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Universal’s P&C units secure largest cat reinsurance programs to date

31st May 2019 - Author: Matt Sheehan

Universal Insurance Holdings, Inc. has announced that its subsidiaries, Universal Property & Casualty Insurance Company (UPCIC) and American Platinum Property and Casualty Insurance Company (APPCIC), have completed their 2019-20 reinsurance programs, effective June 1.

universal-insurance-holdings-logoThe units secured more catastrophe coverage than at any other point in Universal’s history, with the top level of UPCIC’s reinsurance tower providing coverage to beyond a 1-in-300 year level.

The total cost of the reinsurance program for UPCIC and APPCIC is projected to be approximately 33.3% of estimated direct earned premium for the 12-month treaty period.

This compares to 31.2% at this time last year, reflecting a 6.7% increase year-over-year, Universal explained.

UPCIC expanded the top of its reinsurance tower for a single Florida event to $3.28 billion, representing an increase of $134 million over the final 2018-2019 program.

Notably, $1.3 billion of this coverage has limits that automatically reinstate to ensure a certain level of protection in multi-event scenarios.

UPCIC also secured $222.6 million of new catastrophe capacity with limits that extend coverage to the 2020 wind season or beyond.

In total, the unit now has $382.6 million of this multi-year capacity, all of which is below the Florida Hurricane Catastrophe Fund layer, where reinsurance costs are the highest.

Additionally, UPCIC increased its first event catastrophe retention for a Florida loss from $35 million to $43 million, and increased its its first event catastrophe retention for a loss involving states other than Florida from $5 million to $10 million.

“We are pleased to announce the completion and outcome of the 2019-2020 reinsurance programs for both of our insurance companies,” said Jon W. Springer, President and Chief Risk Officer at Universal.

“While this renewal process consumed a greater period of time than prior years, we are pleased with the end result,” he continued. “We respect our reinsurance partners’ evolving view of risk and see the pricing level changes as reasonable given the recent loss experience.”

“Importantly, we successfully secured more catastrophe coverage than at any point in the history of the Company while maintaining our core relationships with our reinsurance partners.”

The largest private reinsurance participants in the program include Nephila Capital via Allianz Risk Transfer, Everest Re, RenaissanceRe, Munich Re, Arch Re, Chubb Tempest Re and Lloyd’s of London syndicates, all of which maintain a rating from S&P Global of A+ or higher.

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