The stability of Florida’s property insurance market continues to come into question, as two insurers operating in the state had their ratings withdrawn, while a third saw a downgrade.
Earlier this week, Demotech announced it has withdrawn the financial-stability ratings for Weston Property & Casualty Insurance Company and FedNat Insurance Company. The ratings agency also revealed that it downgraded United Property & Casualty Insurance Company’s rating from “A” (Exceptional) to “M” (Moderate).
Ratings withdrawals have typically preceded a company’s insolvency or rehabilitation. But while United Property & Casualty’s downgrade may appear to be the lesser penalty, mortgage providers such as Fannie Mae and Freddie Mac do not accept homebuyers with low-rated insurers.
Both FedNat and United Property & Casualty had previously reported financial issues, said CBS Miami.
In May, FedNat had reached an agreement with Florida’s Office of Insurance Regulation (OIR), which ordered the insurer to cancel policies and transfer some to another affiliated insurer, Monarch National Insurance. Meanwhile, United Property & Casualty revealed last month that its board had begun a "review of its strategic and capital raising alternatives," with one of the suggestions being a sale of its assets.
CBS Miami reported that Demotech has not confirmed whether the three insurers are among the 17 insurers it originally planned to downgrade last month, nor has the ratings agency identified all 17 of the insurers involved. The planned downgrade was put on hold last week “due to various circumstances,” said Demotech president Joe Petrelli.
But even as the downgrade was delayed, Petrelli offered a reminder that the updated ratings could still be released.