Financial and Operational Highlights
* Fourth quarter 2008 net income of $6.8 million, or $0.65 per
diluted share
* 2008 net income of $33.4 million, or $3.08 per diluted share
* Total number of homeowner policyholders increased 28% in 2008
to 80,400
* At December 31, 2008, the Company had cash and cash equivalents
of $31.7 million, total assets of $233.1 million and
stockholders' equity of $42.9 million
ST. PETERSBURG, Fla., March 31, 2009 (GLOBE NEWSWIRE) -- United Insurance Holdings Corp. (OTCBB:UIHC)(OTCBB:UIHCW)(OTCBB:UIHCU) ("United" or the "Company"), an underwriter of primarily homeowners insurance in the State of Florida, today announced financial results for its fourth quarter and year-ended December 31, 2008 (see attached tables).
United's CEO, Don Cronin stated, "We are pleased to report strong results for the year ended December 31, 2008, a transformational year for our company. Recently, some competitors, including a large national carrier announced that they are leaving the state, and we feel that United has prudently and appropriately positioned itself for continued growth in Florida's fragmented insurance market. We have been selective with our new business and policy assumption strategy, further strengthened relationships with our reinsurance partners, and maintained a steady investment plan. Let me discuss in detail some of the factors currently affecting United and the Florida insurance market:
* United increased its total number of policyholders in 2008 by 28%
to 80,400, which are diversified throughout the state and not
concentrated in any one region. During 2008, United's gross
premium written was $141.6 million compared to $145.1 million in
2007. Although we experienced healthy policy growth during 2008,
our total gross written premium declined in 2008 due to the wind
mitigation credits that all property and casualty insurance
companies were required to implement and provide to policyholders.
During 2008, the effect of these credits lowered our average
premium per policy by approximately 25% to $1,705 at December 31,
2008 compared to $2,260 at December 31, 2007. Given that the full
effect of the wind mitigation credits has been applied to all of
our policies during 2008, we do not anticipate that these credits
will have a material effect on our gross written premium during
2009.
* We continue to be selective in our assumption of insurance policies
from Florida's state run insurer, Citizens Property Insurance
Corporation ("Citizens"). United was granted approval to assume up
to 75,000 policies, but has remained disciplined in assuming only
those policies that meet our strict underwriting standards. The
Company assumed only 7,000 policies from Citizens during 2008, and
2,200 policies through the first quarter of 2009. The Company has
no plans to assume any additional policies until after the 2009
hurricane season.
* We continue to benefit from experience. United was founded in
1999, and has successfully remained profitable in each year of its
operating history, including years of unprecedented storm activity
in 2004 and 2005. This is especially important in establishing
new and cultivating existing relationships with our reinsurance
partners, who we believe prefer to support seasoned companies that
are well-capitalized and have operated through difficult
conditions."
Nick Griffin, United's CFO added, "The Company continues to maintain a conservative strategy emphasizing liquidity and preservation of invested assets. This strategy has served us well during the last ten years and most notably during the tumultuous last 12 months in the financial markets. Our net investment income and realized gains totaled $7.7 million for 2008, compared to $8.1 million for 2007 with a similarly sized portfolio of assets and cash equivalents. Our investments consist mainly of U.S. treasuries, government agencies, high-quality corporate debt in non-financial sectors and money market instruments. We feel that this asset base and our conservative approach, along with our historically strong cash flow from operations positions United for a successful future. We expect that this will not only continue to provide us with the opportunity to gain market share organically, but potentially capitalize on acquisition opportunities."
2008 Fourth Quarter Financial Review
Gross written premium increased 27.5% to $34.7 million for the three months ended December 31, 2008, compared to $27.3 million for the three months ended December 31, 2007, as the result of continued new business and policies assumed from Citizens. For the fourth quarter of 2008, losses and loss adjustment expenses ("LAE") were $3.1 million, compared to $7.2 million for the three months ended December 31, 2007. The decrease is primarily due to a reduction in loss reserves as a result of favorable loss development on current and prior year claims. The Company attributes this favorable loss development to our effective in-house claims staff and to our conservative loss reserving practices.
Net income for the fourth quarter of 2008 was $6.8 million, or $0.65 per diluted share, compared to net income of $7.9 million, or $0.67 per diluted share, for the quarter ended December 31, 2007.
2008 Year End Financial Review
Gross written premium decreased 2.4% to $141.6 million for the year ended December 31, 2008, compared to $145.1 million for the prior year. During 2008 and 2007, the Company received a bonus from Citizens for assuming and retaining policies during 2004 and 2005. This policy assumption bonus, which includes interest income earned on the bonus amounts, was $6.5 million in 2008 compared to $13.6 million in 2007. Since Citizens no longer provides such a bonus, the Company does not expect to receive bonuses related to policies assumed in current or future years. Losses and LAE incurred in 2008 was $28.1 million compared to $25.7 million in 2007. This change is primarily attributable to $3.3 million of incurred losses and LAE related to claims resulting from Tropical Storm Fay.
Net income for 2008 was $33.4 million, or $3.08 per diluted share, compared to net income of $39.6 million, or $3.37 per diluted share, for the year ended December 31, 2007. The Company also included a pro forma computation of its net income, which takes into account conversion of certain subsidiaries into C-Corporations for income tax purposes. For 2009, all United subsidiaries will be treated as C-Corporations for income tax purposes.
Balance Sheet Highlights
As of December 31, 2008, United's cash and cash equivalents were $31.7 million; total investments were $126.2 million; total assets were $233.1 million; and stockholders' equity of $42.9 million.
Conference Call
The Company will discuss these results in a conference call on Tuesday, March 31, 2009 at 11:00 a.m. EDT.
The dial-in numbers are:
(866) 861-6730 (U.S.)
(706) 679-0882 (INTERNATIONAL)
The conference call will also be broadcast live via the "Investor Relations" section of United's website at www.upcic.com. Once at the "Investor Relations" section, interested parties should click on "Events & Presentations." To listen to the live call, please go to the website at least 15 minutes early to register, download and install any necessary audio software. If you are unable to participate in the live call, the conference call will be archived and can be accessed for approximately 90 days.
About United Insurance Holdings Corp.
Founded in 1999, United Property and Casualty Insurance Company, a subsidiary of United Insurance Holdings Corp., underwrites primarily homeowners insurance in the state of Florida. From its headquarters in St. Petersburg, United's team of dedicated employees manages a completely integrated insurance company, including sales, underwriting, policyholder service and claims. The Company distributes its homeowners, dwelling, fire and flood products through over 200 agency groups and conducts business through four wholly-owned subsidiaries. Homeowners insurance constitutes the majority of United's premiums and policies.
Forward Looking Statements
This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about United. Forward-looking statements are statements that are not historical facts. Such forward-looking statements, based upon the current beliefs and expectations of United or United's management, are subject to risks and uncertainties, which could cause actual results to differ from the forward-looking statements. Please refer to the documents filed by United Insurance Holdings Corp. with the SEC, specifically the most recent report on Form 10-Q, and our registration statement on Form S-4, which identify important risk factors which could cause actual results to differ from those contained in the forward-looking statements. The information set forth herein should be read in light of such risks. United assumes no obligation to update the information contained in this press release.
Condensed Consolidated Statements of Operations
(Unaudited)
In thousands, except share and per share amounts
Three months ended Year ended
December 31, December 31,
---------------------- ----------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
REVENUE:
Gross premiums
written $ 34,748 $ 27,253 $ 141,556 $ 145,050
Gross premiums
ceded (2,750) (967) (59,251) (58,511)
---------- ---------- ---------- ----------
Net premiums
written 31,998 26,286 82,305 86,539
Decrease (increase)
in net unearned
premiums (11,228) (3,127) (1,161) (1,181)
---------- ---------- ---------- ----------
Net premiums
earned 20,770 23,159 81,144 85,358
Net investment
income 1,583 1,815 6,632 7,751
Net realized
investment gains
(losses) (40) 409 1,116 322
Commission and fees 748 326 2,778 2,414
Policy assumption
bonus 51 1,981 6,493 13,556
Other revenue 568 543 2,899 3,200
---------- ---------- ---------- ----------
Total revenue 23,680 28,233 101,062 112,601
---------- ---------- ---------- ----------
EXPENSES:
Losses and loss
adjustment expenses 3,089 7,211 28,063 25,662
Policy acquisition
costs 4,438 3,971 17,616 17,022
Operating and
underwriting
expenses 1,922 4,716 6,460 9,404
Salaries and wages 1,131 985 3,466 2,792
General and
administrative
expenses 1,311 99 3,607 2,078
Interest expense 848 714 2,811 6,078
---------- ---------- ---------- ----------
Total expenses 12,739 17,696 62,023 63,036
---------- ---------- ---------- ----------
Income before other
income (expense) 10,941 10,537 39,039 49,565
Other income and
(expenses) -- (1,626) 2,564 (1,626)
---------- ---------- ---------- ----------
Income before income
taxes 10,941 8,911 41,603 47,939
Provision for
income taxes 4,092 1,012 8,184 8,297
---------- ---------- ---------- ----------
Net income $ 6,849 $ 7,899 $ 33,419 $ 39,642
========== ========== ========== ==========
Weighted average
shares outstanding
Basic 10,548,932 10,548,932 10,548,932 10,548,932
========== ========== ========== ==========
Diluted 10,548,932 11,775,088 10,854,743 11,775,088
========== ========== ========== ==========
Earnings per share
Basic $ 0.65 $ 0.75 $ 3.17 $ 3.76
========== ========== ========== ==========
Diluted $ 0.65 $ 0.67 $ 3.08 $ 3.37
========== ========== ========== ==========
PRO FORMA COMPUTATION OF INCOME TAXES FOR ALL ENTITIES FOR ALL
HISTORICAL PERIODS PRIOR TO THE MERGER (Unaudited):
Historical income
before income taxes $ 8,911 $ 41,603 $ 47,939
Pro forma provision
for income taxes 3,437 16,048 18,492
---------- ---------- ----------
Pro forma net income $ 5,474 $ 25,555 $ 29,447
========== ========== ==========
Pro forma earnings
per share
Basic $ 0.52 $ 2.42 $ 2.79
========== ========== ==========
Diluted $ 0.46 $ 2.35 $ 2.50
---------- ---------- ----------
Condensed Consolidated Balance Sheets
(Unaudited)
In thousands, except share and par value amounts
December 31,
--------------------
2008 2007
--------- ---------
ASSETS
Investments available for sale, at fair value:
Fixed maturities $ 115,332 $ 107,410
Equity securities 10,586 6,072
Other long-term investments 300 300
--------- ---------
Total investments 126,218 113,782
Cash and cash equivalents 31,689 56,852
Accrued investment income 1,392 1,385
Premiums receivable, net 10,216 9,966
Reinsurance recoverable on paid and unpaid
losses 22,604 16,816
Prepaid reinsurance premiums 26,518 26,345
Deferred policy acquisition costs, net 9,075 7,547
Property and equipment at cost, net 294 108
Capitalized software, net 1,232 --
Deferred income tax assets, net 2,744 4,733
Other assets 1,139 4,892
--------- ---------
Total Assets $ 233,121 $ 242,426
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Unpaid losses and loss adjustment expenses 40,098 36,005
Unearned premiums 74,384 73,051
Reinsurance payable 16,694 10,852
Accrued tax distribution payable -- 9,227
Advance premiums 2,152 2,396
Accounts payable and accrued expenses 12,871 13,858
Current portion of notes payable 4,621 11,000
Shares subject to mandatory redemption -- 2,564
Income taxes payable 1,366 2,303
Other liabilities 1,326 2,238
Long-term notes payable, net 36,682 32,833
--------- ---------
Total Liabilities 190,194 196,327
--------- ---------
Commitments and contingencies (Note 14) -- --
Stockholders' Equity:
Preferred stock, $0.0001 par value; 1,000,000
shares authorized; none issued or outstanding
for 2008 and 2007
----------------------------------------------
Common stock, $0.0001 par value; 50,000,000
shares authorized; 10,548,932 issued and
outstanding for 2008 and 2007 1 1
Additional paid-in capital -- 7,463
Accumulated other comprehensive income (loss) (1,490) 744
Retained earnings 44,416 37,891
--------- ---------
Total Stockholders' Equity 42,927 46,099
--------- ---------
Total Liabilities and Stockholders' Equity $233,121 $242,426
--------- ---------
CONTACT: United Insurance Holdings Corp.
Nick Griffin, Chief Financial Officer
(727) 895-7737
ngriffin@upcic.com
The Equity Group Inc.
INVESTOR RELATIONS:
Adam Prior, Vice President
(212) 836-9606
aprior@equityny.com