FedNat
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This would become an event of default under the company's outstanding $100mn senior unsecured notes due 2029 and $21mn convertible notes due 2026 if not discharged within 60 days.
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Loss creep from Hurricane Ida has led to the loss and an increase in loss reserves.
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Demotech earlier warned that more than 15 possible carrier downgrades could come in July.
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Board member David Patterson took on the role on an interim basis, while Monarch has recruited a new CFO who previously served at Security First.
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Group chief accounting officer Erick Fernandez will step in as an interim.
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The company previously had its Demotech rating downgraded from 'A' to 'S'.
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The company cited its continued Q1 2022 underwriting losses and recent rating downgrade.
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The Floridian carrier must improve its financial strength rating ahead of its 1 July reinsurance renewal.
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The downgrade was attributed to weather claims from Louisiana and Texas following the company’s expansion into those markets.
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Net income was impacted by $4.4mn of reserve strengthening, net of reinsurance recoveries.
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The Floridian carrier recorded $8.1mn cat losses net of reinsurance compared with $27.9mn a year earlier.
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Just under half of the $8mn cat losses stem from insurance books FedNat is running off, with reserve strengthening impacted by 2020 reinsurance gaps.
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The financials from the listed Floridians show them plotting a path through challenges by exposure management and rate rises, but reinsurers are still picking up notable storm losses from this reinsurance-reliant group.
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The carrier will put its Maison Insurance operations into run-off.
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Strategic Review Committee chairman Bruce Simberg sets out the challenge ahead for FedNat as natural catastrophes continue to hit southern policyholders.
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The company said claims adjusting fees from the event would offset the hit to its retention.
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The insurer said it had "a tsunami of rate rolling onto the book".
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The insurer reported a combined ratio of 283.5%, sharply worse than the 147.9% in Q2 2020.
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The insurer has lifted its ceded premium ratio and noted tougher terms on low-lying all-perils coverage.
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The insurer has benefited from recoveries from its captive after reworking its reinsurance treaty with the unit.
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The company said adjustments to a previously reported loss related to ceded losses and commissions stemming from a quota share treaty with a captive reinsurer.
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The offering ended up well below the $43mn size initially mooted, as the carrier turned to the public market after taking $41mn of losses from winter storm Uri.
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Texas winter storm losses to spill over FedNat reinsurance retention.
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The company will split out its Florida reinsurance tower and will cede Uri losses to reinsurers after facing six cat events in the past year.
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