Florida based primary insurer FedNat is currently working through an $8 million per quarter increase in its reinsurance spend, according to CEO Mike Braun.
Speaking in an earnings call alongside the release of the company’s 2019 results, Braun said that FedNat had seen substantial rate increases in the reinsurance market in 2019, following losses on Hurricanes Irma and Michael.
FedNat posted a combined ratio of 122.1% in 2019 after bolstering its reserves in Q4 due to adverse prior year developments, with AoB claims costs also weighing heavily on its performance.
Braun noted that the company continues to benefit from $8 million in savings from its combined 2019-2020 reinsurance program, which is in effect through the end of June.
“We are currently working on our 2020-2021 reinsurance program and we are pleased with the large number of re-insurers who are participating in our program, including those that are looking to increase their current participation level,” Braun commented.
He added that FedNat is also exploring options for additional reinsurance coverage from the alternative capital markets, where the company continues to see “encouraging signs.”
While it remains too early to tell what pricing will look like on the upcoming reinsurance program, FedNat remains confident that the pricing environment will enable it to maintain its current combined ratio targets.
“I don’t know where the pricing is going to go, but I think we’re well equipped regardless,” Braun concluded.