Six insurers, including new company, approved to take out more than 195,000 Citizens policies

A month after approving requests by private-market insurers to take over more than 400,000 policies from state-owned Citizens Property Insurance Corp., Florida’s insurance commissioner has approved another 195,035 takeouts from six companies — including the first by the latest insurer OK’d to do business in the state.

Trident Reciprocal Exchange, based in Lake Mary, was approved on July 31 as the state’s ninth new property insurer since a slate of insurance reforms were enacted in 2023, according to a news release by the Florida Office of Insurance Regulation.

On Thursday, the company was approved to select up to 16,035 residential multiperil policies from Citizens “on or about Nov. 19,” according to a consent order posted on the office’s website. Takeouts are the backbone of the state’s effort to depopulate Florida’s so-called insurer of last resort.

Other companies approved for takeouts on Nov. 19 include American Integrity (75,000), Homeowners Choice (25,000, including 1,000 wind-only policies), Manatee Insurance Exchange (39,000, including 1,500 wind-only policies), Slide Insurance (15,000), and TypTap Insurance (25,000).

Citizens spokesman Michael Peltier said that he was aware of a seventh takeout company — Monarch National — that has been approved to take out another 25,000 policies. However, Monarch does not yet show up among other companies approved for Nov. 19 takeouts on the Office of Insurance Regulation’s website.

American Integrity, Manatee, Monarch, Homeowners Choice and TypTap were among 10 insurers approved at the beginning of August to remove more than 400,000 Citizens policies. Those are scheduled to take place on Oct. 22 and Oct. 29.

Citizens customers who receive takeout letters prior to the takeout dates are not allowed to remain with Citizens if any takeout company projects renewal rates that are no more than 20% higher than Citizens’ projected renewal rates. If the actual renewal offer from the takeout company exceeds Citizens’ by more than 20%, the policyholder may return to Citizens.

Startup insurers in Florida have long used Citizens’ takeouts to quickly establish their first books of business in the state, while Citizens has relied on takeouts to shed policies.

Citizens had swelled from 420,000 policies in 2019 to 1.4 million last year as a confluence of factors caused property insurers to increase rates, become insolvent or stop writing business in the state. But after the reforms were enacted, litigation faced by many insurers decreased, rates began to stabilize, and Citizens fell to 1.2 million policies.

According to Citizens spokesman Michael Peltier, 132,445 Citizens policies have been removed through the takeout process so far in 2024. Tim Cerio, Citizens’ president and CEO, recently predicted that the company’s policy count will fall below 1 million before the end of the year.

Approval of Trident’s takeout plan was posted on the same day that the Kroll Bond Rating Agency (KBRA) announced it had assigned a financial strength rating of BBB, or “stable,” to the company. That’s the fourth-highest rating an insurer can be assigned, below AAA, AA and A.

The rating reflects a number of strengths, the agency said in a news release, including that the company is entering the market with improved pricing and lower litigation exposure following insurance reforms approved by the Florida Legislature in 2022 and 2023. The company also enters the market with significant surplus for the amount of projected policies, no legacy liabilities and manageable startup expenses. That’s because, as a reciprocal exchange owned by its policyholders, it will be run by an entity known as an Attorney In Fact, which will incur the majority of startup expenses, KBRA said.

But those strengths are balanced out by a number of factors, including that its entire $27 million surplus consists of a “surplus note,” which the National Association of Insurance Commissioners’ website describes as unsecured debt classified as equity.

Other factors include geographic concentration of the company’s policies in Florida and high reliance on reinsurance, the company said.

KBRA’s BBB rating satisfies requirements of federally backed mortgage loan guarantors Fannie Mae and Freddie Mac.

Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071, on Twitter @ronhurtibise or by email at [email protected].

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