Florida’s Homeowners Choice Secures Nearly $1B in Reinsurance

Homeowners Choice Property & Casualty Insurance Co. Inc., a Florida-based provider of homeowners insurance, has completed its reinsurance program for the 2016-17 reinsurance year, which runs from June 1, 2016, through May 31, 2017, according to recently disclosed reports filed with the Securities and Exchange Commission by HCI Group Inc. Homeowners Choice is a wholly owned subsidiary of HCI.

Homeowners Choice purchases the reinsurance from other insurance companies and institutions to cover losses associated with hurricanes and other catastrophes. The 2016-17 program provides coverage up to $972 million for catastrophic losses in a single event, excluding flood losses. According to catastrophe models approved by the Florida Office of Insurance Regulation (OIR), the amount is sufficient to cover the company’s probable maximum loss resulting from a 1-in 165-year storm based on projected exposure at Sept. 30, 2016.

Paresh Patel, HCI’s chief executive officer, said the company expects to recognize net reinsurance costs of approximately $113 million for the 2016-17 reinsurance year, or approximately 32 percent of the company’s estimated gross premiums earned for that year, compared with approximately $161 million, or 40 percent of gross premiums earned, in the 2015-16 reinsurance year.

“While it is difficult to compare reinsurance coverages year to year, we expect to reduce our reinsurance spend by approximately $48 million this contract year when compared with the prior contract year,” said Patel. “In addition, we replaced a large portion of our participation in the Florida Hurricane Catastrophe Fund with broader private coverage and reduced by approximately $14 million our overall retention of catastrophic risk, including risk retained through HCI’s reinsurance subsidiary, Claddaugh Casualty Insurance Co. We believe our company and our policyholders will remain well protected at a much lower cost.”

Headquartered in Tampa, Fla., Homeowners Choice provides property and casualty homeowners’ insurance, condominium owners’ insurance and tenants’ insurance to Florida property owners. Homeowners Choice serves approximately 152,000 policyholders throughout Florida.

Topics Catastrophe Florida Reinsurance Homeowners