REAL ESTATE JANUARY 29, 2009, 9:43 A.M.

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Small, High-End Insurer Courts Coastal Homeowners

By M.P. MCQUEE N

As large, mass-market homeowner-insurance companies continue withdrawing from coastal areas because of the
hurricane threat, a small, high-end insurer is making a push for the wealthy among these customers.

Privilege Underwriters Reciprocal Exchange, a company headquartered in Fort Lauderdale and White Plains, N.Y.,
recently received licenses to sell policies in New York, Connecticut, New Jersey and the District of Columbia.

Founded in Florida in 2006, the company also sells policies there and in South Carolina, and has applications pending
with regulators in seven eastern states.

The company currently serves about four thousand member-policyholders.

PURE's expansion comes even as Florida state regulators announced Tuesday that a unit of State Farm Mutual
Automobile Insurance Co., intends to drop more than 700,000 homeowner policies there, a continuation of a trend
that began several years ago after the record hurricane seasons of both 2004 and 2005.

About 20 smaller companies have started up in Florida recently to take away business from Citizen's Property
Insurance Corp., a nonprofit alternative insurer, which is currently the largest property insurer in Florida. Meanwhile,
eight new companies have been licensed to sell homeowners insurance in New York since 2007.

PURE President and CEO Ross Buchmueller, who formerly was president of American International Group Inc.'s
Private Client Group and an executive at Chubb Corp., says PURE is able to write competitively priced policies in
high-risk areas because it specializes in large, well-built homes valued at $1 million or more, which industry data
suggest have held up well in recent disasters.

PURE competes primarily with high-end insurers like AIG, Chubb and Fireman's Fund Insurance Co., as well as
excess and surplus lines in the unregulated market, to cover high-value luxury and waterfront homes and various
other properties in communities like the Hamptons in New York, according to Mr. Buchmueller.

Scott Edwards, 63 years old, a retired banker who owns homes in North and South Carolina, said that he switched to
PURE insurance in 2008 from an excess and surplus lines insurer for his retirement home near Georgetown, S.C., on
the recommendation of his insurance agent.

He said that he initially paid about $7,000 in annual premiums to insure the newly built 4,000-square-foot home with
wind- and flood-resistant construction and a replacement cost of more than $1 million.

But in 2006, after Hurricane Katrina, his premium doubled to $14,000. Since switching to PURE, he said his premium
is back to $7,000 again and he has a substantially lower deductible for windstorm damage.

Write to M.P. McQueen at mp.mcqueen@wsj.com

Printed in The Wall Street Journal, page D2