Florida headquartered and expansive primary insurance company, Universal Insurance Holdings, has said that it is expecting to incur $80.1 million of costs in the fourth quarter of 2021 due to reserve strengthening measures and adverse development.
As a result of taking a more conservative inflationary stance, the company estimates 2021 accident year strengthening of reserves in the fourth quarter of $30.7 million on an after-tax, net basis, and $21.5 million in weather above plan on an after-tax, net basis.
Additionally, Universal estimates catastrophe and non-catastrophe related prior years’ adverse development of $27.9 million on an after-tax, net basis.
In total, the company expects a fourth quarter 2021 net impact of approximately $80.1 million after-tax, which will contributing 10.1 points to the full year combined ratio).
“As the second half of 2021 has matured, we have seen the effects of inflationary pressures, which we are addressing through our primary rate increases and current year reserve strengthening on attritional claims and PCS events, as well as on prior years’ claims,” said Stephen J. Donaghy, Chief Executive Officer.
“These actions to combat inflationary and social pressures have resulted in substantial positive strides on our reserve position over the past 24 months. We remain positive on the recent legislative actions taken in Florida and continue to hold all of the capital we raised during the fourth quarter at the parent company level to continue to support growth.”