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United P&C to pull out of Florida homeowners insurance market

United Insurance Holdings Corp. announces plans to pull out of homeowners insurance market in Florida, Louisiana, Texas, and New York
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Posted at 3:08 PM, Aug 25, 2022
and last updated 2022-08-25 15:34:28-04

ST PETERSBURG, Fla. — St. Petersburg-based United Property & Casualty Insurance (United P&C) has filed plans to withdraw operations in Florida, Louisiana and Texas and intends to file a plan of withdrawal in New York, its parent company United Insurance Holdings Corp. (UPC) announced Thursday.

United P&C had its financial stability rating downgraded by Demotech from an "A" exceptional to an "M" moderate on August 1, and now said they received notice that their rating is going to be dropped altogether.

"Due to significant uncertainty around the future availability of reinsurance for our personal lines business, I believe placing United P&C into an orderly run-off is prudent and necessary to protect the Company and its policyholders. The Company is actively pursuing opportunities to leverage our people, technology, and other capabilities. Our commercial business continues to perform well and provides the Company a stable platform to build new engines of growth and profitability,” Dan Peed, Chairman & CEO said in the release.

The company stated that they have received approval to withdraw in Louisiana, but are still pending in Florida and Texas.

A study by Guy Fraker called 'Florida’s P&C Insurance Market: Spiraling Toward Collapse', commissioned by the Senate Banking and Insurance Committee, found that UPC was one of the top companies for the largest net financial losses in 2019.

Its underwriting losses were 35,544, and its net income loss was 20,828. In 2019, UPC had about 5.3% of the Florida market with 761,039 policies. They also had 1,405 pending lawsuits, an 80% increase from 2016.

United P&C was also the only company so far to opt into the Florida Office of Insurance Regulation's (OIR) temporary market stabilization rearrangement created on July 27.

OIR created the sort of back-up reinsurance program through Citizens Property Insurance Corps. after Demotech notified nearly two dozen insurance companies that their ratings were going to be downgraded, according to an OIR letter. Their goal with this program was to allow the companies to continue writing policies in the state and keep homeowners policies in compliance with federal mortgage loan requirements.

United P&C follows several companies to pull out of the Florida homeowners insurance market. Most recently, Bankers, also based in St. Petersburg, announced the removed their rating from Demotech and would no longer be providing homeowners policies in the state.

In the same week, Weston Property Insurance had its rating withdrawn by Demotech and was then placed into receivership by OIR. It was the 5th insurance company operating in Florida to enter receivership this year, now driving more than a million homeowners to get insurance through the state-backed insurer of last resort— Citizens.

Spokesman for the Insurance Information Institute, Mark Friedlander, tells ABC Action News UPC could be headed toward receivership as well.

“It appears we are on the verge of a sixth Florida property insurer insolvency this year, and the third failure since the legislative special session was held in late May. This is another sign that Florida’s home insurance market continues to deteriorate with no signs of stabilization. While the company’s announcement does not reference Florida’s market stabilization program, it appears the state’s plans to use Citizens as a financial backstop for downgraded insurers was not accepted by federal mortgage servicers Fannie Mae and Freddie Mac. UPC had previously been downgraded from A (Exceptional) to M (Moderate) by Demotech before having their financial stability rating withdrawn today. Typically, the next step after a ratings withdrawal is for the insurance regulator to declare a company insolvent and begin legal proceedings of receivership and liquidation," Friedlander said.

In a later statement, Friedlander added, "At an investor presentation in May, UPC announced it had approximately 180,000 Florida policyholders, which would make it one of the largest home insurers in Florida.”

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