PROPERTY INSURANCE REPORT the Authority on Insuring Homes and Commercial Property

Reprinted With Permission Of The Publisher PROPERTY INSURANCE REPORT The Authority on Insuring Homes and Commercial Property

Vol. 26#11/611 Nov. 11, 2019 Florida Dodges Dorian As Other INSIDE Challenges Continue to Howl Many of the home insurers who have left Florida averted a disaster this summer when the path of the market sought greener pastures. Page 2 Hurricane Dorian shifted, but storm clouds continue to hov- er over the state’s homeowners insurance market. Respond- Table: Homeowners insurance groups in ing to rising costs on claims from past hurricanes, higher 1971, with 2018 status. Page 3 reinsurance prices and litigation trends, carriers are raising Research seems clear: a big storm in rates and tightening underwriting Florida will take down a number of insur- Even as legislative reforms that took effect July 1 are ers. Page 6 expected to dramatically reduce lawsuits filed in conjunction with an assignment of benefits, insurers fear unrestrained Rising reinsurance prices squeeze prop- first-party litigation will continue to drive up claims costs. erty specialists in Florida. Page 7 And if that’s not enough, judging by the political at- tention to complaints after Hurricane Michael, insurers are THE GRAPEVINE likely to face legislation governing claims handling practic- Property Insurance Report es. Last week, Florida CFO Jimmy Patronis, who oversees Conference Underway In insurance regulation, said he would pursue legislation in Southern California the next session aimed at “reducing the number of claims For those of you attending the Please see FLORIDA on Page 5 2019 Property Insurance Report National Conference this week, Only the Strong Can Survive: welcome to California. We know you’ll have a great experience. Just 14 of Top 40 Home Insurers For everyone else, we’re busily In 1971 Are Still Writing Today exploring the future of property Everyone believes property insurance is a tough busi- insurance with 230 industry leaders ness, where one big wrong move can kill a business over- representing virtually every active night, or a series of small bad moves can lead to a slow cor- and innovative home insurer and porate death. Now we have proof. Thanks to the researchers every important provider of data at A.M. Best Co., we have a market share table for home- and services, so rest assured that owners insurance writers in 1971, the furthest back they can we will soon have plenty to report reach. And with a lot of research, we have identified what in these pages. PIR has happened to every one of the 40 largest writers. The bottom line? Only the strong survive, with 14 homeowners writers in 1971 still active today, and 26 whose homeowners business (and sometimes the entire business) have gone to live with the big actuary in the sky. Tellingly, it was Hurricane Hugo in 1988 and Hurricane Andrew in 1992 that really separated the strong from the Please see ONLY THE STRONG on Page 2

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Page 2 PROPERTY INSURANCE REPORT November 11, 2019 ONLY THE STRONG Continued from Page 1 owners insurance business in the 1990s and is weak. Of the 26 top-40 home insurers that have only a broker today. exited the market since 1971, the first came in These challenges didn’t keep State Farm 1985, and that was the only one in that decade. Mutual from flourishing over time in property Then 13 big home insurers left the market in the insurance, more than doubling its homeown- 1990s, when the going really got tough. Six more ers insurance market share in the last 47 years. companies disappeared from 2000 to 2010, and Though Allstate, a public company very focused four have exited since 2011. A number of these on its stock price, may have been pulling back in insurers left personal lines to focus on commer- recent years, its homeowners business is bigger cial, while others left property and casualty to today than it was in 1971. Andover and West- focus on life, health and/or investments. field may have a smaller national market share Some died completely, such as General Ac- today than in 1971, but their relatively small size cident and Commercial Union, which merged and geographic concentration have been no bar- into CGU, then sold to White Mountains, rier to long-term success. And their national mar- which sold the remnants of the business to One ket share is smaller largely due to the dramatic Beacon, which sold to Tower, which failed with price increases in catastrophe-prone markets, pieces going to AmTrust. There is no discern- where they are largely absent. If clever Geico is still worried, Progressive, which was a modest Most of the departed insur- auto insurer in 1971 and wouldn’t think about ers are gone because they were selling homeowners for decades, has flourished not good at selling insurance. in property in recent years. There is only one characteristic all these de- ible part of those original businesses still alive in parted insurers have in common: they were not the market today. good property insurance companies. A lack of Reading through the tortured corporate his- leadership, which manifested itself in a lack of tories of the departed home insurers, there are performance, drove all these companies away. many rationalizations for why their management We can’t find a more decisive factor: not size, decided to abandon one of the largest and fast- not geography, not distribution, not corporate est-growing products in the insurance industry. structure. Aetna left property and casualty be- Some feared the general volatility. Some cause it wasn’t good at it, and management felt they were too small and geographically thought health would be easier. (Surprise! Not concentrated. Some thought independent agents true.) The Continental failed in all aspects of couldn’t handle the work. Some decried regula- being a property and casualty insurance com- tors. Some said it wasn’t a business for public pany, as did the Home, Fireman’s Fund, the companies. (Most of the dear departed were pub- Royal, General Accident, Commercial Union, lic.) Some mutuals worried that without access Transamerica, Reliance and others. to the public markets, they would not be able to The survivors are a different breed. They compete in the capital-intensive homeowners learned how to incorporate the astonishing flow business. We’re still puzzled by the fear that of data that has fueled the industry in the past Warren Buffett and Berkshire Hathaway have three decades. They learned to efficiently use for homeowners insurance, owning as he does reinsurance, and/or manage their own capital, one of the world’s leading catastrophe reinsur- to deal with the market’s wild volatility. They ance companies. Spooked by Hurricane Andrew, have embraced modern underwriting, including Berkshire’s Geico walked away from the home- Please see ONLY THE STRONG on Page 10

Warning: Property Insurance Report is a confidential, copyrighted newsletter for subscribers only. No part of this publication may be reproduced by any form or means, including photocopying, scan- ning, fax or email, without prior permission of the Publisher. For information call (949) 443-0330. Reprinted With Permission Of The Publisher

November 11, 2019 PROPERTY INSURANCE REPORT Page 3 Homeowners Insurance Groups Market Share 1971-2018 Ranked by 1971 Market Share 1971 1971 Group Market Share 2018 Market Share, Rank or Corporate Change

1) State Farm Mutual 8.0% 18.4%, ranked #1 2) Allstate Insurance 7.0% 8.4%, ranked #2 3) Aetna Life & Casualty 4.0% P&C unit sold to Travelers for $4.4B in 1996 4) Travelers Insurance 3.7% 3.8%, ranked #6 5) Continental Corp. 3.6% Sold to CNA for $1.1B in 1994 6) Hartford Insurance 3.3% 1.0%, ranked #16 7) Home Insurance 2.6% Sold to TVH Acquisition Corp. in 1991 8) INA Corp. (later Cigna) 2.3% Cigna sold P&C to Ace for $3.45B in 1999 9) Safeco Insurance 2.0% Sold to Liberty Mutual for $6.2B in 2008 10) Nationwide Corp 1.9% 3.2%, ranked #8 11) Farmers Insurance 1.8% 5.9%, ranked #5 12) Fireman’s Fund 1.5% Sold personal lines to ACE for $365M in 2014 13) Republic Financial Svcs 1.5% Sold to Amtrust for $233M in 2016; now 0.1%, ranked #108 14) CT General (later Cigna) 1.5% Cigna sold P&C to Ace for $3.45B in 1999 15) Royal Insurance 1.5% UK’s RSA Group departed US in 2007 16) Ohio Casualty 1.4% Sold to Liberty Mutual in 2007 17) American Financial Group 1.4% Exited personal lines starting in the 1990s 18) General Acc (later CGU) 1.4% CGU sold to White Mountains in 2000; ultimately to Amtrust 19) Crum and Forster 1.3% Sold to Xerox in 1982, Fairfax Fin. in 1998, now ranked #222 20) Comm Union (later CGU) 1.3% CGU sold to White Mountains in 2000; ultimately to Amtrust 21) Liberty Mutual 1.2% 6.7%, ranked #3 22) Transamerica Insurance 1.1% Spin-off TIG sold homeowners to Nationwide in 1993 23) Lincoln National 1.1% P&C Sold to Safeco for $2.8B in 1997 24) American General 1.1% Sold to AIG for $23B in 2001 25) America Grp/Hanover 1.0% 0.6%, ranked 26th; once known as Allmerica 26) Andover Insurance 1.0% 0.3%, ranked 42nd 27) USF&G 1.0% Sold to St. Paul for $3.5B in 1998 28) Chubb Group 1.0% 2.9%, ranked 9th; acquired by Ace for $28.3B in 2016 29) St. Paul Group 0.9% Merged with Travelers in 2003 30) Kemper Insurance 0.9% Failed 2010, Unitrin revived in 2012; now 0.3%, ranked #55 31) Unigard Insurance 0.8% Sold to AXA XL in 2007; now 0.1%, ranked #141 32) Reliance Insurance 0.8% Collapsed and liquidated in 2001 33) Sentry Insurance 0.7% Exited most personal lines starting in 2012 34) Auto-Owners 0.7% 1.5% ranked #11 35) Geico 0.7% Stopped underwriting homeowners starting in 1992 36) Ahmanson Insurance 0.6% Stopped underwriting homeowners starting in 1985 37) Westfield Companies 0.6% 0.3%, ranked #54 38) American Int’l Group 0.6% 1.2%, ranked #13 39) USAA 0.6% 6.2%, ranked #4 40) CNA Insurance 0.6% Sold personal lines to Allstate for $1.2B in 1999

Source: AM Best; Property Insurance Report

Page 4 PROPERTY INSURANCE REPORT November 11, 2019 Florida Homeowners Multiperil Insurers Groups Ranked by Total 2018 Direct Premium Written (000) Mkt Loss Mkt Loss Mkt Loss 2018 share Ratio 2017 share Ratio 2016 share Ratio Group Name Premium 2018 2018 Premium 2017 2017 Premium 2016 2016 Universal Insurance Holdings Inc. $939,938 9.8% 98.6% $851,709 9.3% 66.8% $788,089 8.9% 25.9% State Farm Mutual $660,970 6.9% 58.4% $607,896 6.6% 55.1% $581,448 6.6% 29.7% Tower Hill Group $575,258 6.0% 145.5% $600,184 6.5% 80.8% $607,919 6.9% 39.8% Citizens Property Insurance Corp. $489,870 5.1% 75.6% $460,901 5.0% 148.8% $428,724 4.9% 50.4% Federated National Insurance/Frontline $413,198 4.3% 151.3% $439,948 4.8% 90.4% $443,154 5.0% 43.8% Heritage Insurance $380,555 4.0% 91.7% $393,853 4.3% 137.0% $398,206 4.5% 40.8% USAA Insurance Group $378,257 3.9% 93.6% $390,606 4.3% 56.4% $382,149 4.3% 27.1% UPC Insurance $353,797 3.7% 153.6% $314,698 3.4% 107.1% $281,034 3.2% 47.8% Security First Insurance Co. $345,809 3.6% 104.5% $323,234 3.5% 98.8% $294,492 3.3% 63.8% Progressive Corp. $338,733 3.5% 75.7% $317,079 3.5% 49.0% $311,885 3.5% 28.0% Florida Peninsula Holdings LLC $323,542 3.4% 97.7% $308,429 3.4% 115.9% $301,021 3.4% 36.8% HCI Group Inc. $293,540 3.1% 67.7% $303,125 3.3% 90.4% $321,568 3.7% 30.4% First Protective Insurance Co. $292,275 3.0% 164.3% $285,159 3.1% 107.8% $244,862 2.8% 44.1% American International Group $290,838 3.0% 92.5% $281,509 3.1% 100.5% $265,126 3.0% 48.8% St. Johns Insurance Co. $274,603 2.9% 139.4% $237,168 2.6% 108.2% $227,150 2.6% 46.6% Chubb Ltd. $274,280 2.9% 20.8% $268,774 2.9% 113.5% $247,907 2.8% 28.0% American Integrity Ins Co. of Florida $233,736 2.4% 136.1% $211,956 2.3% 95.7% $184,493 2.1% 34.2% People's Trust Insurance Co. $170,328 1.8% 133.4% $212,164 2.3% 126.1% $243,905 2.8% 59.3% Allstate Corp. $164,746 1.7% 158.2% $163,602 1.8% 81.4% $169,397 1.9% 40.5% Olympus Insurance Co. $141,180 1.5% 113.7% $121,510 1.3% 91.2% $116,658 1.3% 46.8% Liberty Mutual $128,000 1.3% 85.0% $127,213 1.4% 95.6% $120,455 1.4% 40.5% Southern Farm Bureau Casualty $118,392 1.2% 192.1% $112,067 1.2% 104.1% $115,089 1.3% 38.5% Auto Club Insurance Assn. (Michigan) $105,903 1.1% 69.3% $102,330 1.1% 76.2% $99,586 1.1% 35.5% American Traditions Insurance Co. $101,868 1.1% 47.1% $53,654 0.6% 156.6% $48,730 0.6% 50.2% Florida Specialty Insurance Co $94,654 1.0% 79.5% $75,873 0.8% 146.2% $27,290 0.3% 33.0% Gulfstream P&C Insurance Co. $93,278 1.0% 306.3% $90,803 1.0% 91.4% $89,770 1.0% 43.1% PURE Group $91,709 1.0% 58.9% $81,753 0.9% 53.4% $74,554 0.9% 32.9% Florida Family Insurance $85,284 0.9% 63.1% $86,884 1.0% 98.2% $88,938 1.0% 57.5% Safepoint Insurance Co. $80,983 0.8% 91.2% $82,612 0.9% 112.3% $70,421 0.8% 36.0% Southern Oak Insurance Co. $79,874 0.8% 82.6% $75,595 0.8% 68.9% $68,729 0.8% 27.9% Southern Fidelity P&C Inc. $78,690 0.8% 146.3% $75,929 0.8% 123.8% $69,401 0.8% 41.6% Markel Corp. $75,513 0.8% 74.3% $24,222 0.3% 129.6% $3,863 0.0% 19.1% Universal Group Inc. $74,369 0.8% 72.8% $70,106 0.8% 78.8% $62,659 0.7% 54.5% Avatar P&C Insurance Co. $73,237 0.8% 77.8% $76,651 0.8% 42.2% $26,523 0.3% 19.3% Farmers Insurance Group $70,204 0.7% 57.1% $65,554 0.7% 136.2% $65,104 0.7% 28.2% Southern Fidelity Insurance Co $68,344 0.7% 106.2% $59,628 0.7% 120.7% $57,006 0.7% 44.7% GeoVera Holdings $66,972 0.7% 72.6% $67,514 0.7% 118.0% $54,112 0.6% 43.6% Ocean Harbor Insurance $65,911 0.7% 130.7% $62,471 0.7% 90.3% $57,789 0.7% 32.0% Nationwide Mutual Group $63,435 0.7% 75.6% $52,623 0.6% 96.4% $48,496 0.6% 41.6% Prepared Insurance Co. $59,406 0.6% 113.5% $51,530 0.6% 109.9% $57,735 0.7% 42.0% Statewide Totals $9,632,577 103.3% $9,174,761 93.0% $8,805,972 39.3% Source: S&P Global Market Intelligence and the Property Insurance Report database. Loss ratio = incurred losses/direct premium earned and does not include dividends or loss adjustment expense.

November 11, 2019 PROPERTY INSURANCE REPORT Page 5 State Market Focus: FLORIDA Continued from Page 1 would not be surprised by further casualties,” in adjusters assigned to claims to minimize confu- the Florida homeowners insurance market, the sion.” Among the Florida Panhandle residents equity research firmDowling & Partners noted furious about the more 17,000 residential and in September. commercial claims that remained open a year af- In a presentation before the Senate Banking ter Hurricane Michael was former House Speak- and Insurance Committee last month, Security er Allan Bense, whose insurer assigned seven First Insurance Chairman and President Locke different adjusters to deal with his claim. Burt, a former state senator, described the inher- Yet in Florida, even on the dreariest day, the ent challenge of the Florida market: A 1-in-100- state’s ethos is a sunny optimism. And that is year storm in Florida would produce a probable why, despite an acute vulnerability to extreme maximum loss of $117 billion, with the potential catastrophic loss, carriers keep writing policies, for $200 billion in losses if a Category 5 storm albeit at higher costs and with tighter underwrit- hit Miami and continued north through the ing restrictions. Case in point: After the recent densely populated areas of Fort Lauderdale and insolvency of Florida Specialty Insurance Co. in Palm Beach – a course predicted for Hurricane the midst of hurricane season, only 21,000 of its Irma in 2017 soon before its path shifted west. more than 90,000 policies landed in the residual Irma’s size and power invited comparisons market, fewer than the 30,000 originally estimat- to Hurricane Andrew, which occurred 25 years ed, according to Michael Peltier, spokesman for earlier and would have cost $50 billion to $60 Citizens Property Insurance Corp. billion dollars in 2017, according to Swiss Re. Even without a major storm so far this hurri- An analysis published last year in the Jour- cane season, which officially ends Nov. 30, “we Please see FLORIDA on Page 6 Florida Property Insurance Profit Margins 10-Year Summary, % of Direct Premiums Earned, With National Averages 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Avg Total Total Total Total Total Total Total Total Total Total Total Line of Business Profit Profit Profit Profit Profit Profit Profit Profit Profit Profit Profit State Homeowner -17.7 19.7 27.8 31.3 33.0 30.2 25.1 23.2 21.4 25.0 21.9

Nat’l Homeowner -2.6 11.8 14.0 13.9 16.5 8.1 -3.8 7.2 5.7 -2.4 6.8 State Fire -1.2 29.9 40.1 39.4 43.9 41.1 41.9 40.6 33.1 34.1 34.3

Nat’l Fire 4.7 11.0 24.2 21.4 26.9 24.7 24.8 27.6 24.5 13.2 21.0

State Comm -16.5 23.5 30.2 33.1 29.0 26.9 28.1 32.4 24.2 28.4 23.9 MP Nat’l Comm 0.6 9.8 14.5 12.4 14.9 9.0 4.1 13.2 11.0 9.2 9.9 MP State Allied -62.0 33.3 47.2 44.9 48.5 44.0 47.7 48.3 48.1 46.1 34.6 Lines Nat’l Allied -37.6 10.6 19.2 15.7 6.3 -19.4 5.7 28.5 21.2 2.8 5.3 Lines Note: Proﬁt calculations are by Property Insurance Report using data from the National Association of Insurance Commissioners. Calculations are estimates, some based on national averages.

Page 6 PROPERTY INSURANCE REPORT November 11, 2019 Florida Commercial Multiperil NonliabilityState Market Insurers Focus: FLORIDA Groups Ranked by 2018 Premiums Written (000) Continued from Page 5 in 2012, Citizens had 421,332 policies as of 2018 Mkt Loss nalGroup of NameInsurance RegulationPremiums showed sharethat a stormRatio Sept. 30. Citizens covered 4% of total insured theMarkel size Corp. of Hurricane Andrew$97,934 would make7.8% 2052.1 % value (TIV) of residential property as of March insurersZurich Insurance insolvent, Group and the Florida$93,322 insurance7.5% 46.2 % 31, down from 23% at the end of 2011 and 15% GuarantyNationwide Mutual Association Group would$86,137 have trouble6.9% fi79.3- % in mid-2004. Over that same period, the market nancingChubb Ltd. losses for them. The $84,731article – written6.8% by% share of Florida-based domestic carriers grew Heritage Insurance $83,237 6.7% 233.7% catastropheAmerican Capital modeler Assr Corp. Karen Clark$75,981, her6.1 colleague% 226.3% from 22% of residential TIV to 72%, according GlenLiberty MutualDaraskevich and Florida$56,559 State 4.5Univer% 54.3- % to an analysis by Citizens. sityAmerican Professor Family Insurance Jack Nicholson$50,967, formerly4.1 %CEO93.8 % “A lot of companies were lucky during Hur- ofTokio the Marine Florida Hurricane Catastrophe$46,691 3.7 Fund% 101.5 % ricane Irma,” Nicholson said in an interview. –Hartford noted Financial the successful Services depopulation$42,673 and3.4 strong% -54.4 % “We would have wiped out 75% of the market claims-payingNational General Holdings ability Corp. of Citizens,$40,478 but expressed3.2% 26.1% if Irma had taken the path we thought it would American International Group $35,208 2.8% 162.0% concernAXA / XL about the strength of$31,865 domestic2.5 insurers% 118.5 % have taken on the Friday before it hit.” takingBankers Insuranceon that risk. $31,360 2.5% 156.1% So far, there have been no additional ratings TravelersAfter Companies reaching Inc. a high of 1.5$30,123 million2.4 policies% 176.5% downgrades or insolvencies, despite the vulner- Tower Hill $27,998 2.2% 228.2% ability of the state to mammoth storms, reliance Aspen Insurance Holdings Ltd. $24,659 2.0% 111.1% by the majority of carriers on more expensive CNA Financial Corp. Florida$24,495 2.0% 55.7% BerkshireCommercial Hathaway MultiperilInc. Nonliability$24,458 2.0 Insurers% 95.5% reinsurance and their inability to turn a profit. AllianzGroups Group Ranked by 2018 Premiums$20,672 Written1.7% (000)469.4% Florida domestic property insurers experi- GuideOne Insurance 2018$18,348 Mkt1.5% 109.4Loss% enced rates of return of -1.9% in 2016, -6.4% Group Name Premiums share Ratio State Farm Mutual $17,166 1.4% 44.6% and -6.3% in 2017 and 2018, and -2.1% for the Markel Corp. $97,934 7.8% 52.1% Frontline Insurance Unlimited Co. $16,404 1.3% 407.5% Zurich Insurance Group $93,322 7.5% 46.2% first half of 2019, according to Burt’s presenta- Hanover Insurance Group $14,983 1.2% 37.0% Nationwide Mutual Group $86,137 6.9% 79.3% tion. This is a rude awakening for much of the Westﬁeld Insurance $12,048 1.0% 3.0% Chubb Ltd. $84,731 6.8% % Auto-Owners Insurance $10,044 0.8% 108.5% Please see FLORIDA on Page 7 Heritage Insurance $83,237 6.7% 233.7% Church Mutual $10,024 0.8% 335.1% American Capital Assr Corp. $75,981 6.1% 226.3% FCCI $9,616 0.8% 41.5% Liberty Mutual $56,559 4.5% 54.3% Florida 2016 Insured Fairfax Financial $8,811 0.7% 24.0% American Family Insurance $50,967 4.1% 93.8% Home Values (HO3 Policy Form) Southern Farm Bureau Casualty $8,583 0.7% 116.0% Tokio Marine $46,691 3.7% 101.5% Great American Insurance $7,900 0.6% 27.8% Home National Hartford Financial Services $42,673 3.4% -54.4% Centauri Insurance $7,395 0.6% 122.7% Value Florida Average National General Holdings Corp. $40,478 3.2% 26.1% STARR Cos. $6,217 0.5% 55.1% <$50K 0.0% 0.2% American International Group $35,208 2.8% 162.0% Alleghany $5,715 0.5% 31.9% AXA / XL $31,865 2.5% 118.5% $50-75K 0.1% 0.5% CUNA Mutual $5,499 0.4% 312.4% Bankers Insurance $31,360 2.5% 156.1% $75-100K 0.7% 1.6% Munich Re $5,395 0.4% 113.3% Travelers Companies Inc. $30,123 2.4% 176.5% $100-125K 3.5% 4.2% Capacity Insurance Co. $4,729 0.4% 30.3% Tower Hill $27,998 2.2% 228.2% Amerisure $4,712 0.4% 39.7% $125-150K 8.2% 7.0% Aspen Insurance Holdings Ltd. $24,659 2.0% 111.1% Conifer Holdings Inc. $4,573 0.4% 44.5% $150-175K 12.0% 9.3% CNA Financial Corp. $24,495 2.0% 55.7% IAT Insurance $4,393 0.4% 163.4% Berkshire Hathaway Inc. $24,458 2.0% 95.5% $175-200K 12.9% 9.9% Farmers Insurance Group $4,158 0.3% -53.1% Allianz Group $20,672 1.7% 469.4% $200-300K 38.3% 32.6% Global Indemnity $3,851 0.3% 20.3% GuideOne Insurance $18,348 1.5% 109.4% $300-400K 14.0% 17.3% Universal Group Inc. $3,389 0.3% 102.9% State Farm Mutual $17,166 1.4% 44.6% $400-500K 4.9% 8.1% FrontlineStatewide Insurance Totals Unlimited Co. $1,249,018$16,404 1.3% 100.7407.5% >$500K 5.3% 9.2% Hanover Insurance Group $14,983 1.2% 37.0% Source: S&P Global Market Intelligence and the Total exposures 2,803,637 48,948,950 WestﬁeldProperty Insurance Insurance Report database. $12,048 1.0% 3.0% Loss ratio = incurred losses/direct premium earned and does not Auto-Ownersinclude dividends Insurance or loss adjustment expense.$10,044 0.8% 108.5% Source: NAIC, Property Insurance Report Church Mutual $10,024 0.8% 335.1% FCCIWarning: Property Insurance $9,616Report is0.8 a% confidential,41.5% copyrighted newsletter for subscribers only. Fairfax No partFinancial of this publication $8,811may be reproduced0.7% 24.0% by any form or means, including photocopying, scan- ning, fax or email, without prior permission of the Publisher. For information call (949) 443-0330. Southern Farm Bureau Casualty $8,583 0.7% 116.0% Great American Insurance $7,900 0.6% 27.8% Centauri Insurance $7,395 0.6% 122.7% STARR Cos. $6,217 0.5% 55.1% Alleghany $5,715 0.5% 31.9% CUNA Mutual $5,499 0.4% 312.4% Munich Re $5,395 0.4% 113.3% Capacity Insurance Co. $4,729 0.4% 30.3% Amerisure $4,712 0.4% 39.7% Conifer Holdings Inc. $4,573 0.4% 44.5% IAT Insurance $4,393 0.4% 163.4% Farmers Insurance Group $4,158 0.3% -53.1% Global Indemnity $3,851 0.3% 20.3% Universal Group Inc. $3,389 0.3% 102.9%

Statewide Totals $1,249,018 100.7% Source: S&P Global Market Intelligence and the Property Insurance Report database. Loss ratio = incurred losses/direct premium earned and does not include dividends or loss adjustment expense. Reprinted With Permission Of The Publisher

November 11, 2019 PROPERTY INSURANCE REPORT Page 7 Florida State Market Focus: FLORIDAFire Insurers Continued from Page 6 ricaneGroups Michael, Ranked which by 2018 hit Premiumsthe Florida Written Panhandle (000) state’s newer crop of home insurers. For the on Oct. 10, 2018, has produced2018 costlierMkt claims.Loss Group Name Premiums share Ratio decade ended 2017, the homeowners insurance AsAssurant of Sept. 27, Hurricane Michael$90,333 generated7.1% 15.4 % industry in Florida experienced an average annu- 149,448American International claims – Group two-third of$83,219 which are6.6 %residen70.6%- al profit margin of 21.9%, according aProperty tialSecurity property First Insurance claims Co. – with more$76,592 than $7.16.1% billion110.3% Insurance Report calculation based National As- inLiberty estimated Mutual insured losses, according$53,671 4.2to% an anal0.5%- sociation of Insurance Commissioners data. ysisFEDNAT by the Florida Office of$51,940 Insurance4.1% Regu169.0-% People's Trust Insurance Co. $49,322 3.9% 63.9% Rising reinsurance rates after years of a soft lation. Michael’s average claim cost is $44,831, Zurich Insurance Group $49,183 3.9% 31.2% market complicate the situation. Residential comparedArch Capital with $10,800 for Irma$48,143 claims.3.8% 17.5% property insurers statewide spend 49% of premi- SCORUnder Florida law, homeowners$34,994 have2.8% three121.4 % um on reinsurance. “Recent reinsurance pricing yearsMarkel Corp.to file claims. If recent$34,843 experience2.8% is 95.4a % increases of 15% to 25% [or more] will only guide,STARR Cos. insurers will see “loss $33,818creep,” a2.7 growing% 94.9% add to the pressure, and it could be an ongoing problem,HCI Group Inc. most obvious in Hurricane$33,534 Irma,2.7% in67.0 % AXA / XL $32,538 2.6% 59.6% ‘squeeze,’” with thinly capitalized private spe- whichAmer Integrity expected Ins Co. lossesof Florida rise over$30,142 time. 2.4% 144.2% cialists most at risk, Dowling noted. QBE Please see$30,007 FLORIDA2.4 on% Page50.9% 8 Demotech, which rates more than 50 Florida Southern Fidelity Insurance Co $28,196 2.2% 113.4% property insurers, highlighted the risk of rising FM Global $27,385 2.2% 7.8% reinsurance costs in its review of Florida market Southern Fidelity P&C Inc.Florida$25,547 2.0% 186.6% UPC Insurance $25,133 2.0% 197.8% published in February. “Should the cost of ca- Fire Insurers ChubbGroups Ltd. Ranked by 2018 Premiums$21,758 Written1.7% (000)90.6% tastrophe reinsurance increase suddenly or mark- Citizens Property Insurance Corp. $19,898 1.6% 5.9% 2018 Mkt Loss edly, the business models of several insurers will GroupUniversal Name Group Inc. Premiums$19,716 share1.6% Ratio43.2% collide with a financial reality that impinges on AssurantSouthern Oak Insurance Co. $90,333$19,376 7.11.5% 15.488.5% their ability to sustain the Financial Stability Rat- AmericanCapitol Preferred International Insurance Group Co $83,219$17,942 6.61.4% 145.970.6% SecurityFirst Protective First Insurance Insurance Co. Co. $76,592$17,846 6.11.4% 110.3166.5% ing currently assigned,” Demotech said. Progressive Corp. $17,531 1.4% 14.1% While rising reinsurance costs are pushing Liberty Mutual $53,671 4.2% 0.5% FEDNATAlleghany Corp. $51,940$15,942 4.11.3% 169.07.1% up homeowners insurance rates, “the good news People'sBerkshire Trust Hathaway Insurance Inc. Co. $49,322$15,652 3.91.2% 63.945.6% is reinsurance is still available,” Insurance Com- ZurichFlorida Insurance Family Insurance Group $49,183$15,616 3.91.2% 31.247.7% missioner David Altmaier told lawmakers. ArchTravelers Capital Companies Inc. $48,143$15,501 3.81.2% 121.317.5% Over the last three years, the global rein- SCORNationwide Mutual Group $34,994$15,327 2.81.2% 121.4221.3% Allianz Group $14,662 1.2% 107.8% surance market – flush with alternative capital Markel Corp. $34,843 2.8% 95.4% STARRTower Hill Cos. $33,818$12,813 2.71.0% 94.916.7% – has demonstrated that it has the “stomach for HCIUniversal Group Insurance Inc. Holdings Inc. $33,534$10,956 2.70.9% 67.039.3% catastrophe losses,” Altmaier added. AXAAvatar / XL P&C Insurance Co. $32,538$10,502 2.60.8% 105.059.6% Indeed, reinsurers raising rates may be more AmerAspen Integrity Insurance Ins Holdings Co. of Florida Ltd. $30,142$9,574 2.40.8% 144.231.5% concerned about issue of “social inflation,” driv- QBESompo Holdings Inc. $30,007$8,774 2.40.7% 50.918.8% Munich Re $8,298 0.7% 22.1% en by the propensity for more attorney involve- Southern Fidelity Insurance Co $28,196 2.2% 113.4% FMGlobal Global Indemnity $27,385$7,978 2.20.6% 16.67.8% ment in claims and larger jury verdicts. Insurers SouthernAXIS Fidelity P&C Inc. $25,547$7,408 2.00.6% 186.6-4.7% have seen this play out in the non-weather water UPCSafepoint Insurance Insurance Co. $25,133$7,374 2.00.6% 197.839.3% claims that dominated the AOB crisis and hurri- ChubbRLI Ltd. $21,758$7,063 1.70.6% 90.628.7% cane claims from Irma and Michael. CitizensTokio Marine Property Insurance Corp. $19,898$6,788 1.60.5% 73.05.9% While Hurricane Irma affected a much larger UniversalStatewide Group Inc.Totals $1,265,663$19,716 1.6% 43.274.5% area of the state – producing more than 1 million SouthernSource: OakS&P InsuranceGlobal Market Co. Intelligence$19,376 and 1.5% 88.5% Capitolthe Property Preferred Insurance Insurance Report Co database.$17,942 1.4% 145.9% claims at a cost of $10.8 billion – in 2017, Hur- Loss ratio = incurred losses/direct premium earned and does not Firstinclude Protective dividends Insurance or loss adjustment Co. expense.$17,846 1.4% 166.5% Progressive Corp. $17,531 1.4% 14.1% Warning: Property Insurance Report is a confidential,Alleghany copyrighted Corp. newsletter for$15,942 subscribers1.3% only.7.1% No part of this publication may be reproduced by anyBerkshire form Hathaway or means, Inc. including photocopying,$15,652 1.2% scan45.6%- ning, fax or email, without prior permission of the Publisher. For information call (949) 443-0330. Florida Family Insurance $15,616 1.2% 47.7% Travelers Companies Inc. $15,501 1.2% 121.3% Nationwide Mutual Group $15,327 1.2% 221.3% Allianz Group $14,662 1.2% 107.8% Tower Hill $12,813 1.0% 16.7% Universal Insurance Holdings Inc. $10,956 0.9% 39.3% Avatar P&C Insurance Co. $10,502 0.8% 105.0% Aspen Insurance Holdings Ltd. $9,574 0.8% 31.5% Sompo Holdings Inc. $8,774 0.7% 18.8% Munich Re $8,298 0.7% 22.1% Global Indemnity $7,978 0.6% 16.6% AXIS $7,408 0.6% -4.7% Safepoint Insurance Co. $7,374 0.6% 39.3% RLI $7,063 0.6% 28.7% Tokio Marine $6,788 0.5% 73.0%

Statewide Totals $1,265,663 74.5% Source: S&P Global Market Intelligence and the Property Insurance Report database. Loss ratio = incurred losses/direct premium earned and does not include dividends or loss adjustment expense. Reprinted With Permission Of The Publisher

Page 8 PROPERTY INSURANCE REPORT November 11, 2019 Florida Allied Lines StateInsurers Market Focus: FLORIDA ContinuedGroups fromRanked Page by 7 2018 Premiums Written (000) the policyholder’s duties, such as cooperating in House Bill 7065, which took2018 effect Mkt July Loss1, a claims investigation, sitting for examinations Group Name Premiums share Ratio aimedCitizens toProperty reduce Insurance the threat Corp. of$358,648 assignment14.7 %of ben25.7%- under oath by the insurance company and partic- efitsUPC Insurance litigation, though insurers$270,667 believe11.1 that% 43.0with%- ipating in appraisals. outAssurant additional reforms, the litigation$216,251 cost8.9% trends87.5% “Within weeks of the effective date, the num- willAmerican continue International with Group growth in$151,796 first-party6.2 lawsuits.% 39.5% ber of AOB claims went from the thousands to QBEKey Insurance provisions Group Ltd. in the AOB$110,016 legislation4.5% ended53.9% hundreds, and then from hundreds to dozens,” “one-way”Chubb Ltd. attorney fees for $103,922assignees;4.3 allow% 26.1 % Zurich Insurance Group $103,768 4.3% 372.1% said Michael Carlson, president and CEO of insurersEverest Re to sell lower-cost policies$85,580 that3.5 prohibit% 56.7 % the Personal Insurance Federation of Florida, orWeston restrict Insurance the assignmentCo. of benefits$67,941 (as2.8 %long71.9 as% which represents several large national carriers. theySwiss alsoRe sell a policy that allows$61,815 for it);2.5 %require-19.9% “It gives a good sense that unscrupulous actors thatUniversal the Insuranceassignee Holdings give Inc.the insurer$59,399 notice2.4 and% 162.1 % have largely abandoned the practice.” makeBerkshire a demandHathaway Inc. prior to the filing$55,670 of a2.3 lawsuit;% 124.0 % But insurers in Florida contend that when Progressive Corp. $54,072 2.2% 93.8% andAmerican mandate Integrity that Ins Co. assignees of Florida comply$52,538 with2.2 %some99.0 of% one avenue of claims litigation closes, a cottage Safepoint Insurance Co. $51,377 2.1% 48.6% industry of public adjusters, contractors and law- Nationwide Mutual Group Florida$46,073 1.9% 220.9% yers will find another. FM Global Allied Lines Insurers$43,707 1.8% % “I have my members telling me just last week SompoGroups Holdings Ranked Inc. by 2018 Premiums$42,645 Written1.7% 161.8(000)% that Irma claims are accelerating. They are get- Alleghany Corp. $38,072 1.6% 114.0% 2018 Mkt Loss ting hundreds of new Irma claims per month for GroupHeritage Name Insurance Premiums$34,673 share1.4% 101.4Ratio% Travelers Companies Inc. $30,267 1.2% 15.7% a storm that took place two years ago and more Citizens Property Insurance Corp. $358,648 14.7% 25.7% Tower Hill $26,324 1.1% 225.5% UPC Insurance $270,667 11.1% 43.0% everyday,” said William Stander, executive AXIS $24,340 1.0% 222.6% Assurant $216,251 8.9% 87.5% director of the Florida Property and Casualty RLI $22,098 0.9% 208.3% American International Group $151,796 6.2% 39.5% Association, which represents 12 Florida-based Argo $20,399 0.8% 229.4% QBE Insurance Group Ltd. $110,016 4.5% 53.9% St. Johns Insurance Co. $19,852 0.8% 158.0% home insurers. “How can that possibly be?” Chubb Ltd. $103,922 4.3% 26.1% Markel Corp. $16,129 0.7% 337.2% Citing data from the Florida Department Zurich Insurance Group $103,768 4.3% 372.1% AXA / XL $15,390 0.6% % Everest Re $85,580 3.5% 56.7% of Financial Services, Burt said the number of Enstar $14,302 0.6% 137.4% Weston Insurance Co. $67,941 2.8% 71.9% lawsuits against personal residential insurance HCI Group Inc. $12,717 0.5% 4.2% Swiss Re $61,815 2.5% -19.9% companies in Florida has tripled since 2013 and Olympus Insurance Co. $12,600 0.5% 181.2% Universal Insurance Holdings Inc. $59,399 2.4% 162.1% doubled since 2016, with nearly 100,000 law- CNA Financial Corp. $12,315 0.5% 338.3% Berkshire Hathaway Inc. $55,670 2.3% 124.0% USAA Insurance Group $11,941 0.5% 230.0% suits filed this year. Many of this year’s lawsuits Progressive Corp. $54,072 2.2% 93.8% Ocean Harbor Insurance $11,113 0.5% 283.1% relate to Hurricane Michael. “What is driving American Integrity Ins Co. of Florida $52,538 2.2% 99.0% USPlate Glass Insurance Co. $10,946 0.5% 1.6% Safepoint Insurance Co. $51,377 2.1% 48.6% that is, in our view, the fact that attorneys can get GuideOne Insurance $10,302 0.4% 43.8% Nationwide Mutual Group $46,073 1.9% 220.9% an unlimited amount of money for suing a prop- FCCI $9,967 0.4% 24.9% FM Global $43,707 1.8% na % erty insurance company in Florida,” Burt said, Anchor Insurance $9,226 0.4% 103.5% Sompo Holdings Inc. $42,645 1.7% 161.8% Gulfstream P&C Insurance Co. $8,464 0.4% 270.7% describing it as a “gold rush.” Alleghany Corp. $38,072 1.6% 114.0% United Fire Group Inc. $7,936 0.3% 14.2% Policyholder attorney Amy Boggs begged to Heritage Insurance $34,673 1.4% 101.4% Fairfax Financial $7,604 0.3% 199.8% Travelers Companies Inc. $30,267 1.2% 15.7% differ, telling lawmakers that there wouldn’t be Aspen Insurance Holdings Ltd. $7,395 0.3% 336.3% Tower Hill $26,324 1.1% 225.5% so many lawsuits if insurers didn’t deny, delay GeoVera Holdings $7,064 0.3% 84.7% AXIS $24,340 1.0% 222.6% and underpay claims by hundreds of thousands RLI Statewide Totals $2,444,425$22,098 0.9% 208.3108.4% of dollars. “The underpayments I see reek of ArgoSource: S&P Global Market Intelligence$20,399 and 0.8% 229.4% fraud on the other side,” she told lawmakers. St.the Johns Property Insurance Insurance Co. Report database.$19,852 0.8% 158.0% Loss ratio = incurred losses/direct premium earned and does not Markelinclude Corp. dividends or loss adjustment expense.$16,129 0.7% 337.2% Please see FLORIDA on Page 9 AXA / XL $15,390 0.6% % EnstarWarning: Property Insurance$14,302 Report is0.6 a% confidential,137.4% copyrighted newsletter for subscribers only. No part of this publication may be reproduced by any form or means, including photocopying, scan- HCIning, Group fax Inc. or email, without $12,717prior permission0.5% 4.2 of% the Publisher. For information call (949) 443-0330. Olympus Insurance Co. $12,600 0.5% 181.2% CNA Financial Corp. $12,315 0.5% 338.3% USAA Insurance Group $11,941 0.5% 230.0% Ocean Harbor Insurance $11,113 0.5% 283.1% USPlate Glass Insurance Co. $10,946 0.5% 1.6% GuideOne Insurance $10,302 0.4% 43.8% FCCI $9,967 0.4% 24.9% Anchor Insurance $9,226 0.4% 103.5% Gulfstream P&C Insurance Co. $8,464 0.4% 270.7% United Fire Group Inc. $7,936 0.3% 14.2% Fairfax Financial $7,604 0.3% 199.8% Aspen Insurance Holdings Ltd. $7,395 0.3% 336.3% GeoVera Holdings $7,064 0.3% 84.7%

Statewide Totals $2,444,425 108.4% Source: S&P Global Market Intelligence and the Property Insurance Report database. Loss ratio = incurred losses/direct premium earned and does not include dividends or loss adjustment expense. Reprinted With Permission Of The Publisher

November 11, 2019 PROPERTY INSURANCE REPORT Page 9

State Market Focus: FLORIDA Continued from Page 8 Geraci thinks surplus lines homeowners “Far from a gold rush, this is a crying shame.” insurance will continue to grow as the market Wherever the blame for the increasing claims tightens and focuses more on profitability. litigation lies, the consequence is a more difficult “The entire industry has been in love with market for customers buying home insurance. writing premium and hasn’t thought about being “Rates are going to go up between 20% and profitable. Now almost every carrier we talk to is 30% next year, and people are going to find it saying, ‘we have to be profitable,’” he said. “The increasingly difficult to get insurance,” Burt told wheels are in motion for it to be a firm market, lawmakers. He identified lists of companies shut- and so I think we will see the E&S market take a ting down new business in the tri-county area of bigger part.” South Florida and imposing new underwriting Surplus lines carriers are not immune to the restrictions in the Orlando and Tampa areas. trends, and they, too, are tightening their under- Carriers are tightening underwriting for homes writing and raising rates. “In September and Oc- with two or more water losses, shingle roofs over tober, we were hit with major rate increases from 15 years old, replacement cost below $250,000, Scottsdale, Lexington and Lloyd’s,” said Adri- people with poor credit, ZIP codes with high anna Rivera, personal lines manager for RPS claim frequency or high exposure to wind loss, Florida. Lexington, AIG’s surplus lines unit, is homes built before 1995 and those with limited now requiring a 10% deductible for homes it wind mitigation features. writes insured for less than $500,000. “We hav- One sign of the shifting market dynamic: en’t seen a 10% deductible since the late 1990s,” a greater role for surplus lines carriers in the she said. “We’ve reverted 20 years.” homeowners insurance market. Liberty Mutual’s Ironshore subsidiary is Though still a small part of the market, sur- exiting the high net worth market in every state plus lines has grown substantially over the last where it writes, leaving brokers in search of re- decade, in conjunction with the depopulation of placement coverage as of Oct. 3. “The AIGs and Citizens. In 2018, surplus lines represented 6.8% Chubbs won’t do $1 million [homes] with wind, of total personal and commercial residential so it’s going to flow back into the E&S market at property insurance premium in Florida, up from increased rates that are not what these insureds 3% in 2009, according to an analysis by Citizens. are used to,” Rivera said. Personal homeowners insurance has been There is a sense among the Florida domestics the fastest growing line of business for surplus that surplus lines carriers are writing business lines carriers in Florida, said Albert Geraci, that could find coverage in the admitted market president of the Florida unit of wholesale broker – something the legislature made easier when it Risk Placement Services (RPS). Surplus lines passed a bill this year requiring just one rejection insurers wrote 41,693 homeowners policies in by an admitted insurer for houses insured for at the third quarter of this year, up 45% from the least $700,000, down from $1 million. At lower same period in 2016, though this year the growth values, agents must have three rejections before in HO-3 – the most common homeowners insur- placing a policy in the E&S market. ance policy form – has “stabilized a bit more to “We are definitely seeing an emboldened the overall market trends,” according to Kim- E&S market looking at residential property and berly Mask, public information coordinator for looking further down in values,” Stander said. the Florida Surplus Lines Service Office. Please see FLORIDA on Page 10

Page 10 PROPERTY INSURANCE REPORT November 11, 2019 Focus: NEVADA Focus: FLORIDA PROPERTY INSURANCE REPORT Continued from Page 9 Established 1994 “In the past, the E&S market was reserved for Brian P. Sullivan, Editor properties that were truly having trouble finding Telephone: (949) 443-0330 coverage in the admitted market. Now we are Email: [email protected] seeing the E&S market directly competing.” Leslie Werstein Hann, Managing Editor Lawmakers expressed concern that regula- Phone: (908) 310-7129 tors lack the ability to address claims handling Email: [email protected] problems by surplus lines carriers. Altmaier said Ed McMenamin, Senior Editor regulators were looking more carefully at open Phone: ‭(217) 201-3956‬ Email: [email protected] claims and complaints to identify any patterns of wrongdoing and to make recommendations for Contributing Writer: Jeffrey May closing regulatory gaps. Subscription Information: (800) 633-4931 Insurers are concerned the trial bar will use On the Web: www.riskinformation.com Property Insurance Report, © 2019, published bi-weekly, 24 the Hurricane Michael claims experience to push times a year, by Risk Information Inc., 33765 Magellan Isle, Dana for legislative changes that will drive costs up Point, CA 92629. It is a violation of federal law to photocopy or reproduce any part of this publication without first obtaining further, Carlson said. One example would allow permission from the Publisher. ISSN: 1084-2950 policyholder lawsuits, in addition to the current Subscription Rate: $827 per year by mail, regulatory sanctions, against insurers accused of or contact the Editor for information on violating the 90-day prompt pay law. enterprise-wide electronic delivery. Insurers also fear changes that would broaden Florida’s valued policy law in a way ONLY THE STRONG Continued from Page 2 that would force them to pay total losses for by-peril rating. They have, or soon will have, flood-damaged homes. The wind vs. water issue modern infrastructure software. They develop is a significant one in Michael claims. Making or license advanced catastrophe models. They insurers responsible for water losses for which are working hard to find better ways to handle they have not collected premium – “would be a claims and ensure property owners repair and big problem,” Carlson said. rebuild successfully (a still-elusive goal). They According to a news report, Patronis is advo- have found ways to attract talent to a business cating a “one-size-fits-all” policy to cover both that is not always at the top of the list of poten- wind and water, though details were unavailable. tial jobs for the smartest college graduates. Several insurers, including Security First and in- In short, the market survivors are good insur- surers focused on the high net worth market, of- ance companies, embracing underwriting, pric- fer private flood insurance that works with their ing, claims management, capital management, homeowners coverage, helping to eliminate wind marketing and operations. You can be big or and water disputes. small, single state, regional or national, distrib- Florida is one of the largest and fastest ute through captive agents, independent agents, growing private flood insurance markets. As of over the phone, through the internet or all of the March 31, Florida has 29 eligible private flood above. You can have a big advertising budget. insurance writers, with more pending entry, and You can rely solely on word of mouth. 62,000 private flood insurance policies in force, Indeed, history shows almost any kind of a a 169% increase over June 2017, according to property insurance business can succeed, as long PIR state regulators. PIR as it is the smart kind.