United (UPC) forecasts $1bn gross loss from hurricane Ian

United Insurance Holdings Corp. (UPC Insurance) is the second of the Florida and coastal carrier specialists to announce a significant $1 billion gross loss estimate for hurricane Ian, with the majority of that to be ceded to its reinsurance partners.

Thanks to expected reinsurance recoveries, which this next figure is net, United (UPC Insurance) is only anticipating that its catastrophe losses incurred from hurricane Ian will amount to roughly $36.4 million before income taxes.

That’s made up of a net retention of $16.4 million, which is split as $7.4 million to United Property & Casualty Insurance Company and $9.0 million to American Coastal Insurance Company, as well as a $20 million retention for its captive reinsurance company, UPC Re.

So far, around 19,000 claims have been received by United (UPC), but the carriers says the flow of hurricane Ian claims will continue and that it estimates it will receive 27,000 to 30,000 claims in total.

Hence, the forecast for a gross estimated loss from hurricane Ian of $1 billion.

The company said it will also face incurring around $16 million of reinstatement premiums, which will be amortized across the remaining duration of its Core Catastrophe reinsurance program through May 31st 2023.

For the current reinsurance program year, UPC Insurance secured a core catastrophe reinsurance program featuring $2.524 billion of occurrence limit in the aggregate.

The occurrence-based reinsurance structure for 2022/23 provides the company with estimated first event limit of $1.929 billion and second event limit of $594.9 million.

As a result, all of United’s (UPC’s) losses from hurricane Ian above the retained amounts mentioned will fall to its reinsurance partners, with the FHCF set to take a significant chunk given it provides as much as $1.4 billion of Florida only cover within the tower, given the 90% participation rate opted for this year.

United’s (UPC’s) estimate of roughly $1 billion of gross losses from hurricane Ian compares to an announcement of the same figure of loss from Universal Insurance Holdings, the only two comparable carriers to pre-announce their exposure to the storm so far.

While United no longer has catastrophe bond protection in-force, it is expected to cede some of its losses to sources of insurance-linked securities (ILS) market capital.

“Hurricane Ian was a devastating storm, and our primary focus today is on servicing our policyholders. There is a very high degree of uncertainty regarding the long-term economic implications of this event for our Company, and the entire industry. The Company will be working closely with its reinsurers, service providers, and other key stakeholders to adjudicate losses accurately and timely,” commented Brad Martz, President & Chief Financial Officer.

Read all of our coverage of hurricane Ian, and our analysis on the potential market losses, here.