United Insurance Holdings Corporation (UPC) a Florida insurance company holding company whose United Property & Casualty Insurance Company (United P&C) subsidiary was recently downgraded to "M" Moderate by Demotech in July is placing the personal lines subsidiary into runoff. Demotech has also indicated that they intend to withdraw UPC's ratings.
United P&C has filed its intent to withdraw with the departments in Florida, Louisiana and Texas. Louisiana has already approved the withdrawal. In addition they intend to file a plan with New York. The company also wrote in Georgia, South Carolina and North Carolina but has already sold its renewal rights and ceded its premiums and claims in those states.
The company, which had 180,000 policyholders in 2022 in Florida alone will be non-renewing the policies as they come up for renewal, and running off the claims of the company. Runoff is not insolvency but is when a company ceases writing new business and renewing policies, and provides for an orderly mechanism for handling the remaining claims of the company. The contractual obligations of the company to the policyholders remain in place, and the company is responsible for the payment of all incurred claims during the policy period.
The company experienced a significant drop in surplus as of June 30, 2022, along with poor operating results and catastrophic claims experience. In addition, UPC had difficulty securing adequate reinsurance in Florida during the latest round of reinsurance renewals. The company also tried to pursue other strategic avenues, but determined that an orderly runoff of their personal lines business was in best interest of the company and policyholders.
The company is also the first participant in Florida's Temporary Citizens Reinsurance Program, which would provide coverage to United P&C's Florida insureds over the Florida Insurance Guaranty Association's (FIGA) statutory limitation should the company later be declared insolvent. This program was put in place to help policyholders whose insurer no longer meets Fannie Mae or Freddie Mac ratings requirements, and might otherwise have their mortgage lenders force place their property insurance often at much higher cost. This program only extends to the Florida policyholders, and does not address the effects of the Demotech downgrades on the company's insureds in other states.
The company's commercial lines remain profitable, and will continue to operate under their American Coastal Insurance Company (ACIC) and Interboro Insurance Company (IIC).
https://www.nuco.com/fcs/2022/06/06/maxing-out-the-guaranty-fund-assessments/ https://www.nuco.com/fcs/2022/07/25/demotech-ratings-and-how-they-work