COLUMBUS, Ohio, Aug. 5, 2016 /PRNewswire/ -- Earlier this year, Demotech completed its review of the Florida Financial Stability Rating® client companies' catastrophe reinsurance programs for the 2016 hurricane season. Each company provided information to Demotech in response to our annual data call. Based on the information provided, each company has catastrophe reinsurance providing first event coverage to a minimum of a 100-year probable maximum loss (PML). This determination is measured under conservative modeling parameters, including loss amplification and secondary uncertainty. While each company meets our required minimum for a first event, the majority of the companies purchase first event coverage well in excess of the 100-year PML, with the group aggregate limit covering to approximately 130% of the 100-year PML.
In addition to first event coverage, each company has second event coverage in place to at least a 50-year PML based on a first event which would exceed the 100-year PML or fully exhaust the Florida Hurricane Catastrophe Fund. The second event coverage provides approximately 60% of the first event 100-year PML in aggregate. To address exposure beyond two events, companies provide coverage for multiple event scenarios through various structures included in the catastrophe reinsurance programs, such as aggregate covers, cascading features, and quota share agreements. With regard to retentions, the majority of companies have pre-tax catastrophe loss retentions which limit the impact to surplus under multiple event scenarios to less than 25% of surplus.