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Florida’s property insurers off to a rocky start in 2022

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Florida’s property insurers off to a rocky start in 2022

The Florida residential property market remains under pressure as heavy losses continued for many insurers at the start of 2022, according to a review of regulatory statements.

The Sunshine State has seen four insurers become insolvent since the start of the year with Southern Fidelity Insurance Co. Inc. being the most recent. The insurer was deemed to be in a "hazardous" financial situation due its deteriorating operational results and lack of adequate reinsurance, according to a June 3 consent order signed by the Florida Office of Insurance Regulation.

SNL Image* Download a spreadsheet with the full list of individual subsidiaries within the analysis.
* Download a template that generates a financial profile for insurance entities that file U.S. regulatory statements.

The Tallahassee-based insurer was required to file a remediation plan with the regulator by June 8 to address its ability to quickly transition policies to another insurer, fund a solvent run-off for its current and future liabilities and address any reserve inadequacies. The regulator has now deemed the insurer insolvent with an affidavit signed on June 10.

As of the end of May 2022, Southern Fidelity had roughly 78,000 policies in Florida with around 69,000 polices spread across Louisiana, South Carolina and Mississippi.

Steep losses for some insurers in Q1

Southern Fidelity's woes were evident in its first-quarter results reporting a net income loss of $27.5 million, its 13th straight quarter recording a loss. The insurer ended the first quarter with a surplus of $37.1 million, which was aided by a $16.1 million capital contribution by its parent company.

United Property & Casualty Insurance Co., a unit of United Insurance Holdings Corp., was the lone insurer with net losses greater than Southern Fidelity during the period. The subsidiary reported a net loss of $37.8 million during the first quarter compared to losses of $17.7 million during the prior year’s period.

FedNat Insurance Co. reported the third-largest net loss during the quarter of $24.9 million. The struggling insurer is cancelling thousands of policies and has stopped writing new business.

In addition, People's Trust Insurance Co. announced it would stop writing new business on May 19 for its homeowners and dwelling lines of business, according to rate filings submitted to Florida’s regulator. The insurer had a net loss of $9.9 million during the first quarter of 2022.

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Over half of Florida’s residential insurers recorded losses

Meanwhile, the number of insurers within the domestic Florida residential property market recording net quarterly losses continues to outnumber those showing gains.

During the first three months of 2022, 28 out of the 49 individual insurance subsidiaries in the analysis reported losses. In aggregate, the insurers in the marketplace recorded net losses of roughly $161 million during the quarter.

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