Swiss Re Insurance-Linked Fund Management

PCS - Emerging Risks, New Opportunities

FedNat expects reinsurance recoveries for hurricane Ida


U.S. primary insurance carrier group FedNat Holding Company is anticipating reinsurance recoveries will help to minimise the impacts to its business from hurricane Ida, resulting in a net impact to the company less than its retention.

FedNat logoBoth of FedNat’s core insurance underwriting carrier subsidiaries, FedNat Insurance Company and Maison Insurance Company, write homeowners business in Louisiana.

Already our sources have cited FedNat as one company to watch, given its challenges in maintaining the required levels of capital and surplus over recent years.

We’re told a number of primary carriers are set to rely heavily on their reinsurance partners for hurricane Ida, one of which will be FedNat it seems.

Across the two reinsurance programs that FedNat renewed this July 1st, the company said it anticipates gross losses from hurricane Ida will be above its combined $18.3 million retention.

The insurer said it’s too early to understand the extent of its loss from the hurricane, but with roughly $2.25 billion in aggregate reinsurance cover across all states in which FedNat operates, it seems well protected.

FedNat further explained that as much as $910 million of aggregate reinsurance coverage is available for hurricane Ida, portions of which are available to each of its insurance subsidiaries, as determined by which reinsurance tower they benefit from.

In addition, the programs provide $831 million of private reinsurance across the combined programs for second and subsequent events, after individual retentions and the aggregate limit.

Given the way FedNat operates, with claims adjusting subsidiaries to deal with catastrophe events such as this, fee income will be earned and so, as a result, FedNat said its net loss from hurricane Ida will be less than the retention of $18.3 million.

Which means all the rest of the losses from hurricane Ida will flow to its reinsurance partners, including to those from the insurance-linked securities (ILS) marketplace.

Also read:

Hurricane Ida insurance market loss could reach $21bn: CoreLogic.

Hurricane Ida insured losses close to $18 billion: KCC.

Hurricane Ida will add momentum to reinsurance pricing: AM Best.

The catastrophe bonds marked down on hurricane Ida threat.

Hurricane Ida loss puts some aggregate covers at-risk: Fitch.

Hurricane Ida to hit quota shares & excess-of-loss reinsurance: Moody’s.

Hurricane Ida losses to fall more to reinsurance, but renewals influence low.

Hurricane Ida data suggests $15bn to $25bn industry loss: Twelve Capital.

Hurricane Ida insured losses expected in the double-digit billions.

Hurricane Ida cat bond fund impact minor on latest track: Plenum.

Hurricane Ida hits Cat 4, landfall location key to ILS market impact.

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.