United Insurance Holdings Corp., through its wholly owned subsidiaries, entered into reinsurance agreements to seek coverage for catastrophe losses from named or numbered windstorms and earthquakes.
The deals struck with private reinsurers will protect United Insurance Holdings and its subsidiaries, American Coastal Insurance Co. Inc., United Property & Casualty Insurance Co., Family Security Insurance Co. Inc., Interboro Insurance Co. and BlueLine Cayman Holdings, in all states where they operate. The agreements signed with the Florida State Board of Administration, which administers the Florida Hurricane Catastrophe Fund, or FHCF, will provide coverage only in Florida against storms that the National Hurricane Center designates as hurricanes.
Coverage within the contracts includes frequency and severity protection, with an overall program exhaustion point excess of $3.1 billion, as well as lower per occurrence retention levels. The first event retention is $60 million in Florida and $25 million outside of Florida. The contracts also feature coverage from 41 reinsurers and up to $262.5 million of multiyear limit.
For the FHCF reimbursement contracts, United Insurance Holdings elected a 45% coverage for all its insurance subsidiaries with Florida exposure. The company expects that the total mandatory FHCF layer will provide about $907 million of aggregate coverage with varying retentions and limits.
The about $2.19 billion of aggregate open market catastrophe reinsurance coverage is structured into multiple layers with a cascading feature such that all layers drop down as layers below them are exhausted.
The agreements will take effect June 1. The total cost of the 2018 to 2019 catastrophe reinsurance program is about $374 million.