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Citizens settles on $1.45bn reinsurance for 2019, rate-on-line reduces


Florida’s Citizens Property Insurance Corporation settled on a slightly smaller reinsurance tower at its recent 2019 renewal as it only partially placed some layers. But the end result for its coastal account was a reduced average rate-on-line, compared to the previous year.

Florida Citizens logoOriginally, Florida Citizens had been targeting roughly $1.6 billion of reinsurance protection for the 2019 hurricane season, but after a complex renewal the tower has shrunk slightly, as the insurer settled on slightly less coverage in order to secure the best pricing and terms.

Over a month ago, Citizens had been planning to purchase around $503 million of fresh reinsurance at the renewal, for its coastal account, across both personal and commercial residential, as well as the commercial non-residential portfolios.

Citizens did secure the new $100 million sliver of per-occurrence coverage that it had planned for, which will sit alongside the 90% participation Florida Hurricane Catastrophe Fund (FHCF) protection in the lower layer of Citizens reinsurance tower, sitting above retention covered by its surplus.

The next layer of coastal account protection that was due to be purchased at this renewal was a $350 million aggregate reinsurance layer that would sit on top of aggregate multi-year traditional coverage and catastrophe bonds in the upper layer of Citizens tower.

In the end, this layer was only 68.47%, so providing $239.65 million of protection to Florida Citizens.

Next, Florida Citizens targeted securing a $53 million layer of reinsurance in its commercial non-residential tower, which sits surrounded by surplus on all sides.

This layer was secured as a 25% placement of a $213 million layer sitting excess of $54 million of losses in the commercial non-residential tower reinsurance tower and Citizens told us it was oversubscribed, as the insurer received sufficient authorisations from reinsurers to grow the layer to $72.82 million, although it didn’t elect to do so.

While the aggregate top-layer of the coastal account did not place at 100%, Florida Citizens appears to have secured reasonable pricing as it said that the average net rate-on-line for its coastal account is 5.82% after this renewal, compared to 6.04% last year.

Florida Citizens also opted to buy reinsurance for its Personal Lines Account (PLA), due to the reduction in surplus it had seen in that tower.

The insurer had been targeting the acquisition of a $200 million aggregate wrap reinsurance layer around the FHCF protection it has for the PLA.

At the renewal this ended up being only 88.25% placed, for $176.5 million of reinsurance coverage.

After the renewal Florida Citizens reinsurance program is roughly $1.45 billion in size, including all the multi-year protection from traditional reinsurance and catastrophe bonds it already had in-force.

The insurer told us that the total cost of this protection, including the multi-year traditional and cat bond layers, came out significantly below the $110 million of spend that had been approved by its Board.

It was a complex renewal and it seems Florida Citizens has tweaked its program in response to demand and the risk appetite of reinsurance markets.

Alongside the surplus and FHCF coverage, the reinsurance and insurance-linked securities (ILS) market remain key capacity providers to protect Florida Citizens and its policyholders.


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