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Home / Insurance / When will United Property and Casualty Insurance Company declare insolvency? | Property Insurance Protection Law Blog

When will United Property and Casualty Insurance Company declare insolvency? | Property Insurance Protection Law Blog



Many of the crazy denials and claim positions taken by United Property and Casualty Insurance Company (UPC) have been caused by the company trying to survive financially. That doesn’t make it right. It has led to thousands of unnecessary lawsuits, which the company then blames on lawyers rather than looking in the mirror at its own wrongdoing.

UPC suffered a critical financial blow when Hurricane Ian hit. A credit rating agency further lowered an already low rating. An article1 noted:

Other credit negatives include a historical trend of negative reserve development, geographic concentration and reliance on reinsurance, offset by a conservative investment portfolio and an experienced management team.

United̵

7;s estimate of $36.4 million or losses from Ian is before income taxes, net of expected reinsurance, and includes a net retainage of $16.4 million split between approximately $7.4 million to UPCIC and $9.0 million to American Coastal Insurance Company, plus a $20 million retainer of the company’s captive. reinsurer, UPC Re.

UPC Insurance has received approximately 19,000 claims so far and estimates that they will receive 27,000 to 30,000 claims in total with an estimated gross loss of $1 billion.

The company also expects to incur approximately $16 million in reimbursement premiums that will be amortized over the remaining term of its core catastrophe reinsurance program, which expires on May 31, 2023.

KBRA said a significant infusion of capital from United into UPCIC could result in stabilization of its rating, but warned that further downgrades could also be driven by capital deterioration, further impactful weather events, continued operating losses or an inability to collect on reinsurance.

Maybe UPC will find a golden angel to buy it or make a significant reinvestment. But this company is clearly insolvent, and has been acting like one for quite some time when it comes to claims handling.

The only positive thing about such insolvency is that the wrongful damage behavior ends. There is nothing else good from this. Policyholders, employees and the general insurance markers will be affected. This is sad.

My additional concern is that other insurance companies are facing the same financial problems. Hurricane Ian may not be the costliest hurricane to hit Florida, but it may be the most catastrophic.

Today’s thought

A bankruptcy judge can fix your balance sheet, but he can’t fix your business.
—Gordon Bethune
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1 https://www.reinsurancene.ws/kbra-downgrades-uniteds-pc-unit-after-ian-losses/


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