Providers of collateralised reinsurance, notably insurance-linked securities (ILS) market players, have once again taken the largest slice of Florida Citizens Property Insurance Corporation’s reinsurance program.
For 2022, Florida Citizens was looking to secure anywhere up to $3.64 billion of risk transfer and reinsurance from across the traditional reinsurance and catastrophe bond market.
However, back in May, the company’s CFO warned that with markets in disarray, it’s extremely challenging to place a full risk transfer program up to a 1-in-100 year.
In early June, it became clearer just how difficult the environment is amid reduced appetite from reinsurers for property catastrophe risk in Florida, a region which, alongside elevated losses, continues to experience damaging fraud and litigation issues.
At this time, a spokesperson for the company told Reinsurance News that it was set to go through the Atlantic hurricane season under-reinsured, with only 36% of its risk transfer program filled, amounting to some $1.25 billion of reinsurance capacity.
Mid-year reinsurance renewals commentary from brokers has highlighted the trend, revealing that while many were able to secure protection, some reinsurers refused to write certain lines for any price. And details of the firm’s 2022 reinsurance placement shows that some providers of capacity in 2021 are missing from this year’s program, including the likes of RenaissanceRe, Lancashire, and Validus Re on the traditional side, and Fermat Capital Management, Leadenhall Capital Partners, and Securis Investment Partners on the ILS side.
But while Florida Citizens goes into the 2022 Atlantic hurricane season with less protection than last year, it did secure almost $1.25 billion of reinsurance from across the traditional and ILS markets.
Of this, more than $845 million of limit was secured from providers of collateralised reinsurance, led by Nephila Capital, the world’s largest ILS manager, and hedge fund D. E. Shaw.
On the collateralised side and overall, Nephila Capital is the largest writer of risk from the Florida Citizens program, taking $450 million of the smaller program for 2022. Next is D. E. Shaw with an almost $325 million slice of the program.
Other ILS and collateralised providers include Pillar Capital which wrote just over $29 million of the renewal program, AlphaCat, writing nearly $20 million of limit, followed by the $10 million underwritten by LGT Capital, and then $6 million of limit from investor Quantedge fronted by Arch, and $5 million from Credit Suisse’s Bernia Re vehicle.
On the traditional domestic side, global reinsurer Munich Re led Florida Citizens’ 2022 renewal, writing just shy of $125 million of limit. Swiss Re followed, taking more than $90 million of the risk transfer program, with Everest Re underwriting nearly $52 million, Odyssey Re writing nearly $27 million, and then more than $5 million from American Standard Insurance Company of Wisconsin.
As well as Pillar Capital and Bernia Re, Bermudian participants for 2022 include almost $38 million of limit underwritten by Ariel Re, over $20 million provided by PartnerRe, and then more than $14 million of limit from SiriusPoint.
Like last year, the only international reinsurer to feature in Citizens 2022 traditional reinsurance renewal was Korean Re, writing almost $3 million of limit.
The remaining roughly $29.5 million of reinsurance was provided by various Lloyd’s Syndicates owned by Beazley, Ascot, and MAP.
So, overall, the 2022 traditional reinsurance renewal saw Florida Citizens procure approximately $1.25 billion of limit, with most of this coming from collateralised markets, followed by domestic providers of traditional reinsurance, Bermuda-based players, Lloyd’s Syndicates, and then Korean Re.
Of course, in addition to this most recent renewal, the company also has $1.26 billion of catastrophe bond coverage still in-force, across its Coastal and Personal Lines Accounts.
