Heritage places 2023-2024 cat XoL reinsurance at $420.5m

Florida-based property/casualty insurer Heritage Insurance Holdings has placed all of its 2023-2024 indemnity based, catastrophe excess-of-loss (XoL) reinsurance programme for approximately $420.5 million.

The total consolidated amount accounts for 32% of March 31, 2023, premiums-in-force, one point higher than the prior year cost which accounted for 31% of March 31, 2022, premium-in-force.

The exhaustion points for the first event reinsurance tower are: $1.3 billion for the Northeast, $1.1 billion for the Southeast, and $870 million for Hawaii.

The reinsurance programme features a $120 million limit specifically for the Northeast, as well as a combined limit of $115 million for both the Northeast and Hawaii. These limits are provided by the 2023 catastrophe bonds issued by Citrus Re, a special purpose vehicle based in Bermuda. The issuance of these bonds exceeded the initial targets and were priced at the lower end of the guidance. Additionally, there is a $100 million limit from the 2022 Northeast only catastrophe bond that remains in force.

For the Southeast and Hawaii, the consolidated loss retention for the first event is approximately $40 million, while for the Northeast, it is $30 million. Individual insurance companies will have lower retention due to the utilisation of our captive reinsurance company, Osprey Re. The participation of the Florida Hurricane Catastrophe Fund stands at 90%, consistent with the previous year's programme.

The entire reinsurance programme is based on indemnity and does not include parametric covers.

Furthermore, it incorporates the Reinsurance to Assist Policyholders (RAP) programme, which was established by the Florida legislature in 2022. This programme is expected to provide a limit of approximately $71 million to the company at no cost. The RAP programme was deferred in the previous year's placement as it was completed without its inclusion.

"We are pleased to announce the completion and terms of our 2023-2024 CAT XOL reinsurance program," said Heritage CEO Ernie Garateix (pictured). "We appreciate our reinsurance partners' continued support and their recognition of our efforts to provide the appropriate coverage for the market. We expect rates to continue to increase and will take underwriting actions within statutory guidelines to ensure long-term profitability in the markets we serve. We will continue to seek profitable opportunities while maintaining a balanced portfolio."

Heritage's premiums-in-force of $1.3 billion as of first quarter 2023 represented a 10.9% increase from first quarter 2022 due to continued proactive underwriting and rate actions, despite a policy count reduction of approximately 50,000 policies. The significant rating actions resulted in an increase in average premium per policy throughout the book of business of 5.9% from fourth quarter 2022, and 21.9% over the first quarter 2022.

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