Several Property Insurance Companies in Florida Lose Financial Stability Ratings | Florida News | Orlando

In another sign of trouble in Florida’s property insurance market, a financial ratings agency withdrew the ratings of two insurance companies and downgraded another company.

The Demotech agency on Monday withdrew the financial stability ratings of Weston Property & Casualty Insurance Co. and FedNat Insurance Co., according to Demotech’s website. It also changed the rating of United Property & Casualty Insurance Co. from “A Exceptional” to “M Moderate”. The Insurance Journal reported the ratings changes on Tuesday morning.

Signs had appeared earlier of financial problems at FedNat and United Property & Casualty. FedNat reached an agreement in May with the State Insurance Regulatory Board that asked it to cancel the policies and transfer other policies to an affiliate, Monarch National Insurance Co. Monarch has a note “ A Exceptional” by Demotech.

Additionally, United Property & Casualty said last month that its board had begun a “review of its strategic and capital-raising alternatives” that could include steps such as a sale. Financial ratings are important, in part because mortgage giants Fannie Mae and Freddie Mac require homes to be insured by financially sound companies. For insurers rated by Demotech, Fannie Mae and Freddie Mac require “A” ratings or better. Florida regulators scrambled in July after Demotech said it could downgrade about 17 insurers to a level that wouldn’t meet Fannie Mae and Freddie Mac standards.

On July 27, the Office of Insurance Regulation announced an interim plan to try to ensure homeowners can maintain their coverage. The plan involved the Citizens Property Insurance Corp. of the State acting as a financial support. Citizens would take on a reinsurance role to ensure claims are paid if private insurers become insolvent.

Demotech last month did not publicly identify the companies it planned to downgrade, so it was not immediately clear on Tuesday whether Weston Property & Casualty, FedNat and United Property & Casualty were among the 17 potential insurers.

Kristan F. Talley