EX-99.1 2 exh991er30jun20.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1

uhiclogorta21.gif

FOR IMMEDIATE RELEASE
 
UNITED INSURANCE HOLDINGS CORP. REPORTS FINANCIAL RESULTS
FOR ITS SECOND QUARTER ENDED JUNE 30, 2020
 
Company to Host Quarterly Conference Call at 5:00 P.M. ET on August 5, 2020
The information in this press release should be read in conjunction with an investor presentation that is available on our website at investors.upcinsurance.com/Presentations.
 
St. Petersburg, FL - August 5, 2020: 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, 2020.
($ in thousands, except for per share data)
Three Months Ended
 
Six Months Ended
June 30,
 
June 30,
 
2020
 
2019
 
Change
 
2020
 
2019
 
Change
Gross premiums written
$
439,651

 
$
449,762

 
(2.2
)%
 
$
774,834

 
$
768,321

 
0.8
 %
Gross premiums earned
$
344,139

 
$
330,025

 
4.3
 %
 
$
688,758

 
$
641,838

 
7.3
 %
Net premiums earned
$
185,482

 
$
190,404

 
(2.6
)%
 
$
377,078

 
$
371,126

 
1.6
 %
Total revenues
$
216,397

 
$
204,776

 
5.7
 %
 
$
392,701

 
$
407,097

 
(3.5
)%
Earnings (loss) before income tax
$
29,482

 
$
(3,605
)
 
NM

 
$
13,678

 
$
8,728

 
56.7
 %
Net income (loss) attributable to UIHC
$
24,274

 
$
(2,903
)
 
NM

 
$
11,551

 
$
6,566

 
75.9
 %
Net income (loss) available to UIHC common stockholders per diluted share
$
0.56

 
$
(0.07
)
 
NM

 
$
0.27

 
$
0.15

 
80.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of net income (loss) to core income:
 
 
 
 
 
 
 
 
 
 
 
Plus: Non-cash amortization of intangible assets
$
1,044

 
$
1,982

 
(47.3
)%
 
$
2,181

 
$
3,980

 
(45.2
)%
Less: Net realized gains (losses) on investment portfolio
$
59

 
$
(13
)
 
NM

 
$
(9
)
 
$
168

 
(105.4
)%
Less: Unrealized gains (losses) on equity securities
$
20,552

 
$
2,737

 
NM

 
$
(5,904
)
 
$
12,910

 
(145.7
)%
Less: Net tax impact(1)
$
(4,109
)
 
$
(186
)
 
NM

 
$
1,700

 
$
(2,275
)
 
174.7
 %
Core income (loss) (2)
$
8,816

 
$
(3,459
)
 
354.9
 %
 
$
17,945

 
$
(257
)
 
NM

Core income (loss) per diluted share(2)
$
0.20

 
$
(0.08
)
 
350.0
 %
 
$
0.42

 
$
(0.01
)
 
NM

 
 
 
 
 
 
 
 
 
 
 
 
Book value per share
 
 
 
 

 
$
12.27

 
$
12.54

 
(2.2
)%
NM = Not Meaningful

(1) In order to reconcile net income (loss) to the core income (loss) measure, we included the tax impact of all adjustments using the 21% corporate federal tax rate.
(2) Core income and core income per diluted share, measures that are not based on GAAP, are reconciled above to net income (loss) and net income (loss) per diluted share, respectively, the most directly comparable GAAP measures. Additional information regarding non-GAAP financial measures presented in this press release can be found in the "Definitions of Non-GAAP Measures" section, below.

“The second quarter saw a lot of change for me and for UIHC," said Dan Peed, CEO of UPC Insurance. "I am very excited to join the leadership team as Chairman and CEO effective July 1st.  As I have been a catastrophe underwriter for over 25 years, I am very comfortable we can continue to grow our non-cat underwriting margin and optimize catastrophe exposures and reinsurance coverages. The second quarter saw continuing improvement in our underlying combined ratio as rate increases earn their way through the portfolio, and underwriting and risk

1


selection actions take effect. While the second quarter was an active non-named catastrophe quarter, in line with our peers, we were still able to generate a core income of $.20 per share and $.30 per share excluding named storms.” 

“Our results for the second quarter continued to show improvement in several key metrics such as core income and the underlying combined ratio, and I’m grateful for the hard work and progress our team has made," said Brad Martz, President and CFO of UPC Insurance. "However, we are just getting started on the exciting next chapter of our Company’s evolution under Dan’s leadership and more work must be done. A hardening property insurance market provides UPC with a great opportunity to be more selective and optimize our risk portfolio for long-term profitability, so that’s what we intend to focus on.”

Return on Equity and Core Return on Equity

The calculations of the Company's return on equity and core return on equity are shown below.
($ in thousands)
Three Months Ended
 
Six Months Ended
June 30,
 
June 30,
 
2020
 
2019
 
2020
 
2019
Net income (loss) attributable to UIHC
$
24,274

 
$
(2,903
)
 
$
11,551

 
$
6,566

Return on equity based on GAAP net income (loss) attributable to UIHC (1)
18.8
%
 
(2.2
)%
 
4.5
%
 
2.5
 %
 
 
 
 
 
 
 
 
Core income (loss)
$
8,816

 
$
(3,459
)
 
$
17,945

 
$
(257
)
Core return on equity (1)(2)
6.8
%
 
(2.6
)%
 
6.9
%
 
(0.1
)%
(1) Return on equity for the three and six months ended June 30, 2020 and 2019 is calculated on an annualized basis by dividing the net income (loss) or core net income (loss) for the period by the average stockholders' equity for the trailing twelve months.
(2) Core return on equity, a measure that is not based on GAAP, is calculated based on core income (loss), which is reconciled on the first page of this press release to net income (loss), the most directly comparable GAAP measure. Additional information regarding non-GAAP financial measures presented in this press release can be found in the "Definitions of Non-GAAP Measures" section, below.

Combined Ratio and Underlying Ratio

The calculations of the Company's combined ratio and underlying combined ratio are shown below.
($ in thousands)
Three Months Ended
 
Six Months Ended
June 30,
 
June 30,
 
2020
 
2019
 
Change
 
2020
 
2019
 
Change
Loss ratio, net(1)
54.8
 %
 
61.1
%
 
(6.3
) pts
 
54.2
 %
 
59.5
%
 
(5.3
) pts
Expense ratio, net(2)
44.6
 %
 
47.1
%
 
(2.5
) pts
 
45.0
 %
 
46.5
%
 
(1.5
) pts
Combined ratio (CR)(3)
99.4
 %
 
108.2
%
 
(8.8
) pts
 
99.2
 %
 
106.0
%
 
(6.8
) pts
Effect of current year catastrophe losses on CR
16.1
 %
 
8.3
%
 
7.8
 pts
 
12.4
 %
 
7.4
%
 
5.0
 pts
Effect of prior year unfavorable (favorable) development on CR
(0.4
)%
 
8.1
%
 
(8.5
) pts
 
(0.5
)%
 
5.6
%
 
(6.1
) pts
Underlying combined ratio(4)
83.7
 %
 
91.8
%
 
(8.1
) pts
 
87.3
 %
 
93.0
%
 
(5.7
) pts
(1) Loss ratio, net is calculated as losses and loss adjustment expenses (LAE), net of losses ceded to reinsurers, relative to net premiums earned.
(2) Expense ratio, net is calculated as the sum of all operating expenses less interest expense relative to net premiums earned.
(3) Combined ratio is the sum of the loss ratio, net and expense ratio, net.
(4) Underlying combined ratio, a measure that is not based on GAAP, is reconciled above to the combined ratio, the most directly comparable GAAP measure. Additional information regarding non-GAAP financial measures presented in this press release can be found in the "Definitions of Non-GAAP Measures" section, below.

Impact of Coronavirus (COVID-19), Financial Status and Outlook

The COVID-19 pandemic has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans and restrictions, self-imposed quarantine periods, state and local shelter-in-place orders, business and government shutdowns and social distancing, have caused and continue to cause material disruption to businesses and economies globally. In addition, global equity markets have experienced and continue to experience significant volatility and weakness.

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The Company is committed to its employees, agents, customers and stockholders in its resolve to maintain a stable and secure business. The Company has continued to operate at nearly full capacity while taking the necessary steps to ensure the health and safety of its employees through adherence to CDC, state and local government work guidelines. In addition, the Company has converted to virtual sales processes to enable our agents to continue their activities.

The scope, severity and longevity of any potential business shutdowns or disruptions as a result of the COVID-19 outbreak is highly uncertain and cannot be predicted at this time, as new information may continue to emerge concerning the actions governments may take to contain or mitigate the spread of the virus or address its impact on individuals, businesses and the economy. The Company did not incur material claims or significant disruptions to the business for the three and six months ended June 30, 2020. The Company has not incurred any significant disruptions to its business operations, financial position, liquidity or its ability to service its policyholders as of the date of this press release, with the exceptions of fluctuations in our investment portfolios due to the volatility of the equity securities markets and an immaterial decline in new business premium generated from the Northeast region during the start of the second quarter of 2020 due to COVID-19. At this time, it is not possible to reasonably estimate the extent of the impact of the economic uncertainties on the financial results and conditions of the Company in future periods, but the Company will continue to respond to the COVID-19 pandemic and take reasonable measure to make sure customers continue to be served without interruption.

Quarterly Financial Results
 
Net income attributable to the Company for the second quarter of 2020 was $24.3 million, or $0.56 per diluted share, compared to net loss of $2.9 million, or $(0.07) per diluted share, for the second quarter of 2019. The increase in net income was primarily due to an increase in unrealized gains on equity securities, in conjunction with a decrease in loss and loss adjustment expenses (LAE) and a decrease in policy acquisition costs during the second quarter of 2020 compared to the second quarter of 2019. This was offset by a decline in gross written premium for the quarter as described below.

The Company's total gross written premium decreased by $10.1 million, or (2.2)%, to $439.7 million for the second quarter of 2020, from $449.8 million for the second quarter of 2019, driven by a decrease in assumed premiums which was offset by the impact of rate increases in Florida and organic policy growth in new and renewal business generated in the Gulf and Southeast regions. The breakdown of the quarter-over-quarter changes in both direct written and assumed premiums by region and gross written premium by line of business are shown in the table below.
($ in thousands)
 
Three Months Ended June 30,
 
 
 
 
 
 
2020
 
2019
 
Change $
 
Change %
Direct Written and Assumed Premium by Region (1)
 
 
 
 
 
 
 
 
Florida
 
$
263,108

 
$
243,124

 
$
19,984

 
8.2
 %
Gulf
 
74,083

 
63,723

 
10,360

 
16.3

Northeast
 
55,189

 
55,814

 
(625
)
 
(1.1
)
Southeast
 
35,206

 
32,004

 
3,202

 
10.0

Total direct written premium by region
 
427,586

 
394,665

 
32,921

 
8.3
 %
Assumed premium (2)
 
12,065

 
55,097

 
(43,032
)
 
(78.1
)
Total gross written premium by region
 
$
439,651

 
$
449,762

 
$
(10,111
)
 
(2.2
)%
 
 
 
 
 
 
 
 
 
Gross Written Premium by Line of Business
 
 
 
 
 
 
 
 
Personal property
 
$
307,965

 
$
286,106

 
$
21,859

 
7.6
 %
Commercial property
 
131,686

 
163,656

 
(31,970
)
 
(19.5
)
Total gross written premium by line of business
 
$
439,651

 
$
449,762

 
$
(10,111
)
 
(2.2
)%
(1) "Gulf" is comprised of Hawaii, Louisiana and Texas; "Northeast" is comprised of Connecticut, Massachusetts, New Jersey, New York and Rhode Island; and "Southeast" is comprised of Georgia, North Carolina and South Carolina.
(2) Assumed premium written for 2020 and 2019 primarily included commercial property business assumed from unaffiliated insurers.



3


Loss and LAE decreased by $14.6 million, or 12.6%, to $101.7 million for the second quarter of 2020, from $116.3 million for the second quarter of 2019. Loss and LAE expense as a percentage of net earned premiums decreased 6.3 points to 54.8% for the second quarter of 2020, compared to 61.1% for the second quarter of 2019. Excluding catastrophe losses and reserve development, the Company's gross underlying loss and LAE ratio for the second quarter of 2020 would have been 21.1%, a decrease of 4.7 points from 25.8% during the second quarter of 2019.

Policy acquisition costs decreased by $9 million, or 14.6%, to $52.6 million for the second quarter of 2020, from $61.6 million for the second quarter of 2019 primarily due to an increase in ceding commission income, as a result of changes made to the terms of the Company's quota share reinsurance agreements.

Operating and underwriting expenses increased by $2.8 million, or 25.0%, to $14.0 million for the second quarter of 2020, from $11.2 million for the second quarter of 2019, primarily due to increased investments in technology. This was partially offset by a decrease in travel related expenses, as all business-related travel was postponed during the current quarter as a result of closures and government limitations imposed during the pandemic.

General and administrative expenses decreased by $0.7 million, or 4.2%, to $16.1 million for the second quarter of 2020, from $16.8 million for the second quarter of 2019, primarily due to a decrease in legal and consulting expenses, as well as a decrease in amortization expense as all intangible assets acquired following the 2015 acquisition of Family Security Insurance Company, Inc. (FSIC) have been fully amortized in 2020.

Combined Ratio Analysis

The calculations of the Company's loss ratios and underlying loss ratios are shown below.
($ in thousands)
Three Months Ended
 
Six Months Ended
June 30,
 
June 30,
2020
 
2019
 
Change
 
2020
 
2019
 
Change
Loss and LAE
$
101,693

 
$
116,252

 
$
(14,559
)
 
$
204,530

 
$
220,799

 
$
(16,269
)
% of Gross earned premiums
29.5
%
 
35.2
%
 
(5.7
) pts
 
29.7
%
 
34.4
%
 
(4.7
) pts
% of Net earned premiums
54.8
%
 
61.1
%
 
(6.3
) pts
 
54.2
%
 
59.5
%
 
(5.3
) pts
Less:
 
 
 
 
 
 
 
 
 
 
 
Current year catastrophe losses
$
29,799

 
$
15,802

 
$
13,997

 
$
46,917

 
$
27,459

 
$
19,458

Prior year reserve unfavorable (favorable) development
(823
)
 
15,332

 
(16,155
)
 
(1,952
)
 
20,967

 
(22,919
)
Underlying loss and LAE (1)
$
72,717

 
$
85,118

 
$
(12,401
)
 
$
159,565

 
$
172,373

 
$
(12,808
)
% of Gross earned premiums
21.1
%
 
25.8
%
 
(4.7
) pts
 
23.2
%
 
26.9
%
 
(3.7
) pts
% of Net earned premiums
39.2
%
 
44.7
%
 
(5.5
) pts
 
42.3
%
 
46.4
%
 
(4.1
) pts
(1) Underlying loss and LAE is a non-GAAP financial measure and is reconciled above to loss and LAE, the most directly comparable GAAP measure. Additional information regarding non-GAAP financial measures presented in this press release can be found in the "Definitions of Non-GAAP Measures" section, below.

The calculations of the Company's expense ratios are shown below.
($ in thousands)
Three Months Ended
 
Six Months Ended
June 30,
 
June 30,
2020
 
2019
 
Change
 
2020
 
2019
 
Change
Policy acquisition costs
$
52,573

 
$
61,622

 
$
(9,049
)
 
$
111,448

 
$
116,868

 
$
(5,420
)
Operating and underwriting
13,977

 
11,199

 
2,778

 
23,681

 
21,410

 
2,271

General and administrative
16,121

 
16,802

 
(681
)
 
34,422

 
34,383

 
39

Total Operating Expenses
$
82,671

 
$
89,623

 
$
(6,952
)
 
$
169,551

 
$
172,661

 
$
(3,110
)
% of Gross earned premiums
24.0
%
 
27.2
%
 
(3.2
) pts
 
24.6
%
 
26.9
%
 
(2.3
) pts
% of Net earned premiums
44.6
%
 
47.1
%
 
(2.5
) pts
 
45.0
%
 
46.5
%
 
(1.5
) pts


4


Reinsurance Costs as a Percentage of Gross Earned Premium

Reinsurance costs as a percentage of gross earned premium in the second quarter of 2020 and 2019 were as follows:

 
2020
 
2019
Non-at-Risk
(2.6
)%
 
(2.4
)%
Quota Share
(13.0
)%
 
(9.2
)%
All Other
(30.5
)%
 
(30.7
)%
Total Ceding Ratio
(46.1
)%
 
(42.3
)%

The increase in this ratio was driven by the terms of the renewal of the Company's quota share agreement in 2019. From inception through May 2019, the quota share agreement only covered the Company's subsidiary United Property & Casualty Insurance Company at a ceding percentage of 20.0%. When the agreement was renewed on June 1, 2019, the Company modified the terms to add its subsidiary, FSIC and to increase the ceding percentage to 22.5%. This rate was effective through May 2020, and was maintained with the June 1, 2020 renewal of the quota share agreement.

Investment Portfolio Highlights

The Company's cash, restricted cash and investment holdings increased to $1.4 billion at June 30, 2020 from $1.3 billion at December 31, 2019. 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 87.7% of total investments at June 30, 2020, compared to 87.5% at December 31, 2019. At June 30, 2020 our fixed maturity investments had a modified duration of 3.5 years, compared to 3.4 years at December 31, 2019.

Book Value Analysis

Book value per share increased 5.0% from $11.69 at December 31, 2019, to $12.27 at June 30, 2020. Underlying book value per share increased 1.3% from $11.43 at December 31, 2019 to $11.58 at June 30, 2020. The increase in the Company's book value per share was due to an increase in the Company's retained earnings as the result of net income in the first half of 2020. As shown in the table below, removing the effect of AOCI decreases the Company's book value per share however, the Company still experienced an increase in underlying book value per share for the second quarter of 2020 as compared to year end.
($ in thousands, except for share and per share data)
 
June 30, 2020
 
December 31, 2019
 
 
 
Book Value per Share
 
 
 
 
Numerator:
 
 
 
 
Common stockholders' equity attributable to UIHC
 
$
528,267

 
$
503,138

Denominator:
 
 
 
 
Total Shares Outstanding
 
43,068,379

 
43,028,074

Book Value Per Common Share
 
$
12.27

 
$
11.69

 
 
 
 
 
Book Value per Share, Excluding the Impact of Accumulated Other Comprehensive Income (AOCI)
 
 
 
 
Numerator:
 
 
 
 
Common stockholders' equity attributable to UIHC
 
$
528,267

 
$
503,138

Less: Accumulated other comprehensive income (loss)
 
29,527

 
11,319

Stockholders' Equity, excluding AOCI
 
$
498,740

 
$
491,819

Denominator:
 
 
 
 
Total Shares Outstanding
 
43,068,379

 
43,028,074

Underlying Book Value Per Common Share(1)
 
$
11.58

 
$
11.43


5


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

Definitions of Non-GAAP Measures

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

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

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

Combined ratio excluding the effects of current year catastrophe losses and prior year reserve development (underlying combined ratio) is a non-GAAP measure, which 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 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. The Company believes it is useful for investors to evaluate these components 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 which 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 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 income (underlying book value per common share), is a non-GAAP measure which is computed by dividing common stockholders' equity after excluding accumulated other comprehensive income, by total common shares outstanding plus dilutive potential common shares outstanding. The Company uses the trend in book value per common share, excluding the

6


impact of accumulated other comprehensive income, in conjunction with book value per common share to identify and analyze the change in net worth attributable to management efforts between periods. The Company believes the 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 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 the Company's business.

Conference Call Details

Date and Time:    August 5, 2020 - 5:00 P.M. ET

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

Webcast:
To listen to the live webcast, please go to investors.upcinsurance.com (News & Market Data - Event Calendar) and click on the conference call link, or go to: https://event.webcasts.com/starthere.jsp?ei=1346727&tp_key=3df0ca5fb6.
An archive of the webcast will be available for a limited period of time thereafter.

Presentation:
The information in this press release should be read in conjunction with an investor presentation that is available on our website at investors.upcinsurance.com/Presentations.

About UPC Insurance

Founded in 1999, UPC Insurance is an insurance holding company that sources, writes and services personal and commercial residential property and casualty insurance policies using a group of wholly owned insurance subsidiaries and one majority owned insurance subsidiary through a variety of distribution channels. The Company currently writes policies in Connecticut, Florida, Georgia, Hawaii, Louisiana, Massachusetts, New Jersey, New York, North Carolina, Rhode Island, South Carolina and Texas. From its headquarters in St. Petersburg, UPC Insurance's team of dedicated professionals manages a completely integrated insurance company, including sales, underwriting, customer service and claims.

Forward-Looking Statements

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

 ### #### ###
CONTACT:
 
OR
 
INVESTOR RELATIONS:
United Insurance Holdings Corp.
 
 
 
The Equity Group
Jessica Strathman
 
 
 
Adam Prior
Director of Financial Reporting
 
 
 
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,
 
 
2020
 
2019
 
2020
 
2019
REVENUE:
 
 
 
 
 
 
 
 
Gross premiums written
 
$
439,651

 
$
449,762

 
$
774,834

 
$
768,321

Change in gross unearned premiums
 
(95,512
)
 
(119,737
)
 
(86,076
)
 
(126,483
)
Gross premiums earned
 
344,139

 
330,025

 
688,758

 
641,838

Ceded premiums earned
 
(158,657
)
 
(139,621
)
 
(311,680
)
 
(270,712
)
Net premiums earned
 
185,482

 
190,404

 
377,078

 
371,126

Net investment income
 
5,907

 
7,570

 
12,824

 
14,865

Net realized investment gains (losses)
 
59

 
(13
)
 
(9
)
 
168

Net unrealized gains (losses) on equity securities
 
20,552

 
2,737

 
(5,904
)
 
12,910

Other revenue
 
4,397

 
4,078

 
8,712

 
8,028

Total revenues
 
$
216,397

 
$
204,776

 
$
392,701

 
$
407,097

EXPENSES:
 
 
 
 
 
 
 
 
Losses and loss adjustment expenses
 
101,693

 
116,252

 
204,530

 
220,799

Policy acquisition costs
 
52,573

 
61,622

 
111,448

 
116,868

Operating expenses
 
13,977

 
11,199

 
23,681

 
21,410

General and administrative expenses
 
16,121

 
16,802

 
34,422

 
34,383

Interest expense
 
2,565

 
2,527

 
4,984

 
4,936

Total expenses
 
186,929

 
208,402

 
379,065

 
398,396

Income (loss) before other income
 
29,468

 
(3,626
)
 
13,636

 
8,701

Other income
 
14

 
21

 
42

 
27

Income (loss) before income taxes
 
29,482

 
(3,605
)
 
13,678

 
8,728

Provision (benefit) for income taxes
 
5,040

 
(808
)
 
1,752

 
1,947

Net income (loss)
 
$
24,442

 
$
(2,797
)
 
$
11,926

 
$
6,781

Less: Net income attributable to noncontrolling interests
 
168

 
106

 
375

 
215

Net income (loss) attributable to UIHC
 
$
24,274

 
$
(2,903
)
 
$
11,551

 
$
6,566

OTHER COMPREHENSIVE INCOME:
 
 
 
 
 
 
 
 
Change in net unrealized gains on investments
 
28,332

 
10,633

 
24,222

 
24,955

Reclassification adjustment for net realized investment losses (gains)
 
(59
)
 
13

 
9

 
(168
)
Income tax expense related to items of other comprehensive income
 
(6,858
)
 
(2,429
)
 
(5,875
)
 
(5,888
)
Total comprehensive income
 
$
45,857

 
$
5,420

 
$
30,282

 
$
25,680

Less: Comprehensive income attributable to noncontrolling interests
 
549

 
205

 
523

 
436

Comprehensive income attributable to UIHC
 
$
45,308

 
$
5,215

 
$
29,759

 
$
25,244

 
 
 
 
 
 
 
 
 
Weighted average shares outstanding
 
 
 
 
 
 
 
 
Basic
 
42,860,922

 
42,762,417

 
42,833,225

 
42,729,730

Diluted
 
43,055,115

 
42,762,417

 
43,041,623

 
43,097,244

 
 
 
 
 
 
 
 
 
Earnings available to UIHC common stockholders per share

 
 
 
 
 
 
 
 
Basic
 
$
0.57

 
$
(0.07
)
 
$
0.27

 
$
0.15

Diluted
 
$
0.56

 
$
(0.07
)
 
$
0.27

 
$
0.15

 
 
 
 
 
 
 
 
 
Dividends declared per share
 
$
0.06

 
$
0.06

 
$
0.12

 
$
0.12


8


Consolidated Balance Sheets
In thousands, except share amounts



 
 
June 30, 2020
 
December 31, 2019
ASSETS
 
 
 
 
Investments, at fair value:
 
 
 
 
Fixed maturities, available-for-sale
 
$
1,015,291

 
$
884,861

Equity securities
 
131,003

 
116,610

Other investments
 
12,010

 
10,252

Total investments
 
$
1,158,304

 
$
1,011,723

Cash and cash equivalents
 
229,631

 
215,469

Restricted cash
 
51,939

 
71,588

Accrued investment income
 
5,815

 
5,901

Property and equipment, net
 
37,949

 
32,728

Premiums receivable, net
 
113,288

 
86,568

Reinsurance recoverable on paid and unpaid losses
 
486,805

 
550,136

Ceded unearned premiums
 
498,838

 
270,034

Goodwill
 
73,045

 
73,045

Deferred policy acquisition costs
 
120,182

 
104,572

Intangible assets, net
 
23,898

 
26,079

Other assets
 
30,738

 
19,375

Total Assets
 
$
2,830,432

 
$
2,467,218

LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
Liabilities:
 
 
 
 
Unpaid losses and loss adjustment expenses
 
$
683,471

 
$
760,357

Unearned premiums
 
760,131

 
674,055

Reinsurance payable on premiums
 
460,807

 
166,131

Payments outstanding
 
45,552

 
57,555

Accounts payable and accrued expenses
 
88,061

 
78,592

Operating lease liability
 
2,369

 
324

Other liabilities
 
82,184

 
47,407

Notes payable, net
 
158,340

 
158,932

Total Liabilities
 
$
2,280,915

 
$
1,943,353

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; 50,000,000 shares authorized; 43,216,919 and 43,056,310 issued, respectively; 43,068,379 and 43,028,074 outstanding, respectively

 
4

 
4

Additional paid-in capital
 
392,633

 
391,852

Treasury shares, at cost; 212,083 shares
 
(431
)
 
(431
)
Accumulated other comprehensive income
 
29,527

 
11,319

Retained earnings
 
106,534

 
100,394

Total stockholders' equity attributable to UIHC stockholders
 
$
528,267

 
$
503,138

Noncontrolling interests
 
21,250

 
20,727

Total Stockholders' Equity
 
$
549,517

 
$
523,865

Total Liabilities and Stockholders' Equity
 
$
2,830,432

 
$
2,467,218


9