Insurer with 140,000 Florida homeowners policies loses rating

One of Florida’s largest property insurers could be going out of business after a ratings agency withdrew its assessment of St. Johns Insurance Co. on Thursday.

Without its “A” rating, St. Johns’ 140,000 customers in Florida could be forced to find new coverage. The state’s Office of Insurance Regulation said it was working with the company to find options to ensure its customers wouldn’t lose coverage.

Already, one option appears to have emerged. On

Friday, the trade publication The Insurer reported that Tampa insurance startup Slide has petitioned the Office of Insurance Regulation to take over St. Johns’ policies on March 1.

A spokesperson for Slide declined to comment, and a spokesperson for the Office of Insurance Regulation did not answer when asked to confirm that Slide had reached out to its office.

Calls to St. Johns’ president and chief operating officer were not returned.

The Orlando-based company appears to be the latest casualty in Florida’s property insurance market, where rates have been skyrocketing and a handful of insurers have gone out of business in the last few years.

St. Johns, established in Florida in 2003, has been known to be in financial trouble for at least a year. Last year, ratings agency Demotech warned that St. Johns and five other insurers needed to improve financially if they wanted to keep their “A” rating.

Earlier this week, St. Johns announced it was no longer writing homeowners’ policies in Florida, joining at least a dozen other insurers that have recently suspended new business, limited the types of homes they cover or canceled policies outright.

Joe Petrelli, president of Demotech, one of two ratings agencies for Florida-based insurers, said in a statement that the decision to remove the company’s “A” rating came after reviewing the company’s recent financial statements.

“Based upon our recent conversation with St. Johns, we concluded that they would not meet the criteria for sustaining [a financial stability rating] of A and we withdrew their [rating],” Petrelli said in a statement.

For homeowners, the rating is critical: Most mortgage lenders require the homeowner have insurance from a rated company.

When Demotech pulled the rating of St. Petersburg-based American Capital Assurance Corp. last year, the company was ordered into receivership about a month later.

Petrelli, echoing the claims of insurers and many lawmakers, said the industry “is fraught with claims inflation, fraud and well above average litigation rates” that have put a strain on insurance businesses.

For instance, some point to fraudulent claims from roofers going door to door offering to help homeowners replace their roofs as a major factor in industry losses. State lawmakers this session are considering changing state law to allow insurers to offer policies that would make homeowners pay more to replace their roof.