Demotech's Thoughts on the Florida-focused Carriers We Review and Rate
Update - Q1 Financial and Reinsurance Programs
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E-mailCOLUMBUS, Ohio, Aug. 2, 2019 /PRNewswire/ -- This material provides an update on the first quarter 2019 financial statements and 2019 – 2020 reinsurance programs applicable to the Florida-focused carriers reviewed and rated by Demotech.
Our update on operating results as of June 30, 2019, will be held via a live webinar. Register as our guest on September 12, 2019, at 1 PM Eastern at https://attendee.gotowebinar.com/register/4902886576040841483. During our webinar on September 12, 2019:
- Barry J. Koestler, II, CFA, Chief Ratings Officer, and Bob Warren, CPCU, CPA (Inactive), Client Services Manager, will present their thoughts on the financial status of the carriers referenced below, based upon a review of June 30, 2019, financial statements.
- Wesley Todd, CEO, CaseGlide, a premier claims litigation management company, will share his observations on the initial impact of the legislation intended to reform the assignment of benefits anomaly that has been in place in Florida.
- Catastrophe modeling experts will share their thoughts on if, how, or why initial projections for Irma, Michael, and Matthew crept upward in addition to sharing thoughts on model enhancements, Florida and countrywide, that we should expect to see in the future.
Today, we are pleased to release the results of the review and analysis of year-end 2018 financial information, Q1 2019 operating results, and the reinsurance programs placed by the Florida focused carriers reviewed and rated by Demotech. As a brief review of our role stabilizing the Florida residential property insurance marketplace, we offer the following history and perspective:
In 1996, the State of Florida, Florida Office of Insurance Regulation (OIR), and the Florida Residential Property Casualty Joint Underwriting Association (JUA) initiated an effort to depopulate the JUA. The depopulation effort included legislation to permit the State of Florida to offer financial incentives to insurers that depopulated the JUA.
Concurrently, the mortgage lending industry requested that the legislation include a provision requiring the newly capitalized insurers be acceptable to the secondary mortgage marketplace. Absent this provision, unrated start-up insurers would be unacceptable to place hazard insurance policies acceptable to the secondary mortgage marketplace.
When the State of Florida, the secondary mortgage marketplace, and the mortgage lending community needed a solution to this situation, they contacted Demotech and asked us to assist. We developed a procedure to review and rate newly formed insurers that has met the test of time. Since 1996, our process assisted the State of Florida, insurance agents, insurers, consumers, reinsurers, and mortgage lenders. For almost twenty-five years, we have utilized this process to review and analyze start-up insurers throughout the United States.
Over calendar years 2016, 2017, and 2018, catastrophes hammered the Sunshine State. Concurrently, established claims procedures, processes, and protocols in place in Florida continued to increase losses and loss adjustment expense. Reforms became law July 1, 2019, when Governor Ron DeSantis signed House Bill 7065 as a solution to the abuses.
House Bill 7065 included:
- Providing a definition of an "assignment agreement"
- Requiring execution, validity, and effect of an agreement to assign benefits
- Prohibiting some fees and policy provisions related to managed repairs in an assignment of benefits agreement
- Transferring specific pre-lawsuit duties under an insurance policy to the assignee
- Shifting the burden of proof to prove failure to carry out such duties to the assignee
- Requiring insurers to collect specified data on claims paid in prior periods
- Allowing an insurer to make available a policy prohibiting assignment, in whole or in part, under certain conditions
- Revising Florida's one-way attorney fee statute to incorporate a fee structure to be utilized in determining the fee amount due to an assignee filing suit against an insurer
- Requiring service providers to provide an insurer and the consumer written notice of at least 10 business days before filing suit.
Other legislation enacted in 2019 enhanced the operating environment by increasing the loss adjustment expense reimbursement paid to insurers through the Florida Hurricane Catastrophe Fund to 10 percent of reimbursed losses, effective with contracts of June 1, 2019 and subsequent.
Demotech hopes that AOB reform, enhanced claims reimbursement by the Florida Hurricane Catastrophe Fund, and other enacted reforms will mitigate the size and frequency of future rate revisions. However, as Floridians await the emergence of demonstrable objective evidence of the recent reforms, Demotech is pleased that our review process provided sufficient direction and guidance on financial stability despite three consecutive years of natural catastrophes, and seven years of the cost of AOB running unabated through the loss experience of insurers.
Today we present Financial Stability Ratings® (FSRs) reflecting our current perspective, which is based upon the analysis undertaken thus far in 2019, including Q1 2019 financials and the 2019 – 2020 reinsurance program including vertical and horizontal limits. The issuance of these FSRs indicates that each carrier submitted, and Demotech reviewed, at least the following:
- 2018 financial statement to review critical financial ratios and metrics at year-end
- 2018 statement of actuarial opinion as regards loss and loss adjustment expense reserves
- 2018 independent audit
- 2018 information related to a holding company or significant affiliates, if applicable
- Preliminary vertical and horizontal catastrophe reinsurance program for 2019
- Final vertical and horizontal catastrophe reinsurance program for 2019
- Quarterly financial statement prepared as of March 31, 2019 to evaluate whether critical financial ratios and metrics remained acceptable
- Financial stability of reinsurers providing protection to the carriers.
Insurer Reviewed by Demotech | Financial Stability Rating® |
American Coastal Insurance Company | A´ |
American Integrity Insurance Company of Florida, Inc. | A |
American Platinum Property & Casualty Insurance Company | A |
American Traditions Insurance Company | A |
Anchor Property and Casualty Insurance Company | A |
AutoClub Insurance Company of Florida | A |
Avatar Property & Casualty Insurance Company | A |
Bankers Insurance Company | A |
Capitol Preferred Insurance Company | A |
Castle Key Indemnity Company | A´ |
Castle Key Insurance Company | A´ |
Cypress Property & Casualty Insurance Company | A |
Edison Insurance Company | A |
FedNat Insurance Company | A |
First Community Insurance Company | A |
First Protective Insurance Company | A |
Florida Family Home Insurance Company | A´ |
Florida Family Insurance Company | A´ |
Florida Peninsula Insurance Company | A |
Florida Specialty Insurance Company ^ | A |
Frontline Insurance Unlimited Company | A |
Gulfstream Property and Casualty Insurance Company | A |
Heritage Property & Casualty Insurance Company | A |
Homeowners Choice Property & Casualty Insurance Co | A |
KIN Interinsurance Network | A |
Monarch National Insurance Company | A |
Olympus Insurance Company | A |
Omega Insurance Company | A |
People's Trust Insurance Company | A |
Prepared Insurance Company | A |
Safe Harbor Insurance Company | A´ |
Safepoint Insurance Company | A |
Security First Insurance Company | A |
Service Insurance Company | A |
Southern Fidelity Insurance Company | A |
Southern Oak Insurance Company | A |
St. Johns Insurance Company, Inc. | A |
Tower Hill Preferred Insurance Company | A |
Tower Hill Prime Insurance Company | A |
Tower Hill Select Insurance Company | A |
Tower Hill Signature Insurance Company | A |
TypTap Insurance Company | A |
United Property & Casualty Insurance Company | A |
Universal Insurance Company of North America | A |
Universal Property & Casualty Insurance Company | A |
US Coastal Property & Casualty Insurance Company | A |
Weston Insurance Company | A |
^: Reflects measures undertaken to revise the Company's business model
Our thoughts on the reinsurance carriers providing protection for the 2019 storm season and our assessment of the financial stability of these reinsurers are as follows:
Reinsurers Participating in 2019 Reinsurance Programs of Florida-focused Carriers | Demotech's Preliminary 2019 Perspective * | Domicile |
ACE Property & Casualty through Chubb Tempest Re USA, LLC | Secure - 1 | Pennsylvania |
Aeolus Re Ltd | Secure - 1 | Bermuda |
Allianz Risk Transfer AG | Secure - 1 | Liechtenstein |
Allied World Assurance Company (U.S.) Inc. | Secure - 1 | Delaware |
Allied World Assurance Company Limited | Secure - 1 | Bermuda |
Allied World Reinsurance Mgt Co on behalf of Allied World Ins Co | Secure - 1 | New Hampshire |
AlphaCat Reinsurance Ltd. | Secure - 1 | Bermuda |
American Agricultural Insurance Company | Secure - 1 | Indiana |
American Home Assurance Company | Secure - 1 | New York |
American International Reinsurance Company Limited | Secure - 1 | Bermuda |
American Standard Insurance Company of Wisconsin | Secure - 1 | Wisconsin |
Amlin AG | Secure - 1 | Switzerland |
Armor Re II Ltd | Secure - 1 | Bermuda |
Aon Insurance Managers (Bermuda) Ltd/Securis Re | Secure - 1 | Bermuda |
Aquilo CatCo (through Hannover Ruck SE) | Secure - 1 | Germany |
Arch Reinsurance Limited | Secure - 1 | Bermuda |
Argo Re Ltd | Secure - 1 | Bermuda |
Ariel Re Bermuda obo Ariel 1910 | Secure - 1 | Bermuda |
Artex SAC Limited | Secure - 1 | Bermuda |
Ascot Underwriting (BDA) Ltd | Secure - 1 | Bermuda |
Asia Capital Reinsurance Group Pte Ltd | Secure - 1 | Singapore |
Aspen Bermuda Limited | Secure - 1 | Bermuda |
Avatar Re, LLC | Secure - 1 | Delaware |
AXA XL | Secure - 1 | Bermuda |
AXIS Reinsurance Company | Secure - 1 | New York |
Axis Specialty Limited | Secure - 1 | Bermuda |
Berkley Re America/Berkley Insurance Company | Secure - 1 | Delaware |
Berkshire Hathaway Specialty Insurance Company | Secure - 1 | Nebraska |
BGS Services (Bermuda) Limited/Lloyds Syndicate | Secure - 1 | United Kingdom |
Blue Water Re, Ltd. | Secure - 1 | Bermuda |
CATCo Reinsurance Fund | Secure - 1 | Germany |
Cathay Century Ins Co Ltd. | Secure - 1 | Taiwan |
Catlin Insurance Company Limited | Secure - 1 | Bermuda |
Central Reinsurance Corporation | Secure - 1 | Taiwan |
Cerulean Re obo Fermat | Secure - 1 | Bermuda |
China Property & Casualty Reinsurance Company Limited | Secure - 1 | China |
Chord Re Consortium 9840 | Secure - 1 | United Kingdom |
Chubb Tempest Reinsurance Ltd | Secure - 1 | Bermuda |
Cincinnati Insurance Company (The) | Secure - 1 | Ohio |
Citrus Re | Secure - 1 | Bermuda |
Convex Insurance UK Limited | Secure - 1 | United Kingdom |
Convex Re Limited | Secure - 1 | Bermuda |
Credit Suisse obo Hannover Ruck SE | Secure - 1 | Germany |
Credit Suisse obo Tokio Millennium Re AG | Secure - 1 | Switzerland |
DaVinci Reinsurance Ltd | Secure - 1 | Bermuda |
DEVK Ruckversicherungs | Secure - 1 | Germany |
DUAL Commercial LLC t/a Tamesis o/b/o National Union Fire Insurance Co | Secure - 1 | Pennsylvania |
Eclipse Re Ltd | Secure - 1 | Bermuda |
Elementum obo Tokio Millennium Re | Secure - 1 | Bermuda |
Employers Mutual Casualty Company | Secure - 1 | USA |
Endurance Specialty Insurance Limited | Secure - 1 | Bermuda |
Eskatos Capital Mgmt (Hannover Re paper) | Secure - 1 | Germany |
Everest Reinsurance Company | Secure - 1 | Delaware |
Factory Mutual Ins Co | Secure - 1 | Rhode Island |
Farm Mutual Reinsurance Plan | Secure - 1 | Canada |
Fidelis Insurance Bermuda Limited | Secure - 1 | Bermuda |
Fidelis Underwriting Limited | Secure - 1 | United Kingdom |
Fubon Insurance Company Ltd. | Secure - 1 | Taiwan |
General Insurance Corporation of India | Secure - 1 | India |
General Reinsurance Corporation | Secure - 1 | Connecticut |
Greenlight Reinsurance Ltd. | Secure - 1 | Cayman Islands |
Hamilton Re, Ltd | Secure - 1 | Bermuda |
Hannover Re (Bermuda) Ltd | Secure - 1 | Bermuda |
Hannover Reinsurance (Ireland) DAC | Secure - 1 | Ireland |
Hannover Ruck SE | Secure - 1 | Germany |
Harco National Insurance Company | Secure - 1 | Illinois |
Hiscox Insurance Co (Bermuda) Limited | Secure - 1 | Bermuda |
Horseshoe Re Limited (obo Coriolis Capital Limit | Secure - 1 | Bermuda |
Horseshoe Re Limited/Separate Account FC0028 | Secure - 1 | Bermuda |
Houston Casualty Company | Secure - 1 | Texas |
Humboldt Re | Secure - 1 | Guernsey |
ILS Capital obo Prospero Re Ltd. | Secure - 1 | Bermuda |
Indigo Re | Secure - 1 | Cayman Islands |
Insurance Company of the West | Secure - 1 | California |
Kelvin Re Limited | Secure - 1 | Guernsey |
Korean Reinsurance Company | Secure - 1 | South Korea |
Lancashire Insurance Company Limited | Secure - 1 | Bermuda |
Lansforsakringar Sak Forsakrings AB (public) | Secure - 1 | Sweden |
LGT Capital Management Ltd. Obo Collateralised Re | Secure - 1 | Switzerland |
Liberty Mutual Insurance Company | Secure - 1 | Massachusetts |
Liberty Syndicate 4472 | Secure - 1 | United Kingdom |
Lumen Re Ltd | Secure - 1 | Bermuda |
Maiden Reinsurance Ltd. | Secure - 1 | Bermuda |
Manatee Re LTD | Secure - 1 | Bermuda |
Mapfre Re, Compania de Reaseguros, S.A. | Secure - 1 | Spain |
Markel Bermuda Limited | Secure - 1 | Bermuda |
Market Re Ltd. | Secure - 1 | Bermuda |
MS Frontier Reinsurance Limited2 | Secure - 1 | Switzerland |
Munich Reinsurance | Secure - 1 | Delaware |
National Liability & Fire Insurance Company | Secure - 1 | Connecticut |
National Union Fire Ins Co | Secure - 1 | Pennsylvania |
Navigators Insurance Company | Secure - 1 | New York |
Neon Underwriting Bermuda Limited/Lloyd's Syndicate 2468 | Secure - 1 | United Kingdom |
Nephila obo Poseidon | Secure - 1 | Bermuda |
Nephila obo Rubik | Secure - 1 | Bermuda |
New India Assurance Company | Secure - 1 | India |
New Ocean Capital | Secure - 1 | Bermuda |
Oak Leaf Re Ltd. (Fully Collateralized CAT Bonds) | Secure - 1 | Bermuda |
Odin Re | Secure - 1 | Bermuda |
Odyssey Reinsurance Company | Secure - 1 | Connecticut |
Orange Grove Re Ltd. | Secure - 1 | Bermuda |
Osprey Re | Secure - 1 | Bermuda |
Oxbridge Reinsurance Limited | Secure - 1 | Cayman Islands |
Partner Reinsurance Co Ltd | Secure - 1 | Bermuda |
Partner Reinsurance Company of the U.S. | Secure - 1 | New York |
Peak Reinsurance Company Ltd. | Secure - 1 | Hong Kong |
PICC Property and Casualty Company Limited | Secure - 1 | China |
Pilar Capital obo Hannover Ruck SE | Secure - 1 | Germany |
Pompano Re Ltd | Secure - 1 | Bermuda |
Poseidon Re Ltd | Secure - 1 | Bermuda |
Promissum Re SPC Ltd | Secure - 1 | Cayman Islands |
Prospero Re Ltd. | Secure - 1 | Bermuda |
Qatar Re | Secure - 1 | Qatar |
QBE Reinsurance Corporation | Secure - 1 | Pennsylvania |
QuantEdge USA | Secure - 1 | Bermuda |
R+V Versicherung AG | Secure - 1 | Germany |
Radiant Ltd. | Secure - 1 | Bermuda |
Renaissance Reinsurance Limited | Secure - 1 | Bermuda |
Renaissance Reinsurance U.S., Inc. | Secure - 1 | Maryland |
Resilience Re | Secure - 1 | Bermuda |
Rubik Reinsurance Ltd | Secure - 1 | Bermuda |
Satec srl/New Reinsurance Company Ltd. | Secure - 1 | Switzerland |
SCOR Global P&C SE | Secure - 1 | France |
SCOR Reinsurance Company | Secure - 1 | New York |
Secquaero Re Amaral IC Limited | Secure - 1 | Guernsey |
Secquaero Re Arvine IC Ltd. | Secure - 1 | Switzerland |
Secquaero Re Rivaner IC Ltd. | Secure - 1 | Switzerland |
Securis Re I Ltd. Obo SRB 119 | Secure - 1 | Bermuda |
Shelter Reinsurance Company | Secure - 1 | Montana |
Sirius International Insurance Corporation (public) Bermuda Branch | Secure - 1 | Bermuda |
Sompo Japan Canopius Reinsurance AG Bermuda Branch | Secure - 1 | Bermuda |
Swiss Reinsurance America Corporation | Secure - 1 | New York |
Taiping Reinsurance Company Ltd. | Secure - 1 | Hong Kong |
Third Point Reinsurance Company | Secure - 1 | Bermuda |
Toa Reinsurance Company of America | Secure - 1 | Delaware |
Tokio Millennium Re AG - Bermuda Branch | Secure - 1 | Bermuda |
Tokio Millennium Re AG (USA Branch of C0128) | Secure - 1 | New York |
Topsail Reinsurance SPC Ltd | Secure - 1 | Cayman Islands |
Tower Hill Re | Secure - 1 | Cayman Islands |
Transatlantic Reinsurance Company | Secure - 1 | New York |
Validus Reinsurance Ltd | Secure - 1 | Bermuda |
Vermeer Reinsurance Ltd. | Secure - 1 | Bermuda |
Wyndham Ins Co SAC | Secure - 1 | Bermuda |
XL Bermuda Ltd. | Secure - 1 | Bermuda |
Y-Bridge Insurance SPC | Secure - 1 | Cayman Islands |
*: Reference: FL Rule 69O-144.007 Credit for Reinsurance from Certified Reinsurers
Refer requests for additional information to Joseph L. Petrelli, ACAS, ASA, MAAA, President, Barry J. Koestler, II, CFA, Chief Ratings Officer, or Robert M. Warren, CPA, CPCU, Client Services Manager.
About Demotech, Inc.Demotech, Inc. is a financial analysis firm specializing in evaluating the financial stability of regional and specialty insurers. Since 1985, Demotech has served the insurance industry by assigning accurate, reliable and proven Financial Stability Ratings® (FSRs) for Property & Casualty insurers and Title underwriters. FSRs are a leading indicator of financial stability, providing an objective baseline of the future solvency of an insurer. Demotech's philosophy is to review and evaluate insurers based on their area of focus and execution of their business model rather than solely on financial size. Visit www.demotech.com for more information.
Update on Q2 2019 via Webinar on September 12, 2019Register as our guest for the webinar on September 12, 2019 at 1 PM Eastern by visiting https://attendee.gotowebinar.com/register/4902886576040841483.
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SOURCE Demotech, Inc.
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