Floridian Monarch’s Idalia claims count less than 50 so far: Steve Hale

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Floridian insurer Monarch’s claims from Hurricane Idalia are coming in lower than expected, shaking out to roughly 50 claims so far, compared to some 2,000 claims at the same time post-landfall from Hurricane Ian.

In an interview with this publication, Hale Partnership CEO Steve Hale added that the policies in the area where Idalia hit represent less than 5% of the carrier’s book.

Hale concurred with others in the Florida market that Idalia is likely to be a retention event for the industry. With claim frequency coming in lower than expected for many insurers, they may ultimately revise their loss estimates down.

Slide CEO Bruce Lucas also said on September 1 that the company had received less than 100 claims so far from Idalia, compared to an expected 500-1,000 at this point.

The modelling firms have also all put out industry loss estimates which coalesce in the low-to-mid single digit range.

Last year, North Carolina-based distressed investment specialist Hale agreed to put $17.5mn into Monarch National for a 70% ownership position, contingent on a restructuring that cancelled a major block of policies written across FedNat subsidiaries and transferred a subset of FedNat Insurance Company policies to the surviving entity Monarch.

In August, the investment firm took over the remaining 30% and is now the full 100% owner of Monarch, Hale said.

He noted that the company is still focused on growing both inorganically and organically, along with ramping up its newly licensed reinsurance arm.

As expected, the company completed a takeout of 17,000 Citizens policies, representing a roughly 94% uptake rate. The uptake represents around $55mn to $60mn of premium.

“That was a 30% premium jump for Monarch, which is exciting for us as we continue to grow,” Hale said.

The executive added that Monarch has applied for a consent order to take out an additional 10,000 policies in October and 25,000 policies in November.

“In June, we were standing at the water fountain drinking, and there was no line behind us, but now there’s a lot of people in line and a lot of elbows around for the policies out there for October and November,” the CEO said.

“Obviously, that’s a more competitive time of year so it’ll be interesting to watch the allocations that we get once that actually comes.”

The executive reiterated that Monarch’s goal is to have “the best 2%” of the Florida market, with that desire extending to employees and agents in addition to policyholders. The company’s current market share is between 1% and 2% in the state.

With that 2% in mind, Hale estimated the goal would be roughly 110,000 policies and, currently, the company has around 80,000 policies in force.

“The 35,000 that we’ve applied for would take us there. I just don’t think we’re going to get there just from the takeout. I think it’s going to be too competitive. I think the uptake rate is going to be lower,” he said.

In June, we were standing at the water fountain drinking, and there was no line behind us, but now there’s a lot of people in line and a lot of elbows for the policies out there for October and November
Organically, Hale added that Monarch is writing 350 to 400 policies a week, with around $280mn of premiums in force, compared to a peak goal of around $400mn.

The Florida Office of Insurance Regulation (Floir) authorized the assumption of around 78,000 FedNat Insurance Company policies by Monarch effective 1 June 2022, bringing the latter’s total policy count to 83,000.

Reinsurance arm

The second part of the company’s strategy is to fill the capacity needed on the reinsurance side, Hale said.

In late June, the company got its license from the Cayman Islands Monetary Authority for HP Re, which wrote its first line in July, but “missed the big June renewal for most of the Florida marketplace”.

Hale continued that HP Re is focused on providing three types of coverage: “Quota shares, retro opportunities, if reinsurers are looking to offload some of their risk at January 1, and then of course for back-up cover”.

As hurricane season continues and insurers go through more of their reinsurance towers, HP Re is prepared to step in with “appetite for lower layers for Florida and Gulf Coast players for back-up cover”.

The company has so far only written property catastrophe but is interested in other lines such as healthcare, surety and title. Hale Partnership is providing the capital behind HP Re.

“We’re writing $10mn to $15mn right now, but we’d really like to get that up to $40mn, $50mn premium, but there’s no rush for that. We want to make sure that it’s the right opportunity and the right time,” Hale said.

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