Tampa insurance firm Homeowners Choice Property & Casualty Insurance Co. has a preliminary agreement to acquire St. Petersburg’s Anchor Property & Casualty Insurance Co. and all of its policies.
As a result, Anchor stopped taking on new policies in Florida, state regulators said.
Homeowners Choice’s parent company, HCI Group, issued a statement Monday saying the Tampa insurer would absorb all 43,209 policies from Anchor, roughly $69 million in annual premiums. The financial details of the acquisition were not disclosed.
Homeowners Choice is the thirteenth largest property insurance company in the state with roughly 108,200 policies as of June 2019.
Anchor previously wrote insurance policies in Florida, Louisiana and Texas. It did not return an email and a call for comment Wednesday. HCI Group declined to comment to the Tampa Bay Times via email.
Florida Office of Insurance Regulation spokeswoman Alexis Bakofsky said the state regulator received a letter of intent from Homeowners Choice to carry out the acquisition. She said the agency will make sure there will be no gaps in homeowners’ insurance as a result of the takeover.
The acquisition is expected to be finalized by mid-February.
The move comes on the heels of an announcement Tuesday that private insurance company rating firm Demotech Inc. reduced Anchor’s financial stability rating from “A,” which is exceptional, to “M” for moderate. That rating went back to "A" after the acquisition was announced, but that will become moot when Homeowners Choice absorbs Anchor.
In an interview with the Times, Demotech president Joseph Petrelli said the ratings company previously gave Anchor a list of steps it would need to take to retain its rating and a timeline by which to accomplish it.
“Some companies do it, and other companies say, ‘We surrender, and we’re going to take alternative action,’” Petrelli said.
Anchor is one of up to 18 Florida insurance companies that Demotech announced it has planned ratings downgrades through the first quarter of 2020. The downgrades, it said in a letter to Citizens Property Insurance Co., were largely driven by economic factors. Among them are increased debt from storms between 2016 and 2019, as well as a South Florida-driven issue called “assignment of benefits,” where the price of a repair for water damage not caused by a storm is disputed in court.
Petrelli said that more insurers will likely change hands in the coming weeks and months based on Demotech’s downgrades and conversations the ratings company has had with the affected companies.