United Property & Casualty Insurance (United P&C) of St. Petersburg has filed plans to withdraw from operations in Florida, Louisiana, and Texas, and plans to file a withdrawal plan in New York, according to its parent company, United Insurance Holdings Corp. (UPC).
Demotech downgraded United P&C’s financial stability rating from “A” exceptional to “M” moderate on August 1, and they have now received notice that their rating will be dropped entirely.
“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.
According to the company, they have received approval to withdraw in Louisiana but are still awaiting approval in Florida and Texas.
A study commissioned by the Senate Banking and Insurance Committee, titled ‘Florida’s P&C Insurance Market: Spiraling Toward Collapse,’ by Guy Fraker, discovered that UPC was one of the top companies for the largest net financial losses in 2019.
It had 35,544 underwriting losses and a net income loss of 20,828. UPC had approximately 5.3% of the Florida market in 2019 with 761,039 policies. In addition, they had 1,405 pending lawsuits, an increase of 80% from 2016.
United P&C was also the only company to opt into the Florida Office of Insurance Regulation’s (OIR) temporary market stabilization reorganization, which was established on July 27.
According to an OIR letter, OIR established the type of back-up reinsurance program through Citizens Property Insurance Corps. after Demotech informed nearly two dozen insurance companies that their ratings would be downgraded. The program’s goal was to allow companies to continue writing policies in the state while also keeping homeowners’ policies compliant with federal mortgage loan requirements.
United P&C is the latest company to exit the Florida homeowners insurance market. Bankers, also based in St. Petersburg, recently announced that they had removed their Demotech rating and would no longer provide homeowners policies in the state.
Demotech revoked Weston Property Insurance’s rating the same week, and OIR placed the company in receivership. It was the fifth insurance company in Florida to go bankrupt this year, forcing more than a million homeowners to seek coverage from Citizens, the state-backed insurer of last resort.
Mark Friedlander, a spokesman for the Insurance Information Institute, tells ABC Action News that UPC may also be in receivership.
“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.”