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): February 20, 2020


UNITED INSURANCE HOLDINGS CORP.
(Exact name of registrant as specified in its charter)
 
 
 
 
 
Delaware
 
001-35761
 
75-3241967
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)
 
 
 
 
 
800 2nd Avenue S.
Saint Petersburg, FL
 
 
 
33701
(Address of principal executive offices)
 
 
 
(Zip Code)
 
 
 
 
 
 
 
(727) 895-7737
 
 
 
 
(Registrant's telephone number, including area code)
 
 
 
 
 
 
 
(Former name or former address, if changed since last report.)

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:
 
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of Each Exchange on Which Registered
Common stock, $0.0001 par value per share
UIHC
Nasdaq Stock Market LLC

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 o

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. o




Item 2.02. Results of Operations and Financial Condition

On February 20, 2020, United Insurance Holdings Corp. (the Company, we, our) issued a press release relating to our earnings for the fourth quarter and year ended December 31, 2019 (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 February 20, 2020. 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 Exhibit 99.3 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 February 20, 2020
 
 
 
 
Investor presentation issued by the Company on February 20, 2020



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.
February 20, 2020
By:
/s/ B. Bradford Martz
 
 
B. Bradford Martz, Chief Financial Officer
(principal financial officer and principal accounting officer)






Exhibit 99.1

uhiclogorta18.gif

FOR IMMEDIATE RELEASE
 
UNITED INSURANCE HOLDINGS CORP. REPORTS FINANCIAL RESULTS
FOR ITS FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2019
 
Company to Host Quarterly Conference Call at 5:00 P.M. ET on February 20, 2020
The information in this press release should be read in conjunction with an investor presentation that is available on our website at investors.upcinsurance.com/Presentations.
 
St. Petersburg, FL - February 20, 2020: 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 fourth quarter and year ended December 31, 2019.
($ in thousands, except for per share data)
Three Months Ended
 
Year Ended
December 31,
 
December 31,
 
2019
 
2018
 
Change
 
2019
 
2018
 
Change
Gross premiums written
$
294,763

 
$
292,187

 
0.9
 %
 
$
1,380,268

 
$
1,252,401

 
10.2
 %
Gross premiums earned
$
347,005

 
$
308,414

 
12.5
 %
 
$
1,333,526

 
$
1,180,961

 
12.9
 %
Net premiums earned
$
188,354

 
$
181,740

 
3.6
 %
 
$
752,400

 
$
689,276

 
9.2
 %
Total revenues
$
210,421

 
$
181,089

 
16.2
 %
 
$
825,116

 
$
723,942

 
14.0
 %
Earnings before income tax
$
(5,260
)
 
$
(19,416
)
 
72.9
 %
 
$
(32,606
)
 
$
(4,239
)
 
(669.2
)%
Net income (loss) attributable to UIHC
$
(8,158
)
 
$
(11,071
)
 
26.3
 %
 
$
(29,872
)
 
$
290

 
(10,400.7
)%
Net income (loss) available to UIHC common stockholders per diluted share
$
(0.19
)
 
$
(0.26
)
 
26.9
 %
 
$
(0.70
)
 
$
0.01

 
(7,100.0
)%
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of net income (loss) to core income (loss):
 
 
 
 
 
 
 
 
 
 
 
Plus: Non-cash amortization of intangible assets
$
1,326

 
$
1,365

 
(2.9
)%
 
$
5,355

 
$
13,920

 
(61.5
)%
Less: Net realized gains on investment portfolio
$
1,042

 
$
2,329

 
(55.3
)%
 
$
1,228

 
$
1,655

 
(25.8
)%
Less: Unrealized gains (losses) on equity securities
$
9,242

 
$
(14,346
)
 
164.4
 %
 
$
24,761

 
$
(9,300
)
 
366.2
 %
Less: Net tax impact(1)
$
(1,881
)
 
$
2,810

 
(166.9
)%
 
$
(4,333
)
 
$
4,529

 
(195.7
)%
Core income (loss)(2)
$
(15,235
)
 
$
(499
)
 
(2,953.1
)%
 
$
(46,173
)
 
$
17,326

 
(366.5
)%
Core income (loss) per diluted share(2)
$
(0.36
)
 
$
(0.01
)
 
(3,500.0
)%
 
$
(1.08
)
 
$
0.40

 
(370.0
)%
 
 
 
 
 
 
 
 
 
 
 
 
Book value per share
 
 
 
 

 
$
11.69

 
$
12.10

 
(3.4
)%
(1) In order to reconcile net income (loss) to the core income (loss) measure, we included the tax impact of all adjustments using the 21% corporate federal tax rate.
(2) Core income (loss) and core income (loss) per diluted share, measures that are not based on GAAP, are reconciled above to net income (loss) and net income (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.

"2019 was a tough year for our company, and Q4 epitomized that," said John Forney, President & CEO of UPC Insurance. "But we are starting 2020 in a very strong position with regard to our rate actions, reserve strength, capital adequacy and reinsurance placement. I'm excited for what lies ahead in 2020 and beyond."




1


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
 
Year Ended
December 31,
 
December 31,
 
2019
 
2018
 
2019
 
2018
Net income (loss) attributable to UIHC
$
(8,158
)
 
$
(11,071
)
 
$
(29,872
)
 
$
290

Return on equity based on GAAP net income (loss) attributable to UIHC (1)
(6.2
)%
 
(8.3
)%
 
(5.6
)%
 
0.1
%
 
 
 
 
 
 
 
 
Core income (loss)
$
(15,235
)
 
$
(499
)
 
$
(46,173
)
 
$
17,326

Core return on equity (1)(2)
(11.5
)%
 
(0.4
)%
 
(8.7
)%
 
3.3
%
(1) Return on equity for the three months ended December 31, 2019 and 2018 is calculated on an annualized basis by dividing the net income (loss) or core net income (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 income (loss), which is reconciled on the first page of this press release to net income (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.

Combined Ratio and Underlying Ratio

The calculations of the Company's combined ratio and underlying combined ratio are shown below.

($ in thousands)
Three Months Ended
 
Year Ended
December 31,
 
December 31,
 
2019
 
2018
 
Change
 
2019
 
2018
 
Change
Loss ratio, net(1)
69.3
 %
 
67.2
%
 
2.1
 pts
 
66.4
%
 
59.3
%
 
7.1
 pts
Expense ratio, net(2)
44.0
 %
 
41.7
%
 
2.3
 pts
 
46.3
%
 
45.0
%
 
1.3
 pts
Combined ratio (CR)(3)
113.3
 %
 
108.9
%
 
4.4
 pts
 
112.7
%
 
104.3
%
 
8.4
 pts
Effect of current year catastrophe losses on CR
10.2
 %
 
23.0
%
 
(12.8
) pts
 
12.9
%
 
14.5
%
 
(1.6
) pts
Effect of prior year unfavorable (favorable) development on CR
—
 %
 
4.7
%
 
(4.7
) pts
 
4.4
%
 
0.6
%
 
3.8
 pts
Underlying combined ratio(4)
103.1
 %
 
81.2
%
 
21.9
 pts
 
95.4
%
 
89.2
%
 
6.2
 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) Combined ratio is the sum of the loss ratio, net and expense ratio, net.
(4) 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.

2


Quarterly Financial Results
 
Net loss attributable to the Company for the fourth quarter of 2019 was $8.2 million, or $0.19 per diluted share, compared to $11.1 million, or $0.26 per diluted share, for the fourth quarter of 2018. The decrease in net loss was primarily due to an increase in unrealized gains on equity securities during the fourth quarter of 2019 compared to unrealized losses in the fourth quarter of 2018.

The Company's total gross written premium increased by $2.6 million, or 0.9%, to $294.8 million for the fourth quarter of 2019, from $292.2 million for the fourth quarter of 2018, primarily reflecting organic growth in new and renewal business generated in all regions. The breakdown of the quarter-over-quarter changes in both direct written and assumed premiums by region and gross written premium by line of business are shown in the table below.
($ in thousands)
 
Three Months Ended December 31,
 
 
 
 
 
 
2019
 
2018
 
Change $
 
Change %
Direct Written and Assumed Premium by Region (1)
 
 
 
 
 
 
 
 
Florida
 
$
161,587

 
$
151,374

 
$
10,213

 
6.7
 %
Gulf
 
51,566

 
47,779

 
3,787

 
7.9

Northeast
 
46,270

 
45,025

 
1,245

 
2.8

Southeast
 
26,827

 
25,092

 
1,735

 
6.9

Total direct written premium by region
 
286,250

 
269,270

 
16,980

 
6.3
 %
Assumed premium (2)
 
8,513

 
22,917

 
(14,404
)
 
(62.9
)
Total gross written premium by region
 
$
294,763

 
$
292,187

 
$
2,576

 
0.9
 %
 
 
 
 
 
 
 
 
 
Gross Written Premium by Line of Business
 
 
 
 
 
 
 
 
Personal property
 
$
217,380

 
$
207,524

 
$
9,856

 
4.7
 %
Commercial property
 
77,383

 
84,663

 
(7,280
)
 
(8.6
)
Total gross written premium by line of business
 
$
294,763

 
$
292,187

 
$
2,576

 
0.9
 %
(1) "Gulf" is comprised of Hawaii, Louisiana and Texas; "Northeast" is comprised of Connecticut, Massachusetts, New Jersey, New York and Rhode Island; and "Southeast" is comprised of Georgia, North Carolina and South Carolina.
(2) Assumed premium written for 2019 and 2018 primarily included commercial property business assumed from unaffiliated insurers.


Loss and LAE increased by $8.4 million, or 6.9%, to $130.6 million for the fourth quarter of 2019, from $122.2 million for the fourth quarter of 2018. Loss and LAE expense as a percentage of net earned premiums increased 2.1 points to 69.3% for the fourth quarter of 2019, compared to 67.2% for the fourth quarter of 2018. Excluding catastrophe losses and reserve development, the Company's gross underlying loss and LAE ratio for the fourth quarter of 2019 would have been 32.1%, an increase of 8.8 points from 23.3% during the fourth quarter of 2018.

Policy acquisition costs increased by $10.1 million, or 20.5%, to $59.6 million for the fourth quarter of 2019, from $49.4 million for the fourth quarter of 2018. The primary driver of the increase in costs was an increase in agent commissions which were generally consistent with the Company's growth in premium production and higher average market commission rates outside of Florida. The Company also had an increase in managing general agent commissions related to the increase in commercial premiums written.

Operating and underwriting expenses decreased by $0.9 million, or 7.6%, to $10.7 million for the fourth quarter of 2019, from $11.6 million for the fourth quarter of 2018, primarily due to a decrease in printing and postage expenses and agent related expenses. This was partially offset by increased investments in technology.

General and administrative expenses decreased by $2.3 million, or 15.5%, to $12.5 million for the fourth quarter of 2019, from $14.8 million for the fourth quarter of 2018, primarily due to a decrease in salaries and related benefits from a reclassification to loss adjustment expense and a decrease in consulting expenses.


3


Year to Date Financial Results
 
Net loss attributable to the Company for the year ended December 31, 2019 was $29.9 million, or $0.70 per diluted share, compared to net income of $0.3 million, or $0.01 per diluted share, for the year ended December 31, 2018. The decrease in net earnings was primarily due to an increase in losses and LAE, as well as policy acquisition expenses.

The Company's total gross written premium increased by $127.9 million, or 10.2%, to $1.4 billion for the year ended December 31, 2019 from $1.3 billion for the year ended December 31, 2018, primarily reflecting organic growth in new and renewal business generated in all regions. The breakdown of the year-over-year changes in both direct written and assumed premiums by region and gross written premium by line of business are shown in the table below.
($ in thousands)
 
Year Ended December 31,
 
 
 
 
 
 
2019
 
2018
 
Change $
 
Change %
Direct Written and Assumed Premium by Region (1)
 
 
 
 
 
 
 
 
Florida
 
$
737,615

 
$
655,736

 
$
81,879

 
12.5
 %
Gulf
 
225,636

 
210,230

 
15,406

 
7.3

Northeast
 
199,504

 
177,958

 
21,546

 
12.1

Southeast
 
115,886

 
104,266

 
11,620

 
11.1

Total direct written premium by region
 
1,278,641

 
1,148,190

 
130,451

 
11.4
 %
Assumed premium (2)
 
101,627

 
104,211

 
(2,584
)
 
(2.5
)
Total gross written premium by region
 
$
1,380,268

 
$
1,252,401

 
$
127,867

 
10.2
 %
 
 

 
 
 
 
 
 
Gross Written Premium by Line of Business
 

 
 
 
 
 
 
Personal property
 
$
973,354

 
$
890,515

 
$
82,839

 
9.3
 %
Commercial property
 
406,914

 
361,886

 
45,028

 
12.4

Total gross written premium by line of business
 
$
1,380,268

 
$
1,252,401

 
$
127,867

 
10.2
 %
(1) "Gulf" is comprised of Hawaii, Louisiana and Texas; "Northeast" is comprised of Connecticut, Massachusetts, New Jersey, New York and Rhode Island; and "Southeast" is comprised of Georgia, North Carolina and South Carolina.
(2) Assumed premium written for 2019 and 2018 included commercial property business assumed from unaffiliated insurers.


Loss and LAE increased by $90.9 million, or 22.2%, to $499.5 million for the year ended December 31, 2019, from $408.6 million for the year ended December 31, 2018. Loss and LAE expense as a percentage of net earned premiums increased 7.1 points to 66.4% for the year ended December 31, 2019, compared to 59.3% for the year ended December 31, 2018. Excluding catastrophe losses and reserve development, the Company's gross underlying loss and LAE ratio for the year would have been 27.7%, an increase of 1.9 points from 25.8% during the year ended December 31, 2018.

Policy acquisition costs increased by $35.1 million, or 17.3%, to $238.3 million for the year ended December 31, 2019, from $203.1 million for the year ended December 31, 2018. The primary driver of the increase in costs was an increase in agent commissions which were generally consistent with the Company's growth in premium production and higher average market commission rates outside of Florida. The Company also had an increase in managing general agent commissions related to the increase in commercial premiums written.

Operating and underwriting expenses increased by $3.7 million, or 9.2%, to $44.3 million for the year ended December 31, 2019, from $40.6 million for the year ended December 31, 2018, primarily due to increased expenses related to the Company's investment in software. This was partially offset by a decrease in printing and postage costs as well as a decrease in home inspection costs.

General and administrative expenses decreased by $0.1 million, or 0.2%, to $66.0 million for the year ended December 31, 2019, from $66.1 million for the year ended December 31, 2018, primarily due to amortization costs related to the merger with AmCo Holding Company (AmCo) incurred during the first quarter of 2018. This was offset by increased salary costs related to an increase in employee headcount.




4


Combined Ratio Analysis

The calculations of the Company's loss ratios and underlying loss ratios are shown below.
($ in thousands)
Three Months Ended
 
Year Ended
December 31,
 
December 31,
2019
 
2018
 
Change
 
2019
 
2018
 
Change
Loss and LAE
$
130,569

 
$
122,196

 
$
8,373

 
$
499,493

 
$
408,589

 
$
90,904

% of Gross earned premiums
37.6
%
 
39.6
%
 
(2.0
) pts
 
37.5
%
 
34.6
%
 
2.9
 pts
% of Net earned premiums
69.3
%
 
67.2
%
 
2.1
 pts
 
66.4
%
 
59.3
%
 
7.1
 pts
Less:
 
 
 
 
 
 
 
 
 
 
 
Current year catastrophe losses
$
19,248

 
$
41,737

 
$
(22,489
)
 
$
96,875

 
$
99,988

 
$
(3,113
)
Prior year reserve unfavorable (favorable) development
(82
)
 
8,525

 
(8,607
)
 
33,134

 
4,318

 
28,816

Underlying loss and LAE (1)
$
111,403

 
$
71,934

 
$
39,469

 
$
369,484

 
$
304,283

 
$
65,201

% of Gross earned premiums
32.1
%
 
23.3
%
 
8.8
 pts
 
27.7
%
 
25.8
%
 
1.9
 pts
% of Net earned premiums
59.1
%
 
39.6
%
 
19.5
 pts
 
49.1
%
 
44.1
%
 
5.0
 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
 
Year Ended
December 31,
 
December 31,
2019
 
2018
 
Change
 
2019
 
2018
 
Change
Policy acquisition costs
$
59,551

 
$
49,424

 
$
10,127

 
$
238,268

 
$
203,140

 
$
35,128

Operating and underwriting
10,733

 
11,614

 
(881
)
 
44,310

 
40,590

 
3,720

General and administrative
12,501

 
14,786

 
(2,285
)
 
65,989

 
66,112

 
(123
)
Total Operating Expenses
$
82,785

 
$
75,824

 
$
6,961

 
$
348,567

 
$
309,842

 
$
38,725

% of Gross earned premiums
23.9
%
 
24.6
%
 
(0.7
) pts
 
26.1
%
 
26.2
%
 
(0.1
) pts
% of Net earned premiums
44.0
%
 
41.7
%
 
2.3
 pts
 
46.3
%
 
45.0
%
 
1.3
 pts


Reinsurance Costs as a Percentage of Earned Premium

Excluding the Company's business for which it cedes 100% of the risk of loss, reinsurance costs in the fourth quarter of 2019 were 43.4% of gross premiums earned, compared to 40.0% of gross premiums earned for the fourth quarter of 2018. The increase in this ratio was driven by the Company's quota share agreement that was renewed on June 1, 2019. The Company modified the terms of its quota share agreement in 2019 to include its subsidiary, Family Security Insurance Company, Inc. in addition to its subsidiary United Property & Casualty Insurance Company. Also, the ceding percentage increased from 20.0% in 2018 to 22.5% in 2019.

Investment Portfolio Highlights

The Company's cash, restricted cash and investment holdings increased 14.3% to $1.3 billion at December 31, 2019 from $1.1 billion at December 31, 2018. UPC Insurance'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 87.5% of total investments at December 31, 2019, compared to 90.6% at December 31, 2018. At December 31, 2019 our fixed maturity investments had a modified duration of 3.4 years, compared to 3.5 years at December 31, 2018.







5


Book Value Analysis

Book value per share decreased 3.4% from $12.10 at December 31, 2018, to $11.69 at December 31, 2019. Underlying book value per share decreased 7.1% from $12.31 at December 31, 2018 to $11.43 at December 31, 2019. A decrease in the Company's retained earnings as the result of a net loss in 2019 drove the decrease in our book value per share. This was partially offset by an increase in accumulated other comprehensive income (AOCI). As shown in the table below, removing the effect of AOCI further decreases our book value per share.
($ in thousands, except for share and per share data)
 
December 31,
 
December 31,
 
 
2019
 
2018
Book Value per Share
 
 
 
 
Numerator:
 
 
 
 
Common stockholders' equity attributable to UIHC
 
$
503,138

 
$
520,230

Denominator:
 
 
 
 
Total Shares Outstanding
 
43,028,074

 
42,984,578

Book Value Per Common Share
 
$
11.69

 
$
12.10

 
 
 
 
 
Book Value per Share, Excluding the Impact of Accumulated Other Comprehensive Income (AOCI)
 
 
 
 
Numerator:
 
 
 
 
Common stockholders' equity attributable to UIHC
 
$
503,138

 
$
520,230

Less: Accumulated other comprehensive income (loss)
 
11,319

 
(9,030
)
Stockholders' Equity, excluding AOCI
 
$
491,819

 
$
529,260

Denominator:
 
 
 
 
Total Shares Outstanding
 
43,028,074

 
42,984,578

Underlying Book Value Per Common Share(1)
 
$
11.43

 
$
12.31

(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.

6


Definitions of Non-GAAP Measures

We believe that investors' understanding of UPC Insurance's performance is enhanced by our disclosure of the following non-GAAP measures. Our methods for calculating these measures may differ from those used by other companies and therefore comparability may be limited.

Net income excluding the effects of amortization of intangible assets, realized gains (losses) and unrealized gains (losses) on equity securities, net of tax (core income) is a non-GAAP measure which 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 income. Amortization expense is related to the amortization of intangible assets acquired 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 separately and in the aggregate when reviewing the Company's performance. The most directly comparable GAAP measure is net income. The core income measure should not be considered a substitute for net income 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 income 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 income is an after-tax non-GAAP measure that is calculated by excluding from net income 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 income, core income 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 income, core income 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, which 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 incidence of occurrence and magnitude, 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 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 which 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 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 income (underlying book value per common share), is a non-GAAP measure which is computed by dividing common stockholders' equity after excluding accumulated other comprehensive income, 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 income, in conjunction with book value per common share to identify and analyze the change in net worth attributable to management efforts between periods. The Company believes the 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 which are not influenced by

7


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 income, 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.

Conference Call Details

Date and Time:    February 20, 2020 - 5:00 P.M. ET

Participant Dial-In:    (United States): 877-407-8829
(International): 201-493-6724

Webcast:
To listen to the live webcast, please go to investors.upcinsurance.com (News & Market Data - Event Calendar) and click on the conference call link, or go to: https://78449.themediaframe.com/dataconf/productusers/unin/mediaframe/35905/indexl.html.
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 our 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 Connecticut, Florida, Georgia, Hawaii, Louisiana, Massachusetts, New Jersey, New York, North Carolina, Rhode Island, South Carolina and Texas, and is licensed to write in Alabama, Delaware, Maryland, Mississippi, New Hampshire and Virginia. From its headquarters in St. Petersburg, Florida, UPC Insurance's team of dedicated professionals manages a completely integrated insurance company, including sales, underwriting, customer service and claims. UPC Insurance is a company committed to financial stability and solvency.


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” that anticipate results based on our estimates, assumptions and plans and are subject to uncertainty. 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,” “anticipate,” “intend,” “could,” “would,” “estimate” or “continue” or the negative variations thereof or comparable terminology. We believe 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 communicated in these forward-looking statements. Factors that could cause actual results to differ materially from those expressed in, or implied by, the forward-looking statements may be found in our filings with the U.S. Securities and Exchange Commission, including the “Risk Factors” section in our 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, we undertake no obligation to update or revise any forward-looking statement.


 ### #### ###

CONTACT:
 
OR
 
INVESTOR RELATIONS:
United Insurance Holdings Corp.
 
 
 
The Equity Group
Jessica Strathman
 
 
 
Adam Prior
Director of Financial Reporting
 
 
 
Senior Vice-President
(727) 895-7737 / [email protected]
 
 
 
(212) 836-9606 / [email protected]


8


Consolidated Statements of Comprehensive Loss
In thousands, except share and per share amounts

 
 
Three Months Ended
 
Year Ended
 
 
December 31,
 
December 31,
 
 
2019
 
2018
 
2019
 
2018
REVENUE:
 
 
 
 
 
 
 
 
Gross premiums written
 
$
294,763

 
$
292,187

 
$
1,380,268

 
$
1,252,401

Change in gross unearned premiums
 
52,242

 
16,227

 
(46,742
)
 
(71,440
)
Gross premiums earned
 
347,005

 
308,414

 
1,333,526

 
1,180,961

Ceded premiums earned
 
(158,651
)
 
(126,674
)
 
(581,126
)
 
(491,685
)
Net premiums earned
 
188,354

 
181,740

 
752,400

 
689,276

Net investment income
 
7,477

 
7,536

 
30,145

 
27,201

Net realized investment gains
 
1,042

 
2,329

 
1,228

 
1,655

Net unrealized gains (losses) on equity securities
 
9,242

 
(14,346
)
 
24,761

 
(9,300
)
Other revenue
 
4,306

 
3,830

 
16,582

 
15,110

Total revenues
 
$
210,421

 
$
181,089

 
$
825,116

 
$
723,942

EXPENSES:
 
 
 
 
 
 
 
 
Losses and loss adjustment expenses
 
130,569

 
122,196

 
499,493

 
408,589

Policy acquisition costs
 
59,551

 
49,424

 
238,268

 
203,140

Operating expenses
 
10,733

 
11,614

 
44,310

 
40,590

General and administrative expenses
 
12,501

 
14,786

 
65,989

 
66,112

Interest expense
 
2,402

 
2,495

 
9,781

 
9,866

Total expenses
 
215,756

 
200,515

 
857,841

 
728,297

Loss before other income
 
(5,335
)
 
(19,426
)
 
(32,725
)
 
(4,355
)
Other income
 
75

 
10

 
119

 
116

Loss before income taxes
 
(5,260
)
 
(19,416
)
 
(32,606
)
 
(4,239
)
Expense (benefit) for income taxes
 
2,791

 
(8,448
)
 
(3,121
)
 
(4,633
)
Net income (loss)
 
$
(8,051
)
 
$
(10,968
)
 
$
(29,485
)
 
$
394

Less: Net income attributable to noncontrolling interests
 
107

 
103

 
387

 
104

Net income (loss) attributable to UIHC
 
$
(8,158
)
 
$
(11,071
)
 
$
(29,872
)
 
$
290

OTHER COMPREHENSIVE INCOME:
 
 
 
 
 
 
 
 
Change in net unrealized gains (losses) on investments
 
(2,195
)
 
8,442

 
28,366

 
(22,264
)
Reclassification adjustment for net realized investment gains
 
(1,042
)
 
(2,329
)
 
(1,228
)
 
(1,655
)
Income tax benefit (expense) related to items of other comprehensive income
 
786

 
(1,407
)
 
(6,588
)
 
5,703

Total comprehensive loss
 
$
(10,502
)
 
$
(6,262
)
 
$
(8,935
)
 
$
(17,822
)
Less: Comprehensive income attributable to noncontrolling interests
 
51

 
138

 
588

 
139

Comprehensive loss attributable to UIHC
 
$
(10,553
)
 
$
(6,400
)
 
$
(9,523
)
 
$
(17,961
)
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding
 
 
 
 
 
 
 
 
Basic
 
42,801,148

 
42,692,507

 
42,763,423

 
42,650,629

Diluted
 
42,801,148

 
42,692,507

 
42,763,423

 
42,838,886

 
 
 
 
 
 
 
 
 
Earnings available to UIHC common stockholders per share

 
 
 
 
 
 
 
 
Basic
 
$
(0.19
)
 
$
(0.26
)
 
$
(0.70
)
 
$
0.01

Diluted
 
$
(0.19
)
 
$
(0.26
)
 
$
(0.70
)
 
$
0.01

 
 
 
 
 
 
 
 
 
Dividends declared per share
 
$
0.06

 
$
0.06

 
$
0.24

 
$
0.24


9


Consolidated Balance Sheets
In thousands, except share amounts



 
 
December 31, 2019
 
December 31, 2018
ASSETS
 
 
 
 
Investments, at fair value:
 
 
 
 
Fixed maturities, available-for-sale
 
$
884,861

 
$
862,345

Equity securities
 
116,610

 
80,978

Other investments
 
10,252

 
8,513

Total investments
 
$
1,011,723

 
$
951,836

Cash and cash equivalents
 
215,469

 
112,679

Restricted cash
 
71,588

 
71,441

Accrued investment income
 
5,901

 
6,017

Property and equipment, net
 
32,728

 
17,137

Premiums receivable, net
 
86,568

 
95,816

Reinsurance recoverable on paid and unpaid losses
 
550,136

 
625,998

Ceded unearned premiums
 
270,034

 
217,885

Goodwill
 
73,045

 
73,045

Deferred policy acquisition costs
 
104,572

 
105,582

Intangible assets
 
26,079

 
31,351

Other assets
 
19,375

 
12,641

Total Assets
 
$
2,467,218

 
$
2,321,428

LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
Liabilities:
 
 
 
 
Unpaid losses and loss adjustment expenses
 
$
760,357

 
$
661,203

Unearned premiums
 
674,055

 
627,313

Reinsurance payable
 
166,131

 
175,272

Payments outstanding
 
57,555

 
56,534

Accounts payable and accrued expenses
 
78,592

 
71,048

Lease liability
 
324

 
—

Other liabilities
 
47,407

 
29,571

Notes payable
 
158,932

 
160,118

Total Liabilities
 
$
1,943,353

 
$
1,781,059

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; 50,000,000 shares authorized; 43,056,310 and 43,029,845 issued, respectively; 43,028,074 and 42,984,578 outstanding, respectively

 
4

 
4

Additional paid-in capital
 
391,852

 
389,141

Treasury shares, at cost; 212,083 shares
 
(431
)
 
(431
)
Accumulated other comprehensive income (loss)
 
11,319

 
(9,030
)
Retained earnings
 
100,394

 
140,546

Total stockholders' equity attributable to UIHC stockholders
 
$
503,138

 
$
520,230

Noncontrolling interests
 
20,727

 
20,139

Total Stockholders' Equity
 
$
523,865

 
$
540,369

Total Liabilities and Stockholders' Equity
 
$
2,467,218

 
$
2,321,428


10
Investor Presentation Supplement to Fourth Quarter 2019 Results February 20, 2020 St. Petersburg, FL

 
Summary of Operating Results ($ in thousands, except per share amounts) Q419 Q418 Variance FY19 FY18 Variance Selected Income Statement Data Gross Premiums Earned $ 347,005 $ 308,414 12.5% $ 1,333,526 $ 1,180,961 12.9% Income (loss) before income taxes (5,260) (19,416) 72.9% (32,606) (4,239) -669.2% Net income (loss) attributable to UIHC (8,158) (11,071) 26.3% (29,872) 290 -10,400.7% Core income (loss) $ (15,235) $ (499) -2,953.1% $ (46,173) $ 17,326 -366.5% Key Ratios Loss & LAE % of gross premiums earned 37.6% 39.6% -2 pts 37.5% 34.6% 2.9 pts Operating expense % of gross premiums earned 23.8% 24.6% -0.7 pts 26.1% 26.2% -0.1 pts Loss & LAE % of net premiums earned 69.3% 67.2% 2.1 pts 66.4% 59.3% 7.1 pts Operating expense % of net premiums earned 43.9% 41.7% 2.2 pts 46.3% 44.9% 1.4 pts Combined ratio 113.3% 108.9% 4.4 pts 112.7% 104.3% 8.4 pts Underlying combined ratio 103.1% 81.2% 21.9 pts 95.4% 89.2% 6.2 pts Per Share Data Weighted average shares outstanding, diluted 42,801 42,693 0.3% 42,763 42,839 -0.2% EPS $ (0.19) $ (0.26) 26.5%$ (0.70) $ 0.01 -10,418.9% Core EPS $ (0.36) $ (0.01) -2,945.4%$ (1.08) $ 0.40 -367.0% 2

 
Q4-2019 Financial Commentary I. REVENUE HIGHLIGHTS • Gross Premiums Written of $294.8m: • Up +0.9% (+$2.6m) y/y • Personal Lines +7.8% (+$9.9m) | Commercial up +11.5% (+$7.1m) | E&S down -62.9% (-$14.4m) • Excluding E&S, Florida +6.7% (+$10.1m) | Non-Florida +5.7% (+$6.8m) • Gross Premiums Earned (GPE) of $347.0m: • Up +12.5% (+$38.6m) y/y • Ceded Premiums Earned (CPE) of $(158.7)m: • Up +25.2% (+$32.0m) y/y | Ceding Ratio was unchanged from prior year at 33.4% excluding quota share • Increased quota share participation from 20.0% to 22.5% for both UPC & FSIC at 6.1.19 • Quota share CPE was $42.8m (12.3% of GPE) for Q4-19 vs. $23.6m (7.7% of GPE) in Q4-18 II. LOSS & EXPENSE HIGHLIGHTS • Underlying loss & LAE of $111.4m: • Up 55% (+$39.5m) y/y • Underlying loss & LAE ratio increased 8.8 points to 32.1% from 23.3% in Q4-18 • Increased NonCAT IBNR reserves by $14.5m on top of higher frequency and severity driven by large losses • Current accident year CAT losses of $19.2m (10.2% of net premiums earned) in the quarter driven by: • $15.7m net retained mainly from Tropical Storms Olga & Nestor + 3 October PCS events (1959, 1961 & 1965). • $3.5m from increases retention under the aggregate reinsurance treaty • Operating expenses of $82.8m: • Up +9.2% (+$6.9m) but the gross expense ratio improved to 23.9%, down 0.7 points y/y • YTD gross expense ratio in-line with prior year at 26.1% III. STRONG INVESTMENT RETURNS • Total return in UIHC’s investment portfolio was 7.94% for 2019 vs. 0.55% in 2018 • Unrealized gains on equity securities of $9.2m for the quarter resulted in a $23.6m change y/y 3

 
Q4-2019 vs. Q4-2018 Net loss in the quarter driven by higher NonCat severity & reserve strengthening $ in millions Q4-19 PY Change Gross Premiums Earned $ 347.0 $ 308.4 $ 38.6 +12.5% Ceded Premiums Earned (158.7) (126.7) (32.0) Net Premiums Earned 188.4 181.7 6.6 Investment & Other Income 22.1 (0.7) 22.7 $23.6m increase from unrealized gains on equities Total Revenue 210.4 181.1 29.3 Underlying Loss & LAE 111.4 71.9 39.5 ~$15m IBNR increase + $19.4m increase in large losses y/y Current year CAT Loss & LAE 19.2 41.7 (22.5) Hurricane Michael in Q418 Prior year development (0.1) 8.5 (8.6) Prior accident years developed as expected Net Loss & LAE 130.6 122.2 8.4 Operating Expense 82.8 75.8 7.0 +9.2% driven by policy acquisition on premium growth Total Expenses (excluding interest) 213.4 198.0 15.3 Earnings before income tax $ (5.3) $ (19.4) $ 14.2 Net Income $ (8.2) $ (11.1) $ 2.9 Core Income $ (15.2) $ (0.5) $ (14.7) Underlying Gross Loss Ratio 32.1% 23.3% 8.8% Underlying Gross Expense Ratio 23.9% 24.6% -0.7% Reclassified ~$5m G&A to loss adjusting expense Net Loss Ratio 69.3% 67.2% 2.1% Net Expense Ratio 44.0% 41.7% 2.2% Combined Ratio 113.3% 108.9% 4.4% CAT Loss -10.2% -23.0% 12.7% PY Development F/(U) 0.0% -4.7% 4.7% Underlying Combined Ratio 103.1% 81.3% 21.8% 4

 
Q4-19 Cause of Loss Fire & liability severity was the primary driver of poor underlying results Loss Ratio Loss & DCC Severity A&O Severity Frequency Loss Cost Q417 Q418 Q419 Q417 Q418 Q419 Q417 Q418 Q419 Q417 Q418 Q419 Q417 Q418 Q419 Fire 5.7% 4.7% 12.4%$ 101,405 $ 86,081 $ 176,672 $ 3,736 $ 4,767 $ 5,186 0.1% 0.1% 0.1%$ 86 $ 72 $ 194 Liability 1.1% 1.1% 3.1%$ 37,904 $ 27,103 $ 71,349 $ (868) $ 24 $ 1,779 0.0% 0.1% 0.1%$ 17 $ 17 $ 49 Water 16.5% 17.6% 15.4%$ 13,447 $ 15,636 $ 17,502 $ 2,026 $ 1,359 $ 667 1.6% 1.6% 1.3%$ 252 $ 271 $ 239 Weather 4.3% 5.7% 5.5%$ 14,848 $ 11,892 $ 14,608 $ 2,672 $ 1,306 $ 927 0.4% 0.7% 0.6%$ 66 $ 87 $ 86 Other 3.0% 2.0% 3.4%$ 7,334 $ 7,095 $ 11,475 $ 1,281 $ 1,044 $ 637 0.5% 0.4% 0.4%$ 45 $ 30 $ 53 Total 30.6% 31.1% 39.8%$ 15,577 $ 15,852 $ 24,184 $ 1,977 $ 1,371 $ 950 2.7% 2.8% 2.5%$ 466 $ 476 $ 621 $700 Loss Cost $600 $53 $86 $500 $30 $45 $400 $66 $87 $239 $300 $252 $271 $49 $200 $100 $194 $17 $17 $86 $72 $- Q417 Q418 Q419 Fire Liability Water Weather Other 5 Note: Results shown here are just for United Property & Casualty Insurance Company

 
FY2019 vs. FY2018 Net loss for the year also hurt by reserve strengthening & prior year development $ in millions FY19 FY18 Change Gross Premiums Earned $ 1,333.5 $ 1,181.0 $ 152.6 +12.9% Ceded Premiums Earned (581.1) (491.7) (89.4) Net Premiums Earned 752.4 689.3 63.1 Investment & Other Income 72.7 34.7 38.0 $34.1m increase from unrealized gains on equities Total Revenue 825.1 723.9 101.2 Underlying Loss & LAE 369.5 304.3 65.2 Higher non-CAT loss severity Current year CAT Loss & LAE 96.9 100.0 (3.1) Prior year development 33.1 4.3 28.8 $21.6m of FY19 driven by CAT Net Loss & LAE 499.5 408.6 90.9 Operating Expense 348.6 309.8 38.7 Policy acquisition consistent with premium growth Total Expenses (excluding interest) 848.1 718.4 129.6 Earnings before income tax $ (32.6) $ (4.2) $ (28.4) Net Income $ (29.9) $ 0.3 $ (30.2) Core Income $ (46.2) $ 17.3 $ (63.5) Underlying Gross Loss Ratio 27.7% 25.8% 1.9% Rate changes expected to reduce this 2-3 points in 2020 Gross Expense Ratio 26.1% 26.2% -0.1% Net Loss Ratio 66.4% 59.3% 7.0% Net Expense Ratio 46.3% 45.0% 1.4% Combined Ratio 112.7% 104.3% 8.4% CAT Loss -12.9% -14.5% 1.6% PY Development F/(U) -4.4% -0.6% -3.8% Underlying Combined Ratio 95.4% 89.2% 6.3% 6

 
Expense Analysis YTD 12/31/19 Gross Expense Ratio In-line with Prior Year 2019 % GPE 2018 % GPE Change Gross Premiums Earned (GPE)$ 1,333,526 $ 1,180,961 152,565 I Policy acquisition costs (PAC) 238,268 17.9% 203,140 17.2% 35,128 0.7% II Operating and underwriting 44,310 3.3% 40,590 3.4% 3,720 -0.1% III General and administrative (G&A) 65,989 4.9% 65,081 5.5% 907 -0.6% Total operating expenses 348,566 26.1% 308,811 26.1% 39,755 0.0% I Drivers of PAC Agent Commissions 155,058 11.6% 118,547 10.0% 36,511 1.6% Policy Administration 19,765 1.5% 21,270 1.8% (1,504) -0.3% AmRisc MGA Fees 69,668 5.2% 73,694 6.2% (4,027) -1.0% Ceding Commissions Earned (43,235) -3.2% (33,093) -2.8% (10,142) -0.4% Premium taxes and other fees 37,013 2.8% 22,722 1.9% 14,290 0.9% Total PAC Drivers 238,268 17.9% 203,140 17.2% 35,128 0.7% II Drivers of Operating & underwriting Underwriting reports 8,176 0.6% 7,680 0.7% 496 0.0% Equipment, Computer Services & Software 18,593 1.4% 11,515 1.0% 7,078 0.4% Assessments 1,950 0.1% 3,019 0.3% (1,069) -0.1% Advertising, Marketing & Agent Incentives 7,463 0.6% 7,851 0.7% (389) -0.1% All other 8,127 0.6% 10,524 0.9% (2,397) -0.3% Total Operating & underwriting Drivers 44,310 3.3% 40,590 3.4% 3,720 -0.1% III Drivers of G&A Salaries and related expenses 40,024 3.0% 33,953 2.9% 6,071 0.1% Amortization & Depreciation 11,601 0.9% 18,482 1.6% (6,881) -0.7% Legal & Professional 8,493 0.6% 7,491 0.6% 1,002 0.0% All other 5,871 0.4% 5,155 0.4% 716 0.0% Total G&A Drivers 65,989 4.9% 65,081 5.5% 907 -0.6% G&A excluding Amortization & Depreciation 54,388 4.1% 46,599 3.9% 0.1% 7

 
Why We Are Optimistic • RATES • Significant improvements in average premiums on new & renewal business • Retention rates are holding steady and market is moving with us • Biggest 2019 increases just beginning to flow through book • Hardening Commercial market • RESERVES • Strengthening efforts helped drive 52% increase y/y in net loss reserves • No adverse development in Q4 and AY 2019 reserve strengthening in the quarter minimizes 2020 reserve risk • REINSURANCE • Exposure to pricing increases at 6/1/20 will be limited • Over 85% of needed 6-1 capacity already placed • CAPITAL • Balance sheet remains strong with leverage metrics within normal ranges • Very unlikely UIHC will need to raise capital in 2020 even assuming 2 full hurricane retentions • All ratings affirmed 8

 
Rate Increases are Starting to Have a Material Impact Represents over $62 million of additional annual premium based just on actual December renewals 9

 
2019 Reserve Strengthening Minimizes 2020 Reserve Risk +52% Increase in Net Loss & LAE Reserves Y/Y Outpaced Premium & Exposure Growth Loss & LAE Reserves @ 12/31/2018 Loss & LAE Reserves @ 12/31/2019 NonCAT CASE IBNR TOTAL CASE IBNR TOTAL Gross$ 81,601,183 $ 110,973,000 $ 192,574,183 $ 131,616,251 $ 146,170,365 $ 277,786,616 NonCAT ultimate loss Ceded$ (9,573,144) $ (14,979,677) $ (24,552,821) $ (19,820,249) $ (23,140,083) $ (42,960,332) ratio expectations for Net$ 72,028,039 $ 95,993,323 $ 168,021,362 $ 111,796,002 $ 123,030,282 $ 234,826,283 Y/Y $ Change$ 39,767,962 $ 27,036,959 $ 66,804,921 2019 tempered by prior Y/Y % Change 55.2% 28.2% 39.8% year development CAT Gross$ 188,999,965 $ 279,628,950 $ 468,628,915 $ 169,241,768 $ 313,328,720 $ 482,570,488 More conservative Ceded$ (177,183,467) $ (275,843,616) $ (453,027,084) $ (155,446,575) $ (283,553,247) $ (438,999,822) approach to catastrophes Net$ 11,816,498 $ 3,785,334 $ 15,601,832 $ 13,795,193 $ 29,775,473 $ 43,570,665 expected to mitigate Y/Y $ Change$ 1,978,695 $ 25,990,139 $ 27,968,834 reserve risk Y/Y % Change 16.7% 686.6% 179.3% Total Gross$ 270,601,148 $ 390,601,950 $ 661,203,098 $ 300,858,019 $ 459,499,085 $ 760,357,103 Ceded$ (186,756,611) $ (290,823,293) $ (477,579,905) $ (175,266,824) $ (306,693,330) $ (481,960,155) Net$ 83,844,537 $ 99,778,657 $ 183,623,194 $ 125,591,194 $ 152,805,754 $ 278,396,949 Y/Y $ Change $ 41,746,658 $ 53,027,098 $ 94,773,755 Y/Y % Change 49.8% 53.1% 51.6% 10

 
Average Case Loss Reserve Increased Average Case Loss Reserve Jumped +40.4% while Pending Claims Increased +23.2% NonCAT Average Case Reserve 18,000 17,053 16,000 14,774 13,814 14,000 12,684 12,147 12,000 10,000 8,000 5,979 6,000 4,855 4,552 4,361 4,000 2,644 2,000 - 2015 2016 2017 2018 2019 Avg Ending Open Reserve Sum of Pending Count 11

 
June 1 Reinsurance Renewal Is Almost Done UPC’s exposure to reinsurance cost increases in 2020 is substantially lower than the industry overall due to advance planning and strong partnerships with reinsurers. 2020 Projected Total Limit Needed$ 3,331,409,774 Less: 1st Event Retention$ (50,000,000) Less: 2nd Event Retention$ (25,000,000) Less: FHCF$ (1,698,198,445) Open Market Limit Needed$ 1,558,211,329 Less: limit already secured$ (1,080,000,000) Over 85% of UPC’s Core Catastrophe Net Limiting Remaining$ 478,211,329 Program renewing June 1, 2020 is already placed 12

 
2020 Reinsurance Programs Total Over $4 Billion . Quota Share Reinsurance Program – Effective June 1, 2019 - May 31, 2020 United P&C and ‒ 22.5% Cession rate covering all perils and all states ground up Family Security ‒ World class reinsurance panel of A+ markets or better ‒ Includes significant aggregate CAT limit . Aggregate Reinsurance Program – Effective January 1, 2020 – December 31, 2020 ‒ $30m of limit shared with Core CAT excess of approximately 7% of consolidated subject gross premium earned ‒ Covers all catastrophe losses except hurricane and earthquake . AOP CAT Excess of Loss Program – Effective January 1, 2020 – December 31, 2020 ‒ Exhaustion point of $100m, up $10m from 2019 program ‒ 1st event retention of $26.3m; reduced 2nd and subsequent retention dependent on loss size ‒ Covers all catastrophe losses except hurricane and earthquake . Excess Per Risk Program – Effective January 1, 2020 – December 31, 2020 UIHC Group – Personal Lines business covered at $1.5m excess of $1.5m – Commercial Lines business covered in multiple layers up to $70m . Core CAT Excess of Loss Program – Effective June 1, 2019 – May 31, 2020 ‒ $3.2 billion of limit available for 1st event in Florida (including the CAT Bond) ‒ $55.5m retention for 1st event; $18.5m retention for 2nd event ‒ Covers hurricane and earthquake only . CAT Bond – Armor Re II ‒ $100m of limit effective June 1, 2018 on a 2-year basis ‒ $100m of limit effective June 1, 2019 on a 3-year basis . Excess Per Risk Reinsurance Program BlueLine ‒ Three distinct treaties covering our share with multiple reinstatements (Assumed Commercial E&S . CAT Excess of Loss Program property) ‒ Three distinct treaties covering each of our assumed shares ‒ Limit purchased to the 250YR PML all reinstated 13

 
Balance Sheet Remains Strong Dec. 31, Dec. 31, ($ in thousands, except per share amounts) 2019 2018 Variance Selected Balance Sheet Data Cash & investments $ 1,298,780 $ 1,135,956 14.3% • Liquidity of ~$1.3 billion increased 14.3% y/y Financial debt 158,932 160,118 -0.7% Stockholders' equity attributable to UIHC 503,138 520,230 -3.3% • Capital erosion driven by CAT limited to -2.7% Total capital $ 662,070 $ 680,348 -2.7% Leverage Ratios Debt-to-total capital 24.0% 23.5% 2.0% Financial & operating leverage metrics remain Net premiums earned-to-stockholders' equity 143.6% 127.6% 12.6% within our target ranges Per Share Data Common shares outstanding 43,028 42,985 0.1% Book value per common share $ 11.69 $ 12.09 -3.3% Tangible book value per common share $ 9.39 $ 9.66 -2.8% 14

 
Book Value Per Share Growth Over Time CAGR +10.8% (Q4-2012 - Q4-2019) $14.00 $11.69 $13.00 $12.00 $11.00 $10.00 $9.00 UIHC incurred ~$370 million of net retained catastrophe losses $8.00 from FY16-FY19 on $2.48 billion of net premiums earned (~15 points on the combined ratio) with minimal impact to BVPS. $7.00 $6.00 $5.00 $5.70 $4.00 Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 15

 
Cautionary Statements 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 on Form 10-K for the year ended December 31, 2018. 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 the Appendix section of this presentation 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. 16