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					Florida Homeowners Market . . .
At the Tipping Point?
December, 2009

Aon Benfield Analytics
200 East Randolph Street
Chicago, IL 60601
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Florida Homeowners Market … At the Tipping Point?
The 2009 Hurricane season has ended, marking the fourth consecutive year without a significant hurricane
making landfall in Florida. Even without significant hurricanes in the last four years, the state of the homeowners
(HO) insurance market appears to be at a tipping point. Recent comments from Florida’s insurance regulators
may signal an opportunity to tip the market in a favorable direction for insurers and to a more sustainable
insurance market for Florida’s homeowners. Recent insolvencies, however, show that there is a risk in which
years of intense rate scrutiny, rate making process delays and significant reliance on unfunded state assessment-
based catastrophe loss funds may have already taken their toll on the HO insurance market.

     In 2009, two HO insurers have been placed into liquidation by the Office of Insurance Regulation (OIR),
     and national carriers led by State Farm have announced their plan to withdrawal from the market. The
     withdrawal from the Florida HO insurance market is a continuation of a trend that is largely return and risk
     tolerance driven for national HO insurers. To fill the gap left by these larger carrier withdrawals, many new
     HO insurers formed. Today, more than 50 companies write more than $25 million of HO premium.
     Approximately 75 percent of Florida HO premium is written by insurers with an A.M. Best rating lower than
     “A-” or by those that are unrated. Citizens Property Insurance Corporation (Citizens), the State of Florida’s
     (State) competitive and residual HO insurer, has a market share of more than 14 percent, which adds
     materially to the State’s exposure to insured catastrophes. The State’s exposure also includes $23.2
     billion of projected capacity from its Florida Hurricane Catastrophe Fund (FHCF). Even with the State’s
     catastrophe leverage high, it is difficult for Citizens to gain the rates it says it needs. In an October rate
     filing hearing, Citizens indicated a 40 percent rate increase is necessary to make rates actuarially sound.
     In November, a 5.3 percent average rate increase was approved by regulators.
     Although improved compared to the beginning of the 2009 Hurricane season, the FHCF has a $4.2 billion
     shortfall post-borrowing capacity ($15.2 billion shortfall pre-borrowing capacity), according to a recent
     Raymond James report presented to the Cat Fund Advisory Council indicated.
     Aon Benfield estimates that a 1 in 100 year hurricane strike in Florida would result in estimated losses in
     excess of $100 billion. Given an event of this size, Florida (and its residents) would be on the hook for more
     than 25 percent of the losses through Citizens and the FHCF.
     Despite operating in the world’s peak catastrophe market, most Florida-based HO insurers are capitalized
     at lower levels than their non-Florida peers, as measured by NAIC’s risk-based capital (RBC) ratio.

     Despite low storm activity, underwriting results have been deteriorating, impacted by substantial mitigation
     credits, higher reinsurance costs in 2009 and an uptick in fraudulent claims activity. However, 26
     companies have had rate filings with increases approved in 2009 with an average approved rate of 10
     percent; another 28 have filings for rate increases pending. To put these rate increases into perspective, a
     recent Aon Benfield national study of prospective rates showed that a 93.5 percent rate increase would be
     required for the top five carriers in Florida (excluding State controlled Citizens) to attain a 14 percent
     return on equity.

Company Failures and Withdrawals from Florida
In October, the OIR placed a second Florida HO insurer, American Keystone Insurance Company, into
receivership within six months. In April, Coral Insurance Company was also taken over by the State. A stated
reason for both companies’ insolvency was insufficient funds to pay for adequate reinsurance protection.
Coral was in operations for five years, while American Keystone lasted only three years. Meanwhile,
State Farm has a hearing scheduled with the OIR in January regarding its request to withdraw from the
property market. As of year-end 2008, State Farm had a 15.6 percent market share of Florida HO business.
Nationwide recently announced a plan to non-renew up to 60,000 policies to reduce catastrophe exposure.

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Therefore, there are a number of policyholders who will be in need of replacement insurance in the near term,
and many who will have to live with significantly less capitalized, lower-rated or unrated insurers. In the past,
the market was able to respond as the number of companies writing more than $25 million in Florida HO
business increased 50 percent since 2003, benefiting from a number of start-up companies during this period.
The ability of the market to continue to take on business from exiting insurers is very sensitive to the rate
environment and the recent activity may be a welcome sign of a more positive environment.

Quality and Oversight of Insurers
The graph below shows Florida HO insurers’ A.M. Best ratings evolution over time. In 2001, 80 percent of the
market was rated “A-” or higher by A.M. Best; by 2008, that category dropped to 25 percent. This dramatic
decrease is due in part to A.M. Best’s increased emphasis on the catastrophe stress test (which requires
companies to have sufficient capital for two 1 in 100 hurricane events) following the active 2004 and 2005
storm seasons. Some large national carriers, like State Farm and Nationwide, began operating their stand-
alone Florida subsidiaries with lower levels of capital adequacy as measured by A.M. Best, and these
subsidiaries were downgraded from “A-” ratings to “B” level ratings.

           2001              2002    2003         2004            2005      2006   2007        2008       Current*











                   A- and Better         B++           B+            Vulnerable    Not Rated          Citizens

   *2008 year-end market share with ratings as of December 2009

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Meanwhile, Demotech became an active player in Florida HO insurers’ ratings, providing an alternative to an
A.M. Best rating. In 2009, over concerns regarding profitability, Demotech removed ratings from four active
insurers despite no significant storm losses. The graph below depicts the Demotech ratings distribution of
Florida HO insurers over time.

          2001               2002    2003          2004         2005         2006        2007   2008      Current*










                      A''            A'               A                Reviewed - Not Rated        Citizens

      *2008 year-end market share with ratings as of December 2009

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Florida’s Insurance Bet
A Raymond James report recently presented to the Cat Fund Advisory Council indicated the FHCF’s claims
paying capacity at $19 billion, including post-event borrowing of $11 billion, which was determined from a range
of estimates between $5 billion and $20 billion. The post-event bonds of $11 billion, in combination with the
projected year-end fund balance of $4.5 billion and $3.5 billion of available pre-event notes, comprise the $19
billion total capacity. This amount would cover the full mandatory layer and a portion of temporary increase in
coverage limits (TICL) layer for the 2009 season, leaving a $4.2 billion shortfall. These estimates are significantly
more optimistic than in October 2008 or May 2009, when the post-event bonding estimates were $3 billion and
$8 billion, respectively. Due to the improvement in the capital markets, as well as legislation passed in May
2009, the FHCF’s financial position is stronger than last year.

However, there is still a great deal of uncertainty surrounding the post-event bond issuance and thus, the
FHCF’s claim paying capacity. Based on the capacity described above, an event that exhausts the FHCF
would result in policyholders paying a 3.9 percent assessment for 30 years to cover the post-event financing
of $11 billion. This would be in addition to the 1.0 percent assessment in place through 2014 to pay for losses
from previous years (principally Wilma, 2005). Separately, the companies that purchased TICL would bear the
credit risk associated with any unfunded amount. The schematic below illustrates the capacity for the FHCF
and TICL layers of coverage for 2009 in conjunction with estimated sources of funding.


                                                                                                        $4.20B –
                                                $5.56B TICL                                             Shortfall*


                                                                             $11.00B – Projected Post Event
                                                                                  Borrowing Capacity
                        $17.18B Mandatory Coverage

                                                                            $3.50B – Series 2007A Pre-Event
                                                                                     Note Proceeds
                                                                              $4.50B – Projected 2009 Year-
                                                                                   End Fund Balance

                                                                                      FHCF 2009
                      FHCF 2009 Obligations                                     Reimbursement Capacity

*Note: Reimbursement capacity includes $440M (Two limits of $220M) of potential liability for LAC layer coverage
Source: Cat Fund Advisory Council October 20, 2009 Meeting Materials

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Citizens’ net loss estimate for a 1 in 100 year storm is $13.3 billion, while it only estimates $4.1 billion in capital at
the end of 2009. The FHCF currently needs to fund approximately $18.7 billion to cover its exposure to a 1 in 100
year event ($23.2 billion of total capacity less $4.5 billion of projected fund balance). This leaves Florida and its
residents on the hook for nearly $28 billion in losses or more than 25 percent of the total projected $107 billion
loss from a 1 in 100 year industry event in Florida. Following this type of an event, Citizens would be distressed
and surviving companies would likely have to rely more heavily on external market reinsurance with considerably
higher rates. Such a loss would have a significant, long-term impact on the Florida HO insurance market.
However, many believe that Florida’s insurance bet against significant storm losses is hedged by the politics of a
federal bailout, if such an event were to occur. It is not certain though that a federal bailout, if any, would allow
bailout funds to be distributed through current Florida market mechanisms such as Citizens or the FHCF.

Following is an illustration of the source of Citizens’ claims paying capacity for a 1 in 100 year storm for both high
risk accounts (HRA) and personal lines / commercial lines accounts (PLA/CLA). The claims paying capacity for
this type of an event is supported by each account’s surplus position, reinsurance program from the FHCF
Mandatory and TICL layers, and Citizens policyholder surcharge (CPS) and assessment capabilities. It is
noteworthy to mention that the 1 in 100 year probable maximum loss (PML) event shown is on a blended basis of
near-term and long-term modeling results and does not contemplate loss adjustment expenses. Based upon the
figure below, if a 1 in 100 year storm strikes Florida, Citizens would need to levy assessments that total $9.24
billion to Florida insureds. The assessments are levied in the year of Plan Deficit, but the Emergency
assessments may be spread over multiple years.

  $14.65B -
  100-yr                                                        ($ billions)
                                                                                        HRA      PLA/CLA         Sum

                                                                Gross PML               14.65        7.44            22.09
                               $4.79B Emergency                 (100 year occurrence)
                                                                Less: Ceded PML
                                                                    FHCF Mandatory        3.73       1.83             5.55
                                                                    TICL                  2.17       1.06             3.23
                                 $2.00B Regular                                           5.90       2.89             8.78
                                  Assessments                   Net PML                   8.76       4.55            13.31
                                                              $7.44B -
                                        TICL                  100-yr
                               90% of $2.41B xs $5.70B                         $1.25B Regular Assessments
    $5.70B                                                                              $0.80B CPS
    $5.56B                                                    $5.39B
               $0.4B CPS

                                 Mandatory FHCF
                              90% of $4.14B xs $1.56B          $3.98B
                                                                                TICL-90% of 1.18B xs $2.80B
    $1.56B                                                                           Mandatory FHCF
                                                                                  90% of $2.03B xs $0.77B
                                   $1.60B PHS                 $0.77B
                                                                                        $2.50B PHS
                           HRA Claims Paying Capacity                     PLA/CLA Claims Paying Capacity

Source: Citizens Board of Governors May 7, 2009 Meeting Documents

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In the year following a 1 in 100 year storm, Aon Benfield estimates total assessments from the FHCF and Citizens
would likely be as high as 21 percent of subject premium (assuming TICL capacity is only partially funded as
previously discussed). This does not consider a potential 2.0 percent assessment from the Florida Insurance
Guaranty Association (FIGA) if some insurers become insolvent following this event. Although the assessment
percentage declines in subsequent years as Citizens’ CPS, Regular and Emergency assessments are satisfied,
policyholders will continue to be taxed at least 3.9 percent for 30 years to repay the FHCF debt obligations. If TICL
happens to be fully funded post event, the assessments levied from the FHCF and Citizens in total would be even

Capital Adequacy and Financial Trends
In comparing the capital adequacy of Florida HO insurers versus non-Florida HO insurers, our findings show
that a disproportionate number of HO carriers are thinly capitalized as measured by NAIC’s RBC ratio. As
shown in the following table, 54 percent of Florida HO insurers have a strong 2008 RBC score of greater than
500 percent, though this contrasts to the non-Florida HO population in which 88 percent of scores were
greater than 500 percent. Even more telling is that for the non-Florida HO population, there were no
companies with an RBC score below 300 percent, while 21 percent of Florida HO insurers fell below this
mark. A score of 200 percent represents the ‘Company Action Level’ where companies are required to submit
a corrective action plan to regulators. However, Florida HO insurers have grown their capital base in recent
years as surplus is up by more than 50 percent from 2004. A driver of the increase in capital was the state-run
insurance capital build-up incentive program that started in 2006. According to the State Board of
Administration, which administered the program, 13 insurers qualified for $247.5 million of State-issued
surplus notes and helped produce $543.5 million in total new capital for the market. The program’s purpose
was to increase the availability of residential property insurance by matching each company’s capital infusion
with a surplus note, subject to various approvals and constraints. In 2009, driven by the underwriting trends
discussed below, the capital bases of Florida HO insurers dipped by approximately 6 percent through third
quarter. While surplus has grown significantly over the last five years as noted above, it is only comparable to
2003 levels when the industry’s perception of catastrophe risk was much different.

It is noteworthy to mention that unlike most rating agency capital adequacy models, the NAIC RBC model
does not currently incorporate a catastrophe risk charge. Therefore, the relatively low RBC scores for Florida
HO insurers is even more concerning as one would expect companies operating in a high catastrophe-
exposed market to be more strongly capitalized on a non-Cat basis. There has been much discussion in
recent years by the NAIC to incorporate a catastrophe risk charge within RBC. While the process has been
slow and there is still uncertainty around elements of the catastrophe risk charge, it is expected to have a
material impact on catastrophe exposed companies. Aon Benfield estimates that, if the RBC included a
catastrophe risk charge that increased required capital by 15 percent, 29 percent of Florida HO insurers would
fall below a 300 percent RBC score with 11 percent below a 200 percent RBC. By comparison, only 1 percent
of non-Florida HO insurers would fall below 300 percent (and zero below 200 percent).

Distribution of RBC Scores
                                                                     Pro forma RBC w/ Cat Charge
                                    2008 RBC Scores
                                                                (assumes 15% increase in required capital)
                               FL HO Cos       Non-FL HO Cos      FL HO Cos            Non-FL HO Cos
                             (56 Companies)   (150 Companies)   (56 Companies)         (150 Companies)
        500+                     54%               88%              48%                     87%
     400 – 499                   13%                7%               9%                      6%
     300 – 399                   13%                5%              14%                      6%
     200 – 299                   14%                0%              18%                      1%
        < 200                     7%                0%              11%                      0%

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Meanwhile, underwriting results of Florida HO insurers have steadily deteriorated in recent years despite low
storm activity. From 2006 to 2008, the net loss ratio has deteriorated from 51 percent to 72 percent, and was
reported to be 84 percent as of third quarter 2009. Factors influencing these weak results include an inability
to obtain adequate premium to cover reinsurance costs for operating in the world’s peak catastrophe zone
and Citizens, acting as a competitive insurer, recently quoting rates 40 percent below actuarial soundness.
In addition, mandated discounts, related to mitigation credits to insureds that hurricane proof their homes,
have been too generous and have effectively stripped out any wind load. Finally, many companies have seen
an uptick in fraudulent activity tied to a weakened economy.

Florida Homeowners Insurers Composite
                                                                        2008             2007            2006
 Homeowners Direct Loss Ratio                                           34%              25%             34%
 Net Loss Ratio                                                         72%              59%             51%
 Expense Ratio                                                          43%              50%             37%
 Net Combined Ratio                                                    115%              109%            88%
 Change in Surplus                                                      -6%              16%             35%

Separately, the FHCF announced that beginning in 2011, the contract year will change from a June 1
inception date to a January 1 inception date. In 2010, a short period contract will be written for the period June
1, 2010 through December 31, 2010 in advance of this change. As a result, companies will have to recognize
additional ceded premium in calendar year 2010 due to the stub contract period plus the ceded unearned
premium for January 1, 2010 through June 1, 2010 on the prior year's contract. This creates a pre-tax
reduction of income and surplus equal to 5/12 of a company's 2009 FHCF premium. If this change occurred in
2008, the impact on Florida HO insurers would have been approximately $193 million. While the impact on
individual companies would vary considerably, for many carriers it would have represented between 10 to 20
percent of PHS. Companies are currently lobbying the Florida legislature to implement a change that would
mitigate the impact of this, though the outcome will not be known until next year.

In September 2009, Aon Benfield released its updated Homeowners ROE Outlook, which analyzes the
current and prospective return on equity (ROE) by state for the HO line of business. The countrywide
estimated ROE for HO is 6.1 percent, down from 6.5 percent one year ago, and Florida’s is 3.5 percent. The
analysis confirms that the prospective ROE is now far less than the increased cost of insurer capital resulting
from the global credit and liquidity crisis. Aon Benfield estimated that countrywide insurers would have to take
a 26.4 percent rate increase to result in a 14.0 percent ROE, and Florida insurers (excluding State controlled
Citizens) would have to take a 93.5 percent rate increase to achieve the same ROE. These estimates are
based on analysis of actuarial support for rate filings of the five leading insurers in states making up 80
percent of U.S. population.

The inability to earn reasonable returns from writing the staple product of HO insurance has the long-term
effect of discouraging the participation of private capital in the market, leaving states to attempt to finance the
highly volatile risks of their constituents. In turn, states have looked and will continue to look to the federal
government to aid their growing homeowners insurance financing needs. These growing needs could be
decreased through a more reasonable balance between the actual cost of providing insurance for one of the
most volatile lines of business and rates allowed by insurance regulators and state law makers.

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There are positive trends taking place, with 26 filings for rate increases approved and another 28 filings
pending (see Appendix for detail). Approved rate increases have ranged from 3.0 percent to 27.9 percent,
with an average around 10.0 percent. The pending filings for rate increases are comparable to the approved
filings. Assuming these rates were fully implemented and earned, the 2008 combined ratio would have been
104 percent. Also, in November, a 5.3 percent average rate increase was approved for Citizens. Further,
given a quiet hurricane season and the rebound of reinsurer balance sheets from the financial market crisis,
there is belief that reinsurance costs will decline in 2010. The big question is whether the impact of rate
increases and lower reinsurance costs will be enough.

The Florida HO insurance market could be nearing a tipping point, though whether it will tip positive or
negative is still yet to be determined. Companies continue to produce combined ratios well in excess of 100
percent, and 2009 witnessed two companies go into receivership over an inability to pay reinsurance
premiums. Therefore, one must consider whether the plan for new, lower capitalized companies to take a risk
in Florida without being able to obtain adequate rate levels, while the national carriers continue to exit, is good
for the long-term welfare of the market (especially without being tested by names like Andrew or Wilma). This
is, however, offset by the emerging change in Florida regulation allowing companies for the first time in years
to take reasonable rate increases. These rate increases are hopefully the first step to allow companies to work
towards earning a sufficient return for the risk they assume and build their capital base.

Contact Information
For more information, please contact a member of the Aon Benfield Analytics team:

Kelly Superczynski       
Pat Matthews             
Kathleen Armstrong       
Tracy Hatlestad          

About Aon Benfield
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Copyright 2009 Aon Benfield Inc.

This document is intended for general information purposes only and should not be construed as advice or opinions on any specific facts or circumstances.
The analysis and comments in this summary are based upon Aon Benfield’s preliminary analysis of publicly available information. The content of this
document is made available on an “as is” basis, without warranty of any kind. Aon Benfield disclaims any legal liability to any person or organization for loss
or damage caused by or resulting from any reliance placed on that content. Aon Benfield reserves all rights to the content of this document. Members of the
Aon Benfield Analytics Team will be pleased to consult on any specific situations and to provide further information regarding the matters discussed herein.

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2009 Florida Homeowners Rate Filings Through November 15, 2009
 File Log                                             Date         Effective       Change    Change    Change                                          Date
 Number 1 Status 2           Company Name             Filed 3       Date 4        Indicated Requested Approved                    Notes 5            Approved 6
                                                                                                              20.2% (20.4% non-FHCF)
 09-00025 Approved American Traditions               1/4/2009      12/15/2008     -10.60%   -12.30%   -12.30% reinsurance cost. HO-3: 35.7%           3/6/2009
                                                                                                              non-hurricane LLAE ratio.
                     Homeowners Choice Property &
 09-00615 Approved                                                                  N/A       N/A       N/A                                           2/3/2009
                     Casualty                     1/12/2009        12/15/2008                                    Initial Tenants Filing
                                                                                                                 HO-3: 24.7% (24.3% non-FHCF)
                     Universal Property & Casualty               2/27/2009 New
 09-00865 Approved                                   1/16/2009                     8.40%     4.80%     4.80%     reinsurance cost, 18.8% non-        2/24/2009
                     Insurance Co                                4/19/2009 Ren
                                                                                                                 hurricane LLAE ratio
                                                                                                                 Wind-only program. HO-3:
                                                                                                                 27.2% (28.6% non-FHCF)
 09-01853 Approved Homewise Insurance Company        1/30/2009     9/15/2009       8.00%     3.90%     3.80%                                          6/9/2009
                                                                                                                 reinsurance cost, 0.6% non-
                                                                                                                 hurricane LLAE ratio.
                                                                                                                 HO-3: 28.2% (22.2% non-FHCF)
                                                                 4/13/2009 New
 09-02040 Approved St. Johns Insurance Company       2/3/2009                     22.80%    13.90%     8.40%     reinsurance cost, 32.3% non-        3/27/2009
                                                                  6/1/2009 Ren
                                                                                                                 hurricane LLAE ratio

                                                                                                                 HO-3: 4.24% (4.10% non-FHCF)
                                                                                                                 reinsurance cost, 59.7% non-
                   Nationwide Insurance Company
 09-03248 Approved                              2/20/2009          8/21/2009       7.20%     7.20%     5.40%     hurricane LLAE ratio. Indications    5/6/2009
                   of Florida
                                                                                                                 calculated separately for
                                                                                                                 hurricane and non-hurricane.
                                                                                                                 32.8% (29.8% non-FHCF)
                                                                 6/17/2009 New
 09-04486 Approved Edison Insurance Company          3/5/2009                     21.30%     5.90%     9.00%     reinsurance cost, 28.4% non-        5/29/2009
                                                                 7/24/2009 Ren
                                                                                                                 hurricane LLAE ratio
                     Sawgrass Mutual Insurance                                                                   Initial filing. 20.5% (20.6% non-
 09-04597 Approved                                   3/5/2009      4/21/2009        N/A       N/A       N/A                                          4/16/2009
                     Company                                                                                     FHCF) reinsurance cost
                                                                                                                 HO-3: 21.8% (17.5% non-FHCF)
                     United Property & Casualty
 09-05163 Approved                                   3/13/2009     9/15/2009      23.10%     7.60%    12.90%     reinsurance cost, 25.5% non-        6/23/2009
                     Insurance Co
                                                                                                                 hurricane LLAE ratio.

                   Homewise Insurance Company
                                                                                                                 HO-3: 17.2% reinsurance cost,
 09-06199 Approved Homewise Preferred Insurance      3/26/2009     9/10/2009      12.00%     5.00%     5.00%                                          6/8/2009
                                                                                                                 41.3% non-hurricane LLAE ratio.
                                                                                                                 HO-2,3,5: 25.2% reinsurance
                     Hartford Insurance Company of               7/18/2009 New
 09-08863 Approved                                   5/1/2009                     16.50%     9.90%    11.20%     cost, 37.3% non-hurricane LLAE      6/11/2009
                     the Midwest                                  9/9/2009 Ren
                                                                                                                 21.9% (22.6% non-FHCF)
                     Southern Oak Insurance                      8/3/2009 New
 09-09025 Approved                                   5/4/2009                     11.60%     7.90%     7.00%     reinsurance cost, 17.0% non-        6/11/2009
                     Company                                     10/1/2009 Ren
                                                                                                                 hurricane LLAE ratio
                                                                                                                 21.6% reinsurance cost, 40.2%
 09-10445 Approved First Home Insurance Company 5/18/2009          7/23/2009      26.80%    14.90%    14.90%                                         5/29/2009
                                                                                                                 non-hurricane LLAE ratio

                     Tower Hill Select Insurance                 11/1/2009 New                                   22.8% reinsurance cost, 36.8%
 09-11411 Approved                                   6/3/2009                     16.70%     9.90%     9.90%                                         8/27/2009
                     Company                                     11/15/2009 Ren                                  non-hurricane LLAE ratio
                   United Services Automobile
                                                                                                                 Owners Program. 25.9% (25.8%
                   USAA Casualty Insurance
 09-11711 Approved                                   6/9/2009      11/1/2009      18.10%     9.00%     6.60%     non-FHCF) reinsurance cost,         8/13/2009
                                                                                                                 50.0% non-hurricane LLAE ratio.
                   USAA General Indemnity
                   Star and Shield Insurance
 09-11829 Approved                                   6/11/2009     6/19/2009        N/A       N/A       N/A      Initial filing                      6/17/2009
                   Safe Harbor Insurance                                                                         Competitive adjustments. 22.8%
 09-11976 Approved                                   6/15/2009     6/15/2009        N/A     -9.20%    -6.00%                                         8/25/2009
                   Company                                                                                       reinsurance cost
                     Tower Hill Prime Insurance                  11/1/2009 New                                   HO-2/3: 21.2% reinsurance cost,
 09-12136 Approved                                   6/17/2009                    15.70%     9.80%     9.90%                                          9/1/2009
                     Company                                     11/15/2009 Ren                                  41.3% non-hurricane LLAE ratio.
                   American Strategic Insurance
                                                                 10/1/2009 New                                   Change in wind mitigation
 09-12319 Approved Company            ASI            6/19/2009                      N/A     -1.40%    -1.40%                                         9/16/2009
                                                                 12/1/2009 Ren                                   calculations.
                   Assurance Corporation
                                                                                                                 23.7% (24.4% non-FHCF)
                     Federated National Insurance
 09-12946 Approved                                   7/1/2009      11/1/2009      24.70%    14.80%    19.00%     reinsurance cost, 28.7% non-        9/25/2009
                                                                                                                 hurricane LLAE ratio

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 File Log                                               Date         Effective       Change    Change    Change                                         Date
 Number 1 Status 2         Company Name                 Filed 3       Date 4        Indicated Requested Approved               Notes 5                Approved 6
                   United Services Automobile
                                                                                                                   Renters Program. 27.5%
                   USAA Casualty Insurance
 09-13228 Approved                                     7/29/2009     11/1/2009      29.40%     7.10%     8.30%     reinsurance cost, 37.7% non-       8/27/2009
                                                                                                                   hurricane LLAE ratio
                   USAA General Indemnity
                      Armed Forces Insurance                                                                       HO-3: 12.5% reinsurance cost,
 09-13634 Approved                                     7/15/2009     12/28/2009      4.10%     2.90%     3.00%                                        10/22/2009
                      Exchange                                                                                     31.4% non-hurricane LLAE ratio.

                      Universal Property and Casualty           10/22/2009 New                                     32.8% reinsurance cost. HO-3/8:
 09-13685 Approved                                    7/15/2009                     19.80%     9.80%    14.60%                                     10/20/2009
                      Insurance                                 12/11/2009 Ren                                     23.6% non-hurricane LLAE ratio.
                                                                                                                   33.8% (30.4% non-FHCF)
 09-13820 Approved Edison Insurance Company            7/17/2009     10/19/2009     22.30%    12.10%    21.90%     reinsurance cost, 26.8% non-       10/26/2009
                                                                                                                   hurricane LLAE ratio
                                                                                                                   Competitive adjustments. 15.0%
                                                                                                                   reinsurance cost as % of
                      Auto Club Insurance Company                  10/18/2009 New
 09-13830 Approved                                     7/20/2009                      N/A     -2.70%    -1.40%     hurricane premiums, 5.0%           9/11/2009
                      of Florida                                    12/1/2009 Ren
                                                                                                                   reinsurance cost as % of non-
                                                                                                                   hurricane premiums.
                   Northern Capital Insurance                                                                      31.5% (27.8% non-FHCF)
 09-13963 Approved                                     7/22/2009     10/20/2009       N/A     11.00%    11.00%                                        8/10/2009
                   Company                                                                                         reinsurance cost
                   Northern Capital Select                                                                         26.7% (18.8% non-FHCF)
 09-13964 Approved                                     7/21/2009     10/20/2009       N/A     11.00%    11.00%                                        8/10/2009
                   Insurance Company                                                                               reinsurance cost
                   State Farm Florida Insurance                    11/1/2009 New
 09-14135 Approved                                     7/24/2009                      N/A     44.80%    27.90%     45.5% reinsurance cost             8/28/2009
                   Company                                         12/1/2009 Ren
                                                                   9/14/2009 New
 09-14529 Approved Castle Key Insurance Company        7/31/2009                    10.80%     7.10%     7.10%     Limited Reinsurance Filing         8/27/2009
                                                                   11/8/2009 Ren
                      Castle Key Indemnity Insurance               9/14/2009 New
 09-14530 Approved                                     7/31/2009                     8.30%     6.50%     6.50%     Limited Reinsurance Filing         8/28/2009
                      Company                                      11/8/2009 Ren
                                                                                                                   Takeout HO Program. 26.1%
                      American Integrity Insurance
 09-14547 Approved                                     7/31/2009     12/8/2009      18.80%    11.10%    15.00%     reinsurance cost, 39.0% non-hurr   9/23/2009
                                                                                                                   LLAE ratio
                                                                                                                   Initial filing for HO-4 Program.
                      ASI Preferred Insurance                                                                      69.1% reinsurance cost of
 09-14935 Approved                                     8/7/2009       9/1/2009        N/A       N/A       N/A                                            N/A
                      Company                                                                                      reinsurance as % of hurricane
                                                                                                                   Initial filing for Voluntary HO
 09-15671 Approved Prepared Insurance Company          8/14/2009     9/15/2009        N/A       N/A       N/A                                         9/18/2009
                                                                                                                   Change for competitive reasons.
                      Star and Shield Insurance                                                                    The 0.0% approved is from the
 09-16053 Approved                                     8/14/2009     9/14/2009        N/A     -5.10%     0.00%                                         9/8/2009
                      Exchange                                                                                     OIR's figures. The change was
                                                                                                                   approved as filed.
                                                                                                                   HO-2,3,5: 21.3% (14.0% non-
                                                                   12/18/2009 New
 09-16058   Pending Electric Insurance Company         8/20/2009                    27.10%    14.00%               FHCF) reinsurance cost, 22.0%
                                                                    1/17/2009 Ren
                                                                                                                   non-hurricane LLAE ratio

                      American Mercury Insurance                   11/26/2009 New                                  HO-3: 4.8% reinsurance cost,
 09-16370   Pending                                    8/26/2009                    15.90%    13.30%
                      Company                                      12/26/2009 Ren                                  41.8% non-hurricane LLAE ratio.
                    First Floridian Auto and Home
                                                                                                                   HO Dwelling: -0.5% (0.8% non-
                    Phoenix Insurance Company
 09-16393   Pending                                 8/27/2009         1/1/2010      -23.80%   -10.00%              FHCF) reinsurance cost, 38.1%
                    Travelers Indemnity Company of
                                                                                                                   non-hurricane LLAE ratio.
                    Travelers Indemnity Company
                    American Integrity Insurance Co                                                                Voluntary HO Program. 26.1%
 09-16465   Pending                                 8/28/2009        11/28/2009     11.30%     8.50%
                    of Florida                                                                                     reinsurance cost.
                                                                                                                   Conversion to ISO Loss Costs w/
                                                                                                                   Multiplier. 5.5% FHCF
            Disappro New Hampshire Insurance                                                                       reinsurance cost, 14.8% non-
 09-16713                                              9/2/2009      11/30/2009      -3.60%   -3.50%
               ved   Company                                                                                       hurricane LLAE ratio.
                                                                                                                   Disapproved because filing
                                                                                                                   certification not included.
                      Privilege Underwriters                                                                       29.8% (12.1% non-FHCF)
 09-16745   Pending                                    9/2/2009      12/3/2009        N/A      4.30%
                      Reciprocal Exchange                                                                          reinsurance cost.
                                                                                                                   Alternate method produces
                                                                                                                   37.7% indicated and 13.9%
                                                                   12/5/2009 New
 09-16899   Pending St. Johns Insurance Company        9/7/2009                     46.10%    14.90%               proposed. HO-3: 36.2% (30.4%
                                                                    1/1/2010 Ren
                                                                                                                   non-FHCF) reinsurance cost,
                                                                                                                   29.8% non-hurricane LLAE ratio.

                                                                                                                   28.7% (19.0% non-FHCF)
                      Argus Fire and Casualty
 09-17039   Pending                                    9/9/2009      12/15/2009     36.90%     6.40%               reinsurance cost. HO-3: 70.7%
                      Insurance Company
                                                                                                                   non-hurricane LLAE ratio

Proprietary & Confidential                                                                                                    Page 11
 File Log                                              Date         Effective       Change    Change    Change                                          Date
 Number 1 Status 2            Company Name             Filed 3       Date 4        Indicated Requested Approved               Notes 5                 Approved 6
                                                                                                                  Indicated: H2/3 33.1% H6 15.0%
                    Liberty Mutual Fire Insurance
                                                                                                                  H4 12.8% Proposed: H2/3/6
                    Company                                       1/1/2010 New
 09-17087   Pending                                  9/10/2009                     See Notes   14.70%             14.7% H4 12.7%      H2/3: 3.3%
                    First Liberty Insurance                       2/22/2010 Ren
                                                                                                                  FHCF reinsurance cost, 61.1%
                                                                                                                  non-hurricane LLAE ratio.

                                                                                                                  Alternate method produces
                                                                  12/18/2009 New                                  43.5% indicated and 19.5%
 09-17588   Pending Olympus Insurance Company        9/18/2009                      55.30%     25.60%
                                                                   1/18/2010 Ren                                  proposed. HO-3: 24.4% (20.8%
                                                                                                                  non-FHCF) reinsurance cost.
                                                                                                                  Limited Reinsurance Filing. HO-
                      Universal Ins Co of North                   11/15/2009 New
 09-17647 Approved                                   9/21/2009                       N/A       7.20%    7.20%     3: 27.9% reinsurance cost.      10/7/2009
                      America                                     12/15/2009 Ren
                                                                                                                  Approved change uncertain.
                                                                                                                  HO-3 Homeowners. 31.5%
                      Northern Capital Insurance
 09-17687   Pending                                  9/22/2009       1/1/2010       18.80%     14.80%             (27.8% non-FHCF) reinsurance
                                                                                                                  Limited Reinsurance Filing.
                                                                  12/1/2009 New
 09-18011 Approved Ark Royal Insurance Company       9/29/2009                      10.40%     6.20%    6.20%     57.6% reinsurance cost as % of 11/12/2009%
                                                                   2/1/2010 Ren
                                                                                                                  hurricane premium.
                      American Platinum Property &                                                                Initial Rate Filing. 32.8% (31.9%
 09-18149   Pending                                  9/30/2009       1/1/2010        N/A        N/A
                      Casualty Ins                                                                                non-FHCF) reinsurance cost.

                                                                                                                  HO-3: Indicated 16.5%,
                      Fidelity National Insurance                                                                 Proposed 15.0%, 27.8% (28.4%
 09-18170   Pending                                  9/30/2009       1/1/2010        N/A       14.30%
                      Company                                                                                     non-FHCF) reinsurance cost,
                                                                                                                  38.2% non-hurricane LLAE ratio
                      Modern USA Insurance                                                                        39.8% (36.7% non-FHCF)
 09-18674   Pending                                  10/9/2009       1/1/2010        N/A       14.90%
                      Company                                                                                     reinsurance cost.
                                                                                                                  HO-3: 30.6% (24.1% non-FHCF)
                      United Property & Casualty                                                                  reinsurance cost, 32.0% non-
 09-19061   Pending                                  10/15/2009     1/15/2010       24.10%     14.10%
                      Insurance Company                                                                           hurricane LLAE ratio. Includes
                                                                                                                  wind mitigation discount offset.

                    Horace Mann Insurance                                                                         17.8% (17.3% non-FHCF)
 09-19131   Pending Company                          10/16/2009      3/1/2010       35.10%     14.70%             reinsurance cost. HO-3: 33.5%
                    Teachers Insurance Company                                                                    non-hurricane LLAE ratio.
                      Avatar Property & Casualty                                                                  22.46% (18.71% non-FHCF)
 09-19173   Pending                                  10/16/2009     1/15/2010       14.00%     13.10%
                      Insurance Company                                                                           reinsurance cost
                                                                                                                  HO-3: 21.7% (22.2% non-FHCF)
                      Cooperativa de Seguros                      1/17/2010 New
 09-19209   Pending                                  10/19/2009                     40.20%     14.90%             reinsurance cost, 15.1% non-
                      Multiples de PR                             3/17/2010 Ren
                                                                                                                  hurricane LLAE ratio.
                                                                                                                  HO-2/3: 30.3% (25.0% non-
                                                                                                                  FHCF) reinsurance cost, 23.6%
                    Sunshine State Insurance
 09-19580   Pending                                  10/23/2009      2/1/2010       13.70%     11.70%             non-hurricane LLAE ratio.
                                                                                                                  Includes wind mitigation discount
                                                                                                                  Limited Reinsurance Filing. HO-
 09-19631   Pending Gulfstream Insurance Company 10/24/2009          1/1/2010       3.70%      3.70%
                                                                                                                  3: 29.03% reinsurance cost.
                      Sawgrass Mutual Insurance                                                                   Adopt revisions made by Tower
 09-20009   Pending                                  10/30/2009     1/30/2010        N/A       0.80%
                      Company                                                                                     Hilll Select.
                                                                                                                  HO-2,3,5: 30.6% (28.9% non-
                      Cincinnati Indemnity Company
 09-20212   Pending                                  11/3/2009       4/1/2010       32.60%     10.80%             FHCF) reinsurance cost, 58.0%
                      Cincinnati Insurance Company
                                                                                                                  non-hurricane LLAE ratio
                                                                                                                  45.2% (35.7% non-FHCF)
                      People's Trust Insurance
 09-20361   Pending                                  11/3/2009       2/3/2010       25.70%     14.90%             reinsurance cost, HO-3: 27.7%
                                                                                                                  non-hurricane LLAE ratio.
                      Fidelity Fire and Casualty
                                                                                                                  23.5% (149% non-FHCF)
                      Insurance Company
 09-20395   Pending                                  11/4/2009      2/15/2010       13.50%     9.30%              reinsurance cost, HO-2,3: 21.7%
                      First Protective Insurance
                                                                                                                  non-hurricane LLAE ratio.
 09-20633   Pending Hartford the Midwest             11/6/2009       3/9/2010       7.90%      7.90%              HO-2,3: 25.2% reinsurance cost.
                                                                                                                  Initial filing for Select HO
                      Northern Capital Insurance
 09-20638   Pending                                  11/6/2009      11/30/2009       N/A        N/A               Program. 27.0% (19.0% non-
                                                                                                                  FHCF) reinsurance cost.
                    Homewise Insurance Company                                                                    HO-3: 23.4% (20.9% non-FHCF)
 09-20765   Pending Homewise Preferred Insurance     11/9/2010       3/1/2010       47.20%     14.90%             reinsurance cost, 64.5% non-
                    Company                                                                                       hurricane LLAE ratio.

Proprietary & Confidential                                                                                                   Page 12
 File Log                                                   Date          Effective      Change    Change    Change                                              Date
 Number 1 Status 2          Company Name                    Filed 3        Date 4       Indicated Requested Approved                     Notes 5               Approved 6
                     American Strategic Insurance
                                                                                                                            Limited Reinsurance Filing.
                                                                       1/1/2010 New                                         69.1% reinsurance cost of
 09-20777    Pending ASI Assurance Corporation           11/10/2010                       6.60%       6.60%
                                                                       3/1/2010 Ren                                         reinsurance as % of hurricane
                     ASI Preferred Insurance
                                                                                                                            Rating algorithm change and
                                                                                                                            Wind Premium Modifier
                       Universal Property and Casualty                 2/19/2010 New                                        (applicable to Windstorm Loss
 09-21449    Pending                                   11/13/2009                         9.20%       3.80%
                       Insurance Co                                    4/19/2010 Ren                                        Mitigation Credits). 32.8%
                                                                                                                            (31.9% non-FHCF) reinsurance
 09-21479    Pending Service Insurance Company           11/13/2009       3/1/2010          N/A       -0.20%                Wind mitigation discount offset.

                                                                                                                            HO-3: 28.4% (23.5% non-FHCF)
                       Cypress Property and Casualty
 09-21490    Pending                                     11/14/2009      2/15/2010        19.80%      14.30%                reinsurance cost, 29.6% non-
                       Insurance Co
                                                                                                                            hurricane LLAE ratio.

NOTES:       Aon Benfield has attempted to gather information pertaining to Florida rate filings from publicly available sources.
             Under no circumstance does Aon Benfield represent or warrant the accuracy or completeness of the information contained herein.

             File Log Number is the number assigned by the Florida Office of Insurance Regulation (OIR).
             Status is that shown in the OIR's Industry Portal as of November 16, 2009
             Date Filed is the date shown in the OIR's Industry Portal. It may not match the date of the filing letter from the company.
             Effective Date is that requested by the company in their filing letter for pending filings. Approved filings show the effective dates approved by the OIR.
             Notes are based on information contained within the filing. In some cases, judgment was used to select information where there was conflicting information.
             Date Approved is the date of the approval letter from the OIR.

SOURCE: Florida OIR at

Proprietary & Confidential                                                                                                              Page 13

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