The Florida property insurance marketplace needs additional legislative action to be taken to restore it to health, according to the CEO of major insurer Heritage.
Heritage has been reducing its exposure in Florida, reporting an 18.9% reduction in policies-in-force in the state, which drove a 14.9% reduction of total insured value (TIV) there, but just a 5.7% reduction in premiums-in-force year-over-year, which will be thanks to higher rates in part.
Heritage continues on its mission to diversify outside of its core and home state of Florida and into Northeast, Mid-Atlantic, West and Pacific states, with its use of reinsurance and alternative capital key in helping it moderate exposures as it goes.
“Our underwriting profit for the quarter and nearly 6-point reduction in our combined ratio demonstrate that our focus on profitability, exposure management and rate adequacy are having the desired impact,” Heritage CEO Ernie Garateix commented on the insurers’ results yesterday.
“Our improved metrics are significant in comparison to the prior year quarter and we expect these improvements to continue each successive quarter.
“Additionally, I’m pleased with the outcome of our catastrophe reinsurance program which incepted June 1st. Heritage secured appropriate levels of reinsurance, we did not use the new Florida Reinsurance to Assist Policyholders program, and our program included deployment of Citrus Re, which brings in additional collateralized reinsurance through the capital markets.”
Heritage reported a net loss of $87.9 million for the second-quarter, driven by a net $90.8 million or $3.48 per diluted share non-cash goodwill impairment charge.
That charge was driven by a combination of factors, including the disruption in equity markets, elevated weather related catastrophes, higher loss ratios and the firms shares trading below book value.
In fact, despite Q2 being outside of storm season, Heritage has once again shown how severe weather is a driver of losses for its P&C business, which remains very focused on property risks in regions where exposure can be higher.
Current accident year weather losses were $38.1 million in Q2, up 7.3% from $35.5 million in the prior year quarter, Heritage said $32.1 million were net current accident quarter catastrophe losses, up from $24.5 million in the prior year, while $6 million wwre so-called other weather losses, down from $11 million in the prior year.
Once again, Heritage’s CEO took the opportunity to drive home his company’s view that the Florida property insurance market remains in crisis.
Heritage has been vocal in calling for change in Florida and wants lawmakers to do more than the reforms seen at the special session in May.
“We are cautiously optimistic that the actions taken by the Florida legislature will have a positive impact on our results and the challenging claims environment,” CEO Ernie Garateix said.
Adding that, at Heritage, they also, “Believe that more legislative action needs to be taken to improve the health of the Florida property insurance market.”
Read all of our news and analysis on the Florida insurance and reinsurance market.
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