HCI Group – a holding company with subsidiaries in the homeowners’ insurance, information technology, real estate, and reinsurance businesses – has reached an agreement in principle with United Insurance Holdings for the latter to transition all of its personal lines insurance business in Georgia, North Carolina, and South Carolina to HCI Group.
The transaction is subject to the negotiation of definitive agreements and customary closing conditions.
A release said that the business to be acquired accounts for about $90 million of annual premiums.
Under the agreement, HCI will offer 85% quota share reinsurance on all of United’s in-force, new, and renewal policies in the three states, from December 31, 2021 through May 31, 2022. In turn, HCI will pay United a provisional ceding commission of 25% of premium earned. It was stated that the commission could increase to as much as 32% depending on the direct loss ratio results for the reinsured business. HCI will additionally pay United a catastrophe allowance based on 9% of the premium earned.
As part of the deal, HCI will pay United a renewal rights ceding commission of 6% - a portion of which would be paid upfront. In addition, United will agree not to compete with HCI in issuing personal lines insurance for homeowners in the three states until July 01, 2025.
“This transaction offers another great opportunity for HCI,” said HCI Group chairman and CEO Paresh Patel. “HCI is expanding its relationship with United following a successful transaction in the Northeast. This latest agreement further accelerates HCI towards its growth ambitions, expands the company’s footprint in existing and new states, and brings an established agent network.”
Patel added that HCI has “the financial strength” to support the new businesses it had acquired.
One of HCI’s insurance subsidiaries is TypTap Insurance Company – a provider of homeowners and flood insurance powered by technology developed by another HCI subsidiary, Exzeo USA. In 2020, TypTap announced that it was expanding nationwide from its operations in Florida.