FedNat Holding Co. expects aggregate gross losses of approximately $275 million as a result of Hurricane Michael, based on preliminary post-landfall catastrophe model estimates, but expects its reinsurance program to cover the bulk of the losses.
FedNat Insurance Co., a unit of FedNat Holding, expects that its losses, including both Florida and non-Florida exposures, net of reinsurance, will not exceed its first event pretax retention of $20 million. The company writes about 10% of the total insured values in Bay and Gulf counties in Florida, where Michael made landfall.
Monarch National Insurance Co., another FedNat Holding unit, expects that its losses, net of reinsurance, will not exceed its first event pretax retention of $3 million.
Given the limited non-Florida expected aggregate gross losses as a result of Hurricane Michael, FedNat Holding does not expect any recoveries from its non-Florida property catastrophe excess of loss coverage, which has a first event retention of $15 million. However, any non-Florida aggregate gross losses will be included in the core reinsurance program, which took effect July 1 and gives FedNat Insurance and Monarch National $1.8 billion of aggregate cover with a $1.3 billion maximum single event cover.
The impact on FedNat Insurance of any non-Florida net losses from Hurricane Michael will be reduced as a result of the profit-sharing agreement that FedNat Insurance has with the nonaffiliated managing general underwriter that writes its non-Florida property business.