United (UPC) sees full retention loss from Ida, reinsurance support for Q3 cats

United Insurance Holdings (UPC Insurance), the Florida headquartered but regionally expansive insurer, said that it expects a full retention loss from recent hurricane Ida, leading it to pre-announce $27 million of pre-tax losses so far for the third-quarter, net of reinsurance recoveries.

It’s clear United (UPC) will be calling on its reinsurance program to assist in paying claims from hurricane Ida specifically, as well as the aggregation of other events so far in Q3.

The company pre-announced current year Q3 catastrophe losses through August 31st 2021, of around $27 million before income taxes (~$21 million after tax), after accounting for its expected reinsurance recoveries.

Tropical storm Elsa’s impacts are one of the catastrophe events included in this, which are likely to have been relatively minor.

There were also a number of other new PCS designated catastrophe events that occurred during the quarter so far wrapped up in this estimate, the insurer said.

But the main hit to United (UPC) of Q3 so far will be hurricane Ida, which its says hit its reinsurance program as the estimate includes a core catastrophe program retention of $15 million, as well as a catastrophe retention of $3 million for the firms Interboro Insurance Company.

It’s no surprise an event of the magnitude of hurricane Ida would exhaust the retention of an often coastal home focused insurer like United (UPC). We expect many of the usual suspect coastal carriers will suffer full retention losses and call on reinsurance support for this event.

In addition, United (UPC) provided a warning that its aggregate reinsurance cover is also not far off being activated, to reduce future downside risk.

It said that as these catastrophes contributed to its aggregate reinsurance protection, its exposure from potential future catastrophe events this year is expected to be limited to approximately $9 million.

“Our thoughts are with those who have suffered losses from these events, but particularly our policyholders in Louisiana. UPC Insurance is working around the clock to ensure we Keep Our Promise and adjust these claims as quickly and professionally as possible. UPC’s catastrophe reinsurance program was designed to protect our earnings and capital from another potentially active hurricane season, so I’m very pleased that our downside risk from subsequent events this year is limited,” commented Brad Martz, President & Chief Financial Officer of UPC Insurance.