NU Online News Service, Aug. 11, 3:45 p.m. EDT
Despite reinsurance costs remaining at "relatively high" rates, Florida domestic insurer Homeowners Choice Inc. said it recorded 2010 second-quarter net income of $1.3 million, compared to $3 million a year ago.
Richard Allen, chief financial officer of Homeowners Choice, said during a conference call that the insurer ceded 47.6 percent of gross earned premiums to reinsurance. Last year at this time the Clearwater, Fla.-based property insurer spent 31 percent of gross earned premiums on reinsurance.
The percentage ceded to reinsurance significantly impacted net premiums earned, which decreased more than 20 percent in the second quarter to $15.6 million. Net premiums earned for the first six months of 2010 were $31.9 million, a decrease of 22.1 from the prior year.
Another Florida domestic insurer, Universal Insurance Holdings Inc., which is a holding company for Fort Lauderdale-based Universal Property & Casualty Insurance Company (UPCIC), said 2010 second-quarter net income rose to $10.8 million from $7.6 million last year during the same period.
UPCIC said it experienced growth in net premiums earned, but results were affected by state-mandated wind mitigation credits--a factor blamed by many Florida insurers for driving down underwriting income. UPCIC ceded $121.3 million in premiums in the second quarter.
Homeowners Choice got an average rate increase of 14 percent, which began in April. This increase plus anticipated lower reinsurance costs in the future--taking into account another calm hurricane season--should bode well for the insurer's bottom line, according to F.X. McCahill, chief executive officer of Homeowners Choice.
UPCIC was also helped by the approval of an average 14.6 percent statewide rate increase.
UPCIC is the third-largest writer of homeowners multiperil insurance in Florida, behind State Farm and the state-run Citizens Property Insurance Corp.
The company's policy count has grown to 566,000 as of June 30, up from 544,000 at the end of March. UPCIC also writes in North Carolina, South Carolina and Hawaii, where it has a total of 6,800 total policies.
Mr. McCahill of Homeowners Choice said his company will be looking to grow after the hurricane season and plans another assumption from Citizens. At year-end, he predicts Homeowners Choice will have added 20,000 to 35,000 policies. It has 63,000 policies now, he said during the call.
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