Hudson Structured Capital Management Ltd. (HSCM Bermuda), the insurance-linked securities (ILS), reinsurance and transportation focused investment manager, has announced plans to take a majority ownership of Southern Fidelity Insurance Company (SFIC).
In exchange for its majority stake, HSCM Bermuda will provide a capital injection into SFIC.
HSCM Bermuda will also take an active role in maintaining and expanding SFIC’s footprint in the Florida, Louisiana and South Carolina homeowners’ insurance markets.
The move comes after sources told our sister publication, Artemis, that SFIC and another Florida primary carrier were likely to head into receivership and be deemed insolvent within a matter of days.
But this capital injection from HSCM Bermuda could now offer a lifeline for the beleaguered insurer.
”2020 has been a challenging year for the Southeast homeowners’ insurers,” said Edouard von Herberstein, Partner and Chief Underwriting Officer – HSCM Bermuda.
“As rates and the underwriting environment begin to improve, we are excited to support Southern Fidelity as they rebuild.”
James Graganella, Chief Executive Officer of SFIC, also commented: “Southern Fidelity Insurance Company is proud to announce this new partnership with HSCM Bermuda. This alliance will strengthen Southern Fidelity’s position in the marketplace, and we look forward to continuing to serve our agents and policyholders.”
HSCM Bermuda is scheduled to take its stake in SFIC and its affiliated entities on November 12th.
Fidelity Insurance Company and Capitol Preferred Insurance Company have both filed for significant rate increases in recent months in an effort to make the premiums written pay for the costs of running their businesses.
But even with any gains made, their business models have been on the verge of being deemed untenable by the Florida Office of Insurance Regulation and sources told Artemis that the regulator has considered putting the pair into receivership imminently.
It represents yet another sign of the stressed nature of the Florida property insurance market and the fact it has relied on cheap reinsurance through recent years just in order to stay viable.
