Underwriting losses, but $81 million in net income from investments

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The directors of Citizens Property Insurance Corp. said Wednesday they continued to be concerned about the state of the Florida insurance market, Citizens’ growth and potential losses, despite a $6.5 billion surplus and a net gain of $81 million for 2021.

“We just want to be creditworthy, so when a CAT event happens, we don’t stick Floridians to Citizens Ratings statewide,” Citizens Board Chairman Carlos Beruff said at the board’s quarterly meeting. administration of the insurer. “It’s my mission.”

Gilway

The state-backed insurer of last resort, which has become Florida’s largest property and casualty insurer, has recorded underwriting losses since 2015, as have many other insurers. In 2021, Citizens recorded underwriting losses of nearly $166 million, the company reports Pin up. But thanks to its large surplus, the carrier was able to offset the losses with significant investment income.

But other Florida insurers weren’t so lucky. Two have been declared insolvent this year, partly due to insufficient reserves. This means that more abandoned policyholders will turn to Citizens and its premium increases limited by law, despite a plan to depopulate Citizens currently underway. The insurer is expected to surpass one million policyholders by the end of the year, Chairman Barry Gilway said at the meeting, giving it almost twice as many policyholders as the world’s second-largest carrier. ‘State.

Gilway presented a grim scenario of what so many policies in force could mean: In 2017, when Hurricane Irma hit parts of the state, citizens held 400,000 policies and registered 78,000 claims. If another Irma-level hurricane, with winds reaching 185 mph, were to hit this year, citizens could have up to 200,000 claims, he said.

“The recent insolvencies are concerning, but what really worries me is the financial condition of the remaining businesses,” Gilway told the board.

His report showed that of Florida’s top 10 flag carriers, all but two had net losses for 2021. Three had losses of more than $100 million, topping 2020 red numbers when a single insurer recorded a net loss of over $100 million.

Overall, Florida domestic and foreign businesses recorded just over $1 billion in net losses for 2021, according to S&P Global Market Intelligence Data, Gilway noted.

Citizens’ $6.5 billion surplus may seem huge, especially when compared to Florida’s other 52 insurers, which have a combined surplus of $3.6 billion, Gilway said. But he warned that reducing the citizens’ surplus would mean less money for investments, which kept the insurer in the dark.

Administrators urged staff to continue to find ways to reduce costs and strengthen results amid a deteriorating Florida market, high levels of claims litigation and no bill of bailout approved by the Florida Legislature so far this year. Staff said Citizens’ total workforce of 1,841 is about what it was in 2009, but is 17% higher than in 2015, when the insurer employed 1,571 people.

The main cost driver remains litigation, officials said. The carrier reported $343 million in claims expenses in December 2021, some $94 million more than in December 2020. Gilway said that in 2013 Citizens filed 27,000 disputed claims. Last year, the number had risen to around 100,000.

“That’s clearly the dispute,” particularly for water-related claims, an official said. “This is our Alamo – water claims. The sinkhole (problem) has been fixed, now they have another loophole. We need to close that loophole.

Graphic: Courtesy of Citizens. Home insurers ranked by direct premiums written in 2021.

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