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Federated National completes 2017-2018 catastrophe reinsurance programs

4th July 2017 - Author: Luke Gallin

Federated National Holding Company (FNHC) has announced the completion of its 2017-2018 catastrophe reinsurance programs, at an estimated cost of $180 million, and which provide $2.1 billion of aggregate coverage.

Federated National logoFederated National’s 2017-2018 reinsurance programs cover both Florida and non-Florida exposures, and are effective July 1st, 2017. This year’s program includes $89 million of new multiple year protection, and the renewal of $156 million of multiple year protection from last year, and utilises a cascading feature that sees all layers attach at $25.1 million.

The 2017-2018 catastrophe reinsurance programs cost an estimated $180 million, of which approximately $125 million relates to the private reinsurance protection noted above, and with $53.1 million payable to the Florida Hurricane Catastrophe Fund (FHCF), which Federated National maintained its participation at 75% for the 2017 hurricane season.

Combined, Federated National’s private reinsurance and FHCF arrangements provide the firm with $2.19 billion of aggregate reinsurance protection, with a maximum single event coverage of approximately $1.56 billion, exclusive of retentions.

The primary insurer’s single-event retention for a Florida catastrophe is $18 million for the 2017-2018 treaty year.

RMS

Also effective July 1st, 2017, Federated National has secured a new 10% quota share on its Florida homeowners business, which excludes named storms.

In addition, the 2017-2018 program also features $21 million of non-Florida excess of loss aggregate protection with first event coverage of $5 million and second event coverage of $16 million. This, explains the firm, means the “Non-Florida retention is lowered to $13 million for the first event and $2 million for the second event on a gross basis though it is reduced to $6.5 million and $1 million on a net basis.”

Monarch National, a subsidiary of Federated National formed in 2015 as a Florida focused property insurer, secured $109.81 million of aggregate reinsurance cover for the 2017-2018 treaty year, with a maximum single event coverage of $68.89 million. Monarch’s program came at an estimated cost of $5.17 million, of which $1.94 million is payable to the FHCF, with Monarch also reporting 75% participation with the FHCF, for the 2017 hurricane season.

Federated National states that the reinsurance treaties “are with reinsurers that currently have an A.M. Best Company (“AM Best”) or Standard & Poor’s rating of “A-” or better, or have fully collateralized their maximum potential obligations in dedicated trusts.”

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