FedNat Holding Company, the U.S. primary insurance carrier group, has warned that it expects its losses from recent hurricane Sally will trigger another hurricane-related reinsurance recovery for the firm.
Just a fortnight ago, FedNat reported that hurricane Laura would trigger its reinsurance program, saying it estimated losses from that storm would exceed the $25 million single event reinsurance retention level of its program.
Now, FedNat has said similar for more recent hurricane Sally, saying that it estimates that its initial aggregate gross losses from hurricane Sally will also exceed its single-event aggregate reinsurance retention of $25 million.
Further, FedNat said that additional underlying catastrophe reinsurance protection covering the state of Alabama, where much of hurricane Sally’s losses are expected to fall, will also further reduce the total net impact to the insurer.
On top of this, FedNat also noted its 50% quota-share reinsurance treaty on its book written by SageSure Insurance Managers LLC, the firms independent MGU partner, which could reduce the net impact of hurricane Sally even further.
FedNat said that its 2020 reinsurance program remains intact, with cover available for any third hurricane this season after another $25 million event retention.
In addition, FedNat has other underlying reinsurance layers that will lower the retention for any additional events to as low as $10 million for a Florida landfall, the insurer said.
FedNat’s reinsurance program structure has responded well to the recent hurricane activity, providing protection against the events themselves, as well as the aggregating seasonal storm losses for the insurer.