U.S.primary insurance carrier group FedNat Holding Company is anticipating reinsurance recoveries will help to minimise the impacts to its business from hurricane Ida, resulting in a net impact to the company less than its retention.Both of FedNat’s core insurance underwriting carrier subsidiaries, FedNat Insurance Company and Maison Insurance Company, write homeowners business in Louisiana.Already our sources have cited FedNat as one company to watch, given its challenges in maintaining the required levels of capital and surplus over recent years.

We’re told a number of primary carriers are set to rely heavily on their reinsurance partners for hurricane Ida, one of which will be FedNat it seems.Across , the company said it anticipates gross losses from hurricane Ida will be above its combined $18.3 million retention.The insurer said it’s too early to understand the extent of its loss from the hurricane, but with roughly $2.25 billion in aggregate reinsurance cover across all states in which FedNat operates, it seems well protected.

FedNat further explained that as much as $910 million of aggregate reinsurance coverage is available for hurricane Ida, portions of which are available to each of its insurance subsidiaries, as determined by which reinsurance tower they benefit from.In addition, the programs provide $831 million of private reinsurance across the combined programs for second and subsequent events, after individual retentions and the aggregate limit.Given the way FedNat operates, with claims adjusting subsidiaries to deal with catastrophe events such as this, fee income will be earned and so, as a result, FedNat said its net loss from hurricane Ida will be less than the retention of $18.3 million.

Which means all the rest of the losses from hurricane Ida will flow to its reinsurance partners, including to those from the insurance-linked securities (ILS) marketplace.– .– .

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