Florida’s Citizens Property Insurance Corporation is looking set to go through the 2022 hurricane season with less reinsurance protection in place than it would have liked, as sources report that only 36% of its risk transfer program is filled currently.
The state property insurer of last resort has only managed to secure around $1.25 billion of reinsurance capacity at this point in time, a spokesperson told Reinsurance News this week.
At this level, Citizen’s reinsurance coverage is well short of its desired level and less than half of the $2.7 billion that the company ultimately secured last year, for a price of $249 million.
The firm’s CFO, Jennifer Montero, last month described the reinsurance market as being in “disarray” ahead of the crucial mid-year renewals.
Outside of the litigation and wind-related exposures specific to the State of Florida, she added that the global risk transfer market has “experienced additional pressure from global macro factors that are not related to the risk transfer market, such as inflation, Russia’s invasion of Ukraine, the energy crisis, interest rate increases, and equity market volatility.”
According to Florida Citizens spokespersons, the company has still managed to purchase 76% of the traditional reinsurance it was targeting for the Coastal Account tower, a placement that reflects $941 million in traditional limit secured.
But for the Personal Lines Account (PLA) tower, sources say just 14% of the desired traditional capacity has been secured, at $309 million out of a targeted $2.19 billion.
Furthermore, Citizens has been unable to secure $200 million of capital markets backed reinsurance through its recent PLA focused catastrophe bond issuance.
It’s understood that the company is continuing to work on filling out the gaps in its program and more capacity may be gained over the coming days and weeks, but it seemly unlikely that it will be able to reach the level of coverage originally planned as it enters this year’s hurricane season.