Florida’s property insurer of last resort, Citizens Property Insurance Corporation, has projected that it will need to purchase $4.453 billion of reinsurance from the traditional and capital markets for 2025, although the overall size of the firm’s financing tower is expected to come down year-on-year with lower exposure, but also lower attachment points also projected.
For 2024, Citizens purchased $3.564 billion of reinsurance from across the traditional and capital markets, with the majority, or $1.964 billion coming from traditional reinsurance markets.
Current projections for the company’s 2025 risk transfer program suggest Citizens is budgeting for more reinsurance for next year, with the 2025 budget layer chart including $4.453 billion of reinsurance protection.
The projected increase in traditional and capital markets reinsurance is one of a number of changes in the 2025 budget layer chart when compared with the insurer’s 2024 risk transfer program.
Last year, Citizens’ risk transfer tower featured $3.154 billion of surplus below $5.02 billion of FHCF coverage, which attached at $3.113 billion, with the lowest attaching sliver of traditional reinsurance attaching at $3.514 billion and running alongside and slightly above the FHCF layer.
For 2025, there’s two layer charts in the new budget proposal, although for both the level of surplus is down on this year’s program. For the first, which has no coverage below the FHCF layer, surplus is projected at $2.645 billion, with less FHCF coverage of $3.684 billion attaching at the same level of losses as the lowest attaching slice of reinsurance, at $2.645 billion.
For the second layer chart, which includes $200 million of coverage below the FHCF, surplus is projected at $2.445 billion, with the lowest attaching slice of reinsurance attaching at $2.211 billion, and then FHCF coverage attaching slightly higher at $2.645 billion.
The $200 million of coverage below the FHCF for the second layer chart also impacts the level of surplus above all of the firm’s projected traditional and capital markets reinsurance for 2025. For the layer chart with no coverage below the FHCF, $615 million of surplus is projected to attach at $10.783 billion of losses, while for the chart with coverage under the FHCF, surplus of $815 million is projected to attach at $10.583 billion of losses.
For both layer charts, above the reinsurance and surplus, Citizens policyholder surcharge of $533 million is being budgeted for 2025, attaching at $11.398 billion and extending to $11.931 billion.
In comparison, the 2024 risk transfer program featured more surplus above the FHCF coverage, which ran alongside some of the firm’s traditional reinsurance and catastrophe bonds, up to $14.413 billion of losses. Above this is Citizens policyholder surcharge of $865 million, and then almost $2 billion of emergency assessments funding up to $17.424 billion of losses.
As with the 2024 tower, the 2025 proposal features surplus for commercial non-residential (CNR) exposure which is not reinsured by FHCF, which is shown as a stand-alone chart and corresponds to the actual CNR’s PML and return periods.
For 2025, this is the same for both proposals, and takes the top of the tower to a projected $12.415 billion of losses and loss adjustment expenses, which is a fair bit lower than the $18.026 billion in financing and risk transfer secured for 2024.
So, while nothing is guaranteed yet, the proposals for Citizens’ 2025 risk transfer program point to more reinsurance being sought with notably lower attachment points, while the size of the overall financing tower is currently projected to come down by more than $5.6 billion thanks to reduced exposure levels.
