Demotech sees Florida insurers as stable, reinsurers as secure in 2019

Analysis by Demotech, Inc. on the Q1 2019 financial statements and the 2019/2020 reinsurance programmes applicable to its universe of Florida-focused carriers, suggests a “stable” and “secure” environment.

Demotech has now released the results of its review and analysis of year-end 2018 financial information, first-quarter 2019 operating results, and the reinsurance programmes that have been placed by firms it rates and reviews that are focused on the state of Florida.

The firm highlights three years of catastrophe losses hitting the state on the back of a benign period of major loss activity, which combined with serious and challenging assignment of benefits (AOB) abuse has consistently increased losses and loss adjustment expenses (LAE).

The operating landscape in Florida has been challenging for insurers and reinsurers, with some companies scaling back their position in the market during times of market stress and low rates. In more recent times and driven by much needed rate increases following significant cat losses, companies have started to report a growth of exposure in the region in order to take advantage of the firming market.

Discussing the landscape for insurers that it rates and reviews, Demotech’s President, Joseph Petrelli, told Reinsurance News: “The Florida-focused carriers reviewed and rated by Demotech have secured record levels of catastrophe reinsurance for the 2019 – 2020 storm season. This is the case whether one measures vertically on first, second or third events, or measured horizontally for the number of events in the season.

“Concurrently, with our 2019 – 2020 guidance for a first event raised to 1:130 PML versus a 1:100 PML, most of the carriers that we review and rate exceeded the 1:130 guideline and secured a higher limit, despite the cost of doing so. With loss and loss adjustment expense reserve strengthening required periodically throughout the past several years, Demotech rated carriers focused on Florida exhibit exceptional financial stability.”

The firm has released its Financial Stability Ratings (FSRs) of the insurers it reviews, which shows that all have a rating of A, with six of the insurers having a higher A rating.

The company’s analysis also discusses the reinsurance carriers that are providing protection for the 2019 Atlantic hurricane season. According to Demotech, all of these reinsurance companies have a preliminary 2019 perspective of “secure.”

Through the remainder of 2019, it appears that Demotech sees Florida insurance companies as stable, while the reinsurers that back their 2019 reinsurance programmes are all viewed as secure.