Reinsurance News

Florida market policyholders surplus sees 23.5% deterioration in Q3: Gallagher Re

22nd December 2022 - Author: Kane Wells

According to Gallagher Re’s Q3 Florida Market Watch report, the state’s personal property carriers are facing further turmoil this year, with policyholders surplus (PHS) down 23.5% from $12.0Bn to $9.2Bn across the group.

Gallagher Re writes that all subgroups have had PHS decreases ranging from 23.5%-32.5% year-to-date, aside from the Florida Specialists (excluding ANTS) who saw a 7.1% deterioration.

Further, Gallagher Re has reported that the industry combined ratio deteriorated by 27.5 points year-on-year to 147.5%. Troublingly, the significant deterioration in performance does not include the full effects of hurricane Ian, as it is based on initial estimates and reserves, given that Ian hit relatively late in September.

Meanwhile, all subgroups contained within Gallagher Re’s report have noted 2022 year-to-date net underwriting losses.

Of this, Florida’s residual market insurer Citizens, saw the largest year-on-year deterioration in net underwriting results (-2,084.4%) posting a $2.3Bn net underwriting loss year-to-date.

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Total composite net loss & LAE reserves increased $3.2Bn from year end 2021, with Citizens posting the largest increase in net loss & LAE reserves with an additional $2.6Bn added year-to-date.

Gallagher Re’s data also suggests that industry net loss & LAE ratios increased by 30.8 points year-on-year to 116.7%, and expense ratios dropped by 3.4 points.

Direct written premiums increased 10.9% to $15.7 billion, up on the Q3 2021 figure of $14.2 billion.

Citizens grew fastest in the group, with its direct written premiums rising 77.6% year-on-year.

Florida specialist property carriers grew 1.9% by comparison, reflecting the continued transfer of risk to taxpayer-backed coverage in the state.

A recent report from Fitch Ratings has also suggested the pricing uncertainty and possible lack of reinsurance coverage in 2023 following Ian may lead to a reduction in the number of Florida private homeowners specialists, thus further pressuring Citizens to expand its underwriting exposure base.

This, alongside further disruptions as Ian losses become more clear, suggests more difficulty for the Florida homeowners’ market heading into 2023.

Another special state legislative session, which will focus on actions to stabilise the market, is scheduled for this week and may include further assignment of benefits and distribution of legal costs reforms.

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