But earlier this month, ratings firm Demotech confirmed in a release that Southern Fidelity was unable to secure reinsurance coverage for the upcoming hurricane season, and subsequently withdrew its Financial Stability Rating for the insurer.
“After completing our review of first quarter 2022 financial statements and considering that the Company’s reinsurance coverage for the 2022 hurricane season is not complete as of June 2, 2022, Demotech has withdrawn the Financial Stability Rating previously assigned to Southern Fidelity Insurance Company,” Demotech said in its release.
Things continue to look grim for Southern Fidelity, as the Florida Office of Insurance Regulation (OIR) recently issued an order which stated that the insurer had entered negotiations to transfer some or all its policies to another insurer as part of a “winding-down” plan. Artemis.bm reported that Southern Fidelity has about 78,000 policies in force in Florida, as well as another 69,000 across Louisiana, South Carolina and Mississippi.
The OIR said that it found Southern Fidelity in “hazardous financial condition,” and had ordered the insurer to present a remediation plan this week.
Read more: Three Florida insurers approved to drop over 50,000 homeowners’ policies
This is not the first time Southern Fidelity was ordered to offload its policies. In May 2021, the insurer – along with Gulfstream Property and Casualty as well as Universal Insurance Company of North America – was ordered by the OIR to terminate more than 50,000 home insurance policies in the face of Florida’s troubled insurance market. For its part, Southern Fidelity was authorized to cancel 19,600 residential policies.
