Florida carriers entered mid-year 2025 renewals from stronger footing: AM Best

Florida’s specialist personal property insurers entered the key 2025 mid-year reinsurance renewals from a position of relative strength, following improved profitability and more favourable operating conditions, according to a new report from credit ratings agency AM Best.

“Looking ahead to midyear renewals, the balance of power appears to be shifting toward primary carriers,” said Chris Draghi, director at AM Best.

“Given that loss activity has been more moderate in recent years and profitability has stabilized, Florida composite companies are now in a better position to manage risk accumulation and potentially negotiate more favorable terms with reinsurers,” Draghi added.

The comments stem from the agency’s latest Best’s Market Segment Report, which outlines how Florida’s personal property insurance market recorded an underwriting profit of $206.7 million in 2024, a sharp turnaround from the $174.4 million underwriting loss reported the year before.

As well as this, pre-tax operating income reached $492.3 million, up from near breakeven in 2023. While the composite’s combined ratio improved to 93.1% for the year continuing a five-year trend of year-over-year gains driven by tighter underwriting, better exposure management, and legislative reforms.

The report also noted the significant impact of 2024’s hurricane season, including Hurricane Milton, with estimated insured losses of $17.2 billion; Hurricane Helene, under $2 billion; and Hurricane Debbie, at $121 million.

Despite these events, the Florida personal property composite turned a profit, “demonstrating the resilience of the marketplace,” AM Best wrote, adding: “Florida’s property insurance and reinsurance markets have been navigating a complex landscape in recent years shaped by hurricanes, legislative reforms, and evolving market dynamics.”

“How the improvement in performance translates into potential cost savings and capacity availability at the upcoming mid-year renewal season remains to be seen.”

Furthermore, for insurance-linked securities (ILS) and catastrophe bond market participants, the improved underwriting fundamentals present a clearer picture of risk and potentially greater predictability around future issuance and loss performance.

Several Florida-focused catastrophe bonds have already come to market in 2025, led by the $1.525 billion Everglades Re II (Series 2025-1) placement by Citizens Property Insurance Corporation in early May, which at the time was the largest cat bond issuance on record.

The report also underscores just how heavily Florida carriers rely on reinsurance. AM Best cites a ceded reinsurance leverage ratio of 519.4% for active Florida property insurers in 2024, which is far above the 62.2% U.S. composite average, highlighting the continued importance of third-party capital to support underwriting across the state.

“Florida’s legislative reforms acted as a material tailwind for longstanding participants but also improved the environment to attract new entrants, effectively increasing capacity,” said Josie Novak, senior financial analyst at AM Best.

This includes more recent 2025 session measures that aim to expand access to the E&S market, particularly for seasonal homes insured by highly rated carriers.

Novak added: “Additionally, the retreat of certain carriers—whether through reduced market participation or the suspension of new business—has created space for new companies to establish a foothold, further reshaping the competitive landscape.”

Despite the improved conditions, the exposure profile for Florida specialists remains materially higher than national averages. Insurers reported a direct premiums written-to-surplus ratio of 3.2x, versus a U.S. average of 1.7x, underscoring the state’s outsized catastrophe risk and structural reinsurance dependence.

Still, with reinsurance markets softening and capital market solutions playing a growing role, Florida carriers may find themselves with more room to manoeuvre in 2025, particularly as they look to optimise program structure, manage retention levels, and secure cost-effective tail protection via the cat bond market.

Two insurers with significant Florida presence reported on the outcomes of their reinsurance renewals recently, with American Integrity Insurance Company securing a meaningful $799 million increase in reinsurance limit this year, while Universal Insurance Holdings, Inc. bought $110 million more in reinsurance limit at its 2025 renewal, both with the ILS market playing significant roles as counterparties.

Separately, Howden Re reported that risk-adjusted property catastrophe reinsurance rates ranged from flat to down 20% at the June 1 renewal.

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