No capital structure is immune as Florida market remains in freefall: ALIRT

Recent shifts in the strategic focus of property insurance players in Florida, along with the continued failures and challenges of other insurers, show that “no capital structure is immune” in this market. which, according to ALIRT Insurance Research, continues to be in a bit of a free fall.

While reinsurance renewals are now complete and a statement on many of Florida’s P&C insurer ratings is expected soon from Demotech, there have still been other stories of carriers facing difficulties, the analyst writes. principal David Paul of ALIRT in his latest article on the market there.

“If any market watchers still harbored doubts about the dire state of the Florida homeowners market, the events of the past few weeks have likely put them to rest,” Paul begins.

Let’s continue by characterizing the issues to consider that have emerged since the renewal of reinsurance, such as:

  • Florida Citizens CEO Barry Gilway told a board of governors meeting that 75% of Florida’s landlord market is likely closed: “There are very, very few open businesses in the market. Gilway went on to explain the growth in politics expected by citizens, which could bring it back to near record levels of exposure.
  • Capacity Insurance Company (CIC), a small Florida-only commercial property specialist downgraded by AM Best and placed in run-off, which ALIRT says says “Florida’s property insurance woes are spreading beyond the owner’s market”.
  • United Insurance Holdings Corp. (UPC Insurance) announces a strategic review of its options, including raising additional capital.
  • The President of Tower Hill takes on a new role at Producer’s National, at a time when Tower Hill faces challenges.
  • Plus the strategic evolution of FedNat, on which the ALIRT asserts that “its future viability remains uncertain”.

“All of this apparent odds and ends ultimately contribute to a cohesive narrative, which in this case is that the Florida home insurance market remains in something of a free fall, with a number of once-important players sounding a retirement. more urgent,” ALIRT said. Paul writes.

If he also says that the news from United (UPC) and FedNat “only serve to remind us that no capital structure is safe in this difficult market.”

Paul points out that while private equity money can often be a savior of insurance markets, especially where they foresee a chance to “make hay”, in Florida’s case, “private equity was burned in this Florida market before and at specific times when the conflagration was not as severe as it is today.

ALIRT also discusses that the increasingly popular reciprocal exchange structure could be considered the “ownership structure of last resort in Florida”, with recent trends indicating that it is seen as a structure that can improve conditions. of the market, while benefiting from alignment with insured members. .

Finally, ALIRT’s Paul warns that there are now signs that some insurance groups in the “cohort of badly beaten Florida homeowners” may be beginning to focus on underwriting commercial property and casualty.

However, he warns, “this strategic about-face may not be the saving grace for less experienced people. The recent demise of Capacity Insurance Company serves as an object lesson in this regard.

Read all our news and analysis on the insurance and reinsurance market in Florida.

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