Peter Schorsch
United Property & Casualty Insurance Co. has entered receivership after Hurricane Ian leveled its balance sheet.
UPC carries more than 150,000 policies in Florida and previously announced non-renewals for all of them. Many of the policies in its portfolio are for properties in Southwest Florida, which was battered by Ian in late September.
The insurer was slow to pay Ian claims and both policyholders and insurance agents report the company had not been returning calls or emails asking for updates on storm-related claims.
After deadlines to pay policyholders came and went, interim Insurance Commissioner Michael Yaworksy formally asked Chief Financial Officer Jimmy Patronis to begin the process of placing the insurer into receivership. UPC consented to the move.
Ian was the final blow for UPC. The insurer previously anticipated about $36 million in losses from the storm, but it revised its estimates late last month, reporting an additional $140 million in losses.
According to a statement issued by the company earlier this month, about 25,000 policyholders filed Ian-related claims.
“For more than two years, UPC has made every effort possible to return to profitability, remain a going concern, pay covered claims and handle claims with professionalism, while abiding by all regulations,” UPC spokeswoman Jenn Poggie said. “UPC was heavily concentrated in the Southwest Florida region and received approximately 25,000 claims from Hurricane Ian with a gross estimated loss of over $1 billion. UPC’s outside actuaries determined that its losses would exceed the prior estimate of gross losses, which resulted in UPC exceeding its catastrophe reinsurance coverage.”
UPC had been teetering for years. The company has reported more than $250 million in losses since 2020, including a $71 million loss in the third quarter of 2022.
UPC is also the only carrier to announce that it has essentially exhausted its reinsurance coverage related to Ian. According to an industry source and public information, Florida carriers are expecting Ian losses to exhaust 50% of their reinsurance coverage. UPC stands alone in its announcement that its reinsurance coverage is completely exhausted.
Additionally, UPC had its stability rating withdrawn by Demotech, a consulting company that rates the financial health of insurance companies. Historically, a withdrawn rating would place mortgage holders out of compliance with many lenders, including industry giants Fannie Mae and Freddie Mac.
Those two mortgage lenders temporarily agreed to accept policies from lower-rated insurers through a plan that uses the state-backed Citizens Property Insurance Corp. as a backstop. That plan is currently set to expire on May 31.
Amid the company’s financial woes, regulators approved a plan that saw Slide Insurance take over 72,000 UPC policies. The company had about 135,000 policies in the state when the deal was approved on Feb. 1, leaving it with approximately 63,000 policies after Slide swooped in.
Despite struggling to pay Ian claims, UPC continued to pay bonuses to top executives through 2022 — documents show President and CFO Bradford Martzwill get a $283,500 retention bonus; COO and Vice President Chris Griffith will receive $207,900; and interim general counsel and corporate secretary Brooke Adler will receive $170,100.
UPC is the sixth property insurer to enter receivership in the past year, with others including St. Johns Insurance Company and Avatar Property & Casualty, despite lawmakers’ efforts to stabilize the industry.
The losses reported by failing property insurance companies are ultimately passed on to Floridians through assessments collected on other insurance policies.
A year ago, the Florida Insurance Guaranty Association approved a 1.3% assessment to cover St. Johns’ losses — about $190 million — after it entered receivership. In August, FIGA voted to extend an additional 0.7% assessment to cover losses for Southern Fidelity Insurance Co. and Weston Property & Casualty Insurance, both of which declared insolvency last summer.
