Heritage Insurance Holdings Inc., a super-regional property and casualty insurance holding company has announced the full placement of its 2023-2024 indemnity-based, catastrophe excess-of-loss reinsurance program. This program is for its statutory insurance subsidiaries, namely Heritage Property Casualty Insurance Company, Narragansett Bay Insurance Company and Zephyr Insurance Company.
This will be the first event reinsurance tower exhaustion points of $1.3 billion for the Northeast, $1.1 billion in the Southeast and $870 million in Hawaii. The program will also include a $120 million Northeast-only limit and a $115 million of combined Northeast/Hawaii limit from the 2023 catastrophe bonds issued by a special purpose vehicle, Citrus Re Ltd., which provides multi-year reinsurance protection.
Ernie Garateix the CEO of Heritage said, “We are pleased to announce the completion and terms of our 2023-2024 CAT XOL reinsurance program. 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.”
Both of the bonds have received authorizations above the initially targeted limits along with the lowest end of the pricing guidance. In addition to the $100 million limit of the 2022 in-force Northeast-only catastrophe bond that it already has.
The first event consolidated loss retention for the Southeast and Hawaii is approximately $40 million, and $30 million in the Northeast. Individual insurance companies will be less given the use of Heritage’s captive reinsurance company, Osprey Re. The participation of the Florida Hurricane Catastrophe Fund is at 90%, which is consistent with the prior year’s program. The entire program is indemnity based, with no parametric covers.
The program includes the use of the Reinsurance to Assist Policyholders (RAP) program created by the Florida legislature in 2022. It is expected to provide a limit of approximately $71 million at no cost to the Company. The RAP program was deferred last year because the company’s 2022-2023 placement was completed without this program.
Heritage’s premiums-in-force stands at $1.3 billion as of Q1 2023 representing a 10.9% increase from Q1 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 Q4 2022, and 21.9% over Q1 2022.
