FedNat Pulling Out of Louisiana, Texas Amid Heavy Storm Losses

After two years of heavy storm-related losses, FedNat Insurance is pulling out of the Louisiana and Texas markets and doubling down on its home state of Florida.

FedNat announced its decision to exit non-Florida markets during its holding company’s third quarter earnings report on Monday, Nov. 8. FedNat’s wholly-owned subsidiary, Maison Insurance Company, expects to begin non-renewing its Louisiana policies in January 2022 and its Texas policies in February 2022.

In late 2019, FedNat acquired Louisiana-based Maison and with it more than 1,300 homeowners insurance operations, mostly in Louisiana and Texas. At the time, FedNat expected the acquisition to hasten its expansion throughout the South Central.

Over the next two years, the region was battered by major storms, including a severe winter blitz in Texas earlier this year and Hurricane Ida in Louisiana late this summer.

“The impact of these significant catastrophe weather events has put a strain on FedNat’s capital position and further action is now appropriate,” Michael H. Braun, FedNat’s Chief Executive Officer, said during the company’s third quarter earnings.

FedNat Hopes to Improve Numbers By Concentrating on Florida Market

FedNat has grown to be one of the largest homeowners insurance companies in Louisiana with more than $81 million in premiums between FedNat Insurance Company and Maison, according to the National Association of Insurance Commissioners.

FedNat’s expansion in Louisiana didn’t come without difficulties. A report this spring from the Louisiana Department of Insurance showed 157 complaints against the company arising from hurricanes Laura, Delta and Zeta. That was the second most complaints of any insurance company, trailing only State Farm.

Financial rating service Demotech informed FedNat that it is withdrawing its rating for Maison, which Braun said “we believe is appropriate at this time.”

FedNat’s non-Florida book has been written through third-party managing general underwriter SageSure. Beginning in December, SageSurge will start making offers of coverage to FedNat policyholders to renew most policies onto alternative insurance carrier partners.

Braun said, “The process of running off the Maison book and transferring the SageSure policies is expected to take approximately 18 months to complete, resulting in a financially stronger company with approximately $450 million of anticipated in-force premium exclusively in Florida.”