Universal aims to expand in Florida again, secures 90% of first-event reinsurance

Universal Insurance Holdings, a Florida headquartered insurer that is a bellwether for signals of appetite for risk and use of reinsurance for those operating in the state, is aiming to expand its business in Florida once again, with its CEO citing much better conditions after the legislative reforms.

At the same time, Universal has also revealed securing 90% of its first-event reinsurance tower for 2024 already and more multi-year coverage as well, as the company once again gets out early to avoid the market congestion around the mid-year renewals.

Stephen J. Donaghy, Chief Executive Officer, discussed the state of the Florida property insurance market during the recent Universal earnings call.

He explained, “Now that we’re past the 1-year anniversary date of the 2022 special legislative session and all new and renewal policies are subject to the new legislation, the impact of the reforms is becoming clear.

“Claims trends across the board are improving, including reductions in total claims, represented claims, assigned claims, and daily claims.”

Donaghy’s comments mirror those of other’s in Florida, where some carriers are expressing a growing appetite for expansion into the state.

“Given our size, scale, independent agency and reinsurer relationships and the recent steps we’ve taken, we are particularly well positioned to succeed in the revamped Florida environment,” Donaghy added.

Discussing Universal’s plans for growth, Donaghy said, “We grew last year outside of Florida and, beginning in December, we began adding policies to our Florida book of business as well.

“We are laser-focused on profitability and where the business is coming from. Not all counties or territories in the state are behaving identically, so we are being very careful as we head into the future in this new environment.”

“We felt it was very prudent to be extremely cautious or cautious as we went through 2023 because the legislation didn’t affect all policies until the renewal point of each and we wanted to make sure that we had enough dry-powder to handle the business, as well as be positioned going forward to be very secure as we look to begin to grow the business once again,” he added.

Part of that security is reinsurance and Universal has again ventured to market early, to secure indications for a renewal of the tower it had a year ago.

Donaghy said that, “Our first event 2024-2025 reinsurance tower is already 90% secured, and we’ve negotiated additional multiyear capacity for the future.”

Continuing to say, “We are sitting at 90% accomplished for the first tower. We are very pleased with how our team performed in the market.

“The reinsurance now is a year-round effort for myself and our reinsurance team, Matt Palmieri in particular, and we feel really good about where we’re at.”

Universal has been using its own captive reinsurer in recent years as well, as a way to navigate the challenging hard reinsurance market.

That’s an option for 2024 too and Donaghy said, “I don’t think that we will change our philosophy on how we have used the captive in the past.”

But he also said that, “If the open market comes in at a competitive rate, we would consider that in lieu of. But as I sit here today, I think we would continue and it worked out very well for the company last year.”