The Florida Office of InsuranceRegulation (OIR) has approved residential property insurancerate hikes for Castle Key Insurance Co. and Castle Key IndemnityCo., both subsidiaries of Allstate. The OIR heard the raterequests at a public hearing on July 19 and issued its rulingstoday. Castle Key Insurance had requested an average rate hike of31.2 percent; the OIR approved an increase of 14.1 percent. CastleKey Indemnity received the full 35.7 percent increase that itsought in its filing. The increases will take effect November 13for both new and renewals business.

According to a report from the OIR, Florida's top personal andcommercial residential property insurance writers ranked byin-force policies at the end of the first quarter of 2011 were:

1. Citizens Property Insurance Corp. with 1.28 million policies inforce and a 21.1 percent market share
2. State Farm Florida Insurance Co.; 590,830; 9.7 percent
3. Universal Property & Casualty Insurance Co.; 582,422; 9.5percent
4. St. Johns Insurance Co.; 172,897; 2.8 percent
5. USAA; 147,530; 2.4 percent
6. Castle Key Insurance Co.; 135,877; 2.2 percent
7. Castle Key Indemnity Co.; 129,787 2.1 percent
8. ASI Assurance Corp.; 119,798; 2.0 percent
9. Security First Insurance Co.; 119,205; 2.0 percent
10. American Integrity Insurance Co. of Florida; 102,091; 1.7percent.

On August 26, A.M. Best Co. affirmed the financial strengthrating of B- (Fair) and issuer credit ratings of “bb-” of CastleKey Group and its members headquartered in St. Petersburg; theoutlook for all ratings was stated as “negative.” The Castle KeyGroup members are identified as Castle Key Insurance Co., CastleKey Indemnity Co., Encompass Floridian Insurance Co., and EncompassFloridian Indemnity Co.

In the rating affirmation, A.M. Best says, “The ratings andoutlook reflect Castle Key's continued unprofitable operatingperformance and poor risk-adjusted capitalization, as measured byBest's Capital Adequacy Ratio. As Castle Key is the dedicatedFlorida property writer for its parent company, Allstate InsuranceCo., it maintains significant exposure to hurricanes, with acorresponding substantial reliance on catastrophe reinsurance. Inaddition, the group's reinsurance program relies heavily upon theFlorida Hurricane Catastrophe Fund (FHCF), including the purchaseof Temporary Increase in Coverage Limits. As indicated, A.M. Bestremains concerned regarding the ability of the FHCF to fund allobligations in the event of a severe hurricane, largely based onits contingent capital structure. This contributes to A.M. Best'snegative view regarding the adequacy of Castle Key's catastrophereinsurance program in the case of a significant catastropheevent.”