Florida based primary insurer FedNat has increased its total revenue 14.3% to $14.5 million as it continues to focus on organic growth outside of its home state.
This result compares with $101.2 million for the same period in 2019, with the increase driven by net premiums growth, partially offset by investment losses.
Gross written premiums increased 30.8% to $173.0 million, including $17.6 million from Fednat’s newly acquired Maison business.
Organic non-Florida business continued to show strong growth year over year, especially in the state of Texas, with Homeowners growing 31.3% overall.
Higher gross earned premiums, in combination with an increase in Fednat’s excess of loss reinsurance spend, also resulted in a 40.5% increase in ceded premiums, which came to $69.7 million in Q1 2020, compared with $49.6 million previously.
Investment income increased modestly by 4.9% to $3.9 million during the period, mainly due to fixed income portfolio growth from the Maison acquisition.
But net realized and unrealized investment gains decreased by $5.1 million, to $2.8 million due to market volatility and declining economic conditions resulting from COVID-19.
Losses and loss adjustment expenses increased $2.1 million, or 3.1%, to $68.9 million in Q1, while the net loss ratio decreased 10.2 percentage points, to 65.1%.
The lower loss ratio was primarily the result of lower weather-related net losses when comparing the periods, as 2020 included $10.4 million, net of reinsurance (of which, $3.5 million non-Florida losses were subject to a 50% profit-sharing agreement) and 2019 included $19.0 million from the Brevard hail storm.
“Our team drove improved results in the first quarter of 2020, demonstrating resilience as we navigate these uncertain times, in which we are all operating,” said Michael H. Braun, Fednat’s Chief Executive Officer. “We are pleased with our non-Florida market expansion strategy, which performed well this quarter and was bolstered by the performance of Maison, our recent acquisition.”
“We are holding our in-force premium level steady in the Florida market, while continuing to proactively take additional rate increases as we employ our rigorous underwriting practices amidst challenging market conditions. Our growth initiatives continue to focus outside of our home state until our Florida pricing more accurately reflects our increased costs of doing business, which we anticipate being later this year,” Braun continued.
“As we look ahead, FedNat remains focused on providing the highest quality service to our policyholders and our trusted agents.”
