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
Date and Time:
November 9, 2022 - 5:00 P.M.
ET
Participant Dial-In:
(United States): 877-445-9755
(International): 201-493-6744
Webcast:
To listen to the live webcast,
please go to https://investors.upcinsurance.com and click on the
conference call link at the top of the page or go to:
https://event.webcasts.com/starthere.jsp?ei=1579304&tp_key=3b314b94e2
An archive of the webcast will be
available for a limited period of time thereafter.
Presentation:
The information in this press
release should be read in conjunction with an investor presentation
that is available on the Company's website at
investors.upcinsurance.com/Presentations.
About UPC Insurance
Founded in 1999, UPC Insurance is an insurance holding company
that sources, writes and services personal and commercial
residential property and casualty insurance policies using a group
of wholly owned insurance subsidiaries and one majority owned
insurance subsidiary through a variety of distribution channels.
The Company currently writes policies in Florida, Louisiana, New
York, and Texas. The Company also writes policies in South Carolina
and North Carolina, where renewal rights have been sold and all
premiums and losses are ceded. From its headquarters in St.
Petersburg, UPC Insurance's team of dedicated professionals manages
a completely integrated insurance company, including sales,
underwriting, customer service and claims.
Forward-Looking Statements
Statements made in this press release, or on the conference call
identified above, and otherwise, that are not historical facts are
“forward-looking statements”. The Company believes these statements
are based on reasonable estimates, assumptions and plans. However,
if the estimates, assumptions, or plans underlying the
forward-looking statements prove inaccurate or if other risks or
uncertainties arise, actual results could differ materially from
those expressed in, or implied by, the forward-looking statements.
These statements are made subject to the safe-harbor provisions of
the Private Securities Litigation Reform Act of 1995. These
forward-looking statements do not relate strictly to historical or
current facts and may be identified by their use of words such as
“may,” “will,” “expect,” "endeavor," "project," “believe,” "plan,"
“anticipate,” “intend,” “could,” “would,” “estimate” or “continue”
or the negative variations thereof or comparable terminology.
Factors that could cause actual results to differ materially may be
found in the Company's filings with the U.S. Securities and
Exchange Commission, in the “Risk Factors” section in the Company's
most recent Annual Report on Form 10-K and subsequent Quarterly
Reports on Form 10-Q. Forward-looking statements speak only as of
the date on which they are made, and, except as required by
applicable law, the Company undertakes no obligation to update or
revise any forward-looking statements.
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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221109005992/en/
United Insurance Holdings Corp. Alexander Baty Director
of Financial Reporting (727) 895-7737 / abaty@upcinsurance.com
OR
INVESTOR RELATIONS: The Equity Group Karin Daly
Vice President (212) 836-9623 / kdaly@equityny.com
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