United Insurance Holdings Corp. Reports Financial Results for Its Fourth Quarter and Year Ended December 31, 2022
United Insurance Holdings Corp. (UIHC) reported disappointing financial results for Q4 and the full year 2022, reflecting severe losses primarily due to Hurricane Ian. For Q4 2022, the company posted a net loss of $294.9 million, or $6.84 per diluted share, compared to a net loss of $2.3 million, or $0.05 per diluted share in Q4 2021. Gross premiums written declined by 14.7% to $229.2 million, driven by reduced personal lines premiums and the transition of some business segments. The total gross written premium for 2022 decreased by 15.4% to $1.12 billion. Book value per share plummeted to $(4.16) from $7.20 in 2021, significantly affecting shareholder equity.
- Commercial lines operating segment reported pre-tax earnings of $3.7 million in Q4 2022, despite challenges.
- Increased revenues in the commercial lines segment driven by a $17.4 million rise in net premiums earned.
- Net loss attributable to UIHC for 2022 was $468 million, a sharp increase from $57.9 million in 2021.
- Gross premiums written decreased by 15.4%, indicating a significant decline in business activity.
- Book value per share decreased dramatically to $(4.16) in 2022 from $7.20 in 2021, impacting shareholder equity.
- Combined ratio soared to 308.8% for Q4 2022, significantly above the industry norm.
Company to Host Quarterly Conference Call at
The information in this press release should be read in conjunction with an investor presentation that is available on the Company's website at investors.upcinsurance.com/Presentations.
($ in thousands, except for per share data) |
Three Months Ended |
|
Year Ended |
||||||||||||||||||
|
|
|
|||||||||||||||||||
|
|
2022 |
|
|
|
2021 |
|
|
Change |
|
|
2022 |
|
|
|
2021 |
|
|
Change |
||
Gross premiums written |
$ |
229,239 |
|
|
$ |
268,890 |
|
|
(14.7 |
)% |
|
$ |
1,124,063 |
|
|
$ |
1,329,445 |
|
|
(15.4 |
)% |
Gross premiums earned |
$ |
296,323 |
|
|
$ |
341,886 |
|
|
(13.3 |
)% |
|
$ |
1,223,183 |
|
|
$ |
1,408,443 |
|
|
(13.2 |
)% |
Net premiums earned |
$ |
134,177 |
|
|
$ |
145,081 |
|
|
(7.5 |
)% |
|
$ |
462,626 |
|
|
$ |
589,761 |
|
|
(21.6 |
)% |
Total revenues |
$ |
113,475 |
|
|
$ |
154,544 |
|
|
(26.6 |
)% |
|
$ |
455,422 |
|
|
$ |
634,527 |
|
|
(28.2 |
)% |
Loss before income tax |
$ |
(294,616 |
) |
|
$ |
(6,202 |
) |
|
NM |
|
|
$ |
(442,625 |
) |
|
$ |
(83,857 |
) |
|
NM |
|
Net loss attributable to UIHC |
$ |
(294,914 |
) |
|
$ |
(2,316 |
) |
|
NM |
|
|
$ |
(467,999 |
) |
|
$ |
(57,919 |
) |
|
NM |
|
Net loss available to UIHC common stockholders per diluted share |
$ |
(6.84 |
) |
|
$ |
(0.05 |
) |
|
NM |
|
|
$ |
(10.87 |
) |
|
$ |
(1.35 |
) |
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Reconciliation of net loss to core loss: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Plus: Non-cash amortization of intangible assets and goodwill impairment (1) |
$ |
812 |
|
|
$ |
811 |
|
|
0.1 |
% |
|
$ |
16,817 |
|
|
$ |
3,555 |
|
|
NM |
|
Less: Net realized gains (losses) on investment portfolio |
$ |
(30,226 |
) |
|
$ |
(2,349 |
) |
|
NM |
|
|
$ |
(32,082 |
) |
|
$ |
3,567 |
|
|
NM |
|
Less: Unrealized gains (losses) on equity securities |
$ |
3,285 |
|
|
$ |
1,528 |
|
|
NM |
|
|
$ |
(6,585 |
) |
|
$ |
3,237 |
|
|
NM |
|
Less: Net tax impact (2) |
$ |
5,828 |
|
|
$ |
343 |
|
|
NM |
|
|
$ |
11,652 |
|
|
$ |
(682 |
) |
|
NM |
|
Core loss (3) (4) |
$ |
(272,989 |
) |
|
$ |
(1,027 |
) |
|
NM |
|
|
$ |
(424,167 |
) |
|
$ |
(60,486 |
) |
|
NM |
|
Core loss per diluted share (3) (4) |
$ |
(6.33 |
) |
|
$ |
(0.02 |
) |
|
NM |
|
|
$ |
(9.85 |
) |
|
$ |
(1.41 |
) |
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Book value per share |
|
|
|
|
|
|
$ |
(4.16 |
) |
|
$ |
7.20 |
|
|
NM |
|
|||||
NM = Not Meaningful |
||
(1) |
For the year ended |
|
(2) |
In order to reconcile net loss to the core loss measures, the Company included the tax impact of all adjustments using the |
|
(3) |
For the three months and year ended |
|
(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. |
|
"We are deeply disappointed with our fourth quarter results driven by Hurricane Ian loss development that ultimately exhausted the reinsurance available to our subsidiary,
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 |
|
Year Ended |
||||||||||||
|
|
|
|||||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
||||
Net loss attributable to UIHC |
$ |
(294,914 |
) |
|
$ |
(2,316 |
) |
|
$ |
(467,999 |
) |
|
$ |
(57,919 |
) |
Return on equity based on GAAP net loss attributable to UIHC (1) |
|
NM |
|
|
|
(2.7 |
)% |
|
|
NM |
|
|
|
(16.9 |
)% |
|
|
|
|
|
|
|
|
||||||||
Core loss |
$ |
(272,989 |
) |
|
$ |
(1,027 |
) |
|
$ |
(424,167 |
) |
|
$ |
(60,486 |
) |
Core return on equity (1)(2) |
|
NM |
|
|
|
(1.2 |
)% |
|
|
NM |
|
|
|
(17.6 |
)% |
NM = Not Meaningful |
||
(1) |
Return on equity for the three months and year ended |
|
(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.
($ in thousands) |
Three Months Ended |
|
Year Ended |
||||||||||||
|
|
|
|||||||||||||
|
2022 |
|
2021 |
|
Change |
|
2022 |
|
2021 |
|
Change |
||||
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
||||
Loss ratio, net(1) |
252.6 |
% |
|
58.9 |
% |
|
193.7 pts |
|
137.8 |
% |
|
71.6 |
% |
|
66.2 pts |
Expense ratio, net(2)(3) |
56.2 |
% |
|
50.2 |
% |
|
6.0 pts |
|
56.5 |
% |
|
48.7 |
% |
|
7.8 pts |
Combined ratio (CR)(4) |
308.8 |
% |
|
109.1 |
% |
|
199.7 pts |
|
194.3 |
% |
|
120.3 |
% |
|
74.0 pts |
Effect of current year catastrophe losses on CR |
146.5 |
% |
|
8.6 |
% |
|
137.9 pts |
|
61.2 |
% |
|
19.3 |
% |
|
41.9 pts |
Effect of prior year unfavorable (favorable) development on CR |
43.9 |
% |
|
(2.4 |
)% |
|
46.3 pts |
|
24.3 |
% |
|
4.7 |
% |
|
19.6 pts |
Underlying combined ratio(5) |
118.4 |
% |
|
102.9 |
% |
|
15.5 pts |
|
108.8 |
% |
|
96.3 |
% |
|
12.5 pts |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Personal Lines |
|
|
|
|
|
|
|
|
|
|
|
||||
Loss ratio, net(1) |
430.3 |
% |
|
71.2 |
% |
|
359.1 pts |
|
225.9 |
% |
|
88.2 |
% |
|
137.7 pts |
Expense ratio, net(2)(3) |
69.4 |
% |
|
48.1 |
% |
|
21.3 pts |
|
67.6 |
% |
|
46.2 |
% |
|
21.4 pts |
Combined ratio (CR)(4) |
499.7 |
% |
|
119.3 |
% |
|
380.4 pts |
|
293.5 |
% |
|
134.4 |
% |
|
159.1 pts |
Effect of current year catastrophe losses on CR |
252.5 |
% |
|
11.5 |
% |
|
241.0 pts |
|
98.4 |
% |
|
25.0 |
% |
|
73.4 pts |
Effect of prior year unfavorable (favorable) development on CR |
85.5 |
% |
|
(1.3 |
)% |
|
86.8 pts |
|
49.5 |
% |
|
7.7 |
% |
|
41.8 pts |
Underlying combined ratio(5) |
161.7 |
% |
|
109.1 |
% |
|
52.6 pts |
|
145.6 |
% |
|
101.7 |
% |
|
43.9 pts |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial Lines |
|
|
|
|
|
|
|
|
|
|
|
||||
Loss ratio, net(1) |
49.0 |
% |
|
31.9 |
% |
|
17.1 pts |
|
39.8 |
% |
|
31.6 |
% |
|
8.2 pts |
Expense ratio, net(2) |
40.5 |
% |
|
54.3 |
% |
|
(13.8) pts |
|
43.2 |
% |
|
53.5 |
% |
|
(10.3) pts |
Combined ratio (CR)(4) |
89.5 |
% |
|
86.2 |
% |
|
3.3 pts |
|
83.0 |
% |
|
85.1 |
% |
|
(2.1) pts |
Effect of current year catastrophe losses on CR |
24.9 |
% |
|
2.2 |
% |
|
22.7 pts |
|
19.8 |
% |
|
5.5 |
% |
|
14.3 pts |
Effect of prior year favorable development on CR |
(3.9 |
)% |
|
(4.9 |
)% |
|
1.0 pts |
|
(3.6 |
)% |
|
(2.5 |
)% |
|
(1.1) pts |
Underlying combined ratio(5) |
68.5 |
% |
|
88.9 |
% |
|
(20.4) pts |
|
66.8 |
% |
|
82.1 |
% |
|
(15.3) 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 |
|
(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 |
|
Year Ended |
|||||||||||||||||||
|
|
|
||||||||||||||||||||
|
2022 |
|
|
|
2021 |
|
|
Change |
|
|
2022 |
|
|
|
2021 |
|
|
Change |
||||
Loss and LAE |
$ |
338,977 |
|
|
$ |
85,520 |
|
|
$ |
253,457 |
|
$ |
637,647 |
|
|
$ |
422,134 |
|
|
$ |
215,513 |
|
% of Gross earned premiums |
|
114.4 |
% |
|
|
25.0 |
% |
|
89.4 pts |
|
|
52.1 |
% |
|
|
30.0 |
% |
|
22.1 pts |
|||
% of Net earned premiums |
|
252.6 |
% |
|
|
58.9 |
% |
|
193.7 pts |
|
|
137.8 |
% |
|
|
71.6 |
% |
|
66.2 pts |
|||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Current year catastrophe losses |
$ |
196,581 |
|
|
$ |
12,515 |
|
|
$ |
184,066 |
|
$ |
283,190 |
|
|
$ |
113,740 |
|
|
$ |
169,450 |
|
Prior year reserve unfavorable (favorable) development |
|
58,876 |
|
|
|
(3,488 |
) |
|
|
62,364 |
|
|
112,636 |
|
|
|
27,856 |
|
|
|
84,780 |
|
Underlying loss and LAE (1) |
$ |
83,520 |
|
|
$ |
76,493 |
|
|
$ |
7,027 |
|
$ |
241,821 |
|
|
$ |
280,538 |
|
|
$ |
(38,717 |
) |
% of Gross earned premiums |
|
28.2 |
% |
|
|
22.4 |
% |
|
5.8 pts |
|
|
19.8 |
% |
|
|
19.9 |
% |
|
(0.1) pts |
|||
% of Net earned premiums |
|
62.2 |
% |
|
|
52.7 |
% |
|
9.5 pts |
|
|
52.3 |
% |
|
|
47.6 |
% |
|
4.7 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 |
|
Year Ended |
||||||||||||||||||||
|
|
|
|||||||||||||||||||||
2022 |
|
2021 |
|
Change |
|
2022 |
|
2021 |
|
Change |
|||||||||||||
Policy acquisition costs |
$ |
60,285 |
|
|
$ |
44,501 |
|
|
$ |
15,784 |
|
|
$ |
154,233 |
|
|
$ |
173,574 |
|
|
$ |
(19,341 |
) |
Operating and underwriting |
|
8,750 |
|
|
|
14,124 |
|
|
|
(5,374 |
) |
|
|
43,632 |
|
|
|
56,257 |
|
|
|
(12,625 |
) |
General and administrative |
|
6,427 |
|
|
|
14,278 |
|
|
|
(7,851 |
) |
|
|
63,317 |
|
|
|
57,212 |
|
|
|
6,105 |
|
Total Operating Expenses |
$ |
75,462 |
|
|
$ |
72,903 |
|
|
$ |
2,559 |
|
|
$ |
261,182 |
|
|
$ |
287,043 |
|
|
$ |
(25,861 |
) |
% of Gross earned premiums |
|
25.5 |
% |
|
|
21.3 |
% |
|
4.2 pts |
|
|
21.4 |
% |
|
|
20.4 |
% |
|
1.0 pts |
||||
% of Net earned premiums |
|
56.2 |
% |
|
|
50.2 |
% |
|
6.0 pts |
|
|
56.5 |
% |
|
|
48.7 |
% |
|
7.8 pts |
||||
Quarterly Financial Results
Net loss attributable to the Company for the fourth quarter of 2022 was
The Company's total gross written premium decreased by
($ in thousands) |
|
Three Months Ended
|
|
|
|
|
|||||||
|
|
2022 |
|
2021 |
|
Change $ |
|
Change % |
|||||
Direct Written and Assumed Premium by Region (1) |
|
|
|
|
|
|
|
|
|||||
|
|
$ |
202,211 |
|
$ |
190,220 |
|
$ |
11,991 |
|
|
6.3 |
% |
Gulf |
|
|
14,480 |
|
|
41,983 |
|
|
(27,503 |
) |
|
(65.5 |
) |
Northeast |
|
|
11,705 |
|
|
19,741 |
|
|
(8,036 |
) |
|
(40.7 |
) |
Southeast |
|
|
740 |
|
|
16,834 |
|
|
(16,094 |
) |
|
(95.6 |
) |
Total direct written premium by region |
|
|
229,136 |
|
|
268,778 |
|
|
(39,642 |
) |
|
(14.7 |
) |
Assumed premium (2) |
|
|
103 |
|
|
112 |
|
|
(9 |
) |
|
(8.0 |
) |
Total gross written premium by region |
|
$ |
229,239 |
|
$ |
268,890 |
|
$ |
(39,651 |
) |
|
(14.7 |
)% |
|
|
|
|
|
|
|
|
|
|||||
Gross Written Premium by Line of Business |
|
|
|
|
|
|
|
|
|||||
Commercial property (3) |
|
|
122,345 |
|
|
93,832 |
|
|
28,513 |
|
|
30.4 |
|
Personal property |
|
|
106,894 |
|
|
175,058 |
|
|
(68,164 |
) |
|
(38.9 |
) |
Total gross written premium by line of business |
|
$ |
229,239 |
|
$ |
268,890 |
|
$ |
(39,651 |
) |
|
(14.7 |
)% |
(1) |
"Gulf" is comprised of |
|
(2) |
Assumed premium written for 2022 and 2021 primarily included commercial property business assumed from unaffiliated insurers. |
|
(3) |
Commercial written premium for 2022 and 2021 was primarily written in |
Loss and LAE increased by
Policy acquisition costs increased by
Operating and underwriting expenses decreased by
General and administrative expenses decreased by
Personal Lines Operating Segment Highlights
Pre-tax losses attributable to the Company's personal lines operating segment totaled
Quarter-over-quarter, policy acquisition costs increased
Commercial Lines Operating Segment Highlights
Pre-tax earnings attributable to the Company's commercial lines operating segment totaled
This increased expense was partially offset by increased revenues of
Year to Date Financial Results
Net loss attributable to the Company for the year ended
The Company's total gross written premium decreased by
($ in thousands) |
|
Year Ended |
|
|
|
|
|||||||
|
|
2022 |
|
2021 |
|
Change $ |
|
Change % |
|||||
Direct Written and Assumed Premium by Region (1) |
|
|
|
|
|
|
|
|
|||||
|
|
$ |
885,202 |
|
$ |
852,711 |
|
$ |
32,491 |
|
|
3.8 |
% |
Gulf |
|
|
162,786 |
|
|
225,013 |
|
|
(62,227 |
) |
|
(27.7 |
) |
Southeast |
|
|
42,780 |
|
|
93,188 |
|
|
(50,408 |
) |
|
(54.1 |
) |
Northeast |
|
|
32,769 |
|
|
158,217 |
|
|
(125,448 |
) |
|
(79.3 |
) |
Total direct written premium by region |
|
|
1,123,537 |
|
|
1,329,129 |
|
|
(205,592 |
) |
|
(15.5 |
) |
Assumed premium (2) |
|
|
526 |
|
|
316 |
|
|
210 |
|
|
66.5 |
|
Total gross written premium by region |
|
$ |
1,124,063 |
|
$ |
1,329,445 |
|
$ |
(205,382 |
) |
|
(15.4 |
)% |
|
|
|
|
|
|
|
|
|
|||||
Gross Written Premium by Line of Business |
|
|
|
|
|
|
|
|
|||||
Personal property |
|
$ |
615,819 |
|
$ |
907,207 |
|
$ |
(291,388 |
) |
|
(32.1 |
)% |
Commercial property (3) |
|
|
508,244 |
|
|
422,238 |
|
|
86,006 |
|
|
20.4 |
|
Total gross written premium by line of business |
|
$ |
1,124,063 |
|
$ |
1,329,445 |
|
$ |
(205,382 |
) |
|
(15.4 |
)% |
(1) |
"Gulf" is comprised of |
|
(2) |
Assumed premium written for 2022 and 2021 primarily included commercial property business assumed from unaffiliated insurers. |
|
(3) |
Commercial written premium for 2022 and 2021 was primarily written in |
Loss and LAE increased by
Policy acquisition costs decreased by
Operating and underwriting expenses decreased by
General and administrative expenses increased by
Personal Lines Operating Segment Highlights
Pre-tax losses attributable to the Company's personal lines operating segment totaled
Year-over-year, policy acquisition costs and operating expenses decreased
Commercial Lines Operating Segment Highlights
Pre-tax earnings attributable to the Company's commercial lines operating segment totaled
This increase was partially offset by increased expenses of
Reinsurance Costs as a Percentage of Gross Earned Premium
Reinsurance costs as a percentage of gross earned premium in the fourth quarter of 2022 and 2021 were as follows:
|
2022 |
|
2021 |
Non-at-Risk |
(2.1)% |
|
(2.2)% |
Quota Share |
(17.0)% |
|
(23.2)% |
All Other |
(35.6)% |
|
(32.2)% |
Total Ceding Ratio |
(54.7)% |
|
(57.6)% |
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 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. While premiums decreased quarter-over-quarter, the Company's ceding ratio related to its catastrophe program increased, driven by the Company's decrease in gross premiums earned quarter-over-quarter.
Reinsurance costs as a percentage of gross earned premium in the fourth 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 |
(3.3)% |
|
(3.1)% |
|
(0.5)% |
|
(0.3)% |
Quota Share |
(19.4)% |
|
(25.6)% |
|
(13.5)% |
|
(17.4)% |
All Other |
(35.8)% |
|
(29.0)% |
|
(35.5)% |
|
(39.5)% |
Total Ceding Ratio |
(58.5)% |
|
(57.7)% |
|
(49.5)% |
|
(57.2)% |
Investment Portfolio Highlights
The Company's cash, restricted cash and investment holdings decreased from
At
Book Value Analysis
Book value per common share decreased
($ in thousands, except for share and per share data) |
|
|
|
|
||||
|
|
|
||||||
Book Value per Share |
|
|
|
|
||||
Numerator: |
|
|
|
|
||||
Common stockholders' equity attributable to UIHC |
|
$ |
(180,183 |
) |
|
$ |
312,406 |
|
Denominator: |
|
|
|
|
||||
Total Shares Outstanding |
|
|
43,280,173 |
|
|
|
43,370,442 |
|
Book Value Per Common Share |
|
$ |
(4.16 |
) |
|
$ |
7.20 |
|
|
|
|
|
|
||||
Book Value per Share, Excluding the Impact of Accumulated Other Comprehensive Income (AOCI) |
|
|
|
|
||||
Numerator: |
|
|
|
|
||||
Common stockholders' equity attributable to UIHC |
|
$ |
(180,183 |
) |
|
$ |
312,406 |
|
Less: Accumulated other comprehensive loss |
|
|
(30,947 |
) |
|
|
(6,531 |
) |
Stockholders' Equity, excluding AOCI |
|
$ |
(149,236 |
) |
|
$ |
318,937 |
|
Denominator: |
|
|
|
|
||||
Total Shares Outstanding |
|
|
43,280,173 |
|
|
|
43,370,442 |
|
Underlying Book Value Per Common Share(1) |
|
$ |
(3.45 |
) |
|
$ |
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
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, including goodwill, 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: |
|
||
|
|
||
Participant Dial-In: |
( |
||
|
(International): 201-493-6744 |
||
|
|
||
Webcast: |
To listen to the live webcast, please go to http://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=1594437&tp_key=d17c7e1d47 |
||
|
|
||
|
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
Founded in 1999,
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
Consolidated Statements of Comprehensive Loss |
||||||||||||||||
In thousands, except share and per share amounts |
||||||||||||||||
|
|
Three Months Ended |
|
Year Ended |
||||||||||||
|
|
|
|
|
||||||||||||
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
REVENUE: |
|
|
|
|
|
|
|
|
||||||||
Gross premiums written |
|
$ |
229,239 |
|
|
$ |
268,890 |
|
|
$ |
1,124,063 |
|
|
$ |
1,329,445 |
|
Change in gross unearned premiums |
|
|
67,084 |
|
|
|
72,996 |
|
|
|
99,120 |
|
|
|
78,998 |
|
Gross premiums earned |
|
|
296,323 |
|
|
|
341,886 |
|
|
|
1,223,183 |
|
|
|
1,408,443 |
|
Ceded premiums earned |
|
|
(162,146 |
) |
|
|
(196,805 |
) |
|
|
(760,557 |
) |
|
|
(818,682 |
) |
Net premiums earned |
|
|
134,177 |
|
|
|
145,081 |
|
|
|
462,626 |
|
|
|
589,761 |
|
Net investment income |
|
|
4,124 |
|
|
|
3,035 |
|
|
|
14,011 |
|
|
|
13,772 |
|
Net realized investment gains (losses) |
|
|
(30,226 |
) |
|
|
(2,349 |
) |
|
|
(32,082 |
) |
|
|
3,567 |
|
Net unrealized gains (losses) on equity securities |
|
|
3,285 |
|
|
|
1,528 |
|
|
|
(6,585 |
) |
|
|
3,237 |
|
Other revenue |
|
|
2,115 |
|
|
|
7,249 |
|
|
|
17,452 |
|
|
|
24,190 |
|
Total revenues |
|
$ |
113,475 |
|
|
$ |
154,544 |
|
|
$ |
455,422 |
|
|
$ |
634,527 |
|
EXPENSES: |
|
|
|
|
|
|
|
|
||||||||
Losses and loss adjustment expenses |
|
|
338,977 |
|
|
|
85,520 |
|
|
|
637,647 |
|
|
|
422,134 |
|
Policy acquisition costs |
|
|
60,285 |
|
|
|
44,501 |
|
|
|
154,233 |
|
|
|
173,574 |
|
Operating expenses |
|
|
8,750 |
|
|
|
14,124 |
|
|
|
43,632 |
|
|
|
56,257 |
|
General and administrative expenses |
|
|
6,427 |
|
|
|
14,278 |
|
|
|
63,317 |
|
|
|
57,212 |
|
Interest expense |
|
|
2,448 |
|
|
|
2,381 |
|
|
|
9,613 |
|
|
|
9,391 |
|
Total expenses |
|
|
416,887 |
|
|
|
160,804 |
|
|
|
908,442 |
|
|
|
718,568 |
|
Loss before other income |
|
|
(303,412 |
) |
|
|
(6,260 |
) |
|
|
(453,020 |
) |
|
|
(84,041 |
) |
Other income |
|
|
8,796 |
|
|
|
58 |
|
|
|
10,395 |
|
|
|
184 |
|
Loss before income taxes |
|
|
(294,616 |
) |
|
|
(6,202 |
) |
|
|
(442,625 |
) |
|
|
(83,857 |
) |
Provision (benefit) for income taxes |
|
|
298 |
|
|
|
(3,333 |
) |
|
|
25,485 |
|
|
|
(23,989 |
) |
Net Loss |
|
$ |
(294,914 |
) |
|
$ |
(2,869 |
) |
|
$ |
(468,110 |
) |
|
$ |
(59,868 |
) |
Less: Net loss attributable to noncontrolling interests |
|
|
— |
|
|
|
(553 |
) |
|
|
(111 |
) |
|
|
(1,949 |
) |
Net loss attributable to UIHC |
|
$ |
(294,914 |
) |
|
$ |
(2,316 |
) |
|
$ |
(467,999 |
) |
|
$ |
(57,919 |
) |
OTHER COMPREHENSIVE LOSS: |
|
|
|
|
|
|
|
|
||||||||
Change in net unrealized gains (losses) on investments |
|
|
3,632 |
|
|
|
(7,171 |
) |
|
|
(56,600 |
) |
|
|
(18,267 |
) |
Reclassification adjustment for net realized investment losses (gains) |
|
|
30,226 |
|
|
|
2,349 |
|
|
|
32,082 |
|
|
|
(3,567 |
) |
Income tax benefit related to items of other comprehensive income loss |
|
|
— |
|
|
|
1,156 |
|
|
|
49 |
|
|
|
5,264 |
|
Total comprehensive loss |
|
$ |
(261,056 |
) |
|
$ |
(6,535 |
) |
|
$ |
(492,579 |
) |
|
$ |
(76,438 |
) |
Less: Comprehensive loss attributable to noncontrolling interests |
|
|
— |
|
|
|
(694 |
) |
|
|
(164 |
) |
|
|
(2,295 |
) |
Comprehensive loss attributable to UIHC |
|
$ |
(261,056 |
) |
|
$ |
(5,841 |
) |
|
$ |
(492,415 |
) |
|
$ |
(74,143 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
|
43,101,872 |
|
|
|
42,973,753 |
|
|
|
43,052,070 |
|
|
|
42,948,850 |
|
Diluted |
|
|
43,101,872 |
|
|
|
42,973,753 |
|
|
|
43,052,070 |
|
|
|
42,948,850 |
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings available to UIHC common stockholders per share |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
$ |
(6.84 |
) |
|
$ |
(0.05 |
) |
|
$ |
(10.87 |
) |
|
$ |
(1.35 |
) |
Diluted |
|
$ |
(6.84 |
) |
|
$ |
(0.05 |
) |
|
$ |
(10.87 |
) |
|
$ |
(1.35 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Dividends declared per share |
|
$ |
— |
|
|
$ |
0.06 |
|
|
$ |
0.06 |
|
|
$ |
0.24 |
|
Consolidated Balance Sheets |
||||||||
In thousands, except share amounts |
||||||||
|
|
|
|
|
||||
ASSETS |
|
|
|
|
||||
Investments, at fair value: |
|
|
|
|
||||
Fixed maturities, available-for-sale |
|
$ |
376,463 |
|
|
$ |
663,602 |
|
Equity securities |
|
|
39,020 |
|
|
|
37,958 |
|
Other investments |
|
|
16,628 |
|
|
|
18,006 |
|
Total investments |
|
$ |
432,111 |
|
|
$ |
719,566 |
|
Cash and cash equivalents |
|
|
229,893 |
|
|
|
212,024 |
|
Restricted cash |
|
|
53,717 |
|
|
|
33,254 |
|
Accrued investment income |
|
|
3,062 |
|
|
|
3,296 |
|
Property and equipment, net |
|
|
19,591 |
|
|
|
31,561 |
|
Premiums receivable, net |
|
|
86,036 |
|
|
|
79,166 |
|
Reinsurance recoverable on paid and unpaid losses |
|
|
1,632,293 |
|
|
|
997,120 |
|
Ceded unearned premiums |
|
|
213,028 |
|
|
|
430,631 |
|
|
|
|
59,476 |
|
|
|
73,045 |
|
Deferred policy acquisition costs |
|
|
58,933 |
|
|
|
38,520 |
|
Intangible assets, net |
|
|
12,770 |
|
|
|
18,375 |
|
Other assets |
|
|
38,442 |
|
|
|
62,015 |
|
Total Assets |
|
$ |
2,839,352 |
|
|
$ |
2,698,573 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
||||
Liabilities: |
|
|
|
|
||||
Unpaid losses and loss adjustment expenses |
|
$ |
1,946,938 |
|
|
$ |
1,084,450 |
|
Unearned premiums |
|
|
545,820 |
|
|
|
644,940 |
|
Reinsurance payable on premiums |
|
|
59,896 |
|
|
|
248,625 |
|
Payments outstanding |
|
|
215,057 |
|
|
|
114,524 |
|
Accounts payable and accrued expenses |
|
|
74,503 |
|
|
|
76,258 |
|
Operating lease liability |
|
|
1,689 |
|
|
|
1,934 |
|
Other liabilities |
|
|
23,159 |
|
|
|
39,324 |
|
Notes payable, net |
|
|
152,473 |
|
|
|
156,561 |
|
Total Liabilities |
|
$ |
3,019,535 |
|
|
$ |
2,366,616 |
|
Commitments and contingencies |
|
|
|
|
||||
Stockholders' Equity: |
|
|
|
|
||||
Preferred stock, |
|
|
— |
|
|
|
— |
|
Common stock, |
|
|
4 |
|
|
|
4 |
|
Additional paid-in capital |
|
|
395,631 |
|
|
|
394,268 |
|
|
|
|
(431 |
) |
|
|
(431 |
) |
Accumulated other comprehensive loss |
|
|
(30,947 |
) |
|
|
(6,531 |
) |
Retained earnings (deficit) |
|
|
(544,440 |
) |
|
|
(74,904 |
) |
Total stockholders' equity attributable to UIHC stockholders |
|
$ |
(180,183 |
) |
|
$ |
312,406 |
|
Noncontrolling interests |
|
|
— |
|
|
|
19,551 |
|
Total Stockholders' Equity |
|
$ |
(180,183 |
) |
|
$ |
331,957 |
|
Total Liabilities and Stockholders' Equity |
|
$ |
2,839,352 |
|
|
$ |
2,698,573 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20230302005711/en/
Director of Financial Reporting
(727) 895-7737 / abaty@upcinsurance.com
OR
INVESTOR RELATIONS:
The Equity Group
Vice President
(212) 836-9623 / kdaly@equityny.com
Source:
FAQ
What were United Insurance Holdings Corp.'s Q4 2022 financial results?
How did Hurricane Ian impact UIHC's financial performance?
What is the current book value per share for UIHC?
What changes occurred in United Insurance Holdings Corp.'s gross premiums written?
What is the combined ratio for UIHC in Q4 2022?
