Guy Carpenter Executive: New Florida Unit to Serve ‘Largest Cat Zone’

Reinsurance broker Guy Carpenter & Co. is opening a dedicated Florida unit to target "the largest catastrophe zone in the world," said Kevin Stokes, executive vice president and leader of the new unit.

It's the first time the reinsurance broker has opened an office to target a specific state, but Florida is a unique market, Stokes said.

"The domestic homeowners writers have evolved since Hurricane Andrew in 1992, and the withdrawal of many large national companies five to 10 years after that," Stokes said. "The domestic companies writing Florida business today are unique. Their business model is that they rely very heavily on reinsurance."

Hurricane-prone Florida has both state-run insurer of last resort, Citizens Property Insurance Corp., and a state-run reinsurance pool, the Florida Hurricane Catastrophe Fund.

Last month, Hannover Re (Bermuda) Ltd. became the third foreign property/catastrophe reinsurer (behind its German-based parent, Hannover Re, and Cayman Islands-based XL Re Ltd.) to be allowed to post a lower amount of collateral in Florida, (BestWire, Sept. 29, 2010).

Stokes said in theory, lowering the collateral requirements could allow foreign insurers to offer more competitive pricing.

"The Office of Insurance Regulation is looking to foster a better environment for domestic companies," Stokes said.

Stokes, a 30-year veteran of the reinsurance industry, served as a member of Guy Carpenter's client strategy team. Previously, he led Guy Carpenter’s property specialty practice, served as the firm’s New York branch manager and was a member of the company’s Americas board.

With $790.8 million in direct written premiums for homeowners multiperil for 2009 and a market share of 13.4%, Citizens Property Insurance is the second-largest homeowners writer in the state, behind State Farm Group, which has a 15.1% market share. Rounding out the top five writers are Universal Insurance Holdings, with an 8.6% market share; USAA Group, with a 5.9% market share; and St. Johns Insurance Co., with a 4.6% market share, according to BestLink, which provides online access to A.M. Best's Global Insurance & Banking Database.

Guy Carpenter is part of the Marsh & McLennan Cos. (NYSE: MMC). The company's stock was trading at $23.97 a share on the morning of Oct. 13, up 0.08% from the previous close.

(By Meg Green, senior associate editor, BestWeek: [email protected])