United (UPC) adds reinsurance with higher quota share cession rates

Florida headquartered, expansive catastrophe exposed primary property insurer United Insurance Holdings (UPC Insurance), has increased added to its reinsurance program protection by raising the quota share cession rates it has with its reinsurance partners.

By raising the quota share reinsurance cession rates, United (UPC Insurance) will effectively be ceding an increased proportion of its premiums to quota share partners over the next year and a half.

Like all other catastrophe exposed property carriers, United (UPC) was hit by the frequency of major loss events and severe weather impacts this year, with the Atlantic hurricane season in particular taking its toll on the firms results.

Quota share reinsurance protection means that a ceding company can effectively hand off a first share of its premiums and losses, in a fixed percentage, to reinsurance partners, before retaining anything for its own balance-sheet, making quota shares an effective form of reinsurance capital for insulating insurers against active loss years.

United (UPC) announced that it has bound terms to expand its current quota share reinsurance program for subsidiaries United Property & Casualty Insurance Company (UPC) and Family Security Insurance Company (FSIC), while also adding quota share protection for its American Coastal Insurance Company.

The new reinsurance arrangement stakes its quota share protection for UPC and FSIC from its current cession rate of 22.5% to 30.5%, as from December 31st 2020, with quota share cession of 23.0% secured through May 31st 2022 and the remaining 7.5% pending renewal at June 1st 2021.

For its American Coastal subsidiary a cession rate of 23% from December 31st 2020, and expiring May 31st 2022 has been secured by United (UPC).

The company said that the terms and conditions of the quota share reinsurance are largely unchanged, besides the participation rates, explaining that these provide additional ground up protection from all perils for all locations where the covered carriers are operating.

“I’m grateful for the support we continue to receive from our reinsurance partners. The additional quota share capacity supports our efforts to reduce operating leverage and improve capital adequacy for 2020 and beyond,” Brad Martz, President & Chief Financial Officer of UPC Insurance said.