All material subject to strictly enforced copyright laws. © 2021 Insurance Insider is part of Euromoney Institutional Investor PLC.
Accessibility | Terms & Conditions | Privacy Policy | Modern Slavery Act | Cookies | Subscription Terms & Conditions

Speculation mounts over Sawgrass book

Speculation is mounting over the future of Sawgrass Mutual's book of Florida homeowners' business after the company was placed into administrative supervision by its state regulator last week.

The move by the Florida Office of Insurance Regulation (FLOIR) came a day after the carrier was dealt a significant blow by Demotech, as its financial stability rating (FSR) was downgraded from A, Exceptional to L, Licensed.

The FLOIR consent order, signed by Insurance Commissioner David Altmaier, was the result of a review of Sawgrass Mutual's financial condition, said the regulator.

"The Office has determined that grounds exist for Sawgrass to be placed in administrative supervision for the purpose of protecting the assets of Sawgrass and protecting the interests of its insureds during the implementation of an orderly wind-down of the company's operations," the FLOIR said in a statement.

It added that the insurer had been "fully cooperative" and agreed to be placed into administrative supervision.

The supervision is scheduled to last 120 days, but can be extended in 120-day increments for as long as it takes for the company to implement and complete its wind-down plan.

The order added that the wind-down would include the "orderly transition" of policies from Sawgrass Mutual to another insurer.

As reported last week, Demotech downgraded Sawgrass Mutual after it observed a significant deterioration in the carrier's surplus.

http://www.insuranceinsider.com/up-for-sale-sawgrass-loses-crucial-a-rating

In a statement, Demotech said the action had been necessary despite the fact the up-for-sale carrier has been in negotiations over "a number" of potential transactions.

Demotech president Joe Petrelli said the insurer's initial year-end 2016 financial statement, which reported surplus in excess of $20mn, had been filed in a timely manner. It also put in place an effective reinsurance programme prior to the hurricane season, he added.

"The focus of the company was to identify suitors and negotiate a transaction that was favourable to their policyholders rather than write additional new business," he continued.

But the agency added that the deadline for an independent audit of Sawgrass had passed without it receiving a copy.

And second quarter financials filed with Demotech last week, as well as a revised year-end 2016 financial statement, revealed surplus and other financial metrics were at levels that no longer supported the FSR, said the firm.

"Currently, management has not communicated the most recent status of negotiations by the company," the statement concluded.

According to Demotech's website, the policyholders' surplus at Sawgrass had dropped to just over $10.0mn at 30 June this year.

In a revised 2016 statutory annual statement filed on 5 May this year, the carrier's policyholders' surplus was stated at $13.8mn - well down on the more than $20.0mn originally stated.

 

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree