AMERICAN COASTAL INSURANCE Corp 8-K, filed Nov 9, 2022
AMERICAN COASTAL INSURANCE Corp (ACIC)
8-K
2022-11-09
For: 2022-11-09
View Original
Added on
April 12, 2026
About this 8-K
AMERICAN COASTAL INSURANCE Corp filed this 8-K on November 9, 2022.
Items reported
- Item 2.02: Financial results
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): November 9, 2022
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition
On November 9, 2022 , United Insurance Holdings Corp. (the Company, we, our) issued a press release relating to our earnings for the third quarter ended September 30, 2022 (the Earnings Release). We have attached a copy of the Earnings Release as Exhibit 99.1.
Item 7.01: Regulation FD Disclosure.
The executive officers of the Company intend to use the materials filed herewith, in whole or in part, in one or more meetings with investors and analysts, beginning on November 9, 2022 . A copy of the investor presentation is attached hereto as Exhibit 99.2.
The information furnished under this Item 2.02 and 7.01, including Exhibit 99.1 and Exhibit 99.2 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference to such filing.
Item 9.01. Financial Statements and Exhibits
| Exhibit No. | Description | |||||||
Earnings release issued by the Company on | ||||||||
Investor presentation issued by the Company on | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunder duly authorized.
| UNITED INSURANCE HOLDINGS CORP. | ||||||||
| By: | /s/ B. Bradford Martz | |||||||
| B. Bradford Martz, President and Chief Financial Officer (principal financial officer and principal accounting officer) | ||||||||
Exhibit 99.1
FOR IMMEDIATE RELEASE
UNITED INSURANCE HOLDINGS CORP. REPORTS FINANCIAL RESULTS
FOR ITS THIRD QUARTER ENDED SEPTEMBER 30, 2022
Company to Host Quarterly Conference Call at 5:00 P.M. ET on November 9, 2022
The information in this press release should be read in conjunction with an investor presentation that is available on the Company's website at investors.upcinsurance.com/Presentations.
St. Petersburg, FL - November 9, 2022: United Insurance Holdings Corp. (Nasdaq: UIHC) (UPC Insurance or the Company), a property and casualty insurance holding company, today reported its financial results for the third quarter ended September 30, 2022.
| ($ in thousands, except for per share data) | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||||||||||||||
| 2022 | 2021 | Change | 2022 | 2021 | Change | ||||||||||||||||||||||||||||||
| Gross premiums written | $ | 255,203 | $ | 322,493 | (20.9) | % | $ | 894,824 | $ | 1,060,555 | (15.6) | % | |||||||||||||||||||||||
| Gross premiums earned | $ | 301,896 | $ | 353,461 | (14.6) | % | $ | 926,860 | $ | 1,066,557 | (13.1) | % | |||||||||||||||||||||||
| Net premiums earned | $ | 116,187 | $ | 153,271 | (24.2) | % | $ | 328,449 | $ | 444,680 | (26.1) | % | |||||||||||||||||||||||
| Total revenues | $ | 123,788 | $ | 162,740 | (23.9) | % | $ | 341,947 | $ | 479,983 | (28.8) | % | |||||||||||||||||||||||
| Loss before income tax | $ | (70,797) | $ | (18,600) | NM | $ | (148,009) | $ | (77,655) | (90.6) | % | ||||||||||||||||||||||||
| Net loss attributable to UIHC | $ | (70,884) | $ | (14,322) | NM | $ | (173,085) | $ | (55,603) | NM | |||||||||||||||||||||||||
Net loss available to UIHC common stockholders per diluted share | $ | (1.65) | $ | (0.33) | NM | $ | (4.02) | $ | (1.29) | NM | |||||||||||||||||||||||||
| Reconciliation of net loss to core loss: | |||||||||||||||||||||||||||||||||||
Plus: Non-cash amortization of intangible assets and goodwill impairment (1) | $ | 14,381 | $ | 812 | NM | $ | 16,005 | $ | 2,744 | NM | |||||||||||||||||||||||||
| Less: Net realized gains (losses) on investment portfolio | $ | (9) | $ | 5,537 | 100.2 | % | $ | (1,856) | $ | 5,916 | NM | ||||||||||||||||||||||||
| Less: Unrealized gains (losses) on equity securities | $ | (2,518) | $ | (3,293) | 23.5 | % | $ | (9,870) | $ | 1,709 | NM | ||||||||||||||||||||||||
Less: Net tax impact (2) | $ | 3,551 | $ | (301) | NM | $ | 5,824 | $ | (1,025) | NM | |||||||||||||||||||||||||
Core loss (3) (4) | $ | (57,527) | $ | (15,453) | NM | $ | (151,178) | $ | (59,459) | NM | |||||||||||||||||||||||||
Core loss per diluted share (3) (4) | $ | (1.34) | $ | (0.36) | NM | $ | (3.51) | $ | (1.38) | NM | |||||||||||||||||||||||||
| Book value per share | $ | 1.86 | $ | 7.42 | (74.9) | % | |||||||||||||||||||||||||||||
NM = Not Meaningful
(1) For both the three and nine months ended September 30, 2022, non-cash amortization of intangible assets includes $13.6 million related to the impairment of goodwill attributable to the Company's personal residential property and casualty insurance policies (personal lines) operating segment.
(2) In order to reconcile net loss to the core loss measures, the Company included the tax impact of all adjustments using the 21% corporate federal tax rate.
(3) For the three and nine months ended September 30, 2022, core loss includes $13.8 million and $57.5 million, respectively, in tax expense related to the Company's recognition of a valuation allowance.
(4) Core loss, and core loss per diluted share, both of which are measures that are not based on GAAP, are reconciled above to net loss and net loss per diluted share, respectively, the most directly comparable GAAP measures. Additional information regarding non-GAAP financial measures presented in this press release can be found in the "Definitions of Non-GAAP Measures" section, below.
1
Exhibit 99.1
"On September 28, 2022, Ian made landfall on the west coast of Florida as a category four hurricane. Our thoughts and prayers go out to all of the people impacted by Ian," said Dan Peed, CEO of UPC Insurance. "I also want to recognize and thank our team for all of the hard work being done to help the victims restore their lives and property."
Mr. Peed continued, “During the third quarter we made the difficult decision to withdraw United Property & Casualty Insurance Company from the personal lines business in the states of Florida, Louisiana and Texas. While Interboro Insurance Company will continue to write personal lines business in the state of New York, the withdrawal allows us to focus our capacity on our commercial residential business written by American Coastal Insurance Company. Our withdrawal plan will generally begin with non-renewals on January 1, 2023."
Return on Equity and Core Return on Equity
The calculations of the Company's return on equity and core return on equity are shown below.
| ($ in thousands) | Three Months Ended | Nine Months Ended | |||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Net loss attributable to UIHC | $ | (70,884) | $ | (14,322) | $ | (173,085) | $ | (55,603) | |||||||||||||||
Return on equity based on GAAP net loss attributable to UIHC (1) | (121.8) | % | (15.8) | % | (99.1) | % | (20.4) | % | |||||||||||||||
| Core loss | $ | (57,527) | $ | (15,453) | $ | (151,178) | $ | (59,459) | |||||||||||||||
Core return on equity (1)(2) | (98.8) | % | (17.0) | % | (86.6) | % | (21.8) | % | |||||||||||||||
(1) Return on equity for the three and nine months ended September 30, 2022 and 2021 is calculated on an annualized basis by dividing the net loss or core loss for the period by the average stockholders' equity for the trailing twelve months.
(2) Core return on equity, a measure that is not based on GAAP, is calculated based on core loss, which is reconciled on the first page of this press release to net loss, the most directly comparable GAAP measure. Additional information regarding non-GAAP financial measures presented in this press release can be found in the "Definitions of Non-GAAP Measures" section below.
2
Exhibit 99.1
Combined Ratio and Underlying Ratio
The calculations of the Company's combined ratio and underlying combined ratio on a consolidated basis and attributable to both the Company's personal lines and commercial residential property and casualty insurance policies (commercial lines) operating segments are shown below.
| ($ in thousands) | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||||||||||||||
| 2022 | 2021 | Change | 2022 | 2021 | Change | ||||||||||||||||||||||||||||||
| Consolidated | |||||||||||||||||||||||||||||||||||
Loss ratio, net(1) | 100.9 | % | 67.1 | % | 33.8 | pts | 90.9 | % | 75.7 | % | 15.2 | pts | |||||||||||||||||||||||
Expense ratio, net(2)(3) | 64.5 | % | 49.8 | % | 14.7 | pts | 56.5 | % | 48.2 | % | 8.3 | pts | |||||||||||||||||||||||
Combined ratio (CR)(4) | 165.4 | % | 116.9 | % | 48.5 | pts | 147.4 | % | 123.9 | % | 23.5 | pts | |||||||||||||||||||||||
| Effect of current year catastrophe losses on CR | 32.2 | % | 24.1 | % | 8.1 | pts | 26.4 | % | 22.8 | % | 3.6 | pts | |||||||||||||||||||||||
| Effect of prior year unfavorable (favorable) development on CR | 38.4 | % | 1.3 | % | 37.1 | pts | 16.4 | % | 7.0 | % | 9.4 | pts | |||||||||||||||||||||||
Underlying combined ratio(5) | 94.8 | % | 91.5 | % | 3.3 | pts | 104.6 | % | 94.1 | % | 10.5 | pts | |||||||||||||||||||||||
| Personal Lines | |||||||||||||||||||||||||||||||||||
Loss ratio, net(1) | 146.5 | % | 86.1 | % | 60.4 | pts | 140.7 | % | 93.6 | % | 47.1 | pts | |||||||||||||||||||||||
Expense ratio, net(2)(3) | 86.4 | % | 44.8 | % | 41.6 | pts | 66.9 | % | 45.6 | % | 21.3 | pts | |||||||||||||||||||||||
Combined ratio (CR)(4) | 232.9 | % | 130.9 | % | 102.0 | pts | 207.6 | % | 139.2 | % | 68.4 | pts | |||||||||||||||||||||||
| Effect of current year catastrophe losses on CR | 18.0 | % | 32.1 | % | (14.1) | pts | 34.2 | % | 29.3 | % | 4.9 | pts | |||||||||||||||||||||||
| Effect of prior year unfavorable (favorable) development on CR | 81.8 | % | 3.0 | % | 78.8 | pts | 34.4 | % | 10.6 | % | 23.8 | pts | |||||||||||||||||||||||
Underlying combined ratio(5) | 133.1 | % | 95.8 | % | 37.3 | pts | 139.0 | % | 99.3 | % | 39.7 | pts | |||||||||||||||||||||||
| Commercial Lines | |||||||||||||||||||||||||||||||||||
Loss ratio, net(1) | 57.5 | % | 18.8 | % | 38.7 | pts | 36.1 | % | 31.5 | % | 4.6 | pts | |||||||||||||||||||||||
Expense ratio, net(2) | 43.0 | % | 61.0 | % | (18.0) | pts | 44.2 | % | 53.2 | % | (9.0) | pts | |||||||||||||||||||||||
Combined ratio (CR)(4) | 100.5 | % | 79.8 | % | 20.7 | pts | 80.3 | % | 84.7 | % | (4.4) | pts | |||||||||||||||||||||||
| Effect of current year catastrophe losses on CR | 45.7 | % | 4.0 | % | 41.7 | pts | 17.7 | % | 6.7 | % | 11.0 | pts | |||||||||||||||||||||||
| Effect of prior year favorable development on CR | (3.0) | % | (3.0) | % | — | pts | (3.5) | % | (1.7) | % | (1.8) | pts | |||||||||||||||||||||||
Underlying combined ratio(5) | 57.8 | % | 78.8 | % | (21.0) | pts | 66.1 | % | 79.7 | % | (13.6) | pts | |||||||||||||||||||||||
(1) Loss ratio, net is calculated as losses and loss adjustment expenses (LAE), net of losses ceded to reinsurers, relative to net premiums earned.
(2) Expense ratio, net is calculated as the sum of all operating expenses less interest expense relative to net premiums earned.
(3) Includes the impairment of goodwill, which had an impact of 11.7% and 4.1% on the company's consolidated expense ratios and a 23.9% and
7.9% impact on the company's personal lines expense ratios during the three and nine month periods ended September 30, 2022, respectively.
(4) Combined ratio is the sum of the loss ratio, net and expense ratio, net.
(5) Underlying combined ratio, a measure that is not based on GAAP, is reconciled above to the combined ratio, the most directly comparable GAAP measure. Additional information regarding non-GAAP financial measures presented in this press release can be found in the "Definitions of Non-GAAP Measures" section, below.
3
Exhibit 99.1
Combined Ratio Analysis
The calculations of the Company's loss ratios and underlying loss ratios are shown below.
| ($ in thousands) | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||||||||||||||
| 2022 | 2021 | Change | 2022 | 2021 | Change | ||||||||||||||||||||||||||||||
| Loss and LAE | $ | 117,228 | $ | 102,769 | $ | 14,459 | $ | 298,670 | $ | 336,614 | $ | (37,944) | |||||||||||||||||||||||
| % of Gross earned premiums | 38.8 | % | 29.1 | % | 9.7 | pts | 32.2 | % | 31.6 | % | 0.6 | pts | |||||||||||||||||||||||
| % of Net earned premiums | 100.9 | % | 67.1 | % | 33.8 | pts | 90.9 | % | 75.7 | % | 15.2 | pts | |||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||||||||
| Current year catastrophe losses | $ | 37,440 | $ | 37,003 | $ | 437 | $ | 86,609 | $ | 101,225 | $ | (14,616) | |||||||||||||||||||||||
| Prior year reserve unfavorable (favorable) development | 44,561 | 1,947 | 42,614 | 53,760 | 31,344 | 22,416 | |||||||||||||||||||||||||||||
Underlying loss and LAE (1) | $ | 35,227 | $ | 63,819 | $ | (28,592) | $ | 158,301 | $ | 204,045 | $ | (45,744) | |||||||||||||||||||||||
| % of Gross earned premiums | 11.7 | % | 18.1 | % | (6.4) | pts | 17.1 | % | 19.1 | % | (2.0) | pts | |||||||||||||||||||||||
| % of Net earned premiums | 30.3 | % | 41.6 | % | (11.3) | pts | 48.1 | % | 45.9 | % | 2.2 | pts | |||||||||||||||||||||||
(1) Underlying loss and LAE is a non-GAAP financial measure and is reconciled above to loss and LAE, the most directly comparable GAAP measure. Additional information regarding non-GAAP financial measures presented in this press release can be found in the "Definitions of Non-GAAP Measures" section, below.
The calculations of the Company's expense ratios are shown below.
| ($ in thousands) | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||||||||||||||
| 2022 | 2021 | Change | 2022 | 2021 | Change | ||||||||||||||||||||||||||||||
| Policy acquisition costs | $ | 38,944 | $ | 46,925 | $ | (7,981) | $ | 93,948 | $ | 129,073 | $ | (35,125) | |||||||||||||||||||||||
| Operating and underwriting | 9,615 | 15,429 | (5,814) | 34,882 | 42,133 | (7,251) | |||||||||||||||||||||||||||||
| General and administrative | 26,391 | 13,940 | 12,451 | 56,890 | 42,934 | 13,956 | |||||||||||||||||||||||||||||
| Total Operating Expenses | $ | 74,950 | $ | 76,294 | $ | (1,344) | $ | 185,720 | $ | 214,140 | $ | (28,420) | |||||||||||||||||||||||
% of Gross earned premiums | 24.8 | % | 21.6 | % | 3.2 | pts | 20.0 | % | 20.1 | % | (0.1) | pts | |||||||||||||||||||||||
% of Net earned premiums | 64.5 | % | 49.8 | % | 14.7 | pts | 56.5 | % | 48.2 | % | 8.3 | pts | |||||||||||||||||||||||
4
Exhibit 99.1
Quarterly Financial Results
Net loss attributable to the Company for the third quarter of 2022 was $70.9 million, or $1.65 per diluted share, compared to $14.3 million, or $0.33 per diluted share, for the third quarter of 2021. Drivers of the net loss during the third quarter of 2022 include: decreased gross written premiums which were partially offset by a decline in ceded premiums earned, unfavorable prior year loss development during the quarter, the impact of Hurricane Ian making landfall in Florida as a category four hurricane, and the impairment of goodwill attributable to the Company's personal lines operating segment.
The Company's total gross written premium decreased by $67.3 million, or 20.9%, to $255.2 million for the third quarter of 2022, from $322.5 million for the third quarter of 2021. This decrease was driven primarily by the transition of the Northeast business to Homeowners Choice Property & Casualty Insurance Company, Inc. (HCPCI) in the fourth quarter of 2021 and the first half of 2022. In addition, the Company experienced a decline in written premiums across the personal lines business, due to underwriting actions taken by the Company throughout 2021 and in the first half of 2022. The breakdown of the quarter-over-quarter changes in both direct written and assumed premiums by region and gross written premium by line of business are shown in the table below.
| ($ in thousands) | Three Months Ended September 30, | |||||||||||||||||||||||||
| 2022 | 2021 | Change $ | Change % | |||||||||||||||||||||||
Direct Written and Assumed Premium by Region (1) | ||||||||||||||||||||||||||
| Florida | $ | 178,313 | $ | 185,178 | $ | (6,865) | (3.7) | % | ||||||||||||||||||
| Gulf | 49,961 | 62,757 | (12,796) | (20.4) | ||||||||||||||||||||||
| Northeast | 16,627 | 49,982 | (33,355) | (66.7) | ||||||||||||||||||||||
| Southeast | 10,155 | 24,464 | (14,309) | (58.5) | ||||||||||||||||||||||
| Total direct written premium by region | 255,056 | 322,381 | (67,325) | (20.9) | ||||||||||||||||||||||
Assumed premium (2) | 147 | 112 | 35 | 31.3 | ||||||||||||||||||||||
| Total gross written premium by region | $ | 255,203 | $ | 322,493 | $ | (67,290) | (20.9) | % | ||||||||||||||||||
| Gross Written Premium by Line of Business | ||||||||||||||||||||||||||
| Personal property | $ | 178,335 | $ | 258,109 | $ | (79,774) | (30.9) | % | ||||||||||||||||||
| Commercial property | 76,868 | 64,384 | 12,484 | 19.4 | ||||||||||||||||||||||
| Total gross written premium by line of business | $ | 255,203 | $ | 322,493 | $ | (67,290) | (20.9) | % | ||||||||||||||||||
(1) "Gulf" is comprised of Louisiana and Texas; "Northeast" is comprised of Massachusetts, New Jersey and New York in 2022 and Connecticut, Massachusetts, New Jersey, New York and Rhode Island in 2021; and "Southeast" is comprised of Georgia, North Carolina and South Carolina. The Company is no longer writing in New Jersey as of January 15, 2022, Massachusetts as of April 1, 2022, and South Carolina as of June 1, 2022 as the policies have transitioned to HCPCI.
(2) Assumed premium written for 2022 and 2021 primarily included commercial property business assumed from unaffiliated insurers.
Loss and LAE increased by $14.4 million, or 14.0%, to $117.2 million for the third quarter of 2022, from $102.8 million for the third quarter of 2021. Loss and LAE expense as a percentage of net earned premiums increased 33.8 points to 100.9% for the third quarter of 2022, compared to 67.1% for the third quarter of 2021. Excluding catastrophe losses and reserve development, the Company's gross underlying loss and LAE ratio for the third quarter of 2022 would have been 11.7%, a decrease of 6.4 points from 18.1% during the third quarter of 2021.
Policy acquisition costs decreased by $8.0 million, or 17.1%, to $38.9 million for the third quarter of 2022, from $46.9 million for the third quarter of 2021, primarily due to a decrease in expenses such as premium taxes, policy administration fees and agent commissions, which fluctuate in conjunction with the quarter-over-quarter decrease in personal lines gross written premium. In addition, external management fees incurred related to the Company's commercial lines gross written premium decreased during the third quarter of 2022, due to the termination of the profit sharing component of the Company's external commercial management agreement. This was partially offset by decreased ceding commission income due to changes in the terms of the Company's quota share reinsurance agreements.
Operating and underwriting expenses decreased by $5.8 million, or 37.7%, to $9.6 million for the third quarter of 2022, from $15.4 million for the third quarter of 2021, primarily due to decreased investments in technology and decreased underwriting expenses as the result of the decrease in personal lines premiums described above.
5
Exhibit 99.1
General and administrative expenses increased by $12.5 million, or 89.9%, to $26.4 million for the third quarter of 2022, from $13.9 million for the third quarter of 2021, driven by the impairment of goodwill attributable to the Company's personal lines operating segment.
Personal Lines Operating Segment Highlights
Pre-tax losses attributable to the Company's personal lines operating segment totaled $69.8 million for the third quarter of 2022 compared to $25.9 million for the third quarter of 2021. The quarter-over-quarter increase in pre-tax losses can be attributed to decreased net premiums earned of $53.2 million driven by decreased gross written premiums as described above.
Quarter-over-quarter, policy acquisition costs and operating expenses decreased $7.0 million and $5.0 million, respectively, as expenses correlated to the movement of premium decreased with the decline in personal lines gross written premium. Policy acquisition costs also declined due to a decrease in ceding commission income related to changes in the terms of the Company's quota share reinsurance agreements. These decreases were partially offset by an increase in general and administrative expenses of $11.7 million attributed to the impairment of goodwill attributable to the segment.
Drivers of the pre-tax loss during the third quarter of 2022 include: unfavorable prior year loss development during the quarter, the impact of Hurricane Ian making landfall in Florida as a category four hurricane, and the impairment of goodwill attributable to the Company's personal lines operating segment.
Commercial Lines Operating Segment Highlights
Pre-tax earnings attributable to the Company's commercial lines operating segment totaled $1.8 million for the third quarter of 2022 compared to $10.2 million for the third quarter of 2021. This increase can be attributed to increased revenues of $16.8 million, driven by a $16.1 million increase in net premiums earned due to higher gross written premiums quarter-over-quarter as the Company transitions towards becoming a specialty commercial lines underwriter.
This increase was partially offset by increased expenses of $25.2 million, driven by a $26.1 million increase in loss and LAE incurred due to increased catastrophe losses quarter-over-quarter.
Reinsurance Costs as a Percentage of Gross Earned Premium
Reinsurance costs as a percentage of gross earned premium in the third quarter of 2022 and 2021 were as follows:
| 2022 | 2021 | ||||||||||
| Non-at-Risk | (2.0) | % | (0.8) | % | |||||||
| Quota Share | (20.1) | % | (23.9) | % | |||||||
| All Other | (39.4) | % | (31.9) | % | |||||||
| Total Ceding Ratio | (61.5) | % | (56.6) | % | |||||||
While ceded premiums earned decreased quarter-over-quarter, the Company's ceding ratio on a consolidated basis increased, driven by the Company's decrease in gross premiums earned quarter-over-quarter.
Ceded premiums earned related to the Company's quota share reinsurance contracts decreased quarter-over-quarter driven by a decrease in the cession rate for one of the Company's external quota shares and changes to the geographic footprint and exposure covered by the external quota share contracts.
Ceded premiums earned related to the Company's catastrophe program also decreased, driven by the need for less coverage for the 2022-2023 treaty year for the reduction in the geographic footprint and exposure, as well as the change from a cascading aggregate structure to an occurrence-based structure for the Company's 2022-2023 program.
6
Exhibit 99.1
Reinsurance costs as a percentage of gross earned premium in the third quarter of 2022 and 2021 for the Company's personal lines and commercial lines operating segments were as follows:
| Personal | Commercial | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Non-at-Risk | (3.1) | % | (1.4) | % | (0.5) | % | 0.5 | % | |||||||||||||||
| Quota Share | (24.4) | % | (26.7) | % | (13.4) | % | (17.4) | % | |||||||||||||||
| All Other | (41.4) | % | (27.7) | % | (36.4) | % | (41.8) | % | |||||||||||||||
| Total Ceding Ratio | (68.9) | % | (55.8) | % | (50.3) | % | (58.7) | % | |||||||||||||||
Investment Portfolio Highlights
The Company's cash, restricted cash and investment holdings decreased from $964.8 million at December 31, 2021 to $768.6 million at September 30, 2022. The Company's cash and investment holdings consist of investments in U.S. government and agency securities, corporate debt and 100% investment grade money market instruments. Fixed maturities represented approximately 90.3% of total investments at September 30, 2022, compared to 92.2% at December 31, 2021. At September 30, 2022, the Company's fixed maturity investments had a modified duration of 3.6 years, compared to 4.0 years at December 31, 2021.
At September 30, 2022, the Company's fixed maturity investment holdings decreased by $171.4 million, or 25.8% from December 31, 2021, through the sale of securities in order to satisfy the Company's liquidity requirements during 2022 and due to unrealized losses recognized on the portfolio.
Book Value Analysis
Book value per common share decreased 74.2% from $7.20 at December 31, 2021, to $1.86 at September 30, 2022. Underlying book value per common share decreased 54.3% from $7.35 at December 31, 2021 to $3.36 at September 30, 2022. A decrease in the Company's retained earnings as the result of a net loss in the first nine months of 2022 drove the decrease in the Company's book value per share. As shown in the table below, removing the effect of AOCI increases the Company's book value per common share, as the Company experienced unfavorable capital market conditions for the nine months ended September 30, 2022.
| ($ in thousands, except for share and per share data) | September 30, 2022 | December 31, 2021 | ||||||||||||
| Book Value per Share | ||||||||||||||
| Numerator: | ||||||||||||||
| Common stockholders' equity attributable to UIHC | $ | 80,434 | $ | 312,406 | ||||||||||
| Denominator: | ||||||||||||||
| Total Shares Outstanding | 43,285,807 | 43,370,442 | ||||||||||||
| Book Value Per Common Share | $ | 1.86 | $ | 7.20 | ||||||||||
| Book Value per Share, Excluding the Impact of Accumulated Other Comprehensive Income (AOCI) | ||||||||||||||
| Numerator: | ||||||||||||||
| Common stockholders' equity attributable to UIHC | $ | 80,434 | $ | 312,406 | ||||||||||
| Less: Accumulated other comprehensive loss | (64,805) | (6,531) | ||||||||||||
| Stockholders' Equity, excluding AOCI | $ | 145,239 | $ | 318,937 | ||||||||||
| Denominator: | ||||||||||||||
| Total Shares Outstanding | 43,285,807 | 43,370,442 | ||||||||||||
Underlying Book Value Per Common Share(1) | $ | 3.36 | $ | 7.35 | ||||||||||
(1) Underlying book value per common share is a non-GAAP financial measure and is reconciled above to book value per common share, the most directly comparable GAAP measure. Additional information regarding non-GAAP financial measures presented in this press release can be found in the "Definitions of Non-GAAP Measures" section below.
7
Exhibit 99.1
Definitions of Non-GAAP Measures
The Company believes that investors' understanding of UPC Insurance's performance is enhanced by the Company's disclosure of the following non-GAAP measures. The Company's methods for calculating these measures may differ from those used by other companies and therefore comparability may be limited.
Net loss excluding the effects of amortization of intangible assets, realized gains (losses) and unrealized gains (losses) on equity securities, net of tax (core loss) is a non-GAAP measure that is computed by adding amortization, net of tax, to net income and subtracting realized gains (losses) on the Company's investment portfolio, net of tax, and unrealized gains (losses) on the Company's equity securities, net of tax, from net loss. Amortization expense is related to the amortization of intangible assets acquired, including goodwill, through mergers and, therefore, the expense does not arise through normal operations. Investment portfolio gains (losses) and unrealized equity security gains (losses) vary independent of the Company's operations. The Company believes it is useful for investors to evaluate these components both separately and in the aggregate when reviewing the Company's performance. The most directly comparable GAAP measure is net loss. The core loss measure should not be considered a substitute for net loss and does not reflect the overall profitability of the Company's business.
Core return on equity is a non-GAAP ratio calculated using non-GAAP measures. It is calculated by dividing the core loss for the period by the average stockholders’ equity for the trailing twelve months (or one quarter of such average, in the case of quarterly periods). Core loss is an after-tax non-GAAP measure that is calculated by excluding from net loss the effect of non-cash amortization of intangible assets, unrealized gains or losses on the Company's equity security investments and net realized gains or losses on the Company's investment portfolio. In the opinion of the Company’s management, core loss, core loss per share and core return on equity are meaningful indicators to investors of the Company's underwriting and operating results, since the excluded items are not necessarily indicative of operating trends. Internally, the Company’s management uses core loss, core loss per share and core return on equity to evaluate performance against historical results and establish financial targets on a consolidated basis. The most directly comparable GAAP measure is return on equity. The core return on equity measure should not be considered a substitute for return on equity and does not reflect the overall profitability of the Company's business.
Combined ratio excluding the effects of current year catastrophe losses and prior year reserve development (underlying combined ratio) is a non-GAAP measure, that is computed by subtracting the effect of current year catastrophe losses and prior year development from the combined ratio. The Company believes that this ratio is useful to investors, and it is used by management to highlight the trends in the Company's business that may be obscured by current year catastrophe losses and prior year development. Current year catastrophe losses cause the Company's loss trends to vary significantly between periods as a result of their frequency of occurrence and severity and can have a significant impact on the combined ratio. Prior year development is caused by unexpected loss development on historical reserves. The Company believes it is useful for investors to evaluate these components both separately and in the aggregate when reviewing the Company's performance. The most directly comparable GAAP measure is the combined ratio. The underlying combined ratio should not be considered as a substitute for the combined ratio and does not reflect the overall profitability of the Company's business.
Net loss and LAE excluding the effects of current year catastrophe losses and prior year reserve development (underlying loss and LAE) is a non-GAAP measure that is computed by subtracting the effect of current year catastrophe losses and prior year reserve development from net loss and LAE. The Company uses underlying loss and LAE figures to analyze the Company's loss trends that may be impacted by current year catastrophe losses and prior year development on the Company's reserves. As discussed previously, these two items can have a significant impact on the Company's loss trends in a given period. The Company believes it is useful for investors to evaluate these components both separately and in the aggregate when reviewing the Company's performance. The most directly comparable GAAP measure is net loss and LAE. The underlying loss and LAE measure should not be considered a substitute for net loss and LAE and does not reflect the overall profitability of the Company's business.
Book value per common share, excluding the impact of accumulated other comprehensive loss (underlying book value per common share), is a non-GAAP measure that is computed by dividing common stockholders' equity after excluding accumulated other comprehensive loss, by total common shares outstanding plus dilutive potential common shares outstanding. The Company uses the trend in book value per common share, excluding the impact of accumulated other comprehensive loss, in conjunction with book value per common share to identify and
8
Exhibit 99.1
analyze the change in net worth attributable to management efforts between periods. The Company believes this non-GAAP measure is useful to investors because it eliminates the effect of interest rates that can fluctuate significantly from period to period and are generally driven by economic and financial factors that are not influenced by management. Book value per common share is the most directly comparable GAAP measure. Book value per common share, excluding the impact of accumulated other comprehensive loss, should not be considered a substitute for book value per common share and does not reflect the recorded net worth of the Company's business.
9
Exhibit 99.1
Conference Call Details
Date and Time: November 9, 2022 - 5:00 P.M. ET
Participant Dial-In: (United States): 877-445-9755
(International): 201-493-6744
Webcast: To listen to the live webcast, please go to http://investors.upcinsurance.com and click on the conference call link at the top of the page or go to: https://event.webcasts.com/starthere.jsp?ei=1579304&tp_key=3b314b94e2
An archive of the webcast will be available for a limited period of time thereafter.
Presentation: The information in this press release should be read in conjunction with an investor presentation that is available on the Company's website at investors.upcinsurance.com/Presentations.
About UPC Insurance
Founded in 1999, UPC Insurance is an insurance holding company that sources, writes and services personal and commercial residential property and casualty insurance policies using a group of wholly owned insurance subsidiaries and one majority owned insurance subsidiary through a variety of distribution channels. The Company currently writes policies in Florida, Louisiana, New York, and Texas. The Company also writes policies in South Carolina and North Carolina, where renewal rights have been sold and all premiums and losses are ceded. From its headquarters in St. Petersburg, UPC Insurance's team of dedicated professionals manages a completely integrated insurance company, including sales, underwriting, customer service and claims.
Forward-Looking Statements
Statements made in this press release, or on the conference call identified above, and otherwise, that are not historical facts are “forward-looking statements”. The Company believes these statements are based on reasonable estimates, assumptions and plans. However, if the estimates, assumptions, or plans underlying the forward-looking statements prove inaccurate or if other risks or uncertainties arise, actual results could differ materially from those expressed in, or implied by, the forward-looking statements. These statements are made subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements do not relate strictly to historical or current facts and may be identified by their use of words such as “may,” “will,” “expect,” "endeavor," "project," “believe,” "plan," “anticipate,” “intend,” “could,” “would,” “estimate” or “continue” or the negative variations thereof or comparable terminology. Factors that could cause actual results to differ materially may be found in the Company's filings with the U.S. Securities and Exchange Commission, in the “Risk Factors” section in the Company's most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. Forward-looking statements speak only as of the date on which they are made, and, except as required by applicable law, the Company undertakes no obligation to update or revise any forward-looking statements.
### #### ###
| CONTACT: | OR | INVESTOR RELATIONS: | ||||||||||||
| United Insurance Holdings Corp. | The Equity Group | |||||||||||||
| Alexander Baty | Karin Daly | |||||||||||||
| Director of Financial Reporting | Vice President | |||||||||||||
| (727) 895-7737 / abaty@upcinsurance.com | (212) 836-9623 / kdaly@equityny.com | |||||||||||||
10
Exhibit 99.1
Consolidated Statements of Comprehensive Loss
In thousands, except share and per share amounts
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
| REVENUE: | ||||||||||||||||||||||||||
| Gross premiums written | $ | 255,203 | $ | 322,493 | $ | 894,824 | $ | 1,060,555 | ||||||||||||||||||
| Change in gross unearned premiums | 46,693 | 30,968 | 32,036 | 6,002 | ||||||||||||||||||||||
| Gross premiums earned | 301,896 | 353,461 | 926,860 | 1,066,557 | ||||||||||||||||||||||
| Ceded premiums earned | (185,709) | (200,190) | (598,411) | (621,877) | ||||||||||||||||||||||
| Net premiums earned | 116,187 | 153,271 | 328,449 | 444,680 | ||||||||||||||||||||||
| Net investment income | 4,269 | 3,471 | 9,887 | 10,737 | ||||||||||||||||||||||
| Net realized investment gains (losses) | (9) | 5,537 | (1,856) | 5,916 | ||||||||||||||||||||||
| Net unrealized gains (losses) on equity securities | (2,518) | (3,293) | (9,870) | 1,709 | ||||||||||||||||||||||
| Other revenue | 5,859 | 3,754 | 15,337 | 16,941 | ||||||||||||||||||||||
| Total revenues | $ | 123,788 | $ | 162,740 | $ | 341,947 | $ | 479,983 | ||||||||||||||||||
| EXPENSES: | ||||||||||||||||||||||||||
| Losses and loss adjustment expenses | 117,228 | 102,769 | 298,670 | 336,614 | ||||||||||||||||||||||
| Policy acquisition costs | 38,944 | 46,925 | 93,948 | 129,073 | ||||||||||||||||||||||
| Operating expenses | 9,615 | 15,429 | 34,882 | 42,133 | ||||||||||||||||||||||
| General and administrative expenses | 26,391 | 13,940 | 56,890 | 42,934 | ||||||||||||||||||||||
| Interest expense | 2,392 | 2,378 | 7,165 | 7,010 | ||||||||||||||||||||||
| Total expenses | 194,570 | 181,441 | 491,555 | 557,764 | ||||||||||||||||||||||
| Loss before other income | (70,782) | (18,701) | (149,608) | (77,781) | ||||||||||||||||||||||
| Other income (loss) | (15) | 101 | 1,599 | 126 | ||||||||||||||||||||||
| Loss before income taxes | (70,797) | (18,600) | (148,009) | (77,655) | ||||||||||||||||||||||
| Provision (benefit) for income taxes | 87 | (3,482) | 25,187 | (20,656) | ||||||||||||||||||||||
| Net Loss | $ | (70,884) | $ | (15,118) | $ | (173,196) | $ | (56,999) | ||||||||||||||||||
| Less: Net loss attributable to noncontrolling interests | — | (796) | (111) | (1,396) | ||||||||||||||||||||||
| Net loss attributable to UIHC | $ | (70,884) | $ | (14,322) | $ | (173,085) | $ | (55,603) | ||||||||||||||||||
| OTHER COMPREHENSIVE LOSS: | ||||||||||||||||||||||||||
| Change in net unrealized gains (losses) on investments | (15,953) | 2,401 | (60,232) | (11,096) | ||||||||||||||||||||||
| Reclassification adjustment for net realized investment losses (gains) | 9 | (5,537) | 1,856 | (5,916) | ||||||||||||||||||||||
| Income tax benefit related to items of other comprehensive income loss | — | 744 | 49 | 4,108 | ||||||||||||||||||||||
| Total comprehensive loss | $ | (86,828) | $ | (17,510) | $ | (231,523) | $ | (69,903) | ||||||||||||||||||
| Less: Comprehensive loss attributable to noncontrolling interests | — | (844) | (164) | (1,601) | ||||||||||||||||||||||
| Comprehensive loss attributable to UIHC | $ | (86,828) | $ | (16,666) | $ | (231,359) | $ | (68,302) | ||||||||||||||||||
| Weighted average shares outstanding | ||||||||||||||||||||||||||
| Basic | 43,075,234 | 42,971,535 | 43,035,374 | 42,940,458 | ||||||||||||||||||||||
| Diluted | 43,075,234 | 42,971,535 | 43,035,374 | 42,940,458 | ||||||||||||||||||||||
| Earnings available to UIHC common stockholders per share | ||||||||||||||||||||||||||
| Basic | $ | (1.65) | $ | (0.33) | $ | (4.02) | $ | (1.29) | ||||||||||||||||||
| Diluted | $ | (1.65) | $ | (0.33) | $ | (4.02) | $ | (1.29) | ||||||||||||||||||
| Dividends declared per share | $ | — | $ | 0.06 | $ | 0.06 | $ | 0.18 | ||||||||||||||||||
11
Exhibit 99.1
Consolidated Balance Sheets
In thousands, except share amounts
| September 30, 2022 | December 31, 2021 | |||||||||||||
| ASSETS | ||||||||||||||
| Investments, at fair value: | ||||||||||||||
| Fixed maturities, available-for-sale | $ | 492,251 | $ | 663,602 | ||||||||||
| Equity securities | 36,495 | 37,958 | ||||||||||||
| Other investments | 16,609 | 18,006 | ||||||||||||
| Total investments | $ | 545,355 | $ | 719,566 | ||||||||||
| Cash and cash equivalents | 180,947 | 212,024 | ||||||||||||
| Restricted cash | 42,300 | 33,254 | ||||||||||||
| Accrued investment income | 3,203 | 3,296 | ||||||||||||
| Property and equipment, net | 26,709 | 31,561 | ||||||||||||
| Premiums receivable, net | 45,214 | 79,166 | ||||||||||||
| Reinsurance recoverable on paid and unpaid losses | 1,547,282 | 997,120 | ||||||||||||
| Ceded unearned premiums | 373,558 | 430,631 | ||||||||||||
| Goodwill | 59,476 | 73,045 | ||||||||||||
| Deferred policy acquisition costs | 71,204 | 38,520 | ||||||||||||
| Intangible assets, net | 15,940 | 18,375 | ||||||||||||
| Other assets | 30,939 | 62,015 | ||||||||||||
| Total Assets | $ | 2,942,127 | $ | 2,698,573 | ||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||
| Liabilities: | ||||||||||||||
| Unpaid losses and loss adjustment expenses | $ | 1,679,567 | $ | 1,084,450 | ||||||||||
| Unearned premiums | 612,904 | 644,940 | ||||||||||||
| Reinsurance payable on premiums | 200,568 | 248,625 | ||||||||||||
| Payments outstanding | 105,200 | 114,524 | ||||||||||||
| Accounts payable and accrued expenses | 76,358 | 76,258 | ||||||||||||
| Operating lease liability | 1,416 | 1,934 | ||||||||||||
| Other liabilities | 32,996 | 39,324 | ||||||||||||
| Notes payable, net | 152,684 | 156,561 | ||||||||||||
| Total Liabilities | $ | 2,861,693 | $ | 2,366,616 | ||||||||||
| Commitments and contingencies | ||||||||||||||
| Stockholders' Equity: | ||||||||||||||
| Preferred stock, $0.0001 par value; 1,000,000 authorized; none issued or outstanding | — | — | ||||||||||||
Common stock, $0.0001 par value; 100,000,000 shares authorized; 43,497,890 and 43,360,429 issued, respectively; 43,285,807 and 43,370,442 outstanding, respectively | 4 | 4 | ||||||||||||
| Additional paid-in capital | 395,192 | 394,268 | ||||||||||||
| Treasury shares, at cost; 212,083 shares | (431) | (431) | ||||||||||||
| Accumulated other comprehensive loss | (64,805) | (6,531) | ||||||||||||
| Retained earnings (deficit) | (249,526) | (74,904) | ||||||||||||
| Total stockholders' equity attributable to UIHC stockholders | $ | 80,434 | $ | 312,406 | ||||||||||
| Noncontrolling interests | — | 19,551 | ||||||||||||
| Total Stockholders' Equity | $ | 80,434 | $ | 331,957 | ||||||||||
| Total Liabilities and Stockholders' Equity | $ | 2,942,127 | $ | 2,698,573 | ||||||||||
12
United Insurance Holdings Corporation (Nasdaq: UIHC) Investor Presentation November 9th, 2022
Company Overview 2 UPC Insurance is a specialty underwriter of catastrophe exposed property insurance. United Insurance Holding Corp. (NASDAQ: UIHC) was founded in 1999 and is the insurance holding company for 3 P&C carriers and operating affiliates operating under the brand UPC Insurance (UPC). UPC has the #1 market share of commercial residential property insurance (commercial lines) in Florida with roughly 5,500 policies and $488 million of premium in-force. UPC’s homeowners & fire insurance products (personal lines) are focused on Florida, Louisiana, New York, and Texas with roughly 265,000 policies and $638 million of premium in-force. ¹ UIHC as of September 30, 2022 Total Assets: $2.9 billion Total Equity: $80.4 million Premium in-Force: $1.13 billion ¹ Employees: 296 Headquarters: St. Petersburg, FL Credit Rating: BBB- (Kroll) 1 Excludes discontinued states where renewal rights have been sold Specialty Commercial Property Specialty Homeowners
3 Executive Summary • Q3 Results • GAAP net loss of -$70.9m included a -$13.6m non-recurring goodwill impairment charge related to personal lines withdrawal plans. • Core loss of -$57.5m excluding goodwill impairment compared unfavorably to a -$15.5m core loss last year due to higher loss costs. • Gross current year CAT of over $1 billion driven by Hurricane Ian, but reinsurance reduced net retained current year CAT losses to $37.4m • Stockholders’ equity attributable to UIHC as of September 30, 2022, was $80.4m or $1.86 per share. These amounts include an accumulated other comprehensive loss (AOCL) of -$64.8m or -$1.50 per share that may or may not be realized in whole or in part due to the short duration, high credit quality nature of UIHC’s fixed income investment portfolio. • Other Highlights • Received approval from FL, LA & TX regulatory authorities for United Property & Casualty Insurance Company’s (UPCIC) withdrawal plans. • Due to potential Hurricane Ian losses and other pressures on statutory surplus, there is substantial doubt regarding the viability of UPCIC’s run-off plan without additional financial support. • Handled over 23,000 claims from Hurricane Ian (22,362 PL & 712 CL) with 99% contacted, 89% inspected and 77% through quality assurance review. Reinsurance recoveries will be critical to managing liquidity and investment disposals are likely needed in future periods. • Completed reduction in workforce to supplement attrition resulting in a decline from 468 associates at 1/1/22 to 296 at 10/28/22 (-172 or -37%).
Q3-22 Results 4 Core loss excluding goodwill impairment was -$57.5m, a decline of -$42.1m from prior year. Loss development continued to exceed expectations for prior accident years driven by higher severity. Q3-22 Q3-21 Change Core income (loss) (57,527)$ (15,453)$ -272.3% per diluted share (CEPS) (1.34)$ (0.36)$ Included the following items Net current year catastrophe loss & LAE incurred 37,440$ 37,002$ Net (favorable) unfavorable reserve development (PYD) 44,561$ 1,947$ Total items 82,001$ 38,949$ Core income (loss) excluding items 7,254$ 15,316$ -52.6% CEPS excluding items 0.17$ 0.36$ Net loss & LAE ratio 100.9% 67.1% Net expense ratio 64.5% 49.8% Combined ratio 165.4% 116.9% 48.5 pts Net current year catastrophe loss & LAE incurred -32.2% -24.1% Net favorable (unfavorable) reserve development -38.4% -1.3% Underlying combined ratio 94.8% 91.5% 3.3 pts
Q3-22 Results by Line of Business 5 Commercial lines remained profitable despite the impact of Hurricane Ian. $ in millions CL PL Other Total CL PL Other Total Gross Premiums Earned 119.8$ 182.1$ -$ 301.9$ 340.5$ 586.4$ -$ 926.9$ Ceded Premiums Earned (60.3) (125.4) - (185.7) (184.1) (414.3) - (598.4) Net Premiums Earned 59.5 56.7 - 116.2 156.4 172.0 - 328.4 Investment & other revenue 2.9 7.2 0.0 10.1 5.5 17.9 0.0 23.3 Unrealized G(L) on Equities (0.9) (1.6) 0.0 (2.5) (4.1) (5.8) - (9.9) Total Revenue 61.6 62.2 0.0 123.8 157.8 184.1 0.0 341.9 Underlying Loss & LAE 8.8 26.4 - 35.2 34.3 124.0 - 158.3 Current year CAT Loss & LAE 27.2 10.2 - 37.4 27.8 58.9 - 86.6 Prior year development (1.8) 46.4 - 44.6 (5.5) 59.2 - 53.8 Total Loss 34.2 83.0 - 117.2 56.5 242.1 - 298.7 Operating & Interest Expense 25.6 48.9 2.8 77.3 69.2 115.1 8.6 192.8 Total Expenses 59.8 131.9 2.8 194.5 125.7 357.2 8.6 491.5 Other income (loss) 0.0 (0.0) - (0.0) 0.0 (0.1) 1.7 1.6 Income (Loss) before tax 1.8$ (69.8)$ (2.8)$ (70.8) 32.1$ (173.2)$ (6.9)$ (148.0) Income tax expense (benefit) 0.1 25.2 Less: Non-controlling interests - (0.1) Net income (loss) attributable to UIHC (70.9) (173.0) Net Loss Ratio 57.5% 146.5% 100.9% 36.1% 140.7% 90.9% Net Expense Ratio 43.0% 86.4% 64.5% 44.2% 66.9% 56.5% Combined Ratio 100.5% 232.9% 165.4% 80.3% 207.6% 147.4% CAT Loss 45.7% 18.0% 32.2% 17.7% 34.2% 26.4% PY Development (F)/U -3.0% 81.8% 38.4% -3.5% 34.4% 16.4% Underlying Combined Ratio 57.8% 133.1% 94.8% 66.1% 139.0% 104.6% Three Months Ended Sep 30, 2022 Nine Months Ended Sep 30, 2022
Hurricane Ian: Core CAT Reinsurance Program Impact 6 We have $1.39b of aggregate limit remaining, but UPCIC’s limit for Ian is nearing exhaustion. Our retention for a second event could be up to $31.8m with $16.4m net to ACIC & UPC with another $15.4m to UPC Re. Our captive’s (UPC Re) share of the UL Layer Loss was $20.1m.
Balance Sheet Highlights 7 Equity erosion of ~$232m driven by: Hurricane Ian = -$35.6m Change in AOCI = -$58.3m Valuation allowance = -$53.9m Goodwill impairment = -$13.6m Prior year development = -$53.8m All Other items = -$16.8m Sep. 30, Dec. 31, ($ in thousands, except per share amounts) 2022 2021 Variance Selected Balance Sheet Data Cash & investments 768,602$ 964,844$ -20.3% Unpaid loss & LAE reserves, net of reinsurance 132,285$ 87,330$ 51.5% Financial debt 152,684$ 156,561$ -2.5% Accumulated other comprehensive income (loss) (64,805)$ (6,531)$ 892.3% Stockholders' equity attributable to UIHC 80,434$ 312,406$ -74.3% Total capital 233,118$ 468,967$ -50.3% Leverage Ratios Debt-to-total capital 65.5% 33.4% 96.2% Net premiums earned-to-stockholders' equity 544.5% 188.8% 188.4% Per Share Data Common shares outstanding 43,285,807 43,370,442 -0.2% Book value per common share 1.86$ 7.20$ -74.2% Underlying book value per common share 3.36$ 7.35$ -54.4% Tangible book value per common share 0.12$ 5.10$ -97.7% Underlying tangible book value per common share 1.61$ 5.25$ -69.3%
Business In-force 8 Personal lines (PL) continues to shrink while Commercial lines (CL) grows. 12.31.21 9.30.22 Change 12.31.21 9.30.22 Change 12.31.21 9.30.22 Change 1 FL 198,838 147,520 -25.8% 437,211$ 392,844$ -10.1% 89,605$ 71,223$ -20.5% 2 TX 67,755 44,181 -34.8% 130,754$ 91,604$ -29.9% 29,915$ 20,814$ -30.4% 3 LA 41,956 34,573 -17.6% 89,934$ 91,823$ 2.1% 18,330$ 16,988$ -7.3% 4 NY 43,529 38,864 -10.7% 63,787$ 61,798$ -3.1% 32,013$ 29,052$ -9.2% 5 SC 33,748 18,975 -43.8% 50,589$ 31,655$ -37.4% 16,299$ 9,208$ -43.5% 6 MA 24,992 - 47,328$ -$ 20,520$ -$ 7 NC 19,306 10,524 -45.5% 32,464$ 20,880$ -35.7% 10,036$ 5,555$ -44.6% 8 NJ 30,867 - 32,294$ -$ 16,523$ -$ 9 GA 4,708 2,137 -54.6% 6,006$ 3,295$ -45.1% 2,298$ 1,092$ -52.5% 10 Toal PL 465,699 296,774 -36.3% 890,367$ 693,899$ -22.1% 235,539$ 153,932$ -34.6% 11 Discontinued / Sold 113,621 31,636 168,681$ 55,830$ 65,676$ 15,855$ % of UIHC 10% 5% 7% 12 PL Adjusted (10-11) 352,078 265,138 -24.7% 721,686$ 638,069$ -11.6% 169,863$ 138,077$ -18.7% 13 Total CL 6,025 5,522 -8.3% 425,415$ 487,975$ 14.7% 74,130$ 70,548$ -4.8% 14 Total UIHC (10+13) 471,724 302,296 -35.9% 1,315,782$ 1,181,874$ -10.2% 309,669$ 224,480$ -27.5% 15 UIHC Adjusted (12+13) 358,103 270,660 -24.4% 1,147,101$ 1,126,044$ -1.8% 243,993$ 208,625$ -14.5% Policies Premium ($000) TIV ($000,000)
Personal Lines Premium Trend 9 All Personal Lines Metric 2021 Q3 2021 Q4 2022 Q1 2022 Q2 2022 Q3 Renewing Policies 93,364 71,661 64,016 74,306 63,371 Renewal Acceptance 80.8% 82.3% 79.4% 75.1% 70.4% Company Initiated Non-Renewals 11,959 5,046 5,755 10,508 12,270 Renewal Acceptance xNon-Renewals 90.2% 87.4% 85.5% 84.0% 81.6% Renewed TIV 45,444,516,211 35,129,624,436 33,159,540,114 40,229,720,081 34,439,684,504 Expiring TIV 44,302,602,896 33,842,563,649 30,865,894,811 36,331,053,358 30,650,915,393 Additional TIV 1,141,913,315 1,287,060,787 2,293,645,304 3,898,666,723 3,788,769,111 Percent Change 2.6% 3.8% 7.4% 10.7% 12.4% Renewed Premium 199,430,515 156,293,383 151,429,011 187,670,668 174,709,302 Expiring Premium 169,762,340 134,640,765 119,597,661 144,511,760 129,197,464 Additional Premium 29,668,175 21,652,618 31,831,351 43,158,908 45,511,837 Percent Change 17.5% 16.1% 26.6% 29.9% 35.2% Renewal Premium Rate/$1k TIV 4.39 4.45 4.57 4.66 5.07 Expiring Premium Rate/$1k TIV 3.83 3.98 3.87 3.98 4.22 Monthly Rate Change 14.5% 11.8% 17.9% 17.3% 20.4% R e n e w in g P o li ci e s O n ly +70¢ Highest quarterly average rate/$1k TIV recorded to date. Renewal acceptance dipped to 77.3% – down from 92.5% in Sept 2021 – driven by strategic underwriting actions implemented portfolio- wide (rate increases & ITV changes). +68¢+47¢+56¢ Additional premium and percent change are at all time highs due to rate increases in FL. +85¢ We continued to see improvement in rate adequacy during Q3-22.
Commercial Lines Rate Trend 10 Renewal rate change for American Coastal driven by hard market conditions.
Combined Premium & Exposure Trends 11 Premiums still holding flat while exposures decrease.
Cautionary Statements 12 This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements include expectations regarding our diversification, growth opportunities, retention rates, liquidity, investment returns and our ability to meet our investment objectives and to manage and mitigate market risk with respect to our investments. These statements are based on current expectations, estimates and projections about the industry and market in which we operate, and management's beliefs and assumptions. Without limiting the generality of the foregoing, words such as "may," "will," "expect," "endeavor," "project," "believe," "anticipate," "intend," "could," "would," "estimate," or "continue" or the negative variations thereof, or comparable terminology, are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance and involve certain known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. The risks and uncertainties include, without limitation: the regulatory, economic and weather conditions in the states in which we operate; the impact of new federal or state regulations that affect the property and casualty insurance market; the cost, variability and availability of reinsurance; assessments charged by various governmental agencies; pricing competition and other initiatives by competitors; our ability to attract and retain the services of senior management; the outcome of litigation pending against us, including the terms of any settlements; dependence on investment income and the composition of our investment portfolio and related market risks; our exposure to catastrophic events and severe weather conditions; downgrades in our financial strength ratings; risks and uncertainties relating to our acquisitions including our ability to successfully integrate the acquired companies; and other risks and uncertainties described in the section entitled "Risk Factors" and elsewhere in our filings with the Securities and Exchange Commission (the "SEC"), including our Annual Report in Form 10-K for the year ended December 31, 2020 and 2021 and our Form 10-Q for the periods ending March 31, 2021, June 30, 2021, September 30, 2021, March 31, 2022, June 30, 2022, and September 30, 2022. We caution you not to place undue reliance on these forward looking statements, which are valid only as of the date they were made. Except as may be required by applicable law, we undertake no obligation to update or revise any forward-looking statements to reflect new information, the occurrence of unanticipated events, or otherwise. This presentation contains certain non-GAAP financial measures. See our earnings release, Form 10-K ,and Form 10-Q for further information regarding these non-GAAP financial measures. The information in this presentation is confidential. Any photocopying, disclosure, reproduction or alteration of the contents of this presentation and any forwarding of a copy of this presentation or any portion of this presentation to any person is prohibited.
