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16 October 2018Insurance

FedNat expects $275m loss from hurricane Michael

FedNat Holding Company estimates that its aggregate gross losses as a result of hurricane Michael will be approximately $275 million, the bulk of which will be covered by reinsurance.

On Wednesday afternoon, October 10, 2018, Hurricane Michael made landfall near Panama City, Florida, as a strong Category 4 hurricane and then impacted Alabama and Georgia, as a major hurricane.

FedNat purchased a combined reinsurance programme for both FedNat and Monarch National that took effect on July 1, 2018. The reinsurance programme covers both Florida and Non-Florida exposures and affords both carriers approximately $1.8 billion of aggregate coverage with a maximum single event coverage totalling approximately $1.3 billion.

FedNat’s single event pre-tax retention for a catastrophic event in Florida is $20 million and Monarch National’s single event pre-tax retention for a catastrophic event is $3 million.

Given the limited non-Florida expected aggregate gross losses as a result of hurricane Michael, the company does not expect any recoveries from its non-Florida property catastrophe excess of loss coverage, which has a first event retention of $15 million, but any non-Florida aggregate gross losses will be included in the core reinsurance programme described above. Furthermore, the impact on FedNat of any non-Florida net losses from hurricane Michael will be reduced as a result of the profit sharing agreement that FedNat has with the non-affiliated managing general underwriter that writes its non-Florida property business.

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More on this story

Insurance
15 October 2018   Insured residential and commercial storm surge and wind losses from hurricane Michael are estimated at between $3 billion and $5 billion, according to an update by data provider CoreLogic.
Insurance
18 July 2019   US insurer FedNat Holding Company (FedNat) has reported gross catastrophe losses of $17 million, including $15.5 million from the company’s non-Florida property business in Q2 2019.
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13 August 2019   US insurer FedNat has entered into a "cooperation agreement" with its third largest shareholder Capital Returns Management in response to legal proceedings filed by the activist investor, and agreed to add two new directors to its board as part of the deal.