ACIC 8-K
AMERICAN COASTAL INSURANCE Corp (ACIC)
8-K
2021-11-12
For: 2021-11-11
View Original
Added on
April 12, 2026
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 11, 2021
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| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||||||||
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| (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:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ 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 | ||||||
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 11, 2021 , United Insurance Holdings Corp. (the Company, we, our) issued a press release relating to our earnings for the third quarter ended September 30, 2021 (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 11, 2021. 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 November 11, 2021 | ||||||||
| Investor presentation issued by the Company on November 11, 2021 | ||||||||
| 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. | ||||||||
| November 12, 2021 | 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, 2021
Company to Host Quarterly Conference Call at 5:00 P.M. ET on November 11, 2021
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 - November 11, 2021: 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, 2021.
| ($ in thousands, except for per share data) | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||||||||||||||
| 2021 | 2020 | Change | 2021 | 2020 | Change | ||||||||||||||||||||||||||||||
| Gross premiums written | $ | 322,493 | $ | 365,819 | (11.8) | % | $ | 1,060,555 | $ | 1,140,653 | (7.0) | % | |||||||||||||||||||||||
| Gross premiums earned | $ | 353,461 | $ | 353,991 | (0.1) | % | $ | 1,066,557 | $ | 1,042,749 | 2.3 | % | |||||||||||||||||||||||
| Net premiums earned | $ | 153,271 | $ | 188,741 | (18.8) | % | $ | 444,680 | $ | 565,819 | (21.4) | % | |||||||||||||||||||||||
| Total revenues | $ | 162,740 | $ | 212,733 | (23.5) | % | $ | 479,983 | $ | 605,434 | (20.7) | % | |||||||||||||||||||||||
| Earnings before income tax | $ | (18,600) | $ | (100,553) | 81.5 | % | $ | (77,655) | $ | (86,875) | 10.6 | % | |||||||||||||||||||||||
| Net loss attributable to UIHC | $ | (14,322) | $ | (74,072) | 80.6 | % | $ | (55,603) | $ | (62,521) | 11.1 | % | |||||||||||||||||||||||
| Net loss available to UIHC common stockholders per diluted share | $ | (0.33) | $ | (1.73) | 80.9 | % | $ | (1.29) | $ | (1.46) | 11.6 | % | |||||||||||||||||||||||
| Reconciliation of net loss to core income loss: | |||||||||||||||||||||||||||||||||||
| Plus: Non-cash amortization of intangible assets | $ | 812 | $ | 1,043 | (22.1) | % | $ | 2,744 | $ | 3,224 | (14.9) | % | |||||||||||||||||||||||
| Less: Net realized gains on investment portfolio | $ | 5,537 | $ | 24,968 | (77.8) | % | $ | 5,916 | $ | 24,959 | (76.3) | % | |||||||||||||||||||||||
| Less: Unrealized gains (losses) on equity securities | $ | (3,293) | $ | (11,552) | 71.5 | % | $ | 1,709 | $ | (17,456) | NM | ||||||||||||||||||||||||
Less: Net tax impact (1) | $ | (301) | $ | (2,598) | 88.4 | % | $ | (1,025) | $ | (898) | (14.1)% | ||||||||||||||||||||||||
Core loss (2) | $ | (15,453) | $ | (83,847) | 81.6 | % | $ | (59,459) | $ | (65,902) | 9.8 | % | |||||||||||||||||||||||
Core loss per diluted share (2) | $ | (0.36) | $ | (1.95) | 81.6 | % | $ | (1.38) | $ | (1.54) | 10.4 | % | |||||||||||||||||||||||
| Book value per share | $ | 7.42 | $ | 10.54 | (29.6) | % | |||||||||||||||||||||||||||||
NM = Not Meaningful
(1) In order to reconcile net loss to the core loss measures, 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, both of which are 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.
"The third quarter was an active hurricane quarter resulting in a modest loss, much reduced from last year and in line with expectations for this continuing transition year," said Dan Peed, CEO of UPC Insurance. "Over the last year we significantly reduced our gross and net catastrophe exposures, which resulted in a materially reduced hurricane loss for the third quarter. We continue to take steps to improve our underlying profitability including increasing rates, strong exposure management and improved risk selection techniques, as we look forward to a return to a strong underwriting profit."
1
Exhibit 99.1
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 | Nine Months Ended | |||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Net loss attributable to UIHC | $ | (14,322) | $ | (74,072) | $ | (55,603) | $ | (62,521) | |||||||||||||||
Return on equity based on GAAP net loss attributable to UIHC (1) | (15.8) | % | (58.6) | % | (20.4) | % | (16.5) | % | |||||||||||||||
| Core loss | $ | (15,453) | $ | (83,847) | $ | (59,459) | $ | (65,902) | |||||||||||||||
Core return on equity (1)(2) | (17.0) | % | (66.3) | % | (21.8) | % | (17.4) | % | |||||||||||||||
(1) Return on equity for the three and nine-months ended September 30, 2021 and 2020 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 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 | Nine Months Ended | |||||||||||||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||||||||||||||
| 2021 | 2020 | Change | 2021 | 2020 | Change | ||||||||||||||||||||||||||||||
Loss ratio, net(1) | 67.1 | % | 115.8 | % | (48.7) | pts | 75.7 | % | 74.8 | % | 0.9 | pts | |||||||||||||||||||||||
Expense ratio, net(2) | 49.8 | % | 49.0 | % | 0.8 | pts | 48.2 | % | 46.3 | % | 1.9 | pts | |||||||||||||||||||||||
Combined ratio (CR)(3) | 116.9 | % | 164.8 | % | (47.9) | pts | 123.9 | % | 121.1 | % | 2.8 | pts | |||||||||||||||||||||||
| Effect of current year catastrophe losses on CR | 24.1 | % | 74.2 | % | (50.1) | pts | 22.8 | % | 33.0 | % | (10.2) | pts | |||||||||||||||||||||||
| Effect of prior year unfavorable (favorable) development on CR | 1.3 | % | (2.2) | % | 3.5 | pts | 7.0 | % | (1.1) | % | 8.1 | pts | |||||||||||||||||||||||
Underlying combined ratio(4) | 91.5 | % | 92.8 | % | (1.3) | pts | 94.1 | % | 89.2 | % | 4.9 | 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
Exhibit 99.1
Quarterly Financial Results
Net loss attributable to the Company for the third quarter of 2021 was $14.3 million, or $0.33 per diluted share, compared to $74.1 million, or $1.73 per diluted share, for the third quarter of 2020. The increase in earnings was primarily driven by a decrease in loss and LAE expense for the quarter. This was driven by the Company's decision to lower the retention related to its Core Catastrophe reinsurance program for the 2021-2022 hurricane season coupled with a lower frequency of catastrophic weather activity when compared to the third quarter of 2020 and an increase in ceded losses to the Company's quota share reinsurance program. This was partially offset by a decrease in revenue, driven by increased ceded premium earned as a result of the changes to the Company's quota share reinsurance agreements described below.
The Company's total gross written premium decreased by $43.3 million, or 11.8%, to $322.5 million for the third quarter of 2021, from $365.8 million for the third quarter of 2020. This decrease was driven primarily by a decline in written premiums across the personal lines business, due to underwriting actions taken by the Company at the end of 2020. In addition, the Company experienced a decrease in assumed premiums due to the termination of a contract which included commercial property business assumed from unaffiliated insurers. The breakdown of the quarter-over-quarter changes in both direct written and assumed premiums by region and gross written premium by line of business are shown in the table below.
| ($ in thousands) | Three Months Ended September 30, | |||||||||||||||||||||||||
| 2021 | 2020 | Change $ | Change % | |||||||||||||||||||||||
Direct Written and Assumed Premium by Region (1) | ||||||||||||||||||||||||||
| Florida | $ | 185,178 | $ | 191,858 | $ | (6,680) | (3.5) | % | ||||||||||||||||||
| Gulf | 62,757 | 73,804 | (11,047) | (15.0) | ||||||||||||||||||||||
| Northeast | 49,982 | 55,871 | (5,889) | (10.5) | ||||||||||||||||||||||
| Southeast | 24,464 | 36,496 | (12,032) | (33.0) | ||||||||||||||||||||||
| Total direct written premium by region | 322,381 | 358,029 | (35,648) | (10.0) | ||||||||||||||||||||||
Assumed premium (2) | 112 | 7,790 | (7,678) | (98.6) | ||||||||||||||||||||||
| Total gross written premium by region | $ | 322,493 | $ | 365,819 | $ | (43,326) | (11.8) | % | ||||||||||||||||||
| Gross Written Premium by Line of Business | ||||||||||||||||||||||||||
| Personal property | $ | 258,109 | $ | 302,078 | $ | (43,969) | (14.6) | % | ||||||||||||||||||
| Commercial property | 64,384 | 63,741 | 643 | 1.0 | ||||||||||||||||||||||
| Total gross written premium by line of business | $ | 322,493 | $ | 365,819 | $ | (43,326) | (11.8) | % | ||||||||||||||||||
(1) "Gulf" is comprised of Louisiana and Texas in 2021 and Hawaii, Louisiana, and Texas in 2020; "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 2021 and 2020 primarily included commercial property business assumed from unaffiliated insurers.
Loss and LAE decreased by $115.9 million, or 53.0%, to $102.8 million for the third quarter of 2021, from $218.7 million for the third quarter of 2020. Loss and LAE expense as a percentage of net earned premiums decreased 48.7 points to 67.1% for the third quarter of 2021, compared to 115.8% for the third quarter of 2020. Excluding catastrophe losses and reserve development, the Company's gross underlying loss and LAE ratio for the third quarter of 2021 would have been 18.1%, a decrease of 5.3 points from 23.4% during the third quarter of 2020.
Policy acquisition costs decreased by $11.8 million, or 20.1%, to $46.9 million for the third quarter of 2021, from $58.7 million for the third quarter of 2020 primarily due to an increase in ceding commission income related to the Company's quota share reinsurance agreements. In addition, there was a decrease in expenses incurred, such as premium taxes and agent commission expenses, which fluctuate in conjunction with the volume of personal lines premium written which decreased quarter over quarter. This was partially offset by increased external management fees incurred during the third quarter of 2021 as a result of an increased volume of commercial written premium.
3
Exhibit 99.1
Operating and underwriting expenses remained relatively flat, decreasing by $0.9 million, or 6.2%, to $15.4 million for the third quarter of 2021, from $14.5 million for the third quarter of 2020
General and administrative expenses decreased by $5.3 million, or 27.6%, to $13.9 million for the third quarter of 2021, from $19.2 million for the third quarter of 2020, primarily due to an increase in the allocation of claims adjuster payroll related costs to loss & LAE from general and administrative expenses in 2021. In addition, during the third quarter of 2020, the Company incurred expenses related to the discontinuation of plans to build new headquarters, an expense which is non-recurring in 2021.
Combined Ratio Analysis
The calculations of the Company's loss ratios and underlying loss ratios are shown below.
| ($ in thousands) | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||||||||||||||
| 2021 | 2020 | Change | 2021 | 2020 | Change | ||||||||||||||||||||||||||||||
| Loss and LAE | $ | 102,769 | $ | 218,652 | $ | (115,883) | $ | 336,614 | $ | 423,182 | $ | (86,568) | |||||||||||||||||||||||
| % of Gross earned premiums | 29.1 | % | 61.8 | % | (32.7) | pts | 31.6 | % | 40.6 | % | (9.0) | pts | |||||||||||||||||||||||
| % of Net earned premiums | 67.1 | % | 115.8 | % | (48.7) | pts | 75.7 | % | 74.8 | % | 0.9 | pts | |||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||||||||
| Current year catastrophe losses | $ | 37,003 | $ | 140,002 | $ | (102,999) | $ | 101,225 | $ | 186,919 | $ | (85,694) | |||||||||||||||||||||||
| Prior year reserve unfavorable (favorable) development | 1,947 | (4,213) | 6,160 | 31,344 | (6,165) | 37,509 | |||||||||||||||||||||||||||||
Underlying loss and LAE (1) | $ | 63,819 | $ | 82,863 | $ | (19,044) | $ | 204,045 | $ | 242,428 | $ | (38,383) | |||||||||||||||||||||||
| % of Gross earned premiums | 18.1 | % | 23.4 | % | (5.3) | pts | 19.1 | % | 23.2 | % | (4.1) | pts | |||||||||||||||||||||||
| % of Net earned premiums | 41.6 | % | 43.9 | % | (2.3) | pts | 45.9 | % | 42.8 | % | 3.1 | 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, | ||||||||||||||||||||||||||||||||||
| 2021 | 2020 | Change | 2021 | 2020 | Change | ||||||||||||||||||||||||||||||
| Policy acquisition costs | $ | 46,925 | $ | 58,735 | $ | (11,810) | $ | 129,073 | $ | 170,183 | $ | (41,110) | |||||||||||||||||||||||
| Operating and underwriting | 15,429 | 14,483 | 946 | 42,133 | 38,164 | 3,969 | |||||||||||||||||||||||||||||
| General and administrative | 13,940 | 19,224 | (5,284) | 42,934 | 53,646 | (10,712) | |||||||||||||||||||||||||||||
| Total Operating Expenses | $ | 76,294 | $ | 92,442 | $ | (16,148) | $ | 214,140 | $ | 261,993 | $ | (47,853) | |||||||||||||||||||||||
% of Gross earned premiums | 21.6 | % | 26.1 | % | (4.5) | pts | 20.1 | % | 25.1 | % | (5.0) | pts | |||||||||||||||||||||||
% of Net earned premiums | 49.8 | % | 49.0 | % | 0.8 | pts | 48.2 | % | 46.3 | % | 1.9 | pts | |||||||||||||||||||||||
Reinsurance Costs as a Percentage of Gross Earned Premium
Reinsurance costs as a percentage of gross earned premium for the three months ended September 30, 2021 and 2020 were as follows:
| 2021 | 2020 | ||||||||||
| Non-at-Risk | (0.8) | % | (2.2) | % | |||||||
| Quota Share | (23.9) | % | (13.6) | % | |||||||
| All Other | (31.9) | % | (30.9) | % | |||||||
| Total Ceding Ratio | (56.6) | % | (46.7) | % | |||||||
The increase in this ratio was driven by multiple modifications made to the Company's existing quota share agreements effective December 31, 2020 and June 1, 2021. These modifications include extending coverage to
4
Exhibit 99.1
include American Coastal Insurance Company on the 15% quota share agreement, as well as increasing the cession percentage by 8%. In addition, the Company entered into a quota share agreement with Homeowners Choice Property & Casualty Insurance Company, Inc. (HCPIC) effective December 31, 2020 through May 31, 2021, which provided 69.5% reinsurance coverage on in-force, new and renewal policies in Connecticut, Massachusetts, New Jersey, and Rhode Island.
Effective June 1, 2021, the Company entered into a new quota share reinsurance agreement with HCPIC and TypTap Insurance Company (TypTap), which provides 100% reinsurance coverage on in-force, new and renewal policies in Connecticut, Massachusetts, New Jersey, and Rhode Island. The cession of these policies is 50% to HCPIC and 50% to TypTap. Finally, the Company's 7.5% quota share agreement effective in 2020 expired on May 31, 2021 and was not renewed.
In addition to the changes in the Company's quota share agreements, the Company also reduced the retention amounts related to their catastrophe excess of loss reinsurance program for the 2021-2022 season, resulting in higher ceded premiums year over year but less risk if the named storm season is as active as the 2020-2021 season. Combined with increased costs associated with the all other perils catastrophe agreement, these modifications have resulted in increases to the Company's ceding ratio quarter over quarter.
Investment Portfolio Highlights
The Company's cash, restricted cash and investment holdings decreased from $1.3 billion at December 31, 2020 to $1.2 billion at September 30, 2021. 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 93.9% of total investments at September 30, 2021, compared to 94.5% at December 31, 2020. At September 30, 2021, our fixed maturity investments had a modified duration of 4.0 years, compared to 4.1 years at December 31, 2020.
Book Value Analysis
Book value per common share decreased 19.3% from $9.19 at December 31, 2020, to $7.42 at September 30, 2021. Underlying book value per common share decreased 16.4% from $8.96 at December 31, 2020 to $7.49 at September 30, 2021. A decrease in the Company's retained earnings as the result of a net loss for the nine months ended September 30, 2021 drove the decrease in our book value per share. As shown in the table below, removing the effect of AOCI increases the Company's book value per common share, as the Company experienced unfavorable market conditions for the nine months ended September 30, 2021.
| ($ in thousands, except for share and per share data) | September 30, 2021 | December 31, 2020 | ||||||||||||
| Book Value per Share | ||||||||||||||
| Numerator: | ||||||||||||||
| Common stockholders' equity attributable to UIHC | $ | 320,411 | $ | 395,753 | ||||||||||
| Denominator: | ||||||||||||||
| Total Shares Outstanding | 43,207,390 | 43,075,877 | ||||||||||||
| Book Value Per Common Share | $ | 7.42 | $ | 9.19 | ||||||||||
| Book Value per Share, Excluding the Impact of Accumulated Other Comprehensive Income (AOCI) | ||||||||||||||
| Numerator: | ||||||||||||||
| Common stockholders' equity attributable to UIHC | $ | 320,411 | $ | 395,753 | ||||||||||
| Less: Accumulated other comprehensive income (loss) | (3,006) | 9,693 | ||||||||||||
| Stockholders' Equity, excluding AOCI | $ | 323,417 | $ | 386,060 | ||||||||||
| Denominator: | ||||||||||||||
| Total Shares Outstanding | 43,207,390 | 43,075,877 | ||||||||||||
Underlying Book Value Per Common Share(1) | $ | 7.49 | $ | 8.96 | ||||||||||
5
Exhibit 99.1
(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.
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 income (loss) excluding the effects of amortization of intangible assets, realized gains (losses) and unrealized gains (losses) on equity securities, net of tax (core income (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 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 both 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, 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
6
Exhibit 99.1
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 that 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 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 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.
7
Exhibit 99.1
Conference Call Details
Date and Time: November 11, 2021 - 5:00 P.M. ET
Participant Dial-In: (United States): 877-445-9755
(International): 201-493-6724
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=1507459&tp_key=c19a2bd5dd
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 Florida, Georgia, Louisiana, New York, North Carolina, South Carolina, and Texas. The Company also writes policies in Connecticut, Massachusetts, New Jersey, and Rhode Island 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” 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,” "plan," “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 | |||||||||||||
| Deputy CFO | Senior Vice-President | |||||||||||||
| (727) 895-7737 / [email protected] | (212) 836-9606 / [email protected] | |||||||||||||
8
Exhibit 99.1
Consolidated Statements of Comprehensive Income (Loss)
In thousands, except share and per share amounts
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| REVENUE: | ||||||||||||||||||||||||||
| Gross premiums written | $ | 322,493 | $ | 365,819 | $ | 1,060,555 | $ | 1,140,653 | ||||||||||||||||||
| Change in gross unearned premiums | 30,968 | (11,828) | 6,002 | (97,904) | ||||||||||||||||||||||
| Gross premiums earned | 353,461 | 353,991 | 1,066,557 | 1,042,749 | ||||||||||||||||||||||
| Ceded premiums earned | (200,190) | (165,250) | (621,877) | (476,930) | ||||||||||||||||||||||
| Net premiums earned | 153,271 | 188,741 | 444,680 | 565,819 | ||||||||||||||||||||||
| Net investment income | 3,471 | 6,010 | 10,737 | 18,834 | ||||||||||||||||||||||
| Net realized investment gains | 5,537 | 24,968 | 5,916 | 24,959 | ||||||||||||||||||||||
| Net unrealized gains (losses) on equity securities | (3,293) | (11,552) | 1,709 | (17,456) | ||||||||||||||||||||||
| Other revenue | 3,754 | 4,566 | 16,941 | 13,278 | ||||||||||||||||||||||
| Total revenues | $ | 162,740 | $ | 212,733 | $ | 479,983 | $ | 605,434 | ||||||||||||||||||
| EXPENSES: | ||||||||||||||||||||||||||
| Losses and loss adjustment expenses | 102,769 | 218,652 | 336,614 | 423,182 | ||||||||||||||||||||||
| Policy acquisition costs | 46,925 | 58,735 | 129,073 | 170,183 | ||||||||||||||||||||||
| Operating expenses | 15,429 | 14,483 | 42,133 | 38,164 | ||||||||||||||||||||||
| General and administrative expenses | 13,940 | 19,224 | 42,934 | 53,646 | ||||||||||||||||||||||
| Interest expense | 2,378 | 2,210 | 7,010 | 7,194 | ||||||||||||||||||||||
| Total expenses | 181,441 | 313,304 | 557,764 | 692,369 | ||||||||||||||||||||||
| Loss before other income | (18,701) | (100,571) | (77,781) | (86,935) | ||||||||||||||||||||||
| Other income | 101 | 18 | 126 | 60 | ||||||||||||||||||||||
| Loss before income taxes | (18,600) | (100,553) | (77,655) | (86,875) | ||||||||||||||||||||||
| Benefit for income taxes | (3,482) | (26,685) | (20,656) | (24,933) | ||||||||||||||||||||||
| Net Loss | $ | (15,118) | $ | (73,868) | $ | (56,999) | $ | (61,942) | ||||||||||||||||||
| Less: Net income (loss) attributable to noncontrolling interests | (796) | 204 | (1,396) | 579 | ||||||||||||||||||||||
| Net Loss attributable to UIHC | $ | (14,322) | $ | (74,072) | $ | (55,603) | $ | (62,521) | ||||||||||||||||||
| OTHER COMPREHENSIVE LOSS: | ||||||||||||||||||||||||||
| Change in net unrealized gains (losses) on investments | 2,401 | 27,884 | (11,096) | 52,106 | ||||||||||||||||||||||
| Reclassification adjustment for net realized investment gains | (5,537) | (24,968) | (5,916) | (24,959) | ||||||||||||||||||||||
| Income tax benefit (expense) related to items of other comprehensive loss | 744 | (707) | 4,108 | (6,582) | ||||||||||||||||||||||
| Total comprehensive loss | $ | (17,510) | $ | (71,659) | $ | (69,903) | $ | (41,377) | ||||||||||||||||||
| Less: Comprehensive income (loss) attributable to noncontrolling interests | (844) | 208 | (1,601) | 731 | ||||||||||||||||||||||
| Comprehensive loss attributable to UIHC | $ | (16,666) | $ | (71,867) | $ | (68,302) | $ | (42,108) | ||||||||||||||||||
| Weighted average shares outstanding | ||||||||||||||||||||||||||
| Basic | 42,971,535 | 42,893,205 | 42,940,458 | 42,853,364 | ||||||||||||||||||||||
| Diluted | 42,971,535 | 42,893,205 | 42,940,458 | 42,853,364 | ||||||||||||||||||||||
| Earnings available to UIHC common stockholders per share | ||||||||||||||||||||||||||
| Basic | $ | (0.33) | $ | (1.73) | $ | (1.29) | $ | (1.46) | ||||||||||||||||||
| Diluted | $ | (0.33) | $ | (1.73) | $ | (1.29) | $ | (1.46) | ||||||||||||||||||
| Dividends declared per share | $ | 0.06 | $ | 0.06 | $ | 0.18 | $ | 0.18 | ||||||||||||||||||
9
Exhibit 99.1
Consolidated Balance Sheets
In thousands, except share amounts
| September 30, 2021 | December 31, 2020 | |||||||||||||
| ASSETS | ||||||||||||||
| Investments, at fair value: | ||||||||||||||
| Fixed maturities, available-for-sale | $ | 884,940 | $ | 940,011 | ||||||||||
| Equity securities | 29,407 | 7,445 | ||||||||||||
| Other investments | 27,651 | 47,595 | ||||||||||||
| Total investments | $ | 941,998 | $ | 995,051 | ||||||||||
| Cash and cash equivalents | 188,275 | 239,420 | ||||||||||||
| Restricted cash | 32,782 | 62,078 | ||||||||||||
| Accrued investment income | 3,983 | 4,680 | ||||||||||||
| Property and equipment, net | 31,940 | 34,187 | ||||||||||||
| Premiums receivable, net | 63,199 | 87,339 | ||||||||||||
| Reinsurance recoverable on paid and unpaid losses | 1,351,731 | 821,156 | ||||||||||||
| Ceded unearned premiums | 473,482 | 384,588 | ||||||||||||
| Goodwill | 73,045 | 73,045 | ||||||||||||
| Deferred policy acquisition costs | 77,679 | 74,414 | ||||||||||||
| Intangible assets, net | 19,186 | 21,930 | ||||||||||||
| Other assets | 71,286 | 51,053 | ||||||||||||
| Total Assets | $ | 3,328,586 | $ | 2,848,941 | ||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||
| Liabilities: | ||||||||||||||
| Unpaid losses and loss adjustment expenses | $ | 1,509,477 | $ | 1,089,966 | ||||||||||
| Unearned premiums | 717,936 | 723,938 | ||||||||||||
| Reinsurance payable on premiums | 336,113 | 241,636 | ||||||||||||
| Payments outstanding | 135,760 | 77,912 | ||||||||||||
| Accounts payable and accrued expenses | 72,563 | 91,173 | ||||||||||||
| Operating lease liability | 2,038 | 2,311 | ||||||||||||
| Other liabilities | 56,891 | 46,365 | ||||||||||||
| Notes payable, net | 157,152 | 158,041 | ||||||||||||
| Total Liabilities | $ | 2,987,930 | $ | 2,431,342 | ||||||||||
| 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; 43,362,943 and 43,250,731 issued, respectively; 43,207,390 and 43,075,877 outstanding, respectively | 4 | 4 | ||||||||||||
| Additional paid-in capital | 393,844 | 393,122 | ||||||||||||
| Treasury shares, at cost; 212,083 shares | (431) | (431) | ||||||||||||
| Accumulated other comprehensive income (loss) | (3,006) | 9,693 | ||||||||||||
| Retained earnings | (70,000) | (6,635) | ||||||||||||
| Total stockholders' equity attributable to UIHC stockholders | $ | 320,411 | $ | 395,753 | ||||||||||
| Noncontrolling interests | 20,245 | 21,846 | ||||||||||||
| Total Stockholders' Equity | $ | 340,656 | $ | 417,599 | ||||||||||
| Total Liabilities and Stockholders' Equity | $ | 3,328,586 | $ | 2,848,941 | ||||||||||
10
United Insurance Holdings Corporation (NASDAQ: UIHC) Investor Presentation November 11, 2021
Company Overview 2 UPC Insurance is a specialty underwriter of catastrophe exposed property insurance in the U.S. United Insurance Holding Corp. (NASDAQ: UIHC) was founded in 1999 and is the insurance holding company for 5 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 over 6,100 policies and $411 million of premium in-force. Journey Insurance Company, our AM Best rated carrier formed in partnership with Tokio Marine Kiln, has expanded our commercial underwriting capabilities into Texas and South Carolina and is poised for profitable growth. UPC’s homeowners & fire insurance products (personal lines) are now focused on New York and 6 southeastern coastal states, with roughly 440,000 policies and $837 million of premium in-force. ¹ UIHC as of September 30, 2021 Total Assets: $3.33 billion Total Equity: $320 million Premium in-Force: $1.25 billion ¹ Employees: 469 Headquarters: St. Petersburg, FL Financial Strength Ratings: A- (Kroll) A- (AM Best) ² A (Demotech) 1 Excludes discontinued states of CT, HI, MA, NJ & RI 2 AM Best rating for Journey Insurance Company only Specialty Commercial Property Underwriters Specialty Homeowners Underwriters
Corporate Strategy 3 We seek to be a top-quartile specialty underwriter of CAT exposed property insurance Innovative Reinsurance Programs & Long- Standing Partnerships Highly Specialized Coastal Underwriter Sophisticated Risk Selection and Exposure Management Proprietary, Scalable Technology to Price & Service Risks Favorable market dynamics including hard market pricing and an improving regulatory backdrop expected to serve as a tailwind to executing our strategy and improving underwriting profitability
4 • Q3-2021 Results • Core loss of -$15.5m (-$0.36 per share) compared favorably to -$83.8m (-$1.95 per share) last year due to lower net retained losses from named windstorms. • Core income excluding named storms of $9.0m ($0.21 per share) declined from $15.0m ($0.35 per share) in 2020 due to higher reinsurance costs in the current year intended to protect capital during this transition year. • Exposure reduction and renewal rate increases continued to trend favorably producing more premium relative to risk. • Key Accomplishments • Successfully handled roughly 18,000 new hurricane claims from Ida & Nicholas. • Received rating affirmations from Demotech (A for ACIC, FSIC, IIC & UPC) and AM Best (A- for JIC but outlook changed from stable to negative). • Went live with Skyway.com, our direct-to-consumer platform, and are ready to begin active marketing for HO6 new business in Florida targeting commercial properties underwritten by American Coastal. Executive Summary
Q3-2021 Results 5 Reinsurance costs were the primary driver of the y/y decline in core earnings Q3-21 Q3-20 Change Core income (loss) (15,453)$ (83,847)$ -81.6% per diluted share (CEPS) (0.36)$ (1.95)$ Included the following items Net current year catastrophe loss & LAE incurred 37,003$ 140,001$ Net (favorable) unfavorable reserve development 1,947$ (4,213)$ Total items 38,950$ 135,788$ Core income (loss) excluding named windstorms 8,978$ 14,999$ -40.1% CEPS excluding named windstorm 0.21$ 0.35$ Gross underlying loss & LAE ratio 18.1% 23.4% (5.4) pts Gross expense ratio 21.6% 26.1% (4.5) pts Net loss & LAE ratio 67.1% 115.8% Net expense ratio 49.8% 49.0% Combined ratio 116.8% 164.8% (48.0) pts Net current year catastrophe loss & LAE incurred -24.1% -74.2% Net favorable (unfavorable) reserve development -1.3% 2.2% Underlying combined ratio 91.5% 92.8% (1.3) pts Direct and underlying results moving in the right direction
Q3-2021 Results by Line of Business 6 Our Specialty Commercial Continues to Perform Well Personal Lines (PL) represents our homeowners’ business and is performing outside of Florida, but Commercial Lines (CL) is what we seek to grow over time. $ in millions PL CL Total Gross Premiums Earned 248.4$ 105.0$ 353.5$ Ceded Premiums Earned (139.1) (61.1) (200.2) Net Premiums Earned 109.4 43.9 153.3 Investment & Other Income 11.6 1.2 12.8 Unrealized G(L) on Equities (3.6) 0.3 (3.3) Total Revenue 117.4 45.3 162.7 Underlying Loss & LAE 56.9 6.9 63.8 Current year CAT Loss & LAE 35.3 1.7 37.0 Prior year development 2.5 (0.5) 1.9 Total Loss 94.6 8.1 102.8 Operating Expense 49.8 26.5 76.3 Total Expenses (excluding interest) 144.4 34.6 179.1 Core Income (Loss) before tax (30.5)$ 10.5$ (20.0)$ Core Income (Loss) (23.9)$ 8.4$ (15.5)$ Direct Loss Ratio - NonCAT 36.4% 5.9% 27.3% Direct Loss Ratio - CAT (Current AY) 246.9% 0.6% 173.7% Gross Expense Ratio 20.0% 25.2% 21.6% Net Loss Ratio 86.5% 18.5% 67.1% Net Expense Ratio 45.5% 60.4% 49.8% Combined Ratio 132.1% 78.9% 116.9% CAT Loss -32.2% -4.0% -24.1% PY Development F/(U) -2.3% 1.2% -1.3% Underlying Combined Ratio 97.5% 76.1% 91.5% Three-months ended 9.30.21 $ in millions PL CL Total Gross Premiums Earned 761.7$ 304.9$ 1,066.6$ Ceded Premiums Earned (445) (177) (621.9) Net Premiums Earned 317.0 127.7 444.7 Investment & Other Income 30.1 3.5 33.6 Unrealized G(L) on Equities 1.1 0.6 1.7 Total Revenue 348.2 131.8 480.0 Underlying Loss & LAE 171.3 32.8 204.0 Current year CAT Loss & LAE 92.7 8.5 101.2 Prior year development 32.6 (1.3) 31.3 Total Loss 296.6 40.1 336.6 Operating Expense 145.9 68.2 214.1 Total Expenses (excluding interest) 442.5 108.3 550.8 Core Income (Loss) before tax (106.4)$ 23.9$ (82.5)$ Core Income (Loss) (79.7)$ 20.3$ (59.5)$ Direct Loss Ratio - NonCAT 38.8% 12.0% 31.2% Direct Loss Ratio - CAT (Current AY) 104.0% 5.3% 75.8% Gross Expense Ratio 19.2% 22.4% 20.1% Net Loss Ratio 93.6% 31.4% 75.7% Net Expense Ratio 46.0% 53.4% 48.2% Combined Ratio 139.6% 84.8% 123.9% CAT Loss -29.2% -6.7% -22.8% PY Development F/(U) -10.3% 1.0% -7.0% Underlying Combined Ratio 100.1% 79.1% 94.0% Nine-months ended 9.30.21
7 1. Increased Rate Adequacy a) 2020 rate actions averaged ~ 11% across the personal lines portfolio b) 2021 rate actions averaged ~ 14% across the personal lines portfolio through September c) Commercial lines rate increases averaged ~ 19% during Q3-2021 2. Focused on Risk Selection a) Increasing coverage to be no less than 100% of estimated replacement costs to drive proper insurance-to-value b) Restricted new business through tighter eligibility guidelines c) Developed a new proprietary AI tool to enhance renewal underwriting capabilities based on expected profitability 3. Reduced Risk Exposure a) Total insured value decreased ~ $96 billion (-25%) from 9/30/20 to 9/30/21 b) Scheduled additional non-renewals for further PML reduction by 9/30/22 c) Working on a potential sale of Interboro that would reduce TIV by another $33 billion and allow us to reallocate that capital 4. Improved Operating Efficiency a) Reduced personal lines policy acquisition costs by cutting agent commissions up to 3 points b) Redomiciled Family Security from Hawaii to Florida saving ~ $5m annually c) Discontinued 17 of 42 (40%) of personal lines products representing less than 1% of premium 5. Enhanced Distribution System a) Terminated 3,4000 independent agents to foster a “fewer and deeper” strategy with our best partners b) Restricted use of comparative raters c) Launched our new direct-to-consumer channel: www.skyway.com Underwriting Improvement Initiatives Action already taken over the past year is moving us toward underwriting profitability
Homeowners Rate Change by State 8 Florida, New York and Texas are UPC’s 3 biggest states and have led the charge
9 Renewal Rate Change is Significant Retention remains ~90% despite underwriting actions taken to improve results Q3 was our largest rate change to date
Premium Relative to Exposure Still Improving 10 We expect this gap to widen further from additional underwriting improvement initiatives
11 PML-to-Premium Trending Favorably Portfolio optimization should drive PML down at least -10% by 9/30/22
12 Litigation Trended Down in Q3-2021 Early signs of the impact from SB76 are positive since new lawsuits peaked in June We are also having success resolving claims received through the pre-suit notification process with lower loss and defense costs
Final Thoughts 13 Leadership changes made & corrective action plan is in place and working Rate increases are significant and acquisition costs have been cut Lower CAT retentions will limit further capital erosion Exposure management will continue to reduce TIV & PML Return to profitability is expected in Q4-21 & FY 2022 Rule #1 - Underwriting profitability. Rule #2 – See Rule #1.
Cautionary Statements 14 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, 2019 and 2020 and our Form 10-Q for the periods ending March 31, 2021, June 30, 2021 and September 30, 2021, once available. 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.
