0001069996false14050 N.W. 14th
StreetSuite 180SunriseFL00010699962020-10-192020-10-19
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of Report: October 19, 2020
(Date of earliest event reported)
FEDNAT HOLDING COMPANY
(Exact name of registrant as specified in its charter)
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Florida |
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000-25001 |
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65-0248866 |
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(State or other jurisdiction of incorporation) |
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(Commission File Number) |
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(IRS Employer Identification No.) |
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14050 N.W. 14th Street, Suite 180
Sunrise, FL
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33323 |
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(Address of principal executive offices) |
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(Zip Code) |
Registrant’s telephone number, including area code:
(800) 293-2532
(Former Name or Former Address, if Changed Since Last
Report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2.
below):
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☐ |
Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class |
Trading Symbol |
Name of each exchange on which registered |
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Common Stock |
FNHC |
Nasdaq Global Market |
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange
Act of 1934 (§240.12b-2 of this chapter).
Emerging growth
company
☐
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act. ☐
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Item 2.02. |
Results of Operations and Financial Condition. |
Third Quarter Catastrophe Losses
FedNat Holding Company (the “Company”) estimates, as of the date of
this Current Report on Form 8-K, that catastrophe weather losses
incurred during the quarter ended September 30, 2020 will reduce
its third quarter net income by approximately $29 million, net of
all recoveries, including reinsurance, on an after-tax basis. These
catastrophe losses were driven primarily by Hurricanes Laura and
Sally, which together impacted eastern Louisiana, Texas, Alabama
and the Florida Panhandle, as discussed in the respective Reports
on Form 8-K filed during the quarter. Other third quarter events
included Hurricanes Hanna and Isaias, which gave rise to minor
losses. Pre-tax net catastrophe losses, by state, are estimated as
follows (in millions):
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Florida |
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25.7 |
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Louisiana |
16.6 |
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Other |
2.6 |
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Total (pre-tax) |
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44.9 |
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Subsequent Event - Hurricane Delta
Hurricane Delta made landfall near Creole, Louisiana, on October 9,
2020 as a Category 2 hurricane impacting both Texas and Louisiana.
FNIC and MIC each write homeowners insurance in these states. The
Company has deployed the appropriate resources to the affected
areas to best serve our policyholders in their time of
need.
The Company currently estimates that its initial aggregate gross
losses as a result of Hurricane Delta, which will be paid out in
the coming months, will exceed its single-event aggregate
reinsurance retention of $25 million. It is anticipated that the
total net impact to the Company will be reduced to $10-15 million,
pre-tax, as a result of additional underlying catastrophe
reinsurance protection in place on FNIC’s non-Florida business and
the 50% quota-share reinsurance treaty in place on the book written
by SageSure Insurance Managers LLC, our independent Managing
General Underwriter partner.
Rate Increases
The Company continues to file for rate increases on its homeowners
business to ensure its rates better reflect the increased costs
related to claims activity and costs of reinsurance. The most
significant of these rate filings include:
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Description |
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Statewide Average Increase |
Effective Date (Renewals) |
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FNIC Homeowners Florida: |
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Annual - 2020 |
7.4% - Approved |
June 2020 |
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Reinsurance Increase - 2020 |
5.6% - Approved |
October 2020 |
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Annual - 2020 |
8.1% - Filed |
January 2021 (Anticipated) |
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FNIC Homeowners Non-Florida: |
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Texas |
9.5% - Approved |
November 2020 |
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Louisiana |
9.9% - Filed |
December 2020 (Anticipated) |
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Maison Homeowners: |
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Louisiana |
15.9% - Filed |
November 2020 (Anticipated) |
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Texas |
12.3% - Filed |
December 2020 (Anticipated) |
The Company is currently restricting new business throughout
Florida during hurricane season and until our approved rates more
accurately reflect our increased claims costs.
The Company is providing certain updates to its 2020-2021
reinsurance program, which was previously described in a Form 8-K
filed with the SEC on June 1, 2020, as updated by subsequent
filings on Form 8-K filed on September 9, 2020 and September 21,
2020.
FNIC – 2020-2021 Florida Homeowners Quota-Share
Reinsurance
Effective October 1, 2020, FNIC increased the cession percentage on
its quota-share reinsurance program for 2020-2021 on its Florida
homeowners book of business from 10% to 20% on an in-force, new and
renewal basis. The program originally became effective on July 1,
2020 and was initially set at 10%. The treaty continues to provide
protection excluding named storms, subject to certain limitations
including, but not limited to, caps on losses associated with
non-named storm catastrophe losses.
The Company currently intends to explore additional quota-share
reinsurance treaties in the coming months.
_____________________________
The information in Item 2.02 of this Current Report on Form 8-K is
hereby intended to be furnished and, as provided in General
Instruction B.2 of Form 8-K, such information shall not be deemed
"filed" for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), or otherwise subject to
the liabilities of that section, and it shall not be deemed
incorporated by reference in any filing under the Securities Act of
1933, as amended (the “Securities Act”), or under the Exchange Act,
whether made before or after the date hereof, except as expressly
set forth by specific reference in such filing to this Current
Report on Form 8-K.
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Item 9.01. |
Financial Statements and Exhibits. |
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(d) |
Exhibits. |
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104 |
Cover Page Interactive File (the cover page tags are embedded
within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly
authorized.
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FEDNAT HOLDING COMPANY |
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Date: October 19, 2020 |
By: |
/s/ Ronald A. Jordan |
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Name: |
Ronald A. Jordan |
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Title: |
Chief Financial Officer |
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(Principal Financial Officer) |
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FedNat (NASDAQ:FNHC)
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