Heritage hails earlier, stronger, larger reinsurance program renewal

Heritage Insurance Holdings, Inc., the Florida headquartered, nationally expansive U.S. property casualty insurer, has completed its 2021-22 reinsurance program renewal earlier than previous years and feels it has a stronger tower in place, while also having bought some more protection.

Heritage has placed its first event reinsurance tower to an exhaustion point of $1.4 billion, up slightly from the $1.347 billion placed a year ago.

Total reinsurance limit secured for its southeast US exposures has now risen to $2.5 billion, up from $2.382 billion of total reinsurance limit in the southeast a year ago, taking into account loss retentions and co-participations.

The Heritage reinsurance tower now includes some $640 million of private market layers that automatically reinstate, all prepaid in the budget for this year’s reinsurance renewal.

Heritage is having to retain more risk this year, which is natural for a growing primary carrier such as itself, with a first event loss retention in the southeast and Hawaii of $32.0 million (up from last year’s $20m) and $20.7 million in the northeast (up from $13.3m).

The program provides reinsurance cover for Heritage Property Casualty Insurance Company (HPCIC), Narragansett Bay Insurance Company (NBIC) and Zephyr Insurance Company (ZIC) underwriting subsidiaries.

In terms of cost, Heritage has paid approximately $312 million for its 2021 reinsurance renewal, which accounts for 28% of March 31, 2021 premiums-in-force.

That cost is up slightly, from the $272.1 million paid for its 2020-2021 catastrophe reinsurance renewal (28.4% of March 31st 2020 premiums-in-force).

But of course Heritage has more reinsurance protection and the cost includes the pre-paid reinstatements, of which there are more this year, which makes for a challenging comparison.

But overall, even if the cost of cover is up slightly, it does not appear Heritage has been in any way penalised by its reinsurance counterparties at the renewal.

Ernie Garateix, Heritage’s CEO, commented on the renewal, “We completed our 2021-2022 catastrophe reinsurance program meaningfully earlier this year, which is a testament to our strong reinsurance partner relationships, diversified book of business and solid reserving track record.

“Compared to last year, we prepaid reinstatement premiums for all layers with a reinstatement available and substantially eliminated co-participations in the reinsurance tower above our regional retentions. Overall, we have a stronger program with fewer moving parts. We are grateful to our reinsurance partners for their support.”