NU Online News Service, Nov. 8, 12:33 p.m. EST
Florida-based Homeowners Choice Property & Casualty Insurance Co. could double in size after purchasing troubled insurer, HomeWise Insurance Co.
"We think the benefits are tremendous," said Jay Madhu, vice president of marketing for Tampa, Fla.-based Homeowners Choice, in an interview.
In September, HomeWise Preferred, also of Tampa, was ordered into receivership. The company stopped writing policies in a year prior but about 500 claims—mostly sinkhole-related—remained.
"Every move we make is done very cautiously, because there is a lot to lose," Madhu said.
"Their [HomeWise's] policies are in some places where we don't have many," he added. "That could translate to some cost-savings on our reinsurance spend."
Madhu said the deal includes the transfer of up to 70,000 homeowners' policies and about $53 million in unearned premium. Terms of the transaction were undisclosed.
The Florida Office of Insurance Regulation has approved the deal, Madhu added.
Madhu said Homeowners Choice has hired some staff from HomeWise and is reaching out to agents, a majority of which are also Homeowners Choice agents.
Homeowners Choice will be notifying HomeWise policyholders, who have the option to opt out as they would in a Citizens Property Insurance Corp. depopulation scenario, Madhu said.
It is a process Homeowners Choice is familiar with. The company has assumed large numbers of policies in the past as it took advantage of, and formed its book of business by, taking policies from Citizens.
Homeowners Choice is scheduled to release third-quarter earnings on Nov. 8 after the market closes.
According to Highline Data, Homeowners Choice reported a second-quarter net income loss of about $4.8 million. The company posted losses of about $547,000 in 2010 and $648,000 in 2009.
Homeowners Choice had 1.5 percent market share of homeowners' multi-peril business in the Sunshine State.
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