Florida Flood Risk Repricing
Brian@brian
+7.7%
since Sep 29
The idea
I believe Florida's flood and storm risk is only getting more expensive, and the money gets made by whoever reprices that risk, not whoever holds it. So this leans into reinsurers who reset prices every year, brokers who take a cut of every rising premium without ever paying a claim, and a small slice of the data firms whose models set the price. Local carriers stuck holding the risk are deliberately excluded. It is spread across many names rather than one bet, built to sit for years, with some cash kept aside to add after the next big storm scare.
What it owns
- Brokers earn a cut of every premium placed without paying claims, so rising coastal insurance prices flow directly into their fees. · Brown & BrownIt earns commissions on Florida property insurance premiums without holding the underlying risk, so rising coastal premiums flow straight to fees., Aon plcIt collects commissions on insurance premiums placed and never pays claims, so increasing Florida property costs lift its fees., Arthur J. GallagherIt acquires smaller brokers at valuations that rise with premium growth, so repricing benefits both its organic fees and deal economics., Ryan Specialty HoldingsIt places risks standard insurers won't cover, including coastal Florida property, and benefits as traditional carriers retreat from the state., Willis Towers WatsonIt earns the same premium commissions as larger brokers but at a lower valuation, positioning it to capture margin if coastal pricing strength persists.40%
- Reinsurers reset catastrophe prices annually, so worsening Florida storms let them charge more for the same risks. · Arch Capital GroupIt writes reinsurance only when the price justifies the risk, positioning it to benefit from rising Florida catastrophe rates., RenaissanceRe HoldingsCatastrophe reinsurance is its core business, with price resets twice yearly, making it a direct play on rising coastal wind and flood rates., Everest GroupAs one of the largest reinsurers taking Florida storm risk, it reprices its book at scale when the industry charges more after losses., Hamilton Insurance GroupAs a smaller Bermuda reinsurer concentrated in catastrophe risk, it sees outsized earnings growth when Florida storm repricing accelerates., SiriusPointIt combines a turnaround from culling poor risks with exposure to hardening reinsurance pricing, allowing both improvements to compound.38%
- Catastrophe models are what insurers use to price storm risk, and demand for them grows as risk assessments become more severe. · Verisk AnalyticsIt sells the catastrophe models and data the industry uses to price coastal risk, so every repricing cycle runs through its software., Moody's CorporationIt owns RMS, one of the two major catastrophe modeling firms, so Florida flood risk remeasurement often flows through its tools and revenue.12%
- Cash10%