other executives who moved their personal residences

to the South during the pandemic while continuing to telecommute

for firms based in the Northeast have every intention of staying

put, according to two sources familiar with their thinking.

Other Wall Street financial institutions, including Goldman

Sachs ( GS ) and JPMorgan Chase ( JPM ), have built up staff in

Florida both to serve customers who moved and to accommodate

employees eager to work from the South.

CONTINGENCY PLANNING

Many of the firms that moved - including Citadel, Elliott

and Icahn - are based on or near Florida's east coast where easy

flights to New York and other locations were a draw, as was

Miami's bustling nightlife and vibrant arts scene. That has put

them some 300 miles (483 km) east of where forecasters expect

Milton to make landfall and wreak the most serious damage after

Hurricane Helene swept through late last month.

Still, they are working on contingency plans.

"If the need to evacuate were to arise in Miami, we have

robust contingency plans for our employees, their loved ones and

our businesses," said a Citadel spokesman. But the firm's

commitment to Florida, where founder Griffin was born, is clear.

The company plans to build a 54-story tower as its new

headquarters in Brickell, the buzzing Miami neighborhood that

has become the heart of "Wall Street South."

A handful of financial industry firms, however, are based in

the immediate path of Milton.

One founder of an $8 billion fund on Florida's west coast

flew in to the state to keep an eye on both his firm and his

home, and now plans to ride out the storm on a high floor of his

office building, people familiar with his thinking said.

Another firm in the path is Raymond James Financial ( RJF )

, founded and still based in St. Petersburg. The

62-year-old brokerage and investment advisory firm evacuated

staff from its head office on Tuesday.

The firm is maintaining service and support at back-up

facilities and a spokesman declined to provide additional

comment to its communications on social media.

Blue Ocean Technologies ATS, a Florida-based financial

technology company operating an overnight trading system for

U.S. securities, has its executive offices just north of Miami

in West Palm Beach, and has a backup plan.

"I've been living here for 10 years, and the hurricanes have

missed me for 10 years," said Brian Hyndman, president and CEO

of Blue Ocean. The firm's trading system, its trade-matching

engine, is based in New Jersey. "We can work remotely from home,

and we've got backup and support on both the east and west

coasts of the United States."

LONGER-TERM IMPACT?

Two sources familiar with executive recruiting in Florida

told Reuters they are concerned that experienced staff may

become more reluctant to shoulder the growing expense and risk

of living in a hurricane zone, and that hiring may become more

costly or difficult.

Average homeowner premiums in Florida rose 57% between 2019

and 2023 according to data from Benjamin Keys of the University

of Pennsylvania and Philip Mulder of the University of

Wisconsin, a steeper rise than anywhere else in the nation.

Average insurance costs were $4,060 last year, according to

Keys.

Mel Montagne, president of FIRM, a nonprofit that lobbies

for fairer insurance rates for Floridians, and who also sells

commercial insurance, said clients have been getting nervous and

wracked with buyer's remorse.

"They are looking around and saying, 'what the hell is

this?'" said Montagne, whose clients include finance industry

executives who migrated to Florida during COVID.

"They are looking to sell to get the hell out of Dodge."