Heritage will continue to limit the amount of new business it writes as it works to finalise its 2023 catastrophe reinsurance program, Chief Executive Officer (CEO) Ernie Garateix has reported.
Garateix provided some commentary on his company’s upcoming renewals as part of a recent Q1 earnings call, while also breaking down Heritage’s performance in the quarter, which included positing net income of $14.0 million.
The super-regional property and casualty insurer, which renews its reinsurance at June 1st, upped its reinsurance spend to $359.5 million last year amid hardening conditions.
And, given the expected pricing and capacity for catastrophe reinsurance going forward, Garateix says his company “will continue to evaluate and adjust our portfolio to manage exposure concentration and, therefore, manage the cost of reinsurance.”
This will include “limiting the amount of new business we expect to write,” the CEO specified, as well as keeping a check on “the amount of existing business we may renew while maintaining compliance with individual state regulations.”
While details of the renewal are yet to be confirmed, Garateix said last year that Heritage would look to raise its rates and evaluate its portfolio as the cost of reinsurance increased alongside capacity constraints.
“Getting appropriate rates for our coverage offer is paramount,” he asserted at the time, adding that Heritage would “continue to take rates in all our markets to keep up with the reinsurance, higher frequency of weather events and higher repair and replacement costs.”
Last year, Heritage deferred the Florida Reinsurance to Assist Policyholders program, also known as RAP, because its program was already fully-placed. This layer provides reinsurance below the Florida Hurricane Catastrophe Fund (FHCF) at no cost to the company.
Garateix also noted that this year’s catastrophe reinsurance program and costs will include the remaining limit of $100 million from catastrophe bonds issued in 2022 by Citrus Re, which provides Heritage with multi-year reinsurance protection.
And he anticipates complementing this year’s traditional reinsurance placement with another ILS transaction.
