Specialty property and casualty insurance holding company 1347 Property Insurance Holdings, Inc., (PIH), which currently offers insurance to individual and commercial customers in Louisiana and Texas through its wholly-owned subsidiary, Maison Insurance Co., has announced plans to write business in Florida.
The company said March 7 that Maison Insurance Co. has secured a Certificate of Authority from the Florida Office of Insurance Regulation to write allied lines, homeowners multi-peril, and mobile home multi-peril in the state. The authority will allow the company to write homeowners and wind-only coverage.
“Our direct writing activities in Florida will be targeted based on market conditions, and we may pursue approval for ‘take-out business’ should we determine profitable opportunities exist,” the company said in its March 7 statement. “Other states with coastal exposure will be evaluated from time to time for their fit with the Company’s strategy.”
The move comes as 1347 Property Insurance completes its strategic and capital allocation review process that it began last October, in which the company determined that Florida should form a “key part of PIH’s strategic plan.”
“As a specialty insurer, [PIH] expects that its underwriting results and return on deployed capital should be above industry average based on a focused strategy that responds to certain defined markets and their dynamics. We believe that exposure to catastrophic events creates opportunities for superior returns in select markets depending on conditions at the time,” it said. “We expect to write business in targeted property insurance markets, often in underserved areas, where we believe our expertise and innovation will enable us to capture this opportunity.”
On PIH’s fourth quarter and year-end results conference call, held on March 16, CEO Doug Raucy said that the company spent considerable time evaluating and studying the Florida market, and sees a lot of potential in the state.
“Our management team has extensive experience in the Florida market,” Raucy said. “With particular experience extending with niche markets there, both in terms of product and geography, we think this will enable us to develop and market insurance products that will benefit home owners, while also allowing independent agents another tool, which we are taking further to their customer relationships benefitting PIH as well.”
Raucy added that it considered different approaches in its entrance into Florida, including “several opportunities to enter the state via an acquisition.” But it ultimately decided to build its business organically.
“That way, we know each policy we write inside and out, which allows us to observe the maximum control on our risk,” Raucy said.
He acknowledged the challenges facing Florida homeowners companies in the last couple of years, alluding to the state’s ongoing assignment of benefits (AOB) abuse that has threatened Florida’s property insurance market, but said the company is prepared to handle these challenges.
“We are very familiar with these issues and anticipate unique opportunities to develop in that market,” he said. “Starting with a clean slate, we’ll position as well for success as we have no legacy issues in which to contend.”
But he added the Florida expansion will be “methodical” and keep with the company’s “risk adverse style.” He cautioned investors on the call to “gauge their expectations accordingly, as we will not begin to see any impact on our financials until 2018.”
“It will take some time to develop our insurance products and build our agent network…This means that the earliest we’ll start writing policies is likely to be late in 2017,” he said.
The company is not a complete stranger to the state – it is currently based in Tampa. Still, Raucy said it is being opportunistic and monitoring the right moments to “enter at the right spots.”
PIH is also evaluating other states for future expansion and has re-confirmed that certain Louisiana and Texas markets will remain in its book of business.
In the personnel department, the company announced that Gordon Pratt had retired from the the Board of Directors and Larry G. Swets, Jr., elected as the new chairman.
Other take-aways from the company’s strategic review included refining its focus as a specialty insurer in areas with exposure to catastrophic events; and the consideration of alternative investments in support of return on equity objectives.
“Our review also leads us to conclude that our investment activities, an important aspect of our strategy, should evolve to include alternative opportunities, all of which will be overseen by the Company’s Investment Committee,” PIH said in its statement. “This Committee will operate with the Company’s expected return on equity target in mind, particularly at times where the Company’s capital exceeds the amount necessary to support insurance underwriting activities.”
The company finished 2016 with $51.3 million in gross premiums written, a 17 percent increase from $43.9 million the year before. Its in-force policy count as of Dec. 31, 2016 was up 19 percent at 33,800 policies compared to 2015 when it ended the year with 28,400 policies. Net premiums earned were $30.4 million, a 17.4 percent increase from $25.9 million in 2015.
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