Cat bond helps Florida carrier Heritage clear rough & tumble renewals

Florida-based P&C carrier Heritage Insurance upended talk of a rough and tumble mid-year reinsurance renewals season with word by the June 1 deadline that it had fully placed its catastrophe XoL programme.

"We are pleased with the execution and terms of our comprehensive reinsurance structure," Heritage CEO Ernie Garateix (pictured) said in a statement. “We appreciate our reinsurance partners' recognition of our efforts to better diversify and underwrite our business, and we plan to continue to proactively and appropriately raise rates” and adjust underwriting.

The placement was aided by support from the capital markets. Its 2022-23 programme includes Heritage’s first Citrus Re cat bond issued since 2017.

Heritage partly attributed the programme’s success to its recent diversification, which the company notes has increased total insured value outside Florida to 74% of the total as of first quarter 2022, “with zero exposure to Louisiana and Texas.” Heritage was a 100% Florida carrier as recently as 2015.

Heritage further claimed that placement of the programme had not required reaching for the new Reinsurance to Assist Policyholders (RAP) programme written up by Florida lawmakers just ahead of the 2022 renewals season.

Heritage went into renewals season with what it considered a “conservative” programme for the 2021-22 season including “substantial severity and frequency protection,” a first-event reinsurance tower exhaustion point at $1.4 billion and total limit of $2.5 billion in the southeast plus coverage for two other major regions, all at a total cost to Heritage of $312 million, accounting for 27% of 4Q 2021 premiums in‐force.

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