Florida-Grown Homeowners Insurers Eye Fresh Territory for Expansion

Jul 15, 2014

By Michael Buck
Best’s News Service

TALLAHASSEE, Fla. – Florida-based homeowners insurance companies are growing beyond the borders of their home state and some are making their mark among the top writers in the country, according to company information and A.M. Best Co. data.
At the end of 2013, there were four companies with Florida roots among the top 25 writers of homeowners insurance in the United States, according to BestLink, A.M. Best Co.’s online financial system. They are: Citizens Property Insurance Corp., Universal Insurance Holdings Group, American Strategic Insurance Group, and Tower Hill Group. Only one of those insurers — Citizens, Florida’s insurer of last resort — was among the top 25 writers of homeowners insurance in the United States in 2003, according to BestLink.
The growth shows that some Florida-based companies are doing well enough to support expansion, said Sam Miller, executive vice president of the Florida Insurance Council. “It’s a sign that they are quality companies,” Miller said. Universal, American Strategic and Tower Hill are among the strongest of the Florida domestic cohorts, he said.
“There is a segment of the industry that’s criticized as being under-capitalized — whether that’s valid or not — these are never criticized like that,” Miller said.
In Florida, companies that write business only in the state — at least in the beginning — are known as the Florida domestics. There are signs that some Florida-grown insurers want to get bigger. While some Florida domestics already write business outside the state, several companies this year announced moves into fresh territory, while others are expanding for the first time.
American Strategic Insurance Corp., which is also known as ASI, plans to start operations in Tennessee in August, according to John Auer, the company’s president and chief executive officer. He said it tentatively plans to add Iowa and Mississippi by the end of the year. ASI currently writes in 25 states, plus Washington, D.C., Auer said.
“Our plan is to be in all 50 by the end of 2017,” Auer said.
ASI started writing business in Florida in 1998 and always had ambitions of being a multistate carrier, Auer said. The company was licensed in Texas in 2001 — its first new state outside of Florida. It wasn’t until several years later that the company would press expansion, Auer said. The delay was due in large part to rapid growth in Florida following the devastating 2004 and 2005 hurricane seasons, he said.
Universal Insurance Holdings, which writes through two subsidiaries, has applied for admittance this year to at least four new states: Delaware, Indiana, Pennsylvania and Minnesota. The company at the end of June wrote its first homeowners policy in Delaware. Universal, as of 2013, became Florida’s largest private-market homeowners insurer after it surpassed State Farm by market share and direct premiums written, according to BestLink.
HCI Group, a Florida-based company that underwrites business through Homeowners Choice Property & Casualty Insurance Co., earlier this year announced it would be starting business in Alabama, marking its first geographic expansion (Best’s News Service, March 13, 2014). HCI Group was Florida’s sixth-largest homeowners writer in 2013. United Insurance Holdings, which in 2013 was Florida’s eighth-largest homeowners insurer, in December was admitted to write in Georgia and recently started operations in Texas.
While some Florida companies are expanding geographically, Tower Hill Group plans to grow across business lines, according to its president, Don Matz. Tower Hill only writes homeowners business in Florida, Matz said, but wants to increase its commercial writings. The company has a commercial portfolio that it writes as a managing general agent for Rockhill Insurance Co., a subsidiary of State Auto Financial Corp., Matz said.
Tower Hill companies in the late 1990s and early 2000s wrote business in other states, but retrenched to focus solely on the Florida market, where it still sees opportunities for growth, Matz said.
“Florida’s residential property market is predicted to continue to growth with regard to new construction,” Matz said. “It has finally worked its way through some of the fallout of the economic crisis with regard to foreclosures and homes underwater … the economic forecast for Florida is pretty positive. And it never hurts when you have winter like was experienced in the Midwest and Northeast last year to drive Florida’s population growth.”
American Strategic Insurance Group companies currently have a Best’s Financial Strength Rating of A (Excellent).

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