United Insurance Holdings Corp. Reports Financial Results for Its Third Quarter Ended September 30, 2022 | MarketScreener



Company to Host Quarterly Conference Call at 5:00 P.M. ET on November 9, 2022

The information in this press release should be read in conjunction with an investor presentation that is available on the Company’s website at investors.upcinsurance.com/Presentations.

United Insurance Holdings Corp. (Nasdaq: UIHC) (UPC Insurance or the Company), a property and casualty insurance holding company, today reported its financial results for the third quarter ended September 30, 2022.

 

Three Months Ended

 

Nine Months Ended

September 30,

 

September 30,

($ in thousands, except for per share data)

2022

 

2021

 

Change

 

2022

 

2021

 

Change

Gross premiums written

$

255,203

 

 

$

322,493

 

 

(20.9

) %

 

$

894,824

 

 

$

1,060,555

 

 

(15.6

) %

Gross premiums earned

$

301,896

 

 

$

353,461

 

 

(14.6

) %

 

$

926,860

 

 

$

1,066,557

 

 

(13.1

) %

Net premiums earned

$

116,187

 

 

$

153,271

 

 

(24.2

) %

 

$

328,449

 

 

$

444,680

 

 

(26.1

) %

Total revenues

$

123,788

 

 

$

162,740

 

 

(23.9

) %

 

$

341,947

 

 

$

479,983

 

 

(28.8

) %

Loss before income tax

$

(70,797

)

 

$

(18,600

)

 

NM

 

 

$

(148,009

)

 

$

(77,655

)

 

(90.6

) %

Net loss attributable to UIHC

$

(70,884

)

 

$

(14,322

)

 

NM

 

 

$

(173,085

)

 

$

(55,603

)

 

NM

 

Net loss available to UIHC common

stockholders per diluted share

$

(1.65

)

 

$

(0.33

)

 

NM

 

 

$

(4.02

)

 

$

(1.29

)

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of net loss to core loss:

 

 

 

 

 

 

 

 

 

 

 

Plus: Non-cash amortization of intangible assets and goodwill impairment (1)

$

14,381

 

 

$

812

 

 

NM

 

 

$

16,005

 

 

$

2,744

 

 

NM

 

Less: Net realized gains (losses) on investment portfolio

$

(9

)

 

$

5,537

 

 

100.2

%

 

$

(1,856

)

 

$

5,916

 

 

NM

 

Less: Unrealized gains (losses) on equity securities

$

(2,518

)

 

$

(3,293

)

 

23.5

%

 

$

(9,870

)

 

$

1,709

 

 

NM

 

Less: Net tax impact (2)

$

3,551

 

 

$

(301

)

 

NM

 

 

$

5,824

 

 

$

(1,025

)

 

NM

 

Core loss (3) (4)

$

(57,527

)

 

$

(15,453

)

 

NM

 

 

$

(151,178

)

 

$

(59,459

)

 

NM

 

Core loss per diluted share (3) (4)

$

(1.34

)

 

$

(0.36

)

 

NM

 

 

$

(3.51

)

 

$

(1.38

)

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share

 

 

 

 

 

 

$

1.86

 

 

$

7.42

 

 

(74.9

) %

NM = Not Meaningful
(1)

For both the three and nine months ended September 30, 2022, non-cash amortization of intangible assets includes $13.6 million related to the impairment of goodwill attributable to the Company’s personal residential property and casualty insurance policies (personal lines) operating segment.

(2)

In order to reconcile net loss to the core loss measures, the Company included the tax impact of all adjustments using the 21% corporate federal tax rate.

(3)

For the three and nine months ended September 30, 2022, core loss includes $13.8 million and $57.5 million, respectively, in tax expense related to the Company’s recognition of a valuation allowance.

(4)

Core loss, and core loss per diluted share, both of which are measures that are not based on GAAP, are reconciled above to net loss and net loss per diluted share, respectively, the most directly comparable GAAP measures. Additional information regarding non-GAAP financial measures presented in this press release can be found in the “Definitions of Non-GAAP Measures” section, below.

“On September 28, 2022, Ian made landfall on the west coast of Florida as a category four hurricane. Our thoughts and prayers go out to all of the people impacted by Ian,” said Dan Peed, CEO of UPC Insurance. “I also want to recognize and thank our team for all of the hard work being done to help the victims restore their lives and property.”

Mr. Peed continued, “During the third quarter we made the difficult decision to withdraw United Property & Casualty Insurance Company from the personal lines business in the states of Florida, Louisiana and Texas. While Interboro Insurance Company will continue to write personal lines business in the state of New York, the withdrawal allows us to focus our capacity on our commercial residential business written by American Coastal Insurance Company. Our withdrawal plan will generally begin with non-renewals on January 1, 2023.”

Return on Equity and Core Return on Equity

The calculations of the Company’s return on equity and core return on equity are shown below.

Three Months Ended

 

Nine Months Ended

September 30,

 

September 30,

($ in thousands)

2022

 

2021

 

2022

 

2021

Net loss attributable to UIHC

$

(70,884

)

 

$

(14,322

)

 

$

(173,085

)

 

$

(55,603

)

Return on equity based on GAAP net loss attributable to UIHC (1)

 

(121.8

)%

 

 

(15.8

)%

 

 

(99.1

)%

 

 

(20.4

)%

 

 

 

 

 

 

 

 

Core loss

$

(57,527

)

 

$

(15,453

)

 

$

(151,178

)

 

$

(59,459

)

Core return on equity (1)(2)

 

(98.8

)%

 

 

(17.0

)%

 

 

(86.6

)%

 

 

(21.8

)%

(1)

Return on equity for the three and nine months ended September 30, 2022 and 2021 is calculated on an annualized basis by dividing the net loss or core loss for the period by the average stockholders’ equity for the trailing twelve months.

(2)

Core return on equity, a measure that is not based on GAAP, is calculated based on core loss, which is reconciled on the first page of this press release to net loss, the most directly comparable GAAP measure. Additional information regarding non-GAAP financial measures presented in this press release can be found in the “Definitions of Non-GAAP Measures” section below.

Combined Ratio and Underlying Ratio

The calculations of the Company’s combined ratio and underlying combined ratio on a consolidated basis and attributable to both the Company’s personal lines and commercial residential property and casualty insurance policies (commercial lines) operating segments are shown below.

 

Three Months Ended

 

Nine Months Ended

September 30,

 

September 30,

($ in thousands)

2022

 

2021

 

Change

 

2022

 

2021

 

Change

Consolidated

 

 

 

 

 

 

 

 

 

 

 

Loss ratio, net(1)

100.9

%

 

67.1

%

 

33.8 pts

 

90.9

%

 

75.7

%

 

15.2 pts

Expense ratio, net(2)(3)

64.5

%

 

49.8

%

 

14.7 pts

 

56.5

%

 

48.2

%

 

8.3 pts

Combined ratio (CR)(4)

165.4

%

 

116.9

%

 

48.5 pts

 

147.4

%

 

123.9

%

 

23.5 pts

Effect of current year catastrophe losses on CR

32.2

%

 

24.1

%

 

8.1 pts

 

26.4

%

 

22.8

%

 

3.6 pts

Effect of prior year unfavorable (favorable) development on CR

38.4

%

 

1.3

%

 

37.1 pts

 

16.4

%

 

7.0

%

 

9.4 pts

Underlying combined ratio(5)

94.8

%

 

91.5

%

 

3.3 pts

 

104.6

%

 

94.1

%

 

10.5 pts

 

 

 

 

 

 

 

 

 

 

 

 

Personal Lines

 

 

 

 

 

 

 

 

 

 

 

Loss ratio, net(1)

146.5

%

 

86.1

%

 

60.4 pts

 

140.7

%

 

93.6

%

 

47.1 pts

Expense ratio, net(2)(3)

86.4

%

 

44.8

%

 

41.6 pts

 

66.9

%

 

45.6

%

 

21.3 pts

Combined ratio (CR)(4)

232.9

%

 

130.9

%

 

102.0 pts

 

207.6

%

 

139.2

%

 

68.4 pts

Effect of current year catastrophe losses on CR

18.0

%

 

32.1

%

 

(14.1) pts

 

34.2

%

 

29.3

%

 

4.9 pts

Effect of prior year unfavorable (favorable) development on CR

81.8

%

 

3.0

%

 

78.8 pts

 

34.4

%

 

10.6

%

 

23.8 pts

Underlying combined ratio(5)

133.1

%

 

95.8

%

 

37.3 pts

 

139.0

%

 

99.3

%

 

39.7 pts

 

 

 

 

 

 

 

 

 

 

 

 

Commercial Lines

 

 

 

 

 

 

 

 

 

 

 

Loss ratio, net(1)

57.5

%

 

18.8

%

 

38.7 pts

 

36.1

%

 

31.5

%

 

4.6 pts

Expense ratio, net(2)

43.0

%

 

61.0

%

 

(18.0) pts

 

44.2

%

 

53.2

%

 

(9.0) pts

Combined ratio (CR)(4)

100.5

%

 

79.8

%

 

20.7 pts

 

80.3

%

 

84.7

%

 

(4.4) pts

Effect of current year catastrophe losses on CR

45.7

%

 

4.0

%

 

41.7 pts

 

17.7

%

 

6.7

%

 

11.0 pts

Effect of prior year favorable development on CR

(3.0

) %

 

(3.0

) %

 

— pts

 

(3.5

) %

 

(1.7

) %

 

(1.8) pts

Underlying combined ratio(5)

57.8

%

 

78.8

%

 

(21.0) pts

 

66.1

%

 

79.7

%

 

(13.6) pts

(1)

Loss ratio, net is calculated as losses and loss adjustment expenses (LAE), net of losses ceded to reinsurers, relative to net premiums earned.

(2)

Expense ratio, net is calculated as the sum of all operating expenses less interest expense relative to net premiums earned.

(3)

Includes the impairment of goodwill, which had an impact of 11.7% and 4.1% on the company’s consolidated expense ratios and a 23.9% and 7.9% impact on the company’s personal lines expense ratios during the three and nine month periods ended September 30, 2022, respectively.

(4)

Combined ratio is the sum of the loss ratio, net and expense ratio, net.

(5)

Underlying combined ratio, a measure that is not based on GAAP, is reconciled above to the combined ratio, the most directly comparable GAAP measure. Additional information regarding non-GAAP financial measures presented in this press release can be found in the “Definitions of Non-GAAP Measures” section, below.

Combined Ratio Analysis

The calculations of the Company’s loss ratios and underlying loss ratios are shown below.

($ in thousands)

Three Months Ended

 

Nine Months Ended

September 30,

 

September 30,

2022

 

2021

 

Change

 

2022

 

2021

 

Change

Loss and LAE

$

117,228

 

 

$

102,769

 

 

$

14,459

 

 

$

298,670

 

 

$

336,614

 

 

$

(37,944

)

% of Gross earned premiums

 

38.8

%

 

 

29.1

%

 

9.7 pts

 

 

32.2

%

 

 

31.6

%

 

0.6 pts

% of Net earned premiums

 

100.9

%

 

 

67.1

%

 

33.8 pts

 

 

90.9

%

 

 

75.7

%

 

15.2 pts

Less:

 

 

 

 

 

 

 

 

 

 

 

Current year catastrophe losses

$

37,440

 

 

$

37,003

 

 

$

437

 

 

$

86,609

 

 

$

101,225

 

 

$

(14,616

)

Prior year reserve unfavorable (favorable) development

 

44,561

 

 

 

1,947

 

 

 

42,614

 

 

 

53,760

 

 

 

31,344

 

 

 

22,416

 

Underlying loss and LAE (1)

$

35,227

 

 

$

63,819

 

 

$

(28,592

)

 

$

158,301

 

 

$

204,045

 

 

$

(45,744

)

% of Gross earned premiums

 

11.7

%

 

 

18.1

%

 

(6.4) pts

 

 

17.1

%

 

 

19.1

%

 

(2.0) pts

% of Net earned premiums

 

30.3

%

 

 

41.6

%

 

(11.3) pts

 

 

48.1

%

 

 

45.9

%

 

2.2 pts

(1)

Underlying loss and LAE is a non-GAAP financial measure and is reconciled above to loss and LAE, the most directly comparable GAAP measure. Additional information regarding non-GAAP financial measures presented in this press release can be found in the “Definitions of Non-GAAP Measures” section, below.

The calculations of the Company’s expense ratios are shown below.

($ in thousands)

Three Months Ended

 

Nine Months Ended

September 30,

 

September 30,

2022

 

2021

 

Change

 

2022

 

2021

 

Change

Policy acquisition costs

$

38,944

 

 

$

46,925

 

 

$

(7,981

)

 

$

93,948

 

 

$

129,073

 

 

$

(35,125

)

Operating and underwriting

 

9,615

 

 

 

15,429

 

 

 

(5,814

)

 

 

34,882

 

 

 

42,133

 

 

 

(7,251

)

General and administrative

 

26,391

 

 

 

13,940

 

 

 

12,451

 

 

 

56,890

 

 

 

42,934

 

 

 

13,956

 

Total Operating Expenses

$

74,950

 

 

$

76,294

 

 

$

(1,344

)

 

$

185,720

 

 

$

214,140

 

 

$

(28,420

)

% of Gross earned premiums

 

24.8

%

 

 

21.6

%

 

3.2 pts

 

 

20.0

%

 

 

20.1

%

 

(0.1) pts

% of Net earned premiums

 

64.5

%

 

 

49.8

%

 

14.7 pts

 

 

56.5

%

 

 

48.2

%

 

8.3 pts

Quarterly Financial Results

Net loss attributable to the Company for the third quarter of 2022 was $70.9 million, or $1.65 per diluted share, compared to $14.3 million, or $0.33 per diluted share, for the third quarter of 2021. Drivers of the net loss during the third quarter of 2022 include: decreased gross written premiums which were partially offset by a decline in ceded premiums earned, unfavorable prior year loss development during the quarter, the impact of Hurricane Ian making landfall in Florida as a category four hurricane, and the impairment of goodwill attributable to the Company’s personal lines operating segment.

The Company’s total gross written premium decreased by $67.3 million, or 20.9%, to $255.2 million for the third quarter of 2022, from $322.5 million for the third quarter of 2021. This decrease was driven primarily by the transition of the Northeast business to Homeowners Choice Property & Casualty Insurance Company, Inc. (HCPCI) in the fourth quarter of 2021 and the first half of 2022. In addition, the Company experienced a decline in written premiums across the personal lines business, due to underwriting actions taken by the Company throughout 2021 and in the first half of 2022. The breakdown of the quarter-over-quarter changes in both direct written and assumed premiums by region and gross written premium by line of business are shown in the table below.

 

 

Three Months Ended September 30,

 

 

 

 

($ in thousands)

 

2022

 

2021

 

Change $

 

Change %

Direct Written and Assumed Premium by Region (1)

 

 

 

 

 

 

 

 

Florida

 

$

178,313

 

$

185,178

 

$

(6,865

)

 

(3.7

) %

Gulf

 

 

49,961

 

 

62,757

 

 

(12,796

)

 

(20.4

)

Northeast

 

 

16,627

 

 

49,982

 

 

(33,355

)

 

(66.7

)

Southeast

 

 

10,155

 

 

24,464

 

 

(14,309

)

 

(58.5

)

Total direct written premium by region

 

 

255,056

 

 

322,381

 

 

(67,325

)

 

(20.9

)

Assumed premium (2)

 

 

147

 

 

112

 

 

35

 

 

31.3

 

Total gross written premium by region

 

$

255,203

 

$

322,493

 

$

(67,290

)

 

(20.9

) %

 

 

 

 

 

 

 

 

 

Gross Written Premium by Line of Business

 

 

 

 

 

 

 

 

Personal property

 

$

178,335

 

$

258,109

 

$

(79,774

)

 

(30.9

) %

Commercial property

 

 

76,868

 

 

64,384

 

 

12,484

 

 

19.4

 

Total gross written premium by line of business

 

$

255,203

 

$

322,493

 

$

(67,290

)

 

(20.9

) %

(1)

“Gulf” is comprised of Louisiana and Texas; “Northeast” is comprised of Massachusetts, New Jersey and New York in 2022 and Connecticut, Massachusetts, New Jersey, New York and Rhode Island in 2021; and “Southeast” is comprised of Georgia, North Carolina and South Carolina. The Company is no longer writing in New Jersey as of January 15, 2022, Massachusetts as of April 1, 2022, and South Carolina as of June 1, 2022 as the policies have transitioned to HCPCI.

(2)

Assumed premium written for 2022 and 2021 primarily included commercial property business assumed from unaffiliated insurers.

Loss and LAE increased by $14.4 million, or 14.0%, to $117.2 million for the third quarter of 2022, from $102.8 million for the third quarter of 2021. Loss and LAE expense as a percentage of net earned premiums increased 33.8 points to 100.9% for the third quarter of 2022, compared to 67.1% for the third quarter of 2021. Excluding catastrophe losses and reserve development, the Company’s gross underlying loss and LAE ratio for the third quarter of 2022 would have been 11.7%, a decrease of 6.4 points from 18.1% during the third quarter of 2021.

Policy acquisition costs decreased by $8.0 million, or 17.1%, to $38.9 million for the third quarter of 2022, from $46.9 million for the third quarter of 2021, primarily due to a decrease in expenses such as premium taxes, policy administration fees and agent commissions, which fluctuate in conjunction with the quarter-over-quarter decrease in personal lines gross written premium. In addition, external management fees incurred related to the Company’s commercial lines gross written premium decreased during the third quarter of 2022, due to the termination of the profit sharing component of the Company’s external commercial management agreement. This was partially offset by decreased ceding commission income due to changes in the terms of the Company’s quota share reinsurance agreements.

Operating and underwriting expenses decreased by $5.8 million, or 37.7%, to $9.6 million for the third quarter of 2022, from $15.4 million for the third quarter of 2021, primarily due to decreased investments in technology and decreased underwriting expenses as the result of the decrease in personal lines premiums described above.

General and administrative expenses increased by $12.5 million, or 89.9%, to $26.4 million for the third quarter of 2022, from $13.9 million for the third quarter of 2021, driven by the impairment of goodwill attributable to the Company’s personal lines operating segment.

Personal Lines Operating Segment Highlights

Pre-tax losses attributable to the Company’s personal lines operating segment totaled $69.8 million for the third quarter of 2022 compared to $25.9 million for the third quarter of 2021. The quarter-over-quarter increase in pre-tax losses can be attributed to decreased net premiums earned of $53.2 million driven by decreased gross written premiums as described above.

Quarter-over-quarter, policy acquisition costs and operating expenses decreased $7.0 million and $5.0 million, respectively, as expenses correlated to the movement of premium decreased with the decline in personal lines gross written premium. Policy acquisition costs also declined due to a decrease in ceding commission income related to changes in the terms of the Company’s quota share reinsurance agreements. These decreases were partially offset by an increase in general and administrative expenses of $11.7 million attributed to the impairment of goodwill attributable to the segment.

Drivers of the pre-tax loss during the third quarter of 2022 include: unfavorable prior year loss development during the quarter, the impact of Hurricane Ian making landfall in Florida as a category four hurricane, and the impairment of goodwill attributable to the Company’s personal lines operating segment.

Commercial Lines Operating Segment Highlights

Pre-tax earnings attributable to the Company’s commercial lines operating segment totaled $1.8 million for the third quarter of 2022 compared to $10.2 million for the third quarter of 2021. This increase can be attributed to increased revenues of $16.8 million, driven by a $16.1 million increase in net premiums earned due to higher gross written premiums quarter-over-quarter as the Company transitions towards becoming a specialty commercial lines underwriter.

This increase was partially offset by increased expenses of $25.2 million, driven by a $26.1 million increase in loss and LAE incurred due to increased catastrophe losses quarter-over-quarter.

Reinsurance Costs as a Percentage of Gross Earned Premium

Reinsurance costs as a percentage of gross earned premium in the third quarter of 2022 and 2021 were as follows:

 

2022

 

2021

Non-at-Risk

(2.0

) %

 

(0.8

) %

Quota Share

(20.1

) %

 

(23.9

) %

All Other

(39.4

) %

 

(31.9

) %

Total Ceding Ratio

(61.5

) %

 

(56.6

) %

While ceded premiums earned decreased quarter-over-quarter, the Company’s ceding ratio on a consolidated basis increased, driven by the Company’s decrease in gross premiums earned quarter-over-quarter.

Ceded premiums earned related to the Company’s quota share reinsurance contracts decreased quarter-over-quarter driven by a decrease in the cession rate for one of the Company’s external quota shares and changes to the geographic footprint and exposure covered by the external quota share contracts.

Ceded premiums earned related to the Company’s catastrophe program also decreased, driven by the need for less coverage for the 2022-2023 treaty year for the reduction in the geographic footprint and exposure, as well as the change from a cascading aggregate structure to an occurrence-based structure for the Company’s 2022-2023 program.

Reinsurance costs as a percentage of gross earned premium in the third quarter of 2022 and 2021 for the Company’s personal lines and commercial lines operating segments were as follows:

 

Personal

 

Commercial

 

2022

 

2021

 

2022

 

2021

Non-at-Risk

(3.1

) %

 

(1.4

) %

 

(0.5

) %

 

0.5

%

Quota Share

(24.4

) %

 

(26.7

) %

 

(13.4

) %

 

(17.4

) %

All Other

(41.4

) %

 

(27.7

) %

 

(36.4

) %

 

(41.8

) %

Total Ceding Ratio

(68.9

) %

 

(55.8

) %

 

(50.3

) %

 

(58.7

) %

Investment Portfolio Highlights

The Company’s cash, restricted cash and investment holdings decreased from $964.8 million at December 31, 2021 to $768.6 million at September 30, 2022. The Company’s cash and investment holdings consist of investments in U.S. government and agency securities, corporate debt and 100% investment grade money market instruments. Fixed maturities represented approximately 90.3% of total investments at September 30, 2022, compared to 92.2% at December 31, 2021. At September 30, 2022, the Company’s fixed maturity investments had a modified duration of 3.6 years, compared to 4.0 years at December 31, 2021.

At September 30, 2022, the Company’s fixed maturity investment holdings decreased by $171.4 million, or 25.8% from December 31, 2021, through the sale of securities in order to satisfy the Company’s liquidity requirements during 2022 and due to unrealized losses recognized on the portfolio.

Book Value Analysis

Book value per common share decreased 74.2% from $7.20 at December 31, 2021, to $1.86 at September 30, 2022. Underlying book value per common share decreased 54.3% from $7.35 at December 31, 2021 to $3.36 at September 30, 2022. A decrease in the Company’s retained earnings as the result of a net loss in the first nine months of 2022 drove the decrease in the Company’s book value per share. As shown in the table below, removing the effect of AOCI increases the Company’s book value per common share, as the Company experienced unfavorable capital market conditions for the nine months ended September 30, 2022.

 

 

September 30, 2022

 

December 31, 2021

($ in thousands, except for share and per share data)

 

 

Book Value per Share

 

 

 

 

Numerator:

 

 

 

 

Common stockholders’ equity attributable to UIHC

 

$

80,434

 

 

$

312,406

 

Denominator:

 

 

 

 

Total Shares Outstanding

 

 

43,285,807

 

 

 

43,370,442

 

Book Value Per Common Share

 

$

1.86

 

 

$

7.20

 

 

 

 

 

 

Book Value per Share, Excluding the Impact of Accumulated Other Comprehensive Income (AOCI)

 

 

 

 

Numerator:

 

 

 

 

Common stockholders’ equity attributable to UIHC

 

$

80,434

 

 

$

312,406

 

Less: Accumulated other comprehensive loss

 

 

(64,805

)

 

 

(6,531

)

Stockholders’ Equity, excluding AOCI

 

$

145,239

 

 

$

318,937

 

Denominator:

 

 

 

 

Total Shares Outstanding

 

 

43,285,807

 

 

 

43,370,442

 

Underlying Book Value Per Common Share(1)

 

$

3.36

 

 

$

7.35

 

(1)

Underlying book value per common share is a non-GAAP financial measure and is reconciled above to book value per common share, the most directly comparable GAAP measure. Additional information regarding non-GAAP financial measures presented in this press release can be found in the “Definitions of Non-GAAP Measures” section below.

Definitions of Non-GAAP Measures

The Company believes that investors’ understanding of UPC Insurance’s performance is enhanced by the Company’s disclosure of the following non-GAAP measures. The Company’s methods for calculating these measures may differ from those used by other companies and therefore comparability may be limited.

Net loss excluding the effects of amortization of intangible assets, realized gains (losses) and unrealized gains (losses) on equity securities, net of tax (core loss) is a non-GAAP measure that is computed by adding amortization, net of tax, to net income and subtracting realized gains (losses) on the Company’s investment portfolio, net of tax, and unrealized gains (losses) on the Company’s equity securities, net of tax, from net loss. Amortization expense is related to the amortization of intangible assets acquired, including goodwill, through mergers and, therefore, the expense does not arise through normal operations. Investment portfolio gains (losses) and unrealized equity security gains (losses) vary independent of the Company’s operations. The Company believes it is useful for investors to evaluate these components both separately and in the aggregate when reviewing the Company’s performance. The most directly comparable GAAP measure is net loss. The core loss measure should not be considered a substitute for net loss and does not reflect the overall profitability of the Company’s business.

Core return on equity is a non-GAAP ratio calculated using non-GAAP measures. It is calculated by dividing the core loss for the period by the average stockholders’ equity for the trailing twelve months (or one quarter of such average, in the case of quarterly periods). Core loss is an after-tax non-GAAP measure that is calculated by excluding from net loss the effect of non-cash amortization of intangible assets, unrealized gains or losses on the Company’s equity security investments and net realized gains or losses on the Company’s investment portfolio. In the opinion of the Company’s management, core loss, core loss per share and core return on equity are meaningful indicators to investors of the Company’s underwriting and operating results, since the excluded items are not necessarily indicative of operating trends. Internally, the Company’s management uses core loss, core loss per share and core return on equity to evaluate performance against historical results and establish financial targets on a consolidated basis. The most directly comparable GAAP measure is return on equity. The core return on equity measure should not be considered a substitute for return on equity and does not reflect the overall profitability of the Company’s business.

Combined ratio excluding the effects of current year catastrophe losses and prior year reserve development (underlying combined ratio) is a non-GAAP measure, that is computed by subtracting the effect of current year catastrophe losses and prior year development from the combined ratio. The Company believes that this ratio is useful to investors, and it is used by management to highlight the trends in the Company’s business that may be obscured by current year catastrophe losses and prior year development. Current year catastrophe losses cause the Company’s loss trends to vary significantly between periods as a result of their frequency of occurrence and severity and can have a significant impact on the combined ratio. Prior year development is caused by unexpected loss development on historical reserves. The Company believes it is useful for investors to evaluate these components both separately and in the aggregate when reviewing the Company’s performance. The most directly comparable GAAP measure is the combined ratio. The underlying combined ratio should not be considered as a substitute for the combined ratio and does not reflect the overall profitability of the Company’s business.

Net loss and LAE excluding the effects of current year catastrophe losses and prior year reserve development (underlying loss and LAE) is a non-GAAP measure that is computed by subtracting the effect of current year catastrophe losses and prior year reserve development from net loss and LAE. The Company uses underlying loss and LAE figures to analyze the Company’s loss trends that may be impacted by current year catastrophe losses and prior year development on the Company’s reserves. As discussed previously, these two items can have a significant impact on the Company’s loss trends in a given period. The Company believes it is useful for investors to evaluate these components both separately and in the aggregate when reviewing the Company’s performance. The most directly comparable GAAP measure is net loss and LAE. The underlying loss and LAE measure should not be considered a substitute for net loss and LAE and does not reflect the overall profitability of the Company’s business.

Book value per common share, excluding the impact of accumulated other comprehensive loss (underlying book value per common share), is a non-GAAP measure that is computed by dividing common stockholders’ equity after excluding accumulated other comprehensive loss, by total common shares outstanding plus dilutive potential common shares outstanding. The Company uses the trend in book value per common share, excluding the impact of accumulated other comprehensive loss, in conjunction with book value per common share to identify and analyze the change in net worth attributable to management efforts between periods. The Company believes this non-GAAP measure is useful to investors because it eliminates the effect of interest rates that can fluctuate significantly from period to period and are generally driven by economic and financial factors that are not influenced by management. Book value per common share is the most directly comparable GAAP measure. Book value per common share, excluding the impact of accumulated other comprehensive loss, should not be considered a substitute for book value per common share and does not reflect the recorded net worth of the Company’s business.

Conference Call Details

About UPC Insurance

Founded in 1999, UPC Insurance is an insurance holding company that sources, writes and services personal and commercial residential property and casualty insurance policies using a group of wholly owned insurance subsidiaries and one majority owned insurance subsidiary through a variety of distribution channels. The Company currently writes policies in Florida, Louisiana, New York, and Texas. The Company also writes policies in South Carolina and North Carolina, where renewal rights have been sold and all premiums and losses are ceded. From its headquarters in St. Petersburg, UPC Insurance’s team of dedicated professionals manages a completely integrated insurance company, including sales, underwriting, customer service and claims.

Forward-Looking Statements

Statements made in this press release, or on the conference call identified above, and otherwise, that are not historical facts are “forward-looking statements”. The Company believes these statements are based on reasonable estimates, assumptions and plans. However, if the estimates, assumptions, or plans underlying the forward-looking statements prove inaccurate or if other risks or uncertainties arise, actual results could differ materially from those expressed in, or implied by, the forward-looking statements. These statements are made subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements do not relate strictly to historical or current facts and may be identified by their use of words such as “may,” “will,” “expect,” “endeavor,” “project,” “believe,” “plan,” “anticipate,” “intend,” “could,” “would,” “estimate” or “continue” or the negative variations thereof or comparable terminology. Factors that could cause actual results to differ materially may be found in the Company’s filings with the U.S. Securities and Exchange Commission, in the “Risk Factors” section in the Company’s most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. Forward-looking statements speak only as of the date on which they are made, and, except as required by applicable law, the Company undertakes no obligation to update or revise any forward-looking statements.

Consolidated Statements of Comprehensive Loss

In thousands, except share and per share amounts

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2022

 

2021

 

2022

 

2021

REVENUE:

 

 

 

 

 

 

 

 

Gross premiums written

 

$

255,203

 

 

$

322,493

 

 

$

894,824

 

 

$

1,060,555

 

Change in gross unearned premiums

 

 

46,693

 

 

 

30,968

 

 

 

32,036

 

 

 

6,002

 

Gross premiums earned

 

 

301,896

 

 

 

353,461

 

 

 

926,860

 

 

 

1,066,557

 

Ceded premiums earned

 

 

(185,709

)

 

 

(200,190

)

 

 

(598,411

)

 

 

(621,877

)

Net premiums earned

 

 

116,187

 

 

 

153,271

 

 

 

328,449

 

 

 

444,680

 

Net investment income

 

 

4,269

 

 

 

3,471

 

 

 

9,887

 

 

 

10,737

 

Net realized investment gains (losses)

 

 

(9

)

 

 

5,537

 

 

 

(1,856

)

 

 

5,916

 

Net unrealized gains (losses) on equity securities

 

 

(2,518

)

 

 

(3,293

)

 

 

(9,870

)

 

 

1,709

 

Other revenue

 

 

5,859

 

 

 

3,754

 

 

 

15,337

 

 

 

16,941

 

Total revenues

 

$

123,788

 

 

$

162,740

 

 

$

341,947

 

 

$

479,983

 

EXPENSES:

 

 

 

 

 

 

 

 

Losses and loss adjustment expenses

 

 

117,228

 

 

 

102,769

 

 

 

298,670

 

 

 

336,614

 

Policy acquisition costs

 

 

38,944

 

 

 

46,925

 

 

 

93,948

 

 

 

129,073

 

Operating expenses

 

 

9,615

 

 

 

15,429

 

 

 

34,882

 

 

 

42,133

 

General and administrative expenses

 

 

26,391

 

 

 

13,940

 

 

 

56,890

 

 

 

42,934

 

Interest expense

 

 

2,392

 

 

 

2,378

 

 

 

7,165

 

 

 

7,010

 

Total expenses

 

 

194,570

 

 

 

181,441

 

 

 

491,555

 

 

 

557,764

 

Loss before other income

 

 

(70,782

)

 

 

(18,701

)

 

 

(149,608

)

 

 

(77,781

)

Other income (loss)

 

 

(15

)

 

 

101

 

 

 

1,599

 

 

 

126

 

Loss before income taxes

 

 

(70,797

)

 

 

(18,600

)

 

 

(148,009

)

 

 

(77,655

)

Provision (benefit) for income taxes

 

 

87

 

 

 

(3,482

)

 

 

25,187

 

 

 

(20,656

)

Net Loss

 

$

(70,884

)

 

$

(15,118

)

 

$

(173,196

)

 

$

(56,999

)

Less: Net loss attributable to noncontrolling interests

 

 

 

 

 

(796

)

 

 

(111

)

 

 

(1,396

)

Net loss attributable to UIHC

 

$

(70,884

)

 

$

(14,322

)

 

$

(173,085

)

 

$

(55,603

)

OTHER COMPREHENSIVE LOSS:

 

 

 

 

 

 

 

 

Change in net unrealized gains (losses) on investments

 

 

(15,953

)

 

 

2,401

 

 

 

(60,232

)

 

 

(11,096

)

Reclassification adjustment for net realized investment losses (gains)

 

 

9

 

 

 

(5,537

)

 

 

1,856

 

 

 

(5,916

)

Income tax benefit related to items of other comprehensive income loss

 

 

 

 

 

744

 

 

 

49

 

 

 

4,108

 

Total comprehensive loss

 

$

(86,828

)

 

$

(17,510

)

 

$

(231,523

)

 

$

(69,903

)

Less: Comprehensive loss attributable to noncontrolling interests

 

 

 

 

 

(844

)

 

 

(164

)

 

 

(1,601

)

Comprehensive loss attributable to UIHC

 

$

(86,828

)

 

$

(16,666

)

 

$

(231,359

)

 

$

(68,302

)

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

Basic

 

 

43,075,234

 

 

 

42,971,535

 

 

 

43,035,374

 

 

 

42,940,458

 

Diluted

 

 

43,075,234

 

 

 

42,971,535

 

 

 

43,035,374

 

 

 

42,940,458

 

 

 

 

 

 

 

 

 

 

Earnings available to UIHC common stockholders per share

 

 

 

 

 

 

 

 

Basic

 

$

(1.65

)

 

$

(0.33

)

 

$

(4.02

)

 

$

(1.29

)

Diluted

 

$

(1.65

)

 

$

(0.33

)

 

$

(4.02

)

 

$

(1.29

)

 

 

 

 

 

 

 

 

 

Dividends declared per share

 

$

 

 

$

0.06

 

 

$

0.06

 

 

$

0.18

 

Consolidated Balance Sheets

In thousands, except share amounts

 

 

 

September 30, 2022

 

December 31, 2021

ASSETS

 

 

 

 

Investments, at fair value:

 

 

 

 

Fixed maturities, available-for-sale

 

$

492,251

 

 

$

663,602

 

Equity securities

 

 

36,495

 

 

 

37,958

 

Other investments

 

 

16,609

 

 

 

18,006

 

Total investments

 

$

545,355

 

 

$

719,566

 

Cash and cash equivalents

 

 

180,947

 

 

 

212,024

 

Restricted cash

 

 

42,300

 

 

 

33,254

 

Accrued investment income

 

 

3,203

 

 

 

3,296

 

Property and equipment, net

 

 

26,709

 

 

 

31,561

 

Premiums receivable, net

 

 

45,214

 

 

 

79,166

 

Reinsurance recoverable on paid and unpaid losses

 

 

1,547,282

 

 

 

997,120

 

Ceded unearned premiums

 

 

373,558

 

 

 

430,631

 

Goodwill

 

 

59,476

 

 

 

73,045

 

Deferred policy acquisition costs

 

 

71,204

 

 

 

38,520

 

Intangible assets, net

 

 

15,940

 

 

 

18,375

 

Other assets

 

 

30,939

 

 

 

62,015

 

Total Assets

 

$

2,942,127

 

 

$

2,698,573

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Liabilities:

 

 

 

 

Unpaid losses and loss adjustment expenses

 

$

1,679,567

 

 

$

1,084,450

 

Unearned premiums

 

 

612,904

 

 

 

644,940

 

Reinsurance payable on premiums

 

 

200,568

 

 

 

248,625

 

Payments outstanding

 

 

105,200

 

 

 

114,524

 

Accounts payable and accrued expenses

 

 

76,358

 

 

 

76,258

 

Operating lease liability

 

 

1,416

 

 

 

1,934

 

Other liabilities

 

 

32,996

 

 

 

39,324

 

Notes payable, net

 

 

152,684

 

 

 

156,561

 

Total Liabilities

 

$

2,861,693

 

 

$

2,366,616

 

Commitments and contingencies

 

 

 

 

Stockholders’ Equity:

 

 

 

 

Preferred stock, $0.0001 par value; 1,000,000 authorized; none issued or outstanding

 

 

 

 

 

 

Common stock, $0.0001 par value; 100,000,000 shares authorized; 43,497,890 and 43,360,429 issued, respectively; 43,285,807 and 43,370,442 outstanding, respectively

 

 

4

 

 

 

4

 

Additional paid-in capital

 

 

395,192

 

 

 

394,268

 

Treasury shares, at cost; 212,083 shares

 

 

(431

)

 

 

(431

)

Accumulated other comprehensive loss

 

 

(64,805

)

 

 

(6,531

)

Retained earnings (deficit)

 

 

(249,526

)

 

 

(74,904

)

Total stockholders’ equity attributable to UIHC stockholders

 

$

80,434

 

 

$

312,406

 

Noncontrolling interests

 

 

 

 

 

19,551

 

Total Stockholders’ Equity

 

$

80,434

 

 

$

331,957

 

Total Liabilities and Stockholders’ Equity

 

$

2,942,127

 

 

$

2,698,573

 

 

Business Wire 2022

All news about UNITED INSURANCE HOLDINGS CORP.

Analyst Recommendations on UNITED INSURANCE HOLDINGS CORP.

Sales 2021 635 M

Net income 2021 -57,9 M

Net cash 2021 53,5 M

P/E ratio 2021 -3,21x
Yield 2021 5,53%
Capitalization 17,1 M
17,1 M
EV / Sales 2020 0,20x
EV / Sales 2021 0,21x
Nbr of Employees 472
Free-Float 44,6%

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