Demotech, a well known company that rates Florida property/casualty insurers has expressed concerns about the effect hurricane losses and assignment of benefits litigation could have on many insurers financial ratings. As a result, the company has announced that they will be holding off on issuing final ratings on more than a dozen Florida property/casualty insurers until they have completed year-end financial analysis, revised business plans and operating agreements for 2018.
Demotech is responsible for rating more than 50 Florida-based insurers. They’ve made it clear that the combination of catastrophic losses due to hurricanes in 2017, in combination with the assignment of benefits litigation could lead to the ratings downgrades for several Florida-based companies.
In a FSR update released in early February, Demotech affirmed the “A” ratings of 35 Florida insurers, but kept the “A” ratings of 16 other companies in place without affirming them.
According to Demotech, the 35 companies that did have their ratings confirmed all submitted the required financial information, including their year-end financial results. This information allowed Demotech to confidently reaffirm their “A” ratings. However, the remaining 16 companies have not yet submitted their year-end results. Demotech has decided to hold off until on affirming their “A” ratings until those results have been made available.
Demotech President Joseph Petrelli spoke with the Insurance Journal about the situation saying that “The companies that have not yet been affirmed have told us that their year-end statement will look a certain way, but they are concurrently doing things to make changes to their business model or improve their financials”.
Bob Warren, client services manager for Demotech, also spoke with the Insurance Journal saying that “It doesn’t mean that the other companies that we did not affirm were not giving us this info or they were ignoring us – we have had ongoing conversations with these companies and were getting their projections for year-end,” Warren said. “We just weren’t certain what it would look like and are waiting to see what the filings are on March 1.”.