Heritage Insurance Holdings, Inc., the Florida headquartered but nationally expansive property and casualty insurer, has reported the full placement of its reinsurance program for 2022, which includes the company’s first catastrophe bond transaction since 2017.
Despite reports of a challenging mid-year reinsurance renewals, Heritage has fully placed its 2022-2023 catastrophe excess-of-loss reinsurance program for its insurance businesses, Heritage Property Casualty Insurance Company, Narragansett Bay Insurance Company, and Zephyr Insurance Company.
This year’s program includes the $100 million Citrus Re Ltd. (Series 2022-1) catastrophe bond, which cover losses from named storms across named north-east US states, on a per-occurrence and indemnity trigger basis.
It’s the first time Heritage has leveraged the catastrophe bond space since 2017, after it made relatively significant reinsurance recoveries from a number of its cat bonds following the active 2017 Atlantic hurricane season.
“We are pleased with the execution and terms of our comprehensive reinsurance structure, including our ability to access capital markets as part of our 2022-2023 program through the first Citrus Re cat bond we have issued since 2017,” said Heritage Chief Executive Officer (CEO), Ernie Garateix.
“We believe the completion of the program reflects a thorough understanding by our reinsurance partners of our successful diversification strategy, as well as our sound business plan, which has increased our total insured value outside Florida to 74.0% of TIV as of first quarter 2022, with zero exposure to Louisiana and Texas. 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 take underwriting actions within statutory guidelines to improve our profitability for the long term,” he continued.
Interestingly, Heritage highlights that it managed to successful place its full program without needing to use the recently launched Reinsurance to Assist Policyholders (RAP) program, which was authorised as part of the special session in late May.
This $2 billion RAP program acts as a kind-of lower-layer to the Florida Hurricane Catastrophe Fund (FHCF), providing a taxpayer funded reinsurance support mechanism for the insurers struggling to pay for or complete their towers lower down.