U.S. primary insurance group FedNat Holding Company has reported $17 million of gross catastrophe losses for the second-quarter of 2019, but does not expect any of the individual events to trigger a reinsurance recovery from its program.
As of the time of reporting the catastrophe impact, yesterday, FedNat said that the losses are expected to reduce its second quarter pre-tax income by $9.3 million.
The gross catastrophe loss impact felt by FedNat in Q2 amounted to $17 million, the majority of which was outside of Florida and related to convective storm activity, with damage largely from wind and hail.
$15.5 million of the gross loss was from outside of Florida, which is subject to a 50% profit sharing agreement with the non-affiliated managing general underwriter that writes FedNat Insurance Company’s non-Florida property book of business, the company said.
Twelve wind and hail storm catastrophe events reported by Property Claim Services accounted for all of the losses, FedNat said.
However, the impact will not be shared with FedNat’s reinsurance panel as none of the specific events are expected to breach the retention levels set, the company explained.
FedNat’s catastrophe reinsurance program that was in place through June 30th 2019 only covers single events that exceed a $15 million loss for FNIC’s non-Florida business and a $20 million loss for FNIC’s Florida business. In addition, the firm has a $3 million retention for Monarch National Insurance Company’s business which is in Florida as well.
With the aggregated gross losses from 12 separate storm events only expected to total $17 million, FedNat does not believe its reinsurance retention will be reached by any of the individual loss events.
This is where quota share protection could have been effective for FedNat, in sharing some of the loss impact. But the insurer only had a 2% quota share reinsurance arrangement in force for its Florida homeowners book, through June 30th 2019. So no relief can be found from that coverage either.