Florida based primary insurer FedNat expects its payouts for hurricane Sally to exceed its single-event aggregate reinsurance retention of $25 million.
Sally made landfall near Gulf Shores, Alabama, on September 16 as a Category 2 hurricane impacting both Alabama and the Florida Panhandle.
The storm quickly diminished after landfall as it crept northeast at around 3 mph, bringing wind gusts over 100 mph, storm surge of around 6-7 feet, and rainfall of up to 30 inches.
FedNat has three subsidiaries writing homeowners insurance in the region and says it has in place a combined reinsurance program for all of them, with the most recent renewal beginning on July 1.
The total net impact to the company will be reduced based on the amount of Sally losses are incurred in the state of Alabama, where the company has additional underlying catastrophe reinsurance protection.
FedNat also has a 50% quota-share reinsurance treaty in place on its book written by independent MGU partner SageSure, which may serve to further reduce Sally’s net impact.
The company’s reinsurance program remains intact for a potential third hurricane in 2020, with a $25 million retention along with additional underlying layers that lower retention for any additional events to as low as $10 million for a Florida landfall.
FedNat expects to report on its total estimated cat losses from all third quarter events following quarter end.
