0001401521-17-000120.txt : 20170808 0001401521-17-000120.hdr.sgml : 20170808 20170808160957 ACCESSION NUMBER: 0001401521-17-000120 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20170808 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20170808 DATE AS OF CHANGE: 20170808 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED INSURANCE HOLDINGS CORP. CENTRAL INDEX KEY: 0001401521 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 753241967 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-35761 FILM NUMBER: 171014814 BUSINESS ADDRESS: STREET 1: 360 CENTRAL AVENUE STREET 2: SUITE 900 CITY: SAINT PETERSBURG STATE: FL ZIP: 33701 BUSINESS PHONE: 727-895-7737 MAIL ADDRESS: STREET 1: 360 CENTRAL AVENUE STREET 2: SUITE 900 CITY: SAINT PETERSBURG STATE: FL ZIP: 33701 FORMER COMPANY: FORMER CONFORMED NAME: FMG ACQUISITION CORP DATE OF NAME CHANGE: 20070531 8-K 1 form8-k30jun17.htm 8-K Document


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): August 8, 2017


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


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

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

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

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

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. £
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  £    No  R




Item 2.02. Results of Operations and Financial Condition

On August 8, 2017, United Insurance Holdings Corp. (the Company, we, our) issued a press release relating to our earnings for the second quarter ended June 30, 2017 (the Earnings Release). We have attached a copy of the Earnings Release as Exhibit 99.1. The information furnished under this Item 2.02, including Exhibit 99.1 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

We furnish Exhibit 99.1, a copy of the press release we issued on August 8, 2017, herewith.



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.
August 8, 2017
By:
/s/ B. Bradford Martz
 
 
B. Bradford Martz, Chief Financial Officer
(principal financial officer and principal accounting officer)





EXHIBIT INDEX

 
 
 
 
Exhibit
No.
 
Description
     
Press release issued by the Company on August 8, 2017



 EX-99.1 2 exh991er30jun17.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1

uhiclogorta05.gif

FOR IMMEDIATE RELEASE
 
UNITED INSURANCE HOLDINGS CORP. REPORTS FINANCIAL RESULTS
FOR ITS SECOND QUARTER ENDED JUNE 30, 2017
 
Company to Host Quarterly Conference Call at 9:00 A.M. on August 9, 2017

 
St. Petersburg, FL - August 8, 2017: 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 second quarter ended June 30, 2017.
($ in thousands, except per share)
Three Months Ended
 
Six Months Ended
June 30,
 
June 30,
 
2017
 
2016
 
Change
 
2017
 
2016
 
Change
Gross premiums written
$
352,347

 
$
210,756

 
67.2
 %
 
$
521,189

 
$
346,712

 
50.3
 %
Gross premiums earned
$
261,584

 
$
164,585

 
58.9
 %
 
$
443,649

 
$
311,087

 
42.6
 %
Net premiums earned
$
159,618

 
$
114,179

 
39.8
 %
 
$
266,801

 
$
215,549

 
23.8
 %
Total revenues
$
178,073

 
$
120,921

 
47.3
 %
 
$
300,706

 
$
228,482

 
31.6
 %
Earnings before income tax
$
12,650

 
$
15,210

 
(16.8
)%
 
$
18,588

 
$
19,540

 
(4.9
)%
Net income
$
7,257

 
$
9,841

 
(26.3
)%
 
$
11,156

 
$
12,792

 
(12.8
)%
Net income per diluted share
$
0.17

 
$
0.45

 
(62.2
)%
 
$
0.35

 
$
0.59

 
(40.7
)%
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of net income to operating income:
 
 
 
 
 
 
 
 
 
 
 
Plus: Merger expenses, net of tax
$
4,383

 
$
399

 
998.5
 %
 
$
4,481

 
$
447

 
902.5
 %
Plus: Non-cash amortization of intangible assets, net of tax
$
7,407

 
$
2,261

 
227.6
 %
 
$
8,573

 
$
2,710

 
216.3
 %
Less: Realized gains (losses), net of tax
$
(86
)
 
$
66

 
(230.3
)%
 
$
(314
)
 
$
242

 
(229.8
)%
Operating income
$
19,133

 
$
12,435

 
53.9
 %
 
$
24,524

 
$
15,707

 
56.1
 %
Operating income per diluted share
$
0.46

 
$
0.57

 
(19.3
)%
 
$
0.77

 
$
0.73

 
5.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
Book value per share
 
 
 
 

 
$
12.39

 
$
11.97

 
3.5
 %
 
"This was our first quarter of operations as a combined company with AmCo, and we are already seeing some of the scale and diversification benefits we expected from the merger," said John Forney, President & CEO of UPC Insurance. "Our team is working hard to make sure we realize all the upside inherent in this combination in the coming months and years."

Operating Return on Equity

Operating Return on Equity (see calculation below) is a ratio we calculate using non-GAAP measures. It is calculated by dividing the operating income for the most recent twelve months by the average shareholders’ equity for the most recent twelve months. Operating income is an after-tax non-GAAP measure that we calculate by excluding the effect of non-cash amortization of intangible assets, non-recurring expenses such as merger-related professional fees, and realized gains or losses on our investment portfolio from net income. In the opinion of the Company’s management, operating income, operating income per share and operating return on equity are meaningful indicators of our underwriting and operating results, since the excluded items are not necessarily indicative of operating trends. Internally,

1


the Company’s management uses operating income, operating income per share and operating return on equity to evaluate performance against historical results and establish financial targets on a consolidated basis. The following table reconciles operating return on equity to return on equity, the most directly comparable GAAP measure.

($ in thousands)
Three Months Ended
 
Six Months Ended
June 30,
 
June 30,
 
2017
 
2016
 
2017
 
2016
Net income
$
7,257

 
$
9,841

 
$
11,156

 
$
12,792

Return on equity based on GAAP net income (1)
9.1
%
 
16.4
%
 
7.0
%
 
10.7
%
 
 
 
 
 
 
 
 
Operating income
$
19,133

 
$
12,435

 
$
24,524

 
$
15,707

Operating return on equity (1)
24.1
%
 
20.7
%
 
15.4
%
 
13.1
%
(1) Return on equity is calculated on an annualized basis.

The calculation of the Company's underlying combined loss ratios are shown below.

($ in thousands, except per share)
Three Months Ended
 
Six Months Ended
June 30,
 
June 30,
 
2017
 
2016
 
Change
 
2017
 
2016
 
Change
Loss ratio, net(1)
54.5
 %
 
54.8
%
 
(0.3
) pts
 
56.3
 %
 
58.9
%
 
(2.6
) pts
Expense ratio, net(2)
48.7
 %
 
37.7
%
 
11.0
 pts
 
48.9
 %
 
38.0
%
 
10.9
 pts
Combined ratio (CR)(3)
103.2
 %
 
92.5
%
 
10.7
 pts
 
105.2
 %
 
96.9
%
 
8.3
 pts
Effect of current year catastrophe losses on CR
13.7
 %
 
3.3
%
 
10.4
 pts
 
12.1
 %
 
8.7
%
 
3.4
 pts
Effect of prior year (favorable) development on CR
(0.8
)%
 
0.4
%
 
(1.2
) pts
 
(0.7
)%
 
1.7
%
 
(2.4
) pts
Effect of ceding commission income on CR
6.6
 %
 
0.8
%
 
5.8
 pts
 
7.5
 %
 
0.8
%
 
6.7
 pts
Underlying combined ratio(4)(5)
83.7
 %
 
88.0
%
 
(4.3
) pts
 
86.3
 %
 
85.7
%
 
0.6
 pts
(1) Loss ratio, net is calculated as losses and loss adjustment expenses (LAE) 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 U.S. generally accepted accounting principles (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.
(5) Included in both the expense ratio and the combined ratio is $18.1 million and $20.1 million for the three and six months ended June 30, 2017, respectively, and $4.1 million and $4.9 million for the three and six months ended June 30, 2016, respectively, of merger professional fees and amortization expense predominately associated with the AmCo merger. Excluding these additional expenses, the Company would have reported an underlying combined ratio of 72.3% and 78.8% for the three and six months ended June 30, 2017, respectively, and 84.4% and 83.4% for the three and six months ended June 30, 2016, respectively.


Quarterly Financial Results
 
Net income for the second quarter of 2017 was $7.3 million, or $0.17 per diluted share, compared to net income of $9.8 million, or $0.45 per diluted share for the second quarter of 2016. The decrease in net earnings was primarily due to the increase in catastrophe losses for the second quarter of 2017 compared to the second quarter of 2016.

The Company's total gross written premium increased by $141.6 million, or 67.2%, to $352.3 million for the second quarter of 2017 from $210.8 million for the second quarter of 2016, primarily reflecting the Company's merger with AmCo Holdings Company (AmCo) on April 3, 2017, as well as organic growth in new and renewal business generated in the Company's Gulf and Florida regions. The breakdown of the quarter-over-quarter changes in both direct and assumed written premiums by region and gross written premium by line of business are shown in the table below.

2


($ in thousands)
 
Three Months Ended June 30,
 
 
 
 
 
 
2017
 
2016
 
Change
 
Growth %
Direct Written and Assumed Premium by Region (1)
 
 
 
 
 
 
 
 
Florida
 
$
199,736

 
$
110,381

 
$
89,355

 
81.0
%
Gulf
 
56,622

 
42,991

 
13,631

 
31.7

Northeast
 
40,842

 
32,103

 
8,739

 
27.2

Southeast
 
25,088

 
24,240

 
848

 
3.5

Total direct written premium by region
 
322,288

 
209,715

 
112,573

 
53.7
%
Assumed premium (2)
 
30,059

 
1,041

 
29,018

 
2,787.5

Total gross written premium by region
 
$
352,347

 
$
210,756

 
$
141,591

 
67.2
%
 
 
 
 
 
 
 
 
 
Gross Written Premium by Line of Business
 
 
 
 
 
 
 
 
Personal property
 
$
235,132

 
$
203,634

 
$
31,498

 
15.5
%
Commercial property
 
117,215

 
7,122

 
110,093

 
1,545.8

Total gross written premium by line of business
 
$
352,347

 
$
210,756

 
$
141,591

 
67.2
%
(1) Each region is comprised of the following states: Gulf includes Hawaii, Louisiana and Texas, Northeast includes Connecticut, Massachusetts, New Jersey, New York and Rhode Island, and Southeast includes Georgia, North Carolina and South Carolina.
(2) Assumed premium written for 2017 includes commercial property business assumed from an unaffiliated insurer and 2016 premium assumed includes homeowners business from Citizens Property Insurance Corporation and the Texas Windstorm Insurance Association.


Loss and LAE increased by $24.3 million, or 38.9%, to $86.9 million for the second quarter of 2017 from $62.6 million for the second quarter of 2016. Loss and LAE expense as a percentage of net earned premiums decreased 0.3 points to 54.5% for the quarter, compared to 54.8% for the same period last year. Excluding catastrophe losses and reserve development, the Company's gross underlying loss and LAE ratio for the quarter would have been 25.4%, a decrease of 10.1 points from 35.5% during the second quarter of 2016.

Policy acquisition costs increased by $17.6 million, or 68.4%, to $43.3 million for the second quarter of 2017 from $25.7 million for the second quarter of 2016. These costs vary directly with changes in gross premiums earned and were generally consistent with the Company's growth in premium production and higher average market commission rates outside of Florida.

Operating expenses increased by $0.5 million, or 7.6%, to $6.3 million for the second quarter of 2017 from $5.8 million for the second quarter of 2016, primarily due to increased costs related to the Company's ongoing growth.

General and administrative expenses increased by $16.7 million, or 145.1%, to $28.2 million for the second quarter of 2017 from $11.5 million for the second quarter of 2016, primarily due to non-recurring merger expenses and amortization costs related to the merger with AmCo.


















3


Combined Ratio Analysis

The calculation of the Company's underlying loss ratios is shown below.
($ in thousands)
Three Months Ended
 
Six Months Ended
June 30,
 
June 30,
2017
 
2016
 
Change
 
2017
 
2016
 
Change
Loss and LAE
$
86,938

 
$
62,611

 
$
24,327

 
$
150,271

 
$
126,869

 
$
23,402

% of Gross earned premiums
33.2
%
 
38.0
%
 
(4.8
) pts
 
33.9
%
 
40.8
%
 
(6.9
) pts
% of Net earned premiums
54.5
%
 
54.8
%
 
(0.3
) pts
 
56.3
%
 
58.9
%
 
(2.6
) pts
Less:
 
 
 
 
 
 
 
 
 
 
 
Current year catastrophe losses
$
21,798

 
$
3,720

 
$
18,078

 
$
32,410

 
$
18,776

 
$
13,634

Prior year reserve (favorable) development
(1,264
)
 
490

 
(1,754
)
 
(1,790
)
 
3,676

 
(5,466
)
Underlying Loss and LAE (1)
$
66,404

 
$
58,401

 
$
8,003

 
$
119,651

 
$
104,417

 
$
15,234

% of Gross earned premiums
25.4
%
 
35.5
%
 
(10.1
) pts
 
27.0
%
 
33.6
%
 
(6.6
) pts
% of Net earned premiums
41.6
%
 
51.1
%
 
(9.5
) pts
 
44.8
%
 
48.5
%
 
(3.7
) pts
(1) Underlying Loss and LAE is a non-GAAP financial measure and is reconciled above to Net Loss and LAE, the most directly comparable GAAP measure. Additional information regarding non-GAAP financial measures presented can be found in this press release is in the "Definitions of Non-GAAP Measures" section, below.

The calculation of the Company's underlying expense ratios is shown below.
($ in thousands)
Three Months Ended
 
Six Months Ended
June 30,
 
June 30,
2017
 
2016
 
Change
 
2017
 
2016
 
Change
Policy acquisition costs
$
43,320

 
$
25,721

 
$
17,599

 
$
78,756

 
$
52,753

 
$
26,003

Operating and underwriting
6,257

 
5,814

 
443

 
12,129

 
9,768

 
2,361

General and administrative
28,176

 
11,497

 
16,679

 
39,509

 
19,430

 
20,079

Total Operating Expenses
$
77,753

 
$
43,032

 
$
34,721

 
$
130,394

 
$
81,951

 
$
48,443

% of Gross earned premiums
29.7
%
 
26.1
%
 
3.6
 pts
 
29.4
%
 
26.3
%
 
3.1
 pts
% of Net earned premiums
48.7
%
 
37.7
%
 
11.0
 pts
 
48.9
%
 
38.0
%
 
10.9
 pts
Less:
 
 
 
 
 
 
 
 
 
 
 
Ceding commission income
$
10,562

 
$
946

 
$
9,616

 
$
20,094

 
$
1,765

 
$
18,329

Merger expenses and amortization
18,138

 
4,092

 
14,046

 
20,083

 
4,857

 
15,226

Underlying Expense (1)
$
49,053

 
$
37,994

 
$
11,059

 
$
90,217

 
$
75,329

 
$
14,888

% of Gross earned premiums
18.8
%
 
23.1
%
 
(4.3
) pts
 
20.3
%
 
24.2
%
 
(3.9
) pts
% of Net earned premiums
30.7
%
 
33.3
%
 
(2.6
) pts
 
33.8
%
 
34.9
%
 
(1.1
) pts
(1) Underlying Expense is a non-GAAP financial measure and is reconciled above to total operating expenses, 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.


Reinsurance Costs as a % of Earned Premium

Excluding the Company's flood business, for which it cedes 100% of the risk of loss, reinsurance costs in the second quarter of 2017 were 37.1% of gross premiums earned compared to 27.8% of gross premiums earned for the second quarter of 2016. Ceded earned premiums related to the Company's quota share reinsurance program that launched on December 1, 2016 were $43.7 million or 8.0% of the 9.3% increase to reinsurance costs as a percentage of gross premiums earned in the current quarter compared to the second quarter last year. The remaining 1.3% increase is related to our catastrophe reinsurance program.






4


Investment Portfolio Highlights
 
The Company's cash and investment holdings totaled $1.0 billion at June 30, 2017 compared to $679.3 million at December 31, 2016. UPC Insurance's cash and investment holdings consist of investments in U.S. Government and agency securities, corporate debt and 100% investment grade money market instruments. Fixed maturities represented approximately 91.4% of total investments at June 30, 2017 with a modified duration of 3.8 years compared to 93.5% at December 31, 2016 and a modified duration of 3.7 years.

Book Value Analysis

Book value per share increased 11.1% from $11.15 at December 31, 2016, to $12.39 at June 30, 2017 and underlying book value per share increased 10.3% from $11.11 at December 31, 2016 to $12.25 at June 30, 2017. An increase in the Company's retained earnings, along with an increase in paid in capital as a result of the AmCo merger, drove the increase in our book value per share and underlying book value per share. The increase in accumulated other comprehensive income, as shown in the table below, also impacted our underlying book value per share.
($ in thousands, except for per share data)
 
June 30,
 
December 31,
 
 
2017
 
2016
Book Value per Share
 
 
 
 
Numerator:
 
 
 
 
Common shareholders' equity
 
$
529,462

 
$
241,327

Denominator:
 
 
 
 
Total Shares Outstanding
 
42,741,004

 
21,646,614

Book Value Per Common Share
 
$
12.39

 
$
11.15

 
 
 
 
 
Book Value per Share, Excluding the Impact of Accumulated Other Comprehensive Income (AOCI)
 
 
 
 
Numerator:
 
 
 
 
Common shareholders' equity
 
$
529,462

 
$
241,327

Accumulated other comprehensive income
 
5,985

 
822

Shareholders' Equity, excluding AOCI
 
$
523,477

 
$
240,505

Denominator:
 
 
 
 
Total Shares Outstanding
 
42,741,004

 
21,646,614

Underlying Book Value Per Common Share(1)
 
$
12.25

 
$
11.11

(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.



Quarterly Cash Dividend

The Company today announced that its Board of Directors declared a cash dividend of $0.06 per share of common stock outstanding, payable in cash on August 28, 2017 to shareholders of record on August 21, 2017.


5


Definitions of Non-GAAP Measures

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

Combined ratio excluding the effects of current year catastrophe losses, reserve development, and ceding commission income earned (underlying combined ratio) is a non-GAAP ratio, which is computed by subtracting the effect of current year catastrophe losses, prior year development and ceding commission income earned related to our quota share reinsurance agreement from the combined ratio. We believe that this ratio is useful to investors and it is used by management to reveal the trends in our business that may be obscured by current year catastrophe losses, losses from lines in run-off and prior year development. Current year catastrophe losses cause our loss trends to vary significantly between periods as a result of their incidence of occurrence and magnitude, and can have a significant impact on the combined ratio. Prior year development is caused by unexpected loss development on historical reserves. Ceding commission income compensates the Company for expenses it incurs in generating the premium ceded under our quota share reinsurance agreement. We believe it is useful for investors to evaluate these components separately and in the aggregate when reviewing our performance. The most direct comparable GAAP measure is the combined ratio. The underlying combined ratio should not be considered a substitute for the combined ratio and does not reflect the overall profitability of our business.

Net Loss and LAE excluding the effects of current year catastrophe losses and reserve development (underlying Loss and LAE) is a non-GAAP measure which is computed by subtracting current year catastrophe losses and prior year reserve development from Loss and LAE. We use underlying loss and LAE figures to analyze our loss trends that may be impacted by current year catastrophe losses and prior year development on our reserves. As discussed previously, these two items can have a significant impact on our loss trend in a given period. The most direct comparable GAAP measure is net loss and LAE. The underlying loss and LAE measure should not be considered a substitute for net losses and LAE and does not reflect the overall profitability of our business.

Net Operating Expense excluding the effects of ceding commission income earned, merger expenses, and amortization of intangible assets (underlying expense) is a non-GAAP measure which is computed by subtracting ceding income earned related to our quota share reinsurance agreement, merger expenses and amortization from operating expenses. Ceding commission income compensates the Company for expenses it incurs in generating the premium ceded under our quota share reinsurance agreement. Merger expenses are directly related to past mergers and are not reflective of current period operating performance. Similarly, amortization expense is related to the amortization of intangible assets acquired through merger and therefore the expense does not arise through normal operations. We believe it is useful for investors to evaluate these components separately and in the aggregate when reviewing our performance. The most direct comparable GAAP measure is net expense ratio. The underlying expense measure should not be considered a substitute for the net expense ratio and does not reflect the overall profitability of our business.

Book value per share, excluding the impact of accumulated other comprehensive income (underlying book value per share), is a ratio that uses a non-GAAP measure. It is calculated by dividing common shareholders' equity after excluding accumulated other comprehensive income by total common shares outstanding plus dilutive potential common shares outstanding. We use 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. We believe the non-GAAP ratio is useful to investors because it eliminates the effect of interest rates that can fluctuate significantly from period to period and are generally driven by economic and financial factors which are not influenced by 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 our business.


6


Conference Call Details

Date and Time:    August 9, 2017 - 9:00 A.M. ET

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

Webcast:
To listen to the live webcast, please go to www.upcinsurance.com (Investor Relations) and click on the conference call link, or go to: http://upcinsurance.equisolvewebcast.com/q2-2017


About UPC Insurance

Founded in 1999, UPC Insurance is an insurance holding company that sources, writes and services residential property and casualty insurance policies using a network of independent agents and a group of wholly owned insurance subsidiaries. The Company currently writes policies in Connecticut, Florida, Georgia, Hawaii, Louisiana, Massachusetts, New Jersey, New York, North Carolina, Rhode Island, South Carolina and Texas, and is licensed to write in Alabama, Delaware, Maryland, Mississippi, New Hampshire, and Virginia. UPC Insurance also has a commercial residential product in Florida. The Company’s commercial presence was further expanded by the merger with Florida’s largest commercial property writer, American Coastal Insurance Company. 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. UPC Insurance is committed to financial stability and solvency.

Forward-Looking Statements

Statements in this press release, 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 that are subject to uncertainty. These statements are made subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements do not relate strictly to historical or current facts and may be identified by their use of words such as “may,” “will,” “expect,” "endeavor," "project," “believe,” “anticipate,” “intend,” “could,” “would,” “estimate,” or “continue” or the negative variations thereof or comparable terminology are intended to identify forward-looking statements. 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
SEC Reporting Manager
 
 
 
Senior Vice-President
(727) 895-7737 / jstrathman@upcinsurance.com
 
 
 
(212) 836-9606 / aprior@equityny.com

7


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

 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2017
 
2016
 
2017
 
2016
REVENUE:
 
 
 
 
 
 
 
 
Gross premiums written
 
$
352,347

 
$
210,756

 
$
521,189

 
$
346,712

Increase in gross unearned premiums
 
(90,763
)
 
(46,171
)
 
(77,540
)
 
(35,625
)
Gross premiums earned
 
261,584

 
164,585

 
443,649

 
311,087

Ceded premiums earned
 
(101,966
)
 
(50,406
)
 
(176,848
)
 
(95,538
)
Net premiums earned
 
159,618

 
114,179

 
266,801

 
215,549

Investment income
 
4,637

 
2,727

 
7,588

 
5,123

Net realized gains (losses)
 
(132
)
 
102

 
(483
)
 
372

Other revenue
 
13,950

 
3,913

 
26,800

 
7,438

Total revenues
 
$
178,073

 
$
120,921

 
$
300,706

 
$
228,482

EXPENSES:
 
 
 
 
 
 
 
 
Losses and loss adjustment expenses
 
86,938

 
62,611

 
150,271

 
126,869

Policy acquisition costs
 
43,320

 
25,721

 
78,756

 
52,753

Operating expenses
 
6,257

 
5,814

 
12,129

 
9,768

General and administrative expenses
 
28,176

 
11,497

 
39,509

 
19,430

Interest expense
 
752

 
116

 
1,511

 
191

Total expenses
 
165,443

 
105,759

 
282,176

 
209,011

Income before other income
 
12,630

 
15,162

 
18,530

 
19,471

Other income
 
20

 
48

 
58

 
69

Income before income taxes
 
12,650

 
15,210

 
18,588

 
19,540

Provision for income taxes
 
5,393

 
5,369

 
7,432

 
6,748

Net income
 
$
7,257

 
$
9,841

 
$
11,156

 
$
12,792

OTHER COMPREHENSIVE INCOME:
 
 
 
 
 
 
 
 
Change in net unrealized gains on investments
 
4,106

 
7,420

 
7,837

 
13,800

Reclassification adjustment for net realized investment losses (gains)
 
132

 
(102
)
 
483

 
(372
)
Income tax expense related to items of other comprehensive income
 
(1,615
)
 
(2,713
)
 
(3,157
)
 
(5,074
)
Total comprehensive income
 
$
9,880

 
$
14,446

 
$
16,319

 
$
21,146

 
 
 
 
 
 
 
 
 
Weighted average shares outstanding
 
 
 
 
 
 
 
 
Basic
 
41,799,041

 
21,423,739

 
31,691,267

 
21,385,220

Diluted
 
42,028,013

 
21,631,077

 
31,914,559

 
21,584,287

 
 
 
 
 
 
 
 
 
Earnings per share
 
 
 
 
 
 
 
 
Basic
 
$
0.17

 
$
0.46

 
$
0.35

 
$
0.60

Diluted
 
$
0.17

 
$
0.45

 
$
0.35

 
$
0.59

 
 
 
 
 
 
 
 
 
Dividends declared per share
 
$
0.06

 
$
0.06

 
$
0.12

 
$
0.11








8


Consolidated Balance Sheets
In thousands, except share amounts



 
 
June 30, 2017
 
December 31, 2016
ASSETS
 
 
 
 
Investments available for sale, at fair value:
 
 
 
 
Fixed maturities
 
$
716,183

 
$
494,516

Equity securities
 
59,431

 
28,398

Other investments
 
7,848

 
5,733

Total investments
 
$
783,462

 
$
528,647

Cash and cash equivalents
 
254,171

 
150,688

Accrued investment income
 
5,142

 
3,735

Property and equipment, net
 
19,623

 
17,860

Premiums receivable, net
 
93,401

 
38,883

Reinsurance recoverable on paid and unpaid losses
 
69,824

 
24,028

Prepaid reinsurance premiums
 
364,156

 
132,564

Goodwill
 
59,679

 
14,254

Deferred policy acquisition costs
 
94,865

 
65,473

Intangible assets
 
64,948

 
12,371

Other assets
 
12,000

 
11,183

Total Assets
 
$
1,821,271

 
$
999,686

LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
Liabilities:
 
 
 
 
Unpaid losses and loss adjustment expenses
 
$
204,694

 
$
140,855

Unearned premiums
 
578,587

 
372,223

Reinsurance payable
 
332,011

 
99,891

Other liabilities
 
122,752

 
91,215

Notes payable
 
53,765

 
54,175

Total Liabilities
 
$
1,291,809

 
$
758,359

Commitments and contingencies
 
 
 
 
Stockholders' Equity:
 
 
 
 
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding
 
—

 
—

Common stock, $0.0001 par value; 50,000,000 shares authorized; 42,953,087 and 21,858,697 issued; 42,741,004 and 21,646,614 outstanding, respectively

 
4

 
2

Additional paid-in capital
 
375,029

 
99,353

Treasury shares, at cost; 212,083 shares
 
(431
)
 
(431
)
Accumulated other comprehensive income
 
5,985

 
822

Retained earnings
 
148,875

 
141,581

Total Stockholders' Equity
 
$
529,462

 
$
241,327

Total Liabilities and Stockholders' Equity
 
$
1,821,271

 
$
999,686



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