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Federated National Holding Company (FNHC)
Q4Â 2018 Earnings Conference Call
Feb. 28, 2019, 9:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
See all our earnings call transcripts.
Prepared Remarks:
Operator
Good morning and welcome to the FedNat Holding Company's Fourth Quarter 2018 Financial Results Conference Call. My name is Sarah and I will be your operator today. Please note that today's call is being recorded. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Statements in this conference call that are not historical facts are forward-looking statements. Words such as anticipate, believe, budget, contemplate, continue, could, envision, estimate, expect, guidance, indicate, intend, may, might, plan, possibly, potential, predict, probably, pro forma, project, seek, should, target or will and other similar words or phrases are intended to identify forward-looking statements. The matters discussed on this call that are forward-looking statements are based on current management expectations involving risks and uncertainties that may result in these expectations not being realized.
Actual events, outcomes and results may differ materially from what is expressed or forecasted in forward-looking statements made on this call due to numerous risks and uncertainties including, but not limited to, the risks and uncertainties described in today's conference call, our press release issued yesterday and other filings made by the Company with the SEC from time to time.
Forward-looking statements made during this conference call speak only as of today's date and FedNat Holding Company specifically disclaims any obligation to update or revise any forward-looking statement to reflect new information, future events or circumstances or otherwise. Now at this time, I would like to turn the conference call over to Mr. Michael Braun, Chief Executive Officer and President of FedNat Holding Company. Please go ahead, sir.
Michael H. Braun -- President & CEO
Thank you, operator. Good morning everyone and welcome to our 2018 Fourth Quarter and Annual Investor Call. Ron Jordan, our Chief Financial Officer; and Erick Fernandez, our Chief Accounting Officer are with me today, I'll cover 2018 and fourth quarter highlights and progress against our growth strategies. I will also recap the highlights from our discussion of the Maison acquisition, which we announced earlier this week. Ron will then discuss the financials for the fourth quarter and year and we'll circle back for a short summary, then take your questions.
In 2018, we made strong progress on our strategic growth objectives and delivered significantly improved results over 2017, even after accounting for the significant impact of Hurricane Michael in Q4. Michael was a huge storm that impacted many people in Florida's Panhandle and in particular those that reside in Bay and Gulf Counties, and our hearts go out to them. We have many policyholders in the area and have deployed the appropriate resources and are here for them in their time of need.
And looking at the full-year results, we are proud to share some major accomplishments. First and foremost, we improved our underwriting profitability on our core Homeowners business. Clearly, there has been a step up in cat activity in 2017 and 2018 that has impacted our reported performance. So when you look at our gross loss ratio, excluding the impact of Hurricane Irma in 2017 and Michael in the fourth quarter of 2018, we improved to 39.2% compared to 42% in 2017. We continue to expand our non-Florida coastal states, which includes Louisiana, South Carolina, Texas and Alabama. We increased in-force homeowner policies in our non-Florida markets by 46% to 44,000 over last year's fourth quarter, continuing the momentum we established in the beginning of the year. Gross premiums earned for these markets reached $66.6 million for the year, representing almost 51% growth over last year. We are in the final stages of completing our planned wind down of our auto and commercial general liability lines in terms of earned premium. While claims runoff will extend for some quiet (ph) time primarily for CGL over the longer term, these actions will eliminate a significant drag on earnings and allow us to focus our financial and human resources on growing our core Homeowners' line both in Florida and in other coastal states that offer attractive growth opportunities.
Through rigorous exposure management, we achieved substantial cost reductions in our reinsurance program in 2018 and anticipate continued savings in the coming months as we renew our program effective July of 2019. The program has provided strong protection of capital while mitigating risk. We have a robust panel of reinsurers that we do business with year-after-year and greatly appreciate each and every one of those partners.
In the second half of 2018, we captured approximately $15 million (ph) in savings to which we will continue to recognize ongoing savings in the first half of calendar year 2019 and beyond. As we said earlier this week when we close on the Maison transaction, we anticipate additional reinsurance synergies moving forward as well. That transaction is obviously subject to regulatory approval.
In addition, we reduced our operating ongoing expenses and lowered staff levels by 105 positions in 2018 representing over $6 million in annual cost savings. We continue to embrace technological improvements to maximize our operating efficiencies in our core Homeowners business.
Finally, last year's rate increase is now fully earned and has helped mitigate the negative effects of assignment of benefits. Further, an additional 4.6% rate increase has recently been approved by the Florida Office of Insurance Regulation and will begin to benefit new and renewal premiums effective April 22nd.
Overall, we had a successful year and are confident we have set the stage for increased profitability going forward. We achieved these accomplishments despite the severe weather events we faced during a challenging year for Florida home insurers. Hurricane Florence and Tropical Storm Gordon impacted our third quarter results and Michael, a major hurricane with an aggregate loss of $275 million for our companies (ph) reduced fourth quarter earnings. We are here for our policyholders in their time of need and take great pride in the high quality of service that we provide them and our agent partner network across the state, particularly during these severe weather events.
Our team continues to strive for excellence and to do an outstanding job of processing each and every claim as we build on the strong reputation FedNat enjoys in our local markets. And looking at our full-year financial highlights, the improvement in our attritional loss ratio and reinsurance savings drove a significant increase in earnings. Excluding investment gains and losses this year and last, net income grew significantly to $18 million or $1.40 per share over $2.7 million or $0.21 the prior year. In our core Homeowners line, full-year earnings increased to over $22 million from $3.2 million in 2017, a clear demonstration of the progress we've made in improving our core business line. Net premiums earned grew 6.5% to $355.3 million for the year. Revenue for the full-year was $396.1 million, a slight increase over $391.7 million the prior year. Book value per share increased to $17.13 at year-end 2018 compared to $16.16 per share in 2017, excluding accumulated other comprehensive income. Excluding the impact of Hurricane Michael and other severe weather related events, our fourth quarter results were strong and were driven by solid performance in our core Homeowners business line. The net retained loss for Michael of $23 million includes $20 million for FedNat Insurance Company plus $3 million for Monarch National Insurance Company.
Once again, Michael was a major hurricane that made landfall on Mexico Beach in Florida's Panhandle in October. To provide additional context and its impact, FedNat writes approximately 10% of the total insured homeowners value in Bay and Gulf counties where Michael made landfall versus approximately 5% where our statewide average is. To date, we have paid just under 6,000 claims for Michael. Fourth quarter earnings were also reduced by adverse reserve development in the non-core business which as mentioned are winding down. Our net loss excluding investment losses was $5.5 million or $0.43 per share on revenue of $96.4 million. Consolidated net premiums earned grew 4.1% in the quarter with Homeowners up over 11%. We saw continued growth in our coastal states as gross premiums earned increased both year-over-year and sequentially. Revenue, which included a $5.1 million pre-tax loss on investments given the poor macro environment during the fourth quarter, came in at $96.4 million compared with $101.8 million in last year's fourth quarter.
I will make some brief comments on the recently announced Maison acquisition before turning the call over to Ron. Maison primarily operates in Louisiana and Texas and has recently entered the Florida market as well. The transaction presents a very strategic fit with a terrific financial opportunity for FedNat and our shareholders. It is of digestible size with minimal integration risk and an efficiency financed deal that is accretive to earnings and consistent with our geographic expansion. It provides new distribution for us with direct access to our non-Florida retail agents as well as additional carrier to monetize existing distribution channels within the Florida market. The deal offers attractive reinsurance synergies of approximately $5 million annually on a pre-tax basis and another $5 million in operating and expense savings in the next two years excluding transaction integration costs. The consideration for the transaction is $51 million and is projected to provide a very strong internal rate of return. Based on the agreed purchase price and capital requirements associated with the deal while immediately accretive to earnings per share, it's about 2% dilutive to book value and about 9% dilutive to tangible book value per share. Our forecasts show that we expect to earn tangible book value per share dilution back in two years. With a 50/50 cash and stock financing model, we are balancing the accretive, dilutive dynamics while taking out higher cost debt and improving the trading liquidity in our stock. Ron will now go a little deeper on the financial results. Ron?
Ronald A. Jordan -- Chief Financial Officer
Thanks, Mike and good morning to everyone on the call. In addition to the strong fundamentals inherent in the fourth quarter results of our core Homeowners business, our recently announced acquisition of Maison Insurance and the related debt financing are positive developments that position FedNat well for continued strengthening in our financial performance. So let me begin by reviewing the quarter with some remarks on the full-year as I go.
FedNat's fourth quarter and full-year results continue to demonstrate strong and steady improvement in our core Homeowners insurance business. Of course, Hurricane Michael and stock market performance in the quarter masked the underlying operating performance in the business and my remarks will highlight those impacts. We reported a diluted loss of $0.73 per share in the quarter compared to earnings per share of $0.48 in last year's fourth quarter. For the full-year, earnings per share grew significantly to $1.16 over last year's $0.60. Excluding investment gains and losses in all periods, the fourth quarter loss was $0.43 compared with $0.48 of income in last year's fourth quarter and for the full-year, earnings per share were $1.40 compared to $0.21 last year, almost a sevenfold increase. And that is actually a fair comparison to make since 2018 and 2017 were both impacted by a full hurricane retention. With the underlying (ph) takeaway being that the significant increase in profitability I just cited was driven by improved fundamentals in the business.
In the fourth quarter of '18, we incurred a $23 million retention on Michael as Mike just mentioned. Net of directly related catastrophe claims handling revenues of approximately $1 million, Michael reduced our 4Q earnings by approximately $1.29 per share. Excluding this event and investment losses, our 4Q earnings would have been $0.86 with full-year earnings of $2.69 per share, which represents $31.4 million of earnings. On an as reported basis, our full-year 2018 earnings increased $6.9 million or 87% over 2017 and that full-year increase jumps to $15.3 million if one excludes investment gains and losses in both periods. So while we have been through a period of elevated cat activity and a more volatile investment environment, our underlying business performance strengthened considerably in 2018.
Now I'll turn to brief remarks on our lines of business. Our Homeowners business lost $1.4 million in the quarter. Excluding Hurricane Michael's impact, Homeowners earned $15.1 million compared to $7.4 million in the fourth quarter of '17 primarily due to our catastrophe reinsurance save and the numerous claims handling initiatives we have implemented. Rewinding to our last earnings call for a moment, you will recall that in the third quarter we experienced elevated seasonal losses particularly from the fire and lightening causes of loss and the open question at the time was whether that elevated frequency and severity would carry forward into the fourth quarter and the answer is, that it did not.
The Homeowners gross loss ratio ex-cat in the quarter came in at 36%, our lowest in over four quarters. This result includes the favorable impact of our rate increases as well as $5 million of benefits in the quarter from catastrophe claims handling revenue and loss adjusting expense reduction initiatives including improved salvage and subrogation results. The Homeowners combined ratio was approximately 109% in the quarter with Michael adding almost 25 points to the net loss ratio component thereof.
Full-year Homeowners earnings were $22.2 million or almost $39 million if one excludes Michael. For the full-year, Homeowners net loss ratio of 60.2% dropped by over 9 points from 2017 as did the ex-cat net loss ratio for the reasons I cited a moment ago as well as due to our lower cat spend during the second half of 2018, a powerful earnings boost that we have been talking about for a couple of quarters now. As Mike said, one of our important points of progress in 2018 was our exit from non-core lines of business as planned, written and earned premiums in auto and CGL declined each quarter during the year and the fourth quarter decrease was particularly pronounced especially in auto. Auto gross written premiums were essentially zero in the quarter and will continue to be from here forward. Our fourth quarter auto results included amplified efforts by our claims department to prudently resolve open claims inventory. We booked net prior year adverse loss development of $4 million and current year strengthening of $0.5 million in the quarter driving the overall loss of $4 million for auto in the quarter, which was $1.8 million adverse compared to the prior year's fourth quarter. The $4 million loss in our other line of business includes our non-core commercial general liability operations from which we are exiting as well as commissions on brokered products, investment activities and interest expense.
The stock market's poor fourth quarter performance was a major contributor to the $5.1 million of pre-tax losses in our investment portfolio in the quarter. Excluding investment losses, other contributed a loss of $200,000 in the quarter as compared to income excluding investment gain loss (ph) of $1.1 million in the fourth quarter of '17. The decline was driven by adverse prior year reserve development of $2 million on CGL in the quarter. Gross premiums written in the quarter for CGL we're essentially zero down from $1.4 million in the third quarter of '18. Net earned premiums are expected to continue to trend down to zero over the next three quarters. At that point, insurance operations in this line of business will consist solely of our flood book in which we carry no insurance risk since all our flood premiums are 100% ceded (ph) to the National Flood Insurance Program. Net investment income was $3.4 million in the quarter, up 23% from the fourth quarter of '17 and 8% from the third quarter of '18 and benefited from fixed income portfolio repositioning as well as from rising interest rates. Net investment income is now adding over $13.5 million (ph) of steady pre-tax income from interest and dividends on an annual basis.
Now a few comments on our balance sheet as of year-end. Excluding accumulated other comprehensive income, which consists of unrealized losses on our fixed income portfolio, our book value per share was $17.13, up $0.97 or 6% from year-end '17 despite taking a hit of approximately $1.29 share from Hurricane Michael. Absent Michael, this metric would have been up 14% year-over-year. We continue to avoid taking any extra risk in our investment portfolio. The portfolio continues to be relatively short and highly rated. Total carrying value stands at $452 million at year-end, up slightly from a year ago. We continue to maintain a composite S&P rating of A minus as of year-end and average portfolio duration is 4.2, up slightly from September 30.
Total cash on hand at December 31 was $64.4 million. Our holdco and other non-insurance entities together had liquidity of approximately $53 million at year-end. We did not repurchase any shares in the quarter as the in-process status of the Maison acquisition precluded us from being active in the market or from being able to execute a 10b-5 during our open window period between 3Q and 4Q. Our debt to capital ratio at 12/31 stood at 17%. Of course as announced earlier this week, we are about to refinance our existing debt, lowering our weighted average cost of borrowing by 170 basis points. Once the Maison transaction is complete late in the second quarter, subject to regulatory approval, we expect our debt to capital ratio to be around 28% to 29% though we expect it to decline steadily from that point forward.
To conclude my remarks, we are very pleased with the progress we have made over the past year to enhance the operating performance and earnings power of the Company. Our Homeowners book is performing well as a result of rate increases, rigorous exposure management, cat reinsurance saves, meaningful expense reductions and substantive enhancements to our claims handling processes that are reducing our attritional loss adjusting expenses. Historical headwinds from auto and CGL will be diminished substantially going forward. In addition, we expect the Maison acquisition to be double-digit accretive to 2019 earnings. Rate increases in our Florida homeowners book will meaningfully enhance 2019 as well. Even though our August 1, 2017 10% rate increase has been fully baked into our quarterly run rate since the third quarter of 2018, that still leaves an estimated $5 million plus pre-tax of lift to gross earned premiums in calendar 2019 versus calendar 2018 from that rate increase, representing the portion of the new rate that was not yet earning in during the first and second quarters of 2018.
Lastly, our recently approved 4.6% Florida homeowners rate increase takes effect for new and renewal business in the second part of April and in a flat world is expected to add over $5 million to gross earned premiums in 2019 and $20 million to gross earned premiums in 2020. With these developments and the Maison transaction announced earlier this week, we believe the future is bright for our earnings outlook and for our shareholders. Let me turn the call back over to Mike.
Michael H. Braun -- President & CEO
Thanks, Ron. Once again, we made great progress toward reducing our operating expense and improving our efficiency objectives in 2018 and significantly improved the earnings profile of FedNat both from an underwriting profitability and expense perspective. With that, we'll go ahead and open up the call for questions, please, operator.
Questions and Answers:
Operator
Thank you (Operator Instructions). Our first question comes from the line of Greg Peters with Raymond James, your line is now open.
Charles Gregory Peters -- Raymond James -- Analyst
Good morning. This is a double dip, we get to talk to you twice in one week, so good. I thought maybe we could take an opportunity for you to step back and provide some additional perspective on what's going on in Florida? I know in past conference calls and over the last two years, you've talked about implementing rate increases, maybe you could give us an update. Is there more rate that's coming through the books that you expect in 2019. And then secondly, can you talk about where you are with Irma claims? I know on a net basis it's capped (ph), but the gross losses continue to grow and it seems like the litigation and or fraud related efforts and claims continue. So some additional perspective on both those topics would be great.
Michael H. Braun -- President & CEO
Yes, so Greg, I mean, good questions and obviously good talking with you a second time in a week as you say. In terms of rate, we have about -- we have 4.6% approved that will (ph) allowed effective in April, which is only a couple of months away, so that will gradually go out. We've been one of the first ones to take rate in '17 and '18 as well and into '19 so we've been a little ahead of the curve, but we're seeing the rate increases of others catching up with us and that people are taking rate closer to their indications. So the market in Florida remains very competitive. We're recently seeing some people that have pulled back a little bit in a couple -- in the last year or two, kind of taking a more aggressive approach. So there's always someone who's always looking to be a little bit more aggressive than others, but I would say that the market remains very competitive. As you know, we have not grown our book over the last couple of years because of the challenges associated with AOB and we've made a lot of improvements in our operations, but quite honestly, rate goes a long way and it's unfortunate that the policyholders in the state of Florida had to experience these rate increases for these inflated claims, but that's the situation at hand.
As it relates to Irma, Irma is a big event. We continue to get a lot of claims in from Irma of approximately 200 per month and the reason I would say that we're seeing that is to -- Michael was very, what I call a black and white storm where you either had significant damage or you really had no damage, but Irma was such a, what I call a world of grey. Those winds went out and whether they were 50 miles an hour or 80 miles an hour or 100 miles an hour, they went out for 100 miles plus. So there's a great opportunity for people to go ahead and be solicited to, you know, go ahead and get their roofs replaced and so on where the question is, did they really have damage as a result of Irma or is this more of a maintenance issue. So we still do get these claims coming in. The whole industry has felt the creep associated with Irma. We do get more claims from Irma which -- new claims I should say than Michael even though it's on a -- even though it occurred a year later. So we're at approximately $795 million (ph) for Michael. I'm hoping that's the ultimate, but I could see that moving yet again in the future based on current trends and we'll be updating the market as it does move, but I don't think it's going to be significant movement. I don't see it going up by hundreds of millions and perhaps tens of millions and once again that's unfortunate to see that, but that's the reality of the situation.
Charles Gregory Peters -- Raymond James -- Analyst
Great. One of your distribution partners Allstate has in their homeowners product an amortization schedule for roof replacement based on the age of roof and that's more of a nationwide program for them and I'm curious if you've given any thought to introducing some sort of schedule as it relates to your book of business specifically in Florida. And then secondly, and this will be my last question, can you just talk about your participation levels in the Florida Hurricane cat fund and how it might change in the upcoming year if at all?
Michael H. Braun -- President & CEO
Well, to those two questions, the FHCF obviously is a state entity that provides reinsurance. The last few years we participated at 75% instead of 90% meaning we bought an additional 15% from the private market. We're having those conversations right now and we do need to decide before March 1. So, unfortunately I don't have any specific commitment that I can give you today, but we will be ramping that up in the next day or so and it remains to be seen which way we'll go at 90% or 75%, those conversations continue.
And then to your other question on roofs, one of the opportunities we really see with Maison is there is a lot of those policies they write have that ACV (ph) roof as you call it depreciation. That's something that we have do not have in our FedNat, the policies are Monarch National Policies in Florida, it's something that we've looked at that but we really didn't see that it was the value add and obviously that would require regulatory approval. So we do not have that, but that is more accepted in other jurisdictions, other states and we're aware of that and we continue to look at that. You're definitely taking away coverage from policyholders, which you have to make sure you are careful with, but you're exactly right, it does make the claims less costly and therefore we can reduce those premiums. So its something that we continue to look at.
Charles Gregory Peters -- Raymond James -- Analyst
Great, thanks for your answers.
Michael H. Braun -- President & CEO
Thanks, Greg. Have a good day.
Operator
Thank you. Our next question comes from the line of Doug Ruth with Lennox Financial Services. Your line is now open.
Douglas S. Ruth -- Lenox Financial Services -- Analyst
Thank you. Mike, is the rate increase of 4.6%, is that higher than what you had asked for, I thought you asked for (multiple speakers).
Michael H. Braun -- President & CEO
Yes, good morning Doug. So, our indication was 6.5%. We don't always take the indication because there's other things that we're doing that we feel can impact it from claims handling forms and so on. We do try to capture all of that in the rate filing, but sometimes we do believe there is some other room. So our original rate increase that we had requested was 3.6%, but we did have an updated conversation with the regulators and that we did request 4.6% and they did approve that and we did that just to make sure that we could remain competitive in the marketplace, but once again, we need to make sure we're protecting the balance sheet of the insurance company and so we did go forward with that.
Douglas S. Ruth -- Lenox Financial Services -- Analyst
Okay and then the other question now is what is the right mix of business with -- we were at 85% Florida, 15% non-Florida, but what do you think -- do you have a target as far as what mix you want to be non-Florida?
Michael H. Braun -- President & CEO
Yes, well, currently non-Florida is 15%. It's going to be approximately 24% (ph) once we get the Maison transaction approved. I don't have a specific number in mind, I really don't. Florida is a challenging marketplace, but I think it's a great market to be in. It's a fantastic market. It's a growing state. There's a lot of opportunity here. So I'm not really trying to run from it. However, there's challenges and I do believe in time those challenges will be fixed. Unfortunately, the current path is right where more weight is coming and it's punishing the policyholders in the state. I'm hopeful that the legislators will fix that problem. I'm not convinced that will happen this year in the legislative session. It may happen next year or the year after. I'm not certain. So in terms of the mix, I really can't say that we've got a specific target of 50:50 because really once you're in the Florida market, it's -- there's similarities in other coastal states and that's what we're trying to capitalize on and including Texas. I'm a big fan of Texas. I think there's a lot of opportunities there. The Houston market performed well. Louisiana is a great state to operate in, South Carolina, all the states that we're in, we're very happy with, but clearly Florida has got some challenges.
Douglas S. Ruth -- Lenox Financial Services -- Analyst
Okay and then what do you think the status is of Monarch? Can you see a path forward with them at this point?
Michael H. Braun -- President & CEO
Yes, absolutely. So we continue to work on that. We do have a rate filing pending with the regulators here in Florida where we will be instituting credit, but once again that capital was stacked (ph) Monarch where it is underneath FedNat Insurance Company. So that capital is being utilized. The book remains flat at approximately $12 million of gross written premium. As we deploy it, it's going to be slow, but we're very happy to have a second product for distribution in our channel and behind that with the closing of Maison, hopefully in Q2 here, we anticipate having a third product in Florida, which would be Maison. So there's different opportunities to slice and dice the marketplace and we want to be able to afford as much coverage as we can. There's many choices and options to policyholders, but really just to clarify, Maison is clearly -- what we're interested in out of the gate is clearly the opportunities that we see with them in Louisiana and with Texas and expanding that into other coastal states as well.
Douglas S. Ruth -- Lenox Financial Services -- Analyst
Okay. Could you -- Ron you've said what the loss was for the -- the discontinued loss for CGL was for the fourth quarter? Could you say that again for me?
Ronald A. Jordan -- Chief Financial Officer
Yes, I mentioned that we had a $4 million loss on a reported basis and if you back out the effects of the investment loss in the period that it's about a $200,000 loss. So, the after-tax -- $5.1 million investment loss pre-tax, was about $3.8 million after-tax. So $200,000 loss in other when you back out that investment loss.
Douglas S. Ruth -- Lenox Financial Services -- Analyst
Oh, but the commercial general liability, you had a charge in the fourth quarter?
Ronald A. Jordan -- Chief Financial Officer
Yes, OK, I misunderstood your question. Yes, we booked $2 million of adverse prior year development in CGL in the fourth quarter.
Douglas S. Ruth -- Lenox Financial Services -- Analyst
Okay. That's all I got. And what was the total reinsurance cost in 2017 versus 2018?
Michael H. Braun -- President & CEO
The annual contract, Doug in 2017 was approximately $180 million and that runs July to the following June and then in 2018, it was approximately $150 million, which would run once again July 1 through the first half I should say of '19. I don't know if you have it available Ron by calendar year.
Ronald A. Jordan -- Chief Financial Officer
I'll have to add up some quarters here, so maybe we can go on to a next question.
Michael H. Braun -- President & CEO
But that $30 million reduction is because of the efforts where we have decreased our Florida book and half of that $30 million decrease would be realized in the second half of '18 and the other half would be realized in the first half of '19 and the book has continued to decrease in Florida. So we anticipate less reinsurance need in 2019 versus the prior year in 2018, but our non-Florida book obviously has room.
Douglas S. Ruth -- Lenox Financial Services -- Analyst
Okay, so you're thinking that the reinsurance -- there'll be further reductions in the total cost of the reinsurance in the 2019-2020 period?
Michael H. Braun -- President & CEO
Yes, well, so let me clarify. There's a couple of pieces there. So in terms of FedNat and Monarch alone, I think the additional -- the limit needed on the same methodology will decrease by approximately $100 million. So instead of $1.35 billion, it should be approximately $1.25 billion. However, with the Maison acquisition, we do anticipate that going up a couple of $100 million on top of that. So with that acquisition, it will actually be an increase limit. Now as to the total spend because of the distribution between the different states, there's not a direct correlation. So, we spent $150 million last year, they spent $37 million. That's $187 million. In a flat world, we think there is a save. Now the second part of your question that you may be asking is where are reinsurance rates and I think I may addressed the other day, it's hard to say. Last year the market overall, we believe went up about 5% from the Florida markets and the better companies experienced less of an increase. So we believe we went up about 1% last year and the market went up about 5%. So we think we actually picked up about 4 points compared to the market, which is very encouraging. There is continued pressure on reinsurance this year, Doug. There's absolutely continued pressure on pricing. In terms of a flat world, when you compare -- programs moves can make it difficult, but in a flat world, I do believe there's pressure on pricing this year. I can't say for sure where the pricing will go, if it will go up 2% or 5% or 10%,, but I think we're much better situated versus our peer group to be impacted by a rate increase.
Ronald A. Jordan -- Chief Financial Officer
And then to come back to your calendar year question. Calendar year '17, $180 million of spend. Calendar year '18 roughly $165 million of spend and so that's $15 million of save there that Mike referenced in his comments. We've talked about $30 million annualized save. We took half of it in the second half of '18, the other half of its first half of '19. If you just take our fourth quarter cost of about $38 million and annualize that, it gets you to the $150 million full-year run rate for our cat coverage, which is down the full $30 million from 2017's $180 million run rate.
Douglas S. Ruth -- Lenox Financial Services -- Analyst
Okay, I understand. And then my last question, I understand that you have a strategy that you think you might be able to improve the Maison business that you have an idea of what you might do to improve the profitability? Could you maybe talk a little bit about that?
Michael H. Braun -- President & CEO
Yes, I think Maison, they've been around for 6 years. Doug Raucy is the CEO and he formed that company and I think he's done a good job and I think there's an opportunity with our scale and our synergies with reinsurance and our infrastructure that I think there is additional benefit coming. They have taken rate in Louisiana in each of the last two years, they've taken rate in Texas and I know they have some more rate coming. Our focus with Maison is not to aggressively grow it, but to take that book and once again prune it as appropriate, cutback in certain areas, I think I've talked a little bit about Dallas, but Doug's got a great team in place and let them do what they need to do, which is to write profitable business, but the focus is not going to be based on growth in gross written. It's going to be based on profitability. So I think they have everything that they need to be successful and I think they will be successful, but once again I think putting them together with us I think that there'll be results that will be favorable to our shareholders.
Douglas S. Ruth -- Lenox Financial Services -- Analyst
Could you talk a little bit about -- this is my last question. Could you talk a little bit about Dallas and what's going on there and where the challenges are?
Michael H. Braun -- President & CEO
Well, I think the challenge with Dallas is the pricing is not reflective of where it should be relative to HAL (ph). HAL comes through and it's -- Florida is not unique where people -- get people knocking on their doors telling them they need a new roof. So we have the vendors and people always point to Florida with AOB, it's the worst state for that is what people continuously say, but the truth is HAL happens in many places there's winds in many places and it's an issue in many markets. So the frequency of HAL in Dallas it occurs on a regular basis. I'm not certain that the market supports the correct pricing there. So if we can get paid the correct price for that risk, I hope to grow in Dallas, but I don't know if that's the case as we sit here today. We need to make sure we're being paid appropriately for that risk, but that's the only question that I have on the Maison book. Other than that, I think they've got a lot of good moves in place and our focus is on profitability and service and things that they've been working on and we're absolutely committed to.
Douglas S. Ruth -- Lenox Financial Services -- Analyst
Okay. Well, thank you for answering the questions. Grateful for the big improvement in 2018 over 2017.
Michael H. Braun -- President & CEO
Thanks, Doug. Have a great day.
Operator
Thank you. Our next question comes from the line of Samir Khare with Capital Returns Management. Your line is now open.
Samir Khare -- Capital Returns Management -- Analyst
Good morning. On the Homeowner book specifically, the ex-cat earnings power for the year looks good. Any reserve development from prior years in the homeowners book?
Ronald A. Jordan -- Chief Financial Officer
Yes, favorable reserve development. In my remarks, I referenced in the quarter $5 million of benefits from initiatives that we have in place on loss adjusting expenses, also cat claims handling revenue shows itself as essentially favorable development in our results and then a salvage and subrogation as well. So $5 million of benefit in the quarter and for the full-year with cat claims handling revenue we've had all year long and the like that figure is more like $8.5 million favorable.
Samir Khare -- Capital Returns Management -- Analyst
Okay and then I think there were some wording in the press release on favorable development on the current accident year loss ratio. Can you just tell me what you guys are currently booking the Florida homeowners book to?
Ronald A. Jordan -- Chief Financial Officer
Yes, when we think ahead, we are booking at about 36%. We're about 36% in the quarter and we think that that's a good go-forward spot for us to be booking into the future.
Samir Khare -- Capital Returns Management -- Analyst
Okay, thanks. And on auto. I'm surprised it developed so poorly in such a short time, what -- can you give us some metrics as to what accident year the development is coming from and what the nature of the unfavorable development is?
Michael H. Braun -- President & CEO
Well, Samir it is unfortunate and it's very frustrating. So our auto book has gone to zero in the sense that we're no longer obviously writing it those policies. We're gradually decreased from a peak of $70 million and the last policies went off at August 1. We've really had a major push to clear out these auto claims as best we can, as quickly as we can. As we sit here today, we have approximately 750 claims open in auto, which is a low (ph) while we were only getting approximately 50 claims in -- new claims a month, you go back a year ago, we were getting about 800 claims in a month, so it's -- in terms of the accident years, really the big years that we wrote auto was as you know primarily 2016 and '17, we had a couple of different programs out there. It's not good to have this development, it's a short tail line. I'm hoping this is the last call we're going to talk about auto. We took a big bite of the apple this quarter. Anything that you want to add Ron on it.
Ronald A. Jordan -- Chief Financial Officer
If I think back to open claims counts from September 30, we reduced those by almost 50% during the fourth quarter, it was a 45% reduction in open claim count. So that's obviously a very meaningful reduction. Mike mentioned, we're down to 700 claims as of right now kind of in the latter part of February. So we have made very substantial progress and would not expect anything close to any sort of pain in '19 along the lines of what we felt here in the quarter and in '18.
Samir Khare -- Capital Returns Management -- Analyst
Okay. Just couple of questions on that. I was under the impression that the novation or the commutation that you did, new claims are the responsibility of somebody else. Can you just (multiple speakers).
Ronald A. Jordan -- Chief Financial Officer
Oh, sorry. Go ahead, Samir.
Samir Khare -- Capital Returns Management -- Analyst
Why don't you go ahead with that answer and then I've got a further question.
Ronald A. Jordan -- Chief Financial Officer
Sure, in the novated block, which was the links (ph) Texas program, all claims with date of loss after 7/31 go to the recipient company. So you're exactly right about that. So this 700 of open claims inventory that we have now with respect to links Texas, anything in there would pre-date July 31. I have no idea what component, how much of that 700 might relate to links Texas, but the 700 is across all of our programs including the Florida program, which only recently earned out the last of it's earned premium.
Michael H. Braun -- President & CEO
The point Samir being these 50 new claims we're getting, the date of loss had to occur before July 1. So every day that goes forward, this should diminish quickly.
Samir Khare -- Capital Returns Management -- Analyst
Okay. I'm just surprised I guess given the short tail nature that you're even receiving 50 claims you know (multiple speakers).
Michael H. Braun -- President & CEO
You're correct. You're surprised and we are surprised and we're trying to push these through as quick as we can in a fair equitable manner.
Samir Khare -- Capital Returns Management -- Analyst
And is it just a frequency issue of new claims or is there some severity component that is kind of surprising as well that's leading to the adverse development?
Michael H. Braun -- President & CEO
Well, there is some severity to it, there is -- obviously physical damage is also a BI component, but once again, the majority of the policies were off the books way long before August 1. August 1 was just the last piece of the business that was transferred out.
Samir Khare -- Capital Returns Management -- Analyst
Okay and when was your last claims audit with these MGAs. I mean if you know where I'm going with this, I just would like for you guys to ensure that they are actually claims that you guys are responsible for?
Michael H. Braun -- President & CEO
Yes, well, we're the ones that handle the claims on the auto book. So we verify coverage and we process the claim here in our own building. The GAs do not do that. They would generate the business.
Samir Khare -- Capital Returns Management -- Analyst
Okay and just on the -- closing the loop on the auto book. What is the total reserve and the IBNR in the order book and --
Michael H. Braun -- President & CEO
We have approximately $13.5 million in total reserves on auto and they have roughly 50:50 on that between case and bulk.
Ronald A. Jordan -- Chief Financial Officer
That's gross. There's reinsurance coverage on substantial portions of that.
Samir Khare -- Capital Returns Management -- Analyst
Okay and then I guess the same -- similar questions to CGL albeit to a smaller degree. What's going on there, what's causing the adverse development there?
Michael H. Braun -- President & CEO
Well, unfortunately CGL is a longer tail program. So we are still -- we do have policies in force. We did not transfer that book out. That book that was approximately $12 million, $13 million. As we sit here today, it's a little under $4 million. So that book is in force and that is a much longer tail that product that we have. So the staff that handles the liability for the homeowner is also the same team. There's different specialists on the team also handle the liability on auto as well as the liability on CGL.
Ronald A. Jordan -- Chief Financial Officer
Samir, CGL, net earned premiums in CGL in the quarter were about $1.6 million, which was down 20% from the third quarter when they were about $2 million. And as I said in my remarks, we expect that $1.6 million to trend down to zero over the next three quarters in terms of earned premium.
Samir Khare -- Capital Returns Management -- Analyst
Right. You guys have an idea as to what might be causing a (technical difficulty) what's kind of a surprise to expectation on the CGL claims on the reserves?
Michael H. Braun -- President & CEO
There's a lot of different things. One of the issues that we're having from years back is called construction defects where these are small dollar amount claims, but their frequency has surprised us, things that were done 10 years ago including certain job classes that we really didn't expect it, really down to painters, things like that. So it's a litigious environment and if there is ever a challenge or a problem on a property, a lot of the times there's a shotgun approach where anyone who has worked any which way on the property is getting pulled into a claim. So these -- it's got a long tail on it and we're going to continue to get those new claims for some time.
Samir Khare -- Capital Returns Management -- Analyst
Okay and just on your Irma development. It wasn't that bad. Did you say how many open Irma claims that were left? And then on what's the total IBNR reserve on that 675 (ph) estimate?
Ronald A. Jordan -- Chief Financial Officer
Yes, in terms of, we've got over 95%. We're at about 40,000 claims, over 95% closed and we've been stuck at that number for some period and I anticipate that we'll be stuck at that number for a period of time as we continue to get new losses reported as well as old ones reopened. In terms of bulk on there, there's not a lot left on the bulk. So we are reevaluating that and we'll be updating that number here in the next quarter.
Samir Khare -- Capital Returns Management -- Analyst
Okay, same question for Michael. Apologize if you've said how many open claims that are out (ph) and also what's the total in IBNR reserve balance?
Michael H. Braun -- President & CEO
Yes, Michael is we're looking at under 6,000 -- we're about 6,000 claims. The vast majority of those have been closed as well. Unfortunately, I think we're going to -- we have to reevaluate that ultimate as well. I think there is some pressure on that ultimate of 275. I don't have a number for you today where it's going to go, but I think it could be a multiple $10 million (ph), $20 million (ph) in that range, but that's premature for us to give you a definitive number, but that's a very different event as I said earlier. My concern on Michael relates to ALE, additional living expense, just because a lot of these folks have nowhere to go and we have to assist in their housing and also as the rebuild effort gets under way, law and ordinance is a challenge. So the claims that we've been reported, we've been out there and we've paid out the vast majority of what's owed, but there'll be some lingering effects.
Samir Khare -- Capital Returns Management -- Analyst
Okay and just on the law and ordinance, is there supplements usually in these policies?
Michael H. Braun -- President & CEO
Yes, typically 25% of coverage A though some people can have an endorsement up to 50%. So it's a component of A.
Samir Khare -- Capital Returns Management -- Analyst
Okay, thanks. I'll requeue.
Michael H. Braun -- President & CEO
Thank you.
Operator
Thank you. Our next question comes from the line of Matt Carletti with JMP Securities. Your line is now open.
Matthew Carletti -- JMP Securities -- Analyst
Hey Mike and Ron, good morning.
Michael H. Braun -- President & CEO
Hey, good morning Matt.
Matthew Carletti -- JMP Securities -- Analyst
Just a couple of questions, one on reinsurance. I know you touched on it a little bit the likelihood that you're probably buy a little more limit this year given kind of what you've done in reshaping the book. My question is more on the bottom end, in terms of that you bring Maison on, how do you look at that, ex-Florida retention as that book grows and as we think about spring weather, things like the tornadoes in Dallas and Louisiana can have them to. Are you comfortable kind of having that level of retention to eat those losses or would you look to lower that or at an aggregate or something like that to help with that spring weather?
Michael H. Braun -- President & CEO
Yeah, good question there. So basically to refresh everyone's memory. FNIC has a $20 million retention, MNIC has a $3 million retention. So those two programs do come together and operate within the same tower. So our non-Florida FNIC once again, we have a partner SageSure who does take half of the retention that we do elect and last year they participated in that. So what I envision this year is once again one cat tower that all three programs will be in, but once again, MNIC I anticipate at $3 million, FNIC the $20 million and then non-Florida, it could be in the, let's call it the $10 million to $15 million range roughly and then, once again we have a 50% profit share which acts like a reinsurance. Maison they have a $5 million retention in their current program and I think that's appropriate on a go-forward basis. So that would mean that Maison would have to have a (inaudible) on a go-forward separate from the main cat tower that we have and then in terms of the an ag limit, once again, you get back to the challenge with tornado hail. That is a Q2 event. So Maison is exposed to that in 2019 and PIH is aware of that obviously and they are carrying that risk in 2019. I'm hopeful as we go into 2020 that our book will be priced more adequately in Dallas or a smaller book, we'll look at the economics of an ag cover and if it works, we'll be happy to pickup that limit to protect surplus, but really we haven't -- we're just not ready to commit on that at this point.
Matthew Carletti -- JMP Securities -- Analyst
Okay, great. And then just one other question probably for Ron, you mentioned, Ron on the debt leverage and how it will work its way down kind of once the deal closes, which makes sense given the earnings. Guess my question is more so how will that impact your ability to repurchase shares, you think most of the earnings (ph) after dividends will need to go to bring that debt leverage down to a lower level or is there room for both to take place.
Ronald A. Jordan -- Chief Financial Officer
No, I think there is room for both to take place and of course, tell me what this year's hurricane season is going to do and I'll have a stronger answer for you, but there's definitely room for us to do both.
Matthew Carletti -- JMP Securities -- Analyst
Okay, great, thanks very much for the answers and best of luck in 2019.
Michael H. Braun -- President & CEO
Thanks, Matt.
Operator
Thank you. Our next question comes from the line of Christopher Campbell with KBW. Your line is now open.
Christopher Campbell -- KBW -- Analyst
Yes, hi, good morning gentlemen.
Michael H. Braun -- President & CEO
Good morning, Chris.
Christopher Campbell -- KBW -- Analyst
Hey, first question -- I just have a few brief ones. Fair bit of runoff reserve development. I guess have you guys looked into the economics of getting an LPT? I'm just kind of...
Michael H. Braun -- President & CEO
Yes, we have.
Christopher Campbell -- KBW -- Analyst
(multiple speakers) share price, it's a negative reaction, you guys got like 15% core loss ratio improvement and it seems like this is weighing you down. So I guess just what would the economics of an LPT look like for you guys?
Michael H. Braun -- President & CEO
We have looked at it and we didn't see that there was a benefit to us. So you're right that I think there is a perception obviously that's impacting us that we are very well aware of, but once again, that auto program, that's very short tail. I can't (ph) tell you we're never going to say auto again, but I'm sure looking forward to that day and I think we're taking a huge bite of the apple this time. As it relates to CGL, we've looked at that as well for a loss portfolio transfer as well and the economics just really weren't there for us to make that decision. So good point, good question, but we haven't pull that trigger.
Christopher Campbell -- KBW -- Analyst
Okay. And then just a follow up on Greg's question on the cat fund participation. You said that you have to make a decision by tomorrow. Is that correct?
Michael H. Braun -- President & CEO
You are correct and we are down to the wire and I don't want to say anything at this moment because there's a lot of movement today. So we're allowed (ph) to do 75% or 90%. We'll put out an 8-K for everyone's benefit, but there is interest in it and we're not definitive one way or the other, but it has to be made very quickly that decision.
Christopher Campbell -- KBW -- Analyst
So I'm just thinking about like what could change in like today, like what are like the variables that like could change your thinking like now that you're down to the wire. I'm just curious is like a background.
Michael H. Braun -- President & CEO
Well, the question becomes to go from 90%, from 75% to 90% is a 15% corridor. So is the market going to step in with the FHCF pricing and that's where we're at right now. So they've got to match the same term, same pricing and the question is, does the private market want to step into that step and we're committed to making sure that our reinsurers are made whole. So those that have had a loss, we're going to do everything we can to go ahead and repeat it, but the FHCF pricing is out there and we're just waiting to see what the private space is doing.
Christopher Campbell -- KBW -- Analyst
Okay. Got it. And then just one last one I was reading like an insider article that said Demotech isn't going to relax reinsurance requirement if rates rise. I guess just can you walk us through like how that would like impact your capital adequacy and I guess just even thinking more broadly to your peers just in terms of how is that going to impact future rate increases, competition in the market and then any potential M&A?
Michael H. Braun -- President & CEO
Yes, that's correct in terms of Demotech. We've heard the same thing from them over the last decade or so that they absolutely want reinsurance to remain consistent year-after-year. I do believe some people may have a challenge with the reinsurance programs this year for a variety of raising some of the big reinsurers are pulling back and that's why I'm proud that we've got such a robust panel, but when you look at our spend, once again, the spend is approximately Florida 30% of premium and of that two-thirds is private, one-third is FHCF. So the two-thirds of the private is the 20% of the premium. If that goes up 10%, you're looking at a few points on retail pricing and I'm not saying it's going up to 10%. I'm just giving that as the easy way to illustrate my point. So my point is, we've got adequate rate I believe. We've got adequate capital in our insurance company and our holding company. I'm not certain everyone is in that same position and once again pricing is under pressure on Florida reinsurance. Absolutely the case remains to be seen if it's going to be flat or go up 2 points or 5 points, or 10 points, we're well situated and we'll see what happens.
Christopher Campbell -- KBW -- Analyst
Great color. And just one more on the, you had said like that 15% loss corridor. Just in terms of like, you know, the private market pricing versus the cat fund and it sounds like right there is still like an open decision for you guys between 75% and 90%, which implies that the private market is coming in higher. How much higher is the private market on that sliver?
Michael H. Braun -- President & CEO
Well, once again, Chris, it's, I don't want to say too much more about that because literally we're having conversations on that right now and I will tell you at the end of the day, but we all know what the FHCF pricing is and the private market needs to match that pricing if we're going to stay at 75%. It's pretty much that simple. If they don't want to match that price, then we're going to go up to 90%. I want to make sure that those folks on that layer have the opportunity to renew it. Some of them are still on the fence right up to the last minute here and we want to afford them that opportunity and so we have to submit this and today is the day.
Christopher Campbell -- KBW -- Analyst
Okay and is that typical or is this usually like wrapped up like weeks in advance?
Michael H. Braun -- President & CEO
Well, I don't know if there's ever any typical with reinsurance. You know you got a lot of different layers, you have multiple layers and a lot of different participants and things change and we want to make sure we're getting the best deal for ourselves and we want to make sure we're trading fair with our partners. So it's not unusual for it to get a little hectic at the last minute. That's not unusual.
Analyst -- -- Analyst
Okay, awesome. Well, thanks for all the answers. Good luck in 2019.
Michael H. Braun -- President & CEO
All right. Thanks so much Chris.
Operator
Thank you. We do have a follow-up question from the line of Samir Khare with Capital Return Management. Your line is now open.
Samir Khare -- Capital Returns Management -- Analyst
Hi, I guess the $13.5 million of auto reserves, what's the IBNR in that number and if you can give me the total reserves in IBNR at year-end of 2017 for auto reserves as well?
Michael H. Braun -- President & CEO
It's roughly 50:50 on that. So, in terms of cases roughly 7 (ph) and bulk is roughly 6.5 (ph).
Samir Khare -- Capital Returns Management -- Analyst
Okay and then what was the reserve amount and the I guess the IBNR at year-end 2017?
Ronald A. Jordan -- Chief Financial Officer
We're probably going to have to get back to you offline with that figure.
Samir Khare -- Capital Returns Management -- Analyst
Okay and the homeowners ceded premium, how much was the XOL versus the quota share in the quarter?
Ronald A. Jordan -- Chief Financial Officer
In the quarter, the XOL was $38 million and the quota share all in this includes the current quota share as well as the old retrospectively rated ones that are still out there. The three quota shares together were about $8.1 million and then we have our per risk treaty as well and that was about $800,000.
Samir Khare -- Capital Returns Management -- Analyst
Okay and do you guys plan on keeping the quota share at the same level throughout 2019?
Ronald A. Jordan -- Chief Financial Officer
At this point, we do. At this point, we plan on keeping it 10%.
Samir Khare -- Capital Returns Management -- Analyst
Okay and just regarding the staff reduction. Should we be taking out the severance costs from 2018 expenses as a starting point to realize the $6 million.
Michael H. Braun -- President & CEO
Yes, absolutely, we're now (ph) over 100 people and that's a non-reoccurring expense and we think we have right-sized our current book of business.
Samir Khare -- Capital Returns Management -- Analyst
Okay and how much was the severance costs in 2018?
Ronald A. Jordan -- Chief Financial Officer
Hey Samir, It's about a little under $500,000 for the quarter.
Michael H. Braun -- President & CEO
What about the full-year? Do we have the full-year? So if you annualize that, it could be $2 million.
Samir Khare -- Capital Returns Management -- Analyst
Okay and then you have SageSure and will have Maison for production outside Florida going forward. Are you guys contemplating or pursuing any other initiatives whether it be M&A or MGA relationships?
Michael H. Braun -- President & CEO
Nothing to speak of at this time. We're always looking to create shareholder value, but I think that we're thrilled with SageSure. We think they do a fantastic job. We're very excited about Maison and eager to close on that as quick as possible. Nothing else to speak of.
Samir Khare -- Capital Returns Management -- Analyst
All right. And the larger exposure management initiatives of your Florida book, should we expect that to continue at the same pace or will that be slowing? I'm just trying to figure out your growth trajectory overall?
Michael H. Braun -- President & CEO
Yes, so in terms of the SageSure, it grew by about $30 million non-Florida. I think that that's a very reasonable expectation for 2019 as well. We see no reason for that to slow down. And then once again Maison coming on Board. I think that book will be a bit more flat until we get more capital efficient.
Samir Khare -- Capital Returns Management -- Analyst
Okay and the exposure management initiatives within Florida, are those continuing at the same pace or is that slowing?
Michael H. Braun -- President & CEO
Well, we always have exposure management. So Tri-County is about 25% of our business where we've got about 11% of our book in the Panhandle. So we're all over the entire state. So that exposure management never ends. However, there is no wholesale initiative that we're undertaking to rebalance Florida. We're happy with what we have. We look at it every day.
Samir Khare -- Capital Returns Management -- Analyst
Okay and then, can you talk about the homeowners rate environment in Texas and Louisiana, what rate increases are being taken, I guess Maison, yourselves as well as some of your competitors?
Michael H. Braun -- President & CEO
Well, multiple carriers have taken rates up in Louisiana. I don't have the granularity for you by which carrier, but we see rates going up. It's a competitive market in Louisiana and then same thing in Texas. We've seen multiple carriers, go up, but it's 26 million people in Texas there's very distinct marketplaces. Once again I think that when you look at it, you got to look at the big population centers and I've said repeatedly I'm not a big fan of Dallas unless we can get the correct rate for it. I think the rates are more correct for what we're doing in Houston and it's a very competitive marketplace in San Antonio and Austin. So once again, I don't have specific areas for you, but I think pricing has gone up in both of those markets.
Samir Khare -- Capital Returns Management -- Analyst
Okay and then any capital infusions into the insurance companies at year-end?
Michael H. Braun -- President & CEO
FNIC, we waived an MGA fee, which essentially -- for $15 million, which essentially is a capital infusion, but we did it via a waiving of the MGA fee to FNU.
Samir Khare -- Capital Returns Management -- Analyst
Okay and then I guess what's the current STAT capital for the insurance companies and then how much capital do you have in your unregulated subsidiaries?
Ronald A. Jordan -- Chief Financial Officer
So, total STAT surplus FNIC, MNIC together is right around the $180 million. Our Holdco and non-insurance entities have around $65 million of capital, but that equates down to about $53 million of liquidity as I mentioned in my remarks.
Samir Khare -- Capital Returns Management -- Analyst
Okay and then how much do you have left in your current share repurchase authorization? I'm just curious if the stock becomes weak in the coming months, will you use some of that excess to buy back stock?
Michael H. Braun -- President & CEO
We have the full $10 million available to us and we'll once again evaluate the capital needs and initiate a buyback where we have a committee and where we feel it appropriate.
Samir Khare -- Capital Returns Management -- Analyst
So you're willing to do buybacks before the Maison transaction?
Michael H. Braun -- President & CEO
Yes, that's the decision of the committee whether or not we do it and at what price and currently, we did not have a 10b-5 in place because of the negotiations with Maison and I can tell you from my perspective that I'd be, I'm willing to do that. I'm very receptive but we'll be meeting as a committee.
Samir Khare -- Capital Returns Management -- Analyst
Okay and just on the SageSure relationship and the high profit commissions there. It seems that they're getting a pretty good deal with an even split of profits based on subsidized reinsurance costs that you're taking that -- and when you guys are taking on Florida risk and come to think of it, they might actually benefit more with the acquisition of Maison and I guess charging that book for a retention buy down layer help some. When do the terms and conditions of that relationship come up for review or renegotiation?
Michael H. Braun -- President & CEO
Well, so it's an ongoing relationship that has no expiration and in terms of the reinsurance, the more growth we have non-Florida, there was an advantage coming out of Florida initially and the bigger the non-Florida book gets, the more AAL that's exposed to it. Therefore more rate action, more expenses pushed on to them. So I disagree with your statement that they're getting more of a benefit as we diversify. The opposite is the case where they're getting less of a benefit. So let me say it, our non-Florida cat expense will increase as our percentage of premium written outside the state increases.
Samir Khare -- Capital Returns Management -- Analyst
But doesn't that book enjoy a subsidy of reinsurance costs anyway?
Michael H. Braun -- President & CEO
Well under your theory if we had 1% of our policies outside of Florida, your theory would be more correct. If we have 10%, 20%, 30% of our book outside of Florida, it's much less correct and the point is the reinsurance where you're calling subsidy to our non-Florida book diminishes or goes away as the book is more diversified. So that subsidy and the fact is in the beginning.
Samir Khare -- Capital Returns Management -- Analyst
Okay, thanks and when does that come? Is there a date where that gets renegotiated every year or does that -- you can have that conversation any time you want?
Michael H. Braun -- President & CEO
No, there is no expiration. So they are the source of the business. It is no different than any of our other retail agents and we are not looking for them to move that book of business, the terms have been agreed to. There's no expiration on it. Either party can leave the partnership, but I think that would be very foolish on our part. I know you've expressed your thoughts on that clearly over the years. I know where you're coming from Samir. I disagree. I think it's a great partnership. We are thrilled with them. We want that book to continue to grow and I think it will.
Samir Khare -- Capital Returns Management -- Analyst
Okay, thank you very much.
Michael H. Braun -- President & CEO
Thanks, Samir.
Operator
Thank you. This does conclude today's question-and-answer session. I would now like to turn the call back to Mr. Michael Braun for any further remarks.
Michael H. Braun -- President & CEO
Yes, just wanted to thank everyone on the call today for those folks who had dialed in and or listened online for your interest in our Company. Myself, Ron, Eric, we're always available. We're very excited where we're at. We're happy with the acquisition that is pending. We're hoping for a speedy approval from the regulators and so that we can close on this in Q2. Obviously, the state of Louisiana and the state of Florida we'll be evaluating it. We're very excited about it and we will continue to be disciplined in what we do and how we write our business and our expense control. So to that, thank you very much everyone and have a great day.
Operator
Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone have a great day.
Duration: 75 minutes
Call participants:
Michael H. Braun -- President & CEO
Ronald A. Jordan -- Chief Financial Officer
Charles Gregory Peters -- Raymond James -- Analyst
Douglas S. Ruth -- Lenox Financial Services -- Analyst
Samir Khare -- Capital Returns Management -- Analyst
Matthew Carletti -- JMP Securities -- Analyst
Christopher Campbell -- KBW -- Analyst
Analyst -- -- Analyst
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