In another sign of problems in Florida’s property-insurance market, the AM Best rating agency has raised concerns about Castle Key insurance companies.
AM Best said Thursday that it has “placed under review with negative implications” the financial-strength rating and the long-term issuer credit rating of Castle Key Group.
AM Best said in a news release that it made the move “due to a material deterioration in its (Castle Key’s) surplus position as a result of challenging personal property insurance conditions in Florida, including higher loss severity, catastrophe-related losses and the increased cost of reinsurance. Castle Key management has taken significant corrective underwriting actions and is actively engaged in discussions with state regulators on appropriate capitalization levels.
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Given the uncertainty regarding the placement of its 2023 reinsurance program and future capital position, the ratings will remain under review until AM Best can fully analyze the impact of these actions.” Florida property insurers have dropped hundreds of thousands of policies and raised rates because of widespread financial problems during the past two years.
The state has placed seven insurers in receivership since early 2022, including United Property & Casualty Insurance, which was placed in receivership last month.
A key issue has been a lack of affordable reinsurance, which plays a critical role as backup coverage for insurers.
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The AM Best news release said Thursday’s move applied to four Castle Key companies: Castle Key Insurance Co., Castle Key Indemnity Co., Encompass Floridian Insurance Co. and Encompass Floridian Indemnity Co.
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