Current Report Filing (8-k)
September 09 2020 - 04:02PM
Edgar (US Regulatory)
0001069996false14050 N.W. 14th
StreetSuite 180SunriseFL00010699962020-09-092020-09-09
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: September 9, 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 |
(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 |
(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 |
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. ☐
Hurricane Laura made landfall near Cameron, Louisiana, on August
27, 2020 as a Category 4 hurricane impacting both Louisiana and
eastern Texas. FedNat Holding Company (the “Company”) has two
insurance subsidiaries that write homeowners insurance in these
states: FedNat Insurance Company (“FNIC”) and Maison Insurance
Company (“MIC”). The Company has deployed the appropriate resources
to the affected areas to best serve our policyholders in their time
of need.
The Company has in place a combined reinsurance program for all its
carriers, with the most recent renewal beginning on July 1, 2020.
The Company estimates that its initial aggregate gross losses as a
result of Hurricane Laura, which will be paid out in the coming
months, will exceed its single-event reinsurance retention of $25
million. Approximately $19 million of this retention will be borne
by the Company, after reflecting the impact of the quota-share
treaty in place with a reinsurance entity under the same ownership
umbrella as SageSure Insurance Managers LLC (“SageSure”), the
managing general underwriter for FNIC’s non-Florida business. The
Company anticipates incurring the full $6 million co-participation
previously disclosed related to the reinstatement premium
protection (discussed further below), which will be reduced to $5
million, after the SageSure quota-share offset. As such, the total
initial pre-tax impact to the Company from Hurricane Laura is
estimated to be $24 million. This estimate is subject to change
based primarily on the actual ultimate losses incurred and the
split thereof between FNIC and MIC.
As previously disclosed, the Company purchased reinstatement
premium protection within its reinsurance program that will replace
any reinsurance limit utilized by Hurricane Laura so that the
Company has the same core single-event coverage available for a
subsequent event. As such, the Company has $616 million of limit
available for an event outside Florida or approximately $1.3
billion available for an event in Florida. The Company previously
purchased second event reinsurance coverage for FNIC’s non-Florida
book of business which reduces FNIC’s non-Florida retention to
approximately $2 million for a second hurricane event, 50% of which
would be borne by SageSure. Because Hurricane Laura did not impact
Florida, if a future event were to impact the state of Florida the
Company’s retention would be limited to $25 million, which would
decrease to approximately $10 million if a second or third future
event were to impact Florida during the current treaty year, which
ends on June 30, 2021.
On September 3, 2020, the Company secured an additional $39.2
million of reinsurance limit at an approximate cost of $11.2
million, which increases the Company’s estimated total reinsurance
spend for this treaty year from approximately $265 million to $276
million. This newly secured additional limit will be available for
a second event (excluding Hurricane Laura), should one occur,
during the remainder of the current treaty year. Any disturbances
that were active in the Atlantic Ocean as of September 3, 2020 are
excluded with respect to this additional limit.
The Company expects to report on its total estimated catastrophe
losses from all third quarter events following quarter end. Please
see the Company’s Form 8-K dated June 1, 2020 and Form 10-Q dated
June 30, 2020 for further information regarding the reinsurance
program and how it protects each of our three insurance companies
from catastrophic losses both inside and outside the state of
Florida.
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Item 9.01. |
Financial Statements and Exhibits. |
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(d) |
Exhibits. |
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: September 9, 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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