Even before it went to work for the state, BlackRock's director of
credit analysis had produced a detailed accounting of the scarey
mortgage-backed investments that had caused a $16.5 billion run on the
state-managed fund.

Late Friday, BlackRock put that homework to use, securing the
$125,000 state contract to advise Florida what to do with its stinky
investments.

On BlackRock's safe-to-sell list: properties like AngleSea Funding
and Berkely Square Finance, both conduits for repossessions.

On the "dislike" list: Axon Financial Funding, a $9.3 billion SIV
that's in default, and Giro Balanced Funding, which BlackRock notes has
a 35 percent direct interest in subprime mortgage-related assets.

There are a few mortgage-backed investments in Florida's portfolio
that BlackRock considers keepers: Belmont Funding ("sound asset
quality") and Beethoven Funding ("fully-supported by structured
liquidity").

Net income for the three months ending in September is up 15 percent
at $1.2 billion, helped by increases in both premiums and investment
earnings. That raises its profits for the year to date to $3.5 billion.

The company says it has raised home insurance rates this past year an
average 9 percent nationwide.

In Florida, operating under the moniker of First Floridian, the
company seeks to raise home insurance rates an average four percent,
after lowering them 8 percent in June.

The filing with the Office of Insurance Regulation has been quietly
stamped "approved," pending receipt of final documents.

The approval brings total premium reductions since June to 21 percent
for the Florida insurer, exceeding the expectations and promises of
Florida's insurance consultants. The savings is despite Nationwide
Insurance Company of Florida's decision to buy $49 million in additional
reinsurance from its national parent as well as the private market.

Every day that goes by without the rate hike being approved is saving
Florida Farm Bureau's customers $78,000 -- $2.4 million a month.

The state agency on Monday asked an administrative law judge in
Tallahassee to postpone hearings on the two-month-old case, set for hearings on Nov.
5 through 9. The state contends the case is "complex" and requires
extensive discovery, including expert witnesses and depositions of nine
individuals that have not yet taken place.

What's more, OIR lawyer Marc Herskovitz says he's tied up in other
matters -- including a district court appeal with Universal Health Care
Insurance.

The property insurance wars go public again on Thursday, when state
regulators are scheduled to grill executives of Cincinnati Insurance
about the role financial rating firms and reinsurers played in the
company's request for rate hikes.

House Majority Whip Ellyn Bogdanoff likes CFO Alex Sink's proposal to
let the Florida Cabinet set the terms and rates of hurricane protection
the state sells the insurance industry.

In fact, Bogdanoff helped originate it.

But the current calendar of blended special sessions doesn't leave
the House leader enough time to make her case to the rest of the
Legislature. Bogdanoff says she would need at least two weeks' down time
to sell fellow legislators on the merits of giving up the steering wheel
and allowing the Cabinet to drive a more-nimble Florida Hurricane
Catastrophe Fund.

If that's the case, Florida's fallback position is going through a
second hurricane season with the full $28 billion Cat Fund created by
the Legislature in January 2007 -- selling what for Sink is a very
uncomfortable amount of insurance at a time when private market
reinsurance rates are beginning to drop.

Bogdanoff's hope -- that those prices go down so low that private
insurers simply pass by the exposed state fund, and do their reinsurance
shopping in Bermuda.