Florida-based primary insurer FedNat Holding Company has reported a fourth-quarter combined ratio of 122.1%, up 3.8 points from the prior year quarter and representing 4.7 points of net catastrophe losses, 12.6 points of adverse development and 5.3 points from current accident year reserve strengthening.
“The claims environment in the Florida homeowners market remains challenging, even despite the enactment of AOB reform on July 1, 2019,” said Mr. Michael H. Braun, the Company’s Chief Executive Officer.
“Increased litigation costs were a major factor in the reserve strengthening in our Florida homeowners line and also contributed to the adverse development in our non-core lines, which continue to be in run-off.
“While FedNat has been a leader in taking rate in Florida homeowners and ensuring stringent underwriting practices, nonetheless at this time we have a cautious near-term outlook in this market and do not expect our Florida policy count to grow in 2020.”
FedNat also reported a $6.9 million net loss for Q4, compared to a $9.3 million loss in prior year quarter.
The company slumped to an adjusted operating loss of $7.9 million, down 60.5% from the $4.9 million loss reported a year earlier.
The firm also reported $4.5 million of claims, net of recoveries, pre-tax, from Tropical Storms Olga and Nestor as well as other severe weather events impacting Texas, Florida and other states, as previously communicated.
Also for Q4, FedNat posted $12 million of claims, net of recoveries, pre-tax for adverse prior year reserve development, including $8.0 million of non-core losses, as previously communicated.
Gross written premiums hit $150.1 million, including $6.6 million from Maison, while net premiums earned increased 4.5% to $95.2 million, including $4.1 million from Maison.
“Following the successful acquisition of Maison in 2019, we have expanded our presence in more stable and profitable coastal homeowners markets outside of Florida,” Braun added.
“Our non-Florida book of business was profitable in the fourth quarter, including Maison’s contribution for the month of December.
“We believe our non-Florida growth opportunities position FedNat for improved financial performance in 2020, and long-term profitable growth.
“FedNat’s balance sheet remains strong and will enable us to continue our commitment to returning value to shareholders through growth, as appropriate, and our dividend and share repurchases.”
