FedNat lowers hurricane Matthew loss, so reinsurance takes less

Share

U.S. primary insurance firm Federated National Insurance (FedNat) has revealed a decrease in its loss from hurricane Matthew, compared to its initial estimate, meaning that reinsurance capital has taken a smaller share than it had first assumed.

Hurricane Matthew's waves (image from LiveScience)Initially, FedNat had estimated aggregate gross liabilities from hurricane Matthew of $77.5 million. At the time of that announcement the insurer believed that it could pass on a significant proportion of those losses to its reinsurance panel, which includes some fully collateralized arrangements.

However in the insurers results announced FedNat has announced its gross hurricane Matthew loss at $47 million across Florida and South Carolina, and after using its reinsurance cover only expects to retain net loss of $21.4 million.

The retained loss consists of its $18.45 million excess-of-loss property catastrophe reinsurance program retention, and $2.3 million due to a reversal of the profit-sharing balance on its 10% Florida-only property quota share reinsurance, which had previously been recognised as income at the insurer.

The Florida only quota-share reinsurance arrangement takes 10% of losses from the ground-up, so it’s safe to assume that reinsurers on this layer took a share of FedNat’s losses as well, but it does not reduce the retained level of loss on the excess-of-loss contract it seems.

The outcome is that reinsurers took less of the loss than had been expected initially, a scenario that has likely played out in many insurers programs as the final claims tally from hurricane Matthew came in below initial expectations.

Reported hurricane Matthew claims stood at $1.182 billion in early March, according to the Florida regulator.

———————————————————————
Artemis Live - ILS and reinsurance video interviews and podcastView all of our Artemis Live video interviews and subscribe to our podcast.

All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance video content and video interviews can be accessed online.

Our Artemis Live podcast can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.

Print Friendly, PDF & Email

Artemis Newsletters and Email Alerts

Receive a regular weekly email newsletter update containing all the top news stories, deals and event information

  • This field is for validation purposes and should be left unchanged.

Receive alert notifications by email for every article from Artemis as it gets published.

Read previous post:
Prudential & Rothesay Life strike $1.2bn longevity reinsurance deal

Prudential Financial and Rothesay Life have announced their sixth major longevity reinsurance transaction since 2011, with a $1.2 billion deal...

Close