Start-Up Insurer Mount Beacon Closes Doors, 22,000 Policies Taken Over

May 23--A start-up player in Florida's home insurance market, Mount Beacon Insurance Co., is going out of business and about 22,000 of its policies have been transferred to Florida Specialty Insurance Co., the latter firm's CEO said Monday.

Call it a sign of the challenges facing consumers in Florida, where many big national insurers have largely stopped writing new business and a host of small and untested competitors have stepped into the fray.

The Palm Beach Post reported trouble finding Mount Beacon's headquarters less than a year after its 2014 founding. It drew attention for making offers to take customers of state-run Citizens Property Insurance Corp. who lived in mobile homes -- an unconventional target for such offers. At the time, there was no company sign at the company's official Pinellas Park address in state corporate records and an employee at the front desk had never heard of the CEO.

By the start of 2015, Mount Beach had 31,871 customers, including 1,624 in Palm Beach County. The most recent statewide customer count available to The Palm Beach Post's insurance guide was about 37,000.

The 22,000 remaining policies are in good hands, the new stewards say.

"Agency and policyholder information can now be found on the Florida Specialty Insurance Company website, www.floridaspecialty.com," said Susan J. Patschak, chief executive officer of Florida Specialty Insurance Co. in Sarasota. "Customer service, underwriting, billing and claim service numbers have not changed and can be found on the Florida Specialty website as well."

After the additional policies, Florida Specialty has about 50,000 customers in Florida, she said.

The manufactured home business that Mount Beacon took out of Citizens was profitable before reinsurance costs, meaning back-up coverage insurance companies buy to make sure they can cover claims after a disaster, Patschak said. It was these costs that made this profitable underlying business unprofitable, she said.

As of May 15, 2017, Mount Beacon Insurance Co. no longer had any active policies and its remaining assets will be merged into a firm based out of state, Oakwood Insurance Co., officials said.

Florida Specialty Insurance Co. said it received notification from ratings firm Demotech Inc. on March 10 affirming Florida Specialty's Financial Stability Rating of "A (Exceptional)." Demotech plays an important role in helping determine acceptability in the mortgage lending marketplace for smaller companies not necessarily graded by other ratings firms.

The Palm Beach Post reported in March that Mount Beacon was among several Florida insurers that merged, changed ownership, shifted customers to new hands or added new investment after threatened ratings downgrades from Demotech. The return of hurricanes to Florida in 2016 after an 11-year pause and trends in non-catastrophe claims placed financial pressure on many of the state's fledgling companies, Demotech said.

A release by the ratings firm at the time said Mount Beacon "did not report financials acceptable to Demotech. The investors controlling the Company opted to sell the Company rather than recommit to Florida or adapt its business model to the emerging operating environment."

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