Heritage Insurance Holdings (HRTG), a property and casualty insurance holding company, announced that its insurance subsidiaries, Heritage Property & Casualty Insurance Company ("Heritage P&C") and Zephyr Insurance Company completed the placement of their 2016-2017 reinsurance programs.

The programs are incorporated into one reinsurance structure and are allocated amongst traditional reinsurers, catastrophe bonds issued by Citrus Re and the Florida Hurricane Catastrophe Fund (FHCF).

The program provides approximately $3.0 billion in reinsurance protection for catastrophic losses and exceeds the requirements established by the Company’s rating agency, Demotech, Inc., the Florida Office of Insurance Regulation and the Hawaii Insurance Department.

Bruce Lucas, Chairman and CEO of Heritage, said, "We are pleased to have secured $3.0 billion in reinsurance coverage. This level of catastrophe reinsurance reflects the Company’s conservative approach to risk management and our focus on protecting both our policyholders and our stockholders against the peril of a hurricane.

Our mix of business has changed from last year with the addition of the wind-only book of business from Zephyr, the wind-only policies assumed from Citizens and the growth we have experienced in our commercial residential business, all of which have higher reinsurance costs and lower attritional loss ratios.

"The addition of the Zephyr policies allowed us to recognize significant synergies, while further diversifying our reinsurer panel by adding several new reinsurers to our program. We are pleased with our rate, the significant level of coverage we have from our partners and the positive shift in business toward lower attritional losses."

The 2016-2017 reinsurance program provides first event coverage up to $1.9 billion in Florida, first event coverage up to $1.1 billion in Hawaii, and multiple event coverage up to $3.0 billion.

Heritage P&C has a first event primary retention of $20 million and Osprey Re, Heritage’s captive reinsurance company, has an additional $20 million first event primary retention.

Heritage P&C has a $15 million second event primary retention and a $5 million primary retention for third and subsequent events. If the first event happens in Hawaii, Zephyr and Osprey Re have a $15 million and a $20 million primary retention, respectively. Zephyr has a $5 million primary retention for second and subsequent events.

The Company’s estimated total cost for the 2016-2017 catastrophe reinsurance program is approximately $240 million, which represents an estimated 37% cost of reinsurance or ceded premium ratio.

The cost as a percentage of gross premiums earned is an increase of approximately 2.6 percentage points over last year’s program. The primary factor causing the increase is the shift in the mix of business to include wind only business and a greater number of commercial residential policies that have lower non-wind (all other peril) losses.

The Company also renewed its property per risk treaty, which limits losses to $1 million, at a rate decrease.

Heritage Insurance Holdings, Inc. is a property and casualty insurance holding company headquartered in Clearwater, Florida.

Its insurance subsidiaries, Heritage Property & Casualty Insurance Company and Zephyr Insurance Company, write over $600 million and $60 million, respectively, of personal and commercial residential premium through a large network of experienced agents.