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Heritage places its largest ever catastrophe reinsurance program

3rd June 2019 - Author: Luke Gallin

Property and casualty (P&C) insurance holding company, Heritage Insurance Holdings, Inc. has increased its 2019 – 2020 catastrophe reinsurance program to the highest level in its history.

Heritage Insurance logoThe placement of its 2019 – 2020 reinsurance program for its statutory insurance subsidiaries, including Heritage Property Casualty Insurance Company, Narragansett Bay Insurance Company, and Zephyr Insurance Company, features a first event reinsurance exhaustion point of $1.5 billion, an increase on the previous year’s program.

Despite challenging and competitive market conditions, the firm significantly increased the return period to the highest level ever, and this was achieved at a total cost of $249.2 million, which is down on the $259.5 million recorded last year, representing a saving of around $10 million for the insurer.

The firm’s first event retentions in both the southeast and Hawaii remain at $20 million, while in the northeast this increased by $1 million to $13.8 million.

Bruce Lucas, Heritage’s Chairman and Chief Executive Officer (CEO), commented: “Over the past four years we have led the market on diversifying away from Florida and the Tri-County. Our differentiated business plan is creating very favorable results for our shareholders as evidenced by lower attritional loss trends and better reinsurance terms and pricing.

“Despite a hard market, we were able to significantly increase our reinsurance program to the highest point in the Company’s history at a cost savings of $10 million. I would like to thank all of our reinsurance partners for their strong support.”

The insurer revealed during its fourth-quarter 2018 earnings call that it had increased its Florida Hurricane Catastrophe Fund (FHCF) participation from 45% to 90%, which Lucas said would have a positive impact on reinsurance pricing. It could be the case that the reinsurance savings made, in spite of the firm securing its largest ever program, is a result of its increased FHCF participation to the highest level.

Furthermore, and as noted by Lucas, Heritage continues to diversify outside of the highly competitive and pressured Florida marketplace, which might have also had some more positive impacts on its 2019 – 2020 catastrophe reinsurance program.

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