Back in 2004, state lawmakers increased the size of the mandatory layer
from $11 billion to $15 billion.
Best's analytical judgment, coverage provided by the FHCF's mandatory layer
will be reduced by 12.
All insurers are required to purchase a mandatory layer
of reinsurance from the state-sponsored Florida Hurricane Catastrophe Fund (Cat Fund).
Residential insurers in Florida are required to purchase at least some Cat Fund coverage, and many elect to purchase the maximum amount of limit possible from the mandatory layer
The successful completion of Swiss Life's initiatives to reduce its dependency on capital markets and restore the long-term profitability of its core domestic business -- including the introduction of risk-adjusted pricing for the mandatory layer
of its Swiss group life business -- remain key factors in maintaining the ratings.
The fund consists of several layers of coverage: A mandatory layer
for all Florida residential property insurers, and an optional $10 million "drop-down" layer of coverage that it has offered to select insurers over the past few years.
The improving financial outlook means that the Cat Fund is finally in a position to handle all of its coverage obligations under the so-called mandatory layer
However, the Swiss government's announcement to reduce the guaranteed yield on the mandatory layer
of group life business to 3% from 4% will alleviate some of the industry's earnings pressure.
The new bonding estimates released in May mean that the Cat Fund probably has nearly enough to cover the claims associated with the mandatory layer
of coverage that all carriers in Florida must purchase in order to sell homeowners' policies.
July 4, 2002-- Standard & Poor's said today it welcomes the Swiss government's plans (announced July 3, 2002) to cut the minimum required yield on the mandatory layer
of group life pension plans to 3% from 4%.