United Insurance Holdings Corp. Announces Transfer of Business in Northeast to HCI Group, Inc.
United Insurance Holdings Corp. (NASDAQ: UIHC) has reached an agreement with HCI Group, Inc. to transfer its personal lines business in Connecticut, New Jersey, Massachusetts, and Rhode Island to HCI. This move will allow UIHC to focus on expanding its specialty commercial property business and enhance its financial stability. HCI will provide a 69.5% quota share reinsurance for UPCIC’s policies, with an estimated ceded earned premium of $37.6 million. The transaction also includes a stock payment of 100,000 shares and a cash payment of up to $3.1 million, subject to regulatory approvals.
- Transaction allows UIHC to focus on growing its specialty commercial property business.
- Reduction in operating leverage expected to improve statutory risk-based capital position.
- Estimated net ceding commissions between $13.8 million and $16.3 million enhance cash flow.
- Consideration includes both stock and cash payments, providing immediate financial benefits.
- UPCH will not be able to issue personal lines homeowners business in the four states until July 2024.
United Insurance Holdings Corp. (NASDAQ: UIHC), a property and casualty insurance holding company (“UPC”) and HCI Group, Inc. (NYSE: HCI), an InsurTech company with operations in insurance, software development and real estate (“HCI”), have reached an agreement in principle to transfer UPC’s personal lines business in four Northeast states of Connecticut, New Jersey, Massachusetts, and Rhode Island to HCI. UPC, and its wholly owned subsidiaries, United Property & Casualty Insurance Company (“UPCIC”) and Interboro Insurance Company, will continue writing policies and servicing policyholders in New York. The transaction will better enable UPC to focus on growing its specialty commercial property business and improve its statutory risk based capital position by reducing operating leverage.
Under the terms of the transaction, HCI will provide
As part of the transaction, HCI will also pay UPC consideration of 100,000 shares of HCI common stock. Additionally, HCI will pay UPC a cash payment of up to
The transaction is subject to negotiation of definitive agreements and customary closing conditions, including receipt of all applicable regulatory approvals. The quota share reinsurance agreement is expected to be effective no later than December 31, 2020.
Raymond James is acting as financial advisor to UPC in the transactions and Debevoise & Plimpton LLP is acting as legal advisor. Foley & Lardner LLP is acting as legal advisor to HCI.
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 may be “forward-looking statements.” These statements are made subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. 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.
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FAQ
What is the agreement between United Insurance Holdings Corp. and HCI Group related to?
What financial implications does the transfer of UPC's personal lines business have for UIHC?
When is the quota share reinsurance agreement expected to take effect for United Insurance Holdings Corp.?
What will HCI provide in terms of quota share reinsurance for UPCIC's policies?
How much cash will HCI pay to UPC as part of the transaction?
