FedNat parts ways with CFO as losses loom; wants to become ‘much smaller’
FedNat Holding Company has replaced its chief financial officer (CFO) amid efforts to reduce its scale and refocus on Florida business in a move to reduce volatility and regain its financial stability. The troubled Florida headquartered primary insurance carrier recently lost its ‘A’ rating and plunged to a higher loss than seen in the previous year quarter, prompting a strategic action plan to become “much smaller”.
The carrier said in a filing that it has received the resignation of chief financial officer Ronald Jordan, effective from June 10.
The board of directors of FedNat has appointed Erick Fernandez (pictured), the company’s chief accounting officer, to serve as interim CFO after Jordan’s departure.
Fernandez has served in his current role since April 2017, before which he served as the company’s interim CFO from June 2016 to April 2017.
FedNat fell to a bigger loss of $31.3 million in the first quarter of the year, from $19.4 million seen a year ago. Its gross premiums written also decreased almost 21% to $138 million in the quarter compared with $174.2 million for the same three-month period last year, driven by a reduction in our policies-in-force and exposure in non-Florida states. Net investment income also disappointed, with a decrease of or 24.5% or $0.4 million.
In April, Demotech downgraded the financial stability rating of FedNat National Insurance Company (FNIC), which its chief executive Michael Braun admitted “will adversely impact our ability to obtain excess-of-loss reinsurance for coverage beginning July 1, 2022 and would place the Company in non-compliance with the regulations of the Florida Office of Insurance Regulation (OIR).”
Braun highlighted that the company has crafted a new “action plan” to become “much smaller, with significantly fewer policies in force” in hope that this will potentially result in additional capital coming into the holding company or into its insurance carriers.
“If approved, the proposed action plan would be expected to enable the Company to obtain excess-of-loss reinsurance on a smaller, Florida-only book of business. Our action plan is currently being reviewed by the OIR and we will provide an update on the outcome of their review when available,” he said.
Braun also noted that the company is making progress in its Florida homeowners business, thanks to the strategic actions taken over the past five years “to right size our Florida book and increase rates to more accurately reflect the higher costs of doing business.”
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