The Florida Cabinet’s State Board of Administration and Governor Scott have now approved the Florida Hurricane Catastrophe Fund (FHCF) to buy $1 billion of private reinsurance coverage, from a combination of traditional and collateralized reinsurance.
As we wrote earlier today, the FHCF and State Board of Administration was taking a proposal to buy $1 billion of reinsurance to the Cabinet today. That meeting, still ongoing, has just approved the proposal with no changes and now the work to secure the protection can begin.
This is new reinsurance premiums for the international reinsurance market to tap into, as the FHCF has not sought reinsurance cover before.
In our article from earlier today we explained that the reinsurance will not include a catastrophe bond, for all the reasons we mentioned in that article. It can include collateralized reinsurance though and Artemis understands that the FHCF has been approached by numerous markets and investors that would like to participate in this reinsurance purchase in some way.
The FHCF will have a lot of choice available to it, enabling it to build a wide and diversified panel of reinsurance counterparties if it wants to. It could also elect to go with a much smaller panel, as the appetite to take on this risk will lead some to seek to take very large lines.
The FHCF told Artemis previously that while it has been assessing enquiries from interested parties, it remains open to both pools and syndicates of capital that would look to take on this risk.
We’ll update again as more information on the reinsurance purchase becomes available in the coming weeks.