Florida’s Citizens Property Insurance Corporation, the state’s insurer of last resort, has cited favourable market conditions as it was able to successfully place its target risk transfer programme of $4.49 billion for the 2025 wind season, which includes $2.89 billion of new coverage from the traditional reinsurance and capital markets.
Back in April, the Citizens Board approved the carrier to look to secure the $4.49 billion of coverage for its 2025 risk transfer programme, at a maximum cost of $550 million.
The insurer of last resort has now confirmed that, thanks to “favourable market conditions”, it was able to secure the target amount of reinsurance protection at its renewal, for a total cost of $530.6 million, so below the top-end of the budget.
This year’s programme is comprised of $1.6 billion of in-force multi-year coverage from 2023 and 2024, and $2.89 billion of new coverage, of which $1.369 billion, or 47% was placed in the traditional reinsurance market, and $1.525 billion, or 53% was placed in the capital markets via Everglades Re II Ltd. (Series 2025-1), the largest catastrophe bond ever issued at the time.
Interestingly, Citizens has noted that the $2.89 billion of new coverage secured for 2025 has a net rate on line (ROL) of 11.95%, which is a 13.5% decrease on the net ROL of 13.81% for the $3.064 billion of new risk transfer placed for the 2024 programme. For the entire 2025 risk transfer programme, the gross ROL is 11.89% and the net ROL is 11.74%, explains Citizens.
The fact Citizens was able to secure the target amount of risk transfer below budget, and with a significant drop in the ROL year-on-year, is another sign of the more favourable conditions for buyers of protection in 2025 when compared with recent years, which reflects some market softening, albeit it from a high base.
In contrast, last year, Citizens was approved to purchase $5 billion of fresh capital from the traditional and capital markets, but only placed $3.064 billion, split $1.964 billion from the traditional market and around $1.6 billion from the capital markets, for a cost of $482 million.
“The 2025 risk transfer program incorporates strategic elements from prior risk transfer programs, which include: transferring risk alongside the FHCF and transferring single occurrence and annual aggregate risk to protect a portion of surplus for most catastrophic events and thereby eliminates the probability of emergency assessments for a 1-in-100-year event to the citizens of Florida and reduces the probability of a Citizens’ policyholders surcharge to a 1-in-96-year return time,” explains Citizens.
You can see Citizens’ 2025 risk transfer tower below, which includes surplus, Florida Hurricane Catastrophe Fund (FHCF) coverage, and traditional reinsurance and catastrophe bonds from 2023, 2024, and 2025.
“The 2025 risk adjusted price reflects substantial improvement in market conditions. For coverage placed in 2025, the price is approximately 13.5% lower than it would have cost for similar coverage in 2024,” explains Citizens.
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