SCHEDULE II. CONDENSED FINANCIAL INFORMATION OF REGISTRANT



Condensed Balance Sheets

	December 31,
	2018			2017
Assets
Fixed maturities, available for sale, at fair value	$	45,372		$	26,583
Equity securities, available for sale, at fair value	14,178			—
Cash and cash equivalents	4,567			79,331
Accrued investment income	192			—
Investment in subsidiaries	643,526			579,313
Goodwill	10,157			10,157
Property and equipment, net	8,054			7,761
Other assets	14,163			12,439
Total Assets	$	740,209		$	715,584

Liabilities
Intercompany payable	$	48,103		$	26,128
Accounts payable and accrued expenses	443			967
Long-term notes payable	151,294			151,364
Total Liabilities	199,840			178,459

Stockholders’ Equity
Common stock	4			4
Additional paid-in capital	389,141			387,145
Treasury stock	(431		)	(431		)
Accumulated other comprehensive income (loss)	(9,030		)	9,221
Retained earnings	140,546			141,186
Total UIHC Stockholders’ Equity	520,230			537,125
Noncontrolling Interests	20,139			—
Total Stockholders’ Equity	540,369			537,125
Total Liabilities and Stockholders’ Equity	$	740,209		$	715,584

SCHEDULE II. CONDENSED FINANCIAL INFORMATION OF REGISTRANT, CONTINUED



Condensed Statements of Comprehensive Income (Loss)

	Years Ended December 31,
	2018			2017			2016
Revenues
Net income from subsidiaries (equity method)	$	10,124		$	14,000		$	13,296
Net realized investment loss	(160		)	—			(14		)
Net investment income	2,353			53			88
Net unrealized loss on equity securities	(1,223		)	—			—
Total revenues	11,094			14,053			13,370

Expenses
Operating and underwriting	198			348			337
General and administrative	3,416			9,078			11,805
Interest expense	9,557			2,939			496
Total expenses	13,171			12,365			12,638
Income (loss) before other income	(2,077		)	1,688			732
Other income	11			75			60
Income (loss) before income taxes	(2,066		)	1,763			792
Provision for income tax benefit	(2,460		)	(8,382		)	(4,906		)
Net income	$	394		$	10,145		$	5,698
Less: Net income attributable to NCI	104			—			—
Net income attributable to UIHC	290			10,145			5,698
Unrealized gain (loss) on investments	(22,264		)	10,647			(629		)
Reclassification adjustments - losses (gains)	(1,655		)	(67		)	(547		)
Income tax (expense) benefit related to other items of comprehensive income	5,703			(2,181		)	378
Total comprehensive income (loss)	$	(17,822	)	$	18,544		$	4,900
Less: Comprehensive income attributable to NCI	139			—			—
Total comprehensive income (loss) attributable to UIHC	$	(17,961	)	$	18,544		$	4,900

SCHEDULE II. CONDENSED FINANCIAL INFORMATION OF REGISTRANT, CONTINUED



Condensed Statements of Cash Flows

	Year Ended December 31,
	2018			2017			2016
OPERATING ACTIVITIES
Net income	$	394		$	10,145		$	5,698
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Dividends received from subsidiaries	51,764			—			—
Depreciation and amortization	1,079			1,208			682
Bond amortization	(6		)	—			—
Unrealized loss on equities	1,223			—			—
Net realized investment losses	160			—			14
Deferred income taxes, net	(570		)	(777		)	382
Stock based compensation	2,414			2,613			1,947
Changes in operating assets and liabilities:
Accrued investment income	(192		)	—			3
Other assets	(908		)	359			(22,553		)
Accounts payable and accrued expenses	(524		)	447			—
Intercompany payable	21,975			11,597			5,874
Other liabilities	—			(1,905		)	1,969
Net cash provided by (used in) operating activities	76,809			23,687			(5,984		)
INVESTING ACTIVITIES
Proceeds from sales of investments available for sale	37,315			—			34,551
Purchases of investments available for sale	(72,635		)	(26,584		)	(70		)
Additional investment in subsidiaries	(104,125		)	(23,283		)	(68,563		)
Cost of property and equipment acquired	(1,032		)	(449		)	(1,797		)
Net cash used in investing activities	(140,477		)	(50,316		)	(35,879		)
FINANCING ACTIVITIES
Tax withholding payment related to net settlement of equity awards	(418		)	(287		)	(270		)
Proceeds from borrowings	—			150,000			42,951
Repayments of borrowings	(347		)	(38,897		)	—
Payments of debt issuance costs	(63		)	(3,264		)	—
Dividends	(10,268		)	(8,991		)	(4,974		)
Net cash provided by (used in) financing activities	(11,096		)	98,561			37,707
Increase in cash	(74,764		)	71,932			(4,156		)
Cash and cash equivalents at beginning of period	79,331			7,399			11,555
Cash and cash equivalents at end of period	$	4,567		$	79,331		$	7,399

Notes to Condensed Financial Statements - Basis of Presentation

The Company’s investment in subsidiaries is stated at cost plus equity in the undistributed earnings of subsidiaries since the date of acquisition. The Company’s share of net income of its subsidiaries is included in income using the equity method. These financial statements should be read in conjunction with UPC Insurance’s consolidated financial statements contained in Part II, Item 8 of this Form 10-K.