Weiss Ratings gives low grades to 35 Florida property insurers

The following article was published in the Jacksonville Business Journal on October 12, 2011:

Weiss Ratings gives low grades to 35 Florida property insurers

By Brian Bandell

The number of troubled property and casualty insurers in Florida has increased, according to Jupiter-based Weiss Ratings.

After analyzing the financial condition of the insurers in Florida as of midyear, Weiss Ratings gave 35 of them a rating of D or F. That’s up from 29 with poor grades on Dec. 31 – and one of those companies, Argus Fire and Casualty Insurance Co., has since been closed by regulators.

The largest insurer with a D rating was State Farm Florida Insurance Co.  State Farm Florida Insurance Co. Latest from The Business Journals Weiss Ratings give low grades to 35 Florida property insurers. Weiss gives low ratings to 29 Florida property insurers. The List: Property and casualty insurance follow this company , which is held separately from the national State Farm. It had $221 million in net premiums in the second quarter and lost $27 million. State Farm has 2,000 employees in Northeast Florida, according to the Business Journal’s 2011 Book of Lists.

Universal Property & Casualty Insurance, a subsidiary of Fort Lauderdale-based Universal Insurance Holdings Universal Insurance Holdings Latest from The Business Journals Weiss Ratings give low grades to 35 Florida property insurers Universal Insurance CEO to sell stock Universal Insurance doubles income follow this company (AMEX: UVE), was the largest insurer rated E+ by Weiss Ratings. It had $18.1 million in net premiums in the second quarter and earned $3.4 million.

Sarasota-based Sunshine State Insurance Co   Sunshine State Insurance Co Latest from The Business Journals Weiss Ratings give low grades to 35 Florida property insurers Homeowners has United Insurance in its sights United Insurance Holdings returns to profitability Follow this company . was the only insurer in Florida that earned an E rating.

Meanwhile, Weiss Ratings found that only state-owned Citizens Property Insurance Corp Citizens Property Insurance Corp. Latest from The Business Journals Weiss Ratings give low grades to 35 Florida property insurers State OKs smaller rate hikes for Citizens Citizens Property Insurance to raise rates by 6.2 percent Follow this company deserved an A+ rating. The only firms in Florida with B+ ratings were American Family Home Insurance Co. and American Strategic Insurance Co.    American Strategic Insurance Co. Latest from The Business Journals Weiss Ratings give low grades to 35 Florida property insurers OIR approves first rate cut under new law OIR approves first rate cut under new law Follow this company Weiss Rating did not recommend any other insurers.

“They aren’t a lot of strong companies in Florida. It’s either OK or weak,” said Gavin Magor, a senior financial analyst at Weiss Ratings. “The property insurers tend to be weaker in Florida than in almost every other state.”

Most Florida property insurers showed deeper losses in the second quarter, which is surprising because there wasn’t a major loss event in the state, Magor said. Despite years of dodging a major hurricane, few companies have managed to build up a sizable reserve. Many of the companies that Florida insurance regulators have allowed to take policies out of Citizens are on shaky ground, he added.

“We are very concerned that in the event of a serious (weather) event that there will be a number of these takeout companies struggling to survive,” Magor said. “Some of them, in our opinion, are undercapitalized and they aren’t in the position to survive …. These companies will have to merge or fold, or they will be taken under the wing of the regulator.”

Magor said he has yet to see the benefits to company finances of the property insurance reforms passed by the state this year, but many of those changes have recently taken effect. He is concerned that poor investment performance could be an additional drag on property insurers in the third quarter

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