Reinsurance News

Universal pegs ultimate hurricane Ian loss at $1 billion

12th October 2022 - Author: Luke Gallin

Universal Insurance Holdings has so far received approximately 18,000 claims following the impacts of hurricane Ian and expects its overall gross ultimate loss from the storm to be $1 billion, which is below its $3 billion reinsurance tower.

universal-insurance-holdings-logoTo date, Universal has received around half the number of claims as it had at this point from 2017’s hurricane Irma.

The carrier states that despite its overall Florida homeowners market share being roughly 7.9%, based on the latest Florida residential industry total insured value data, its market share in the places hit by Ian’s most intense wind path, which includes the counties of Charlotte, Desoto, Lee, and Sarasota, is around 3.8%.

Universal adds that its exposure to policies that provide roof and external structural coverage in these four regions is just 2.8%, while it does not provide flood coverage.

Taking all of this into account, the insurer has pegged its ultimate loss from hurricane at $1 billion. Thanks to its reinsurance protection, projected net exposure will be limited to retentions at the firm’s insurance and captive insurance subsidiaries.

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Universal announced the renewal of its reinsurance coverage back in June, securing more open market catastrophe capacity across all treaties and multiple events, as well as a reduction to the top end of one reinsurance tower.

As a reminder, the protection was secured for Universal Property & Casualty Insurance Company (UPCIC) and American Platinum Property and Casualty Insurance Company (APPCIC) at a cost of $696 million.

UPCIC’s first event reinsurance tower has a top end of $3.16 billion, with all states retentions standing at $45 million for first and second events and $25 million for third and fourth events. So, the anticipation of a $1 billion gross loss from Ian does not suggest significant reinsurance recoveries.

At the same time, this tower includes $1.14 billion of limit that automatically reinstates after hurricane Ian to provide protection in multi-event scenarios. Additionally, the insurer secured $383 million of multi-year catastrophe capacity below the Florida Hurricane Catastrophe Fund (FHCF) for UPCIC, with contractually agreed limits that extend coverage through the 2023 wind season, $277 million of which extends through the 2024 wind season.

Cosaint Re Pte. Ltd, the firm’s catastrophe bond transaction, also remains in-force and provides one limit of $150 million of reinsurance against US named storm losses.

Stephen Donaghy, Chief Executive Officer (CEO), commented: “Our thoughts are with all impacted Florida residents. We’re focused on helping our policyholders rebuild and return to normalcy. Our claims, catastrophe response and customer service teams are on the ground and on the phone, helping our policyholders in their time of need. With our dedicated staff, our disaster preparedness planning and conservative reinsurance program, we’re well prepared for this event and maintain substantial reinsurance protection for any subsequent events.

“We’ve been serving the Florida market since 1998 and have experience across over a dozen hurricanes, including the highly active 2004-2005 seasons as well as recent major catastrophe events, including Hurricanes Irma and Michael in 2017 and 2018, respectively.

“Our strong reinsurance relationships have been formed over many years and we have access to our share of the FLOIR’s RAP layer of reinsurance coverage for the 2023-2024 renewal given that we deferred participation this year, on top of significant multi-year excess of loss catastrophe coverage that is part of next year’s program.”

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