Second Quarter Highlights
-- Gross premiums written increased 40% over last year's second quarter to
$58.1 million, and increased 57% over the first quarter of 2009
-- Homeowner policies-in-force increased 44% over June 30, 2008 to 96,500,
and increased 12% over March 31, 2009
-- Book value per share increased 16% to $4.73 at June 30, 2009, compared
to $4.07 at December 31, 2008
-- Quarterly dividend of $0.05 per share was approved by the Board of
Directors and will be payable on September 15, 2009 to shareholders of
record on August 31, 2009
ST. PETERSBURG, Fla.--(BUSINESS WIRE)--
United Insurance Holdings Corp. (OTCBB: UIHC; UIHCW; UIHCU) ("United"
or "the Company"), a property and casualty insurance holding company,
today reported its unaudited financial results for the three- and
six-month period ended June 30, 2009. For the second quarter, the
Company's gross premiums written increased 40% to $58.1 million compared
to $41.5 million during the second quarter of 2008. United also
experienced an increase in gross premiums written of 35% for the
six-month period ended June 30, 2009, compared to the prior year. Gross
premiums written increased primarily as a result of the growth in new
business and improved policy retention. The Company expects that the
seasonality of its business will cause gross premiums written to level
off in the third quarter.
"Our premium growth in the second quarter once again demonstrates that
we can generate strong performance while still maintaining a disciplined
underwriting approach regarding risk exposure." said Don Cronin,
President and Chief Executive Officer of United. "Our policyholders
recognize the value of an insurer that provides its customers with
quality products and services, so they are responding by choosing our
policies."
The Company received approval for a 12.7% overall rate increase for its
homeowner product that will become effective on September 15, 2009, and
also received approval for a 15% rate increase for its dwelling/fire
product that will become effective on October 15, 2009.
On June 1, 2009, United entered into new reinsurance agreements with a
total cost of $83.6 million for the 2009 storm season, an increase of
$33.8 million compared to the total reinsurance costs for the 2008 storm
season. These increased reinsurance costs, which have impacted all
property and casualty insurers in the State of Florida, will be
reflected ratably in the Company's earnings through May 2010. United
therefore expects to file for a rate adjustment to become effective
January 1, 2010, to mitigate the impact of the higher reinsurance costs.
"Raising rates is certainly not a step that we take lightly," noted Mr.
Cronin, "but given the current reinsurance climate, it is a step that is
necessary so that we remain able to quickly respond to our
policyholders' needs, as we have since our inception."
Financial Review
Net premiums earned during the second quarter were $21.9 million,
compared to $19.7 million during the second quarter of 2008. The
increase in the year-to-date period over the same period in 2008 was
$3.1 million, primarily a result of the growth in net premiums written
over the past twelve months.
Losses and loss adjustment expenses ("LAE") incurred during the second
quarter were $11.5 million, compared to $5.3 million during the second
quarter 2008. Losses and LAE for the six months ended June 30, 2009,
increased $6.2 million to $18.7 million, compared to $12.5 million for
the same period in 2008. The increases in losses and LAE were primarily
due to a few large, non-routine fire losses that occurred in the second
quarter and an increase in roof-damage claims that resulted from
afternoon thunderstorm activity that occurred in May and June 2009. As
the Company expected, the growth in the number of policyholders also
contributed to the increase in losses and LAE. Despite the increases in
losses and LAE, the frequency of claims remains in line with Company
projections.
For the second quarter, the Company generated net income of $2.8
million, or $0.27 per diluted share, compared to net income of $9.2
million, or $0.78 per diluted share, for the same period last year. For
the six-month period ended June 30, 2009, the Company generated net
income of $6.0 million, or $0.57 per diluted share, compared to net
income of $17.7 million, or $1.50 per diluted share, for the same period
last year. The decrease in net income for the three- and six-month
periods ended June 30, 2009, was primarily the result of increased
losses and LAE in the second quarter, increased reinsurance costs that
took effect in June, and policy assumption bonuses that United received
from Citizens during 2008. United did not receive any policy assumption
bonuses in 2009.
United's cash and investment holdings totaled $196.2 million at June 30,
2009, and consisted primarily of investments in high-quality money
market instruments, U.S. Treasuries, government agencies and
high-quality corporate debt. Fixed maturities and cash represented
approximately 94.7% of United's total investments at June 30, 2009.
Conference Call
The Company will hold its quarterly conference call to discuss these
results on Friday, August 14, 2009, at 11:00 a.m. EDT.
The dial-in numbers are:
(866) 861-6730 (US)
(706) 679-0882 (International)
A recorded replay of the call will be available until 11:00 p.m. EDT on
August 17, 2009. Listeners may dial 800-642-1687 (Domestic) or
706-645-9291 (International) and use the code 21258384 for the replay.
A live webcast of the call can be accessed at www.upcic.com
in the "Events & Presentations" section. If you are unable to
participate in the live call, the webcast version of the conference call
will be available at the same link following the call. Listeners
interested in participating in the Q&A session should go to the website
at least 15 minutes early to register, download and install any
necessary audio software.
About United Insurance Holdings Corp.
Founded in 1999, United Property & Casualty Insurance Company, a
subsidiary of United Insurance Holdings Corp., primarily underwrites
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,
customer service and claims. The Company distributes its homeowners,
dwelling/fire and flood products through many agency groups and conducts
business through four wholly-owned subsidiaries. Homeowners insurance
constitutes the majority of United's premiums and policies.
Forward-Looking Statements
Statements in this press release that are not historical facts are
forward-looking statements that are subject to certain risks and
uncertainties that could cause actual events and results to differ
materially from those discussed herein. Without limiting the generality
of the foregoing, words such as "may," "will," "expect," "believe,"
"anticipate," "intend," "could," "would," "estimate," "or "continue" or
the other negative variations thereof or comparable terminology are
intended to identify forward-looking statements. The forward-looking
statements in this press release include statements regarding: our
ability to obtain approval for a rate adjustment from the Florida Office
of Insurance Regulation, the impact of reinsurance costs on our
operating results and the outlook for our business. The risks and
uncertainties that could cause our actual results to differ from those
expressed or implied herein include, without limitation, the success of
the Company's marketing initiatives, inflation and other changes in
economic conditions (including changes in interest rates and financial
markets); the impact of new regulations adopted in Florida which affect
the property and casualty insurance market; the costs of reinsurance and
the collectibility of reinsurance, assessments charged by various
governmental agencies; pricing competition and other initiatives by
competitors; our ability to obtain regulatory approval for requested
rate changes, and the timing thereof; legislative and regulatory
developments; the outcome of litigation pending against us, including
the terms of any settlements; risks related to the nature of our
business; dependence on investment income and the composition of our
investment portfolio; the adequacy of our liability for loss and loss
adjustment expense; insurance agents; claims experience; ratings by
industry services; catastrophe losses; reliance on key personnel;
weather conditions (including the severity and frequency of storms,
hurricanes, tornadoes and hail); changes in loss trends; acts of war and
terrorist activities; court decisions and trends in litigation, and
health care; and other matters described from time to time by us in our
filings with the SEC, including, but not limited to, the Company's
Annual Report on Form 10-K/A for the year ended December 31, 2008. In
addition, investors should be aware that generally accepted accounting
principles prescribe when a company may reserve for particular risks,
including litigation exposures. Accordingly, results for a given
reporting period could be significantly affected if and when a reserve
is established for a major contingency. Reported results may therefore,
appear to be volatile in certain accounting periods. The Company
undertakes no obligations to update, change or revise any
forward-looking statement, whether as a result of new information,
additional or subsequent developments or otherwise.
Condensed Consolidated Statements of Income
(Unaudited)
In thousands, except share and per share amounts
Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008
REVENUE:
Gross premiums $ 58,147 $ 41,518 $ 95,178 $ 70,608
written
Gross premiums ceded (86,073 ) (52,203 ) (87,974 ) (53,565 )
Net premiums written (27,926 ) (10,685 ) 7,204 17,043
Decrease in net 49,821 30,335 36,233 23,242
unearned premiums
Net premiums earned 21,895 19,650 43,437 40,285
Net investment 1,288 1,721 2,683 3,354
income
Net realized 1,513 1,035 705 878
investment gains
Other-than-temporary
impairment of -- -- (1,878 ) --
investments
Commission and fees 867 651 1,633 1,298
Policy assumption -- 1,371 -- 4,283
bonus
Other revenue 757 512 1,724 1,292
Total revenue 26,320 24,940 48,304 51,390
EXPENSES:
Losses and loss 11,538 5,343 18,739 12,474
adjustment expenses
Policy acquisition 5,574 4,377 10,502 8,599
costs
Operating and
underwriting 2,061 1,554 3,864 3,092
expenses
Salaries and wages 766 722 2,050 1,530
General and
administrative 970 1,041 1,983 2,378
expenses
Interest expense 783 601 1,537 1,466
Total expenses 21,692 13,638 38,675 29,539
Income before income 4,628 11,302 9,629 21,851
taxes
Provision for income 1,781 2,143 3,657 4,159
taxes
Net income $ 2,847 $ 9,159 $ 5,972 $ 17,692
Weighted average
shares outstanding
Basic 10,573,932 10,548,932 10,562,468 10,548,932
Diluted 10,573,932 11,797,768 10,562,468 11,757,811
Earnings per share
Basic $ 0.27 $ 0.87 $ 0.57 $ 1.68
Diluted $ 0.27 $ 0.78 $ 0.57 $ 1.50
Dividends declared $ 0.15 $ -- $ 0.15 $ --
per share
PRO FORMA COMPUTATION OF INCOME TAXES FOR HISTORICAL PERIOD PRIOR TO THE MERGER:
Historical income $ 11,302 $ 21,851
before income taxes
Pro forma provision 4,360 8,429
for income taxes
Pro forma net income $ 6,942 $ 13,422
Pro forma earnings
per share
Basic $ 0.66 $ 1.27
Diluted $ 0.59 $ 1.14
Condensed Consolidated Balance Sheets
In thousands, except share and par value amounts
June 30, December 31,
2009 2008
Unaudited
ASSETS
Investments available for sale, at fair value:
Fixed maturities (amortized cost of $83,911 and $ 84,911 $ 115,332
$114,078, respectively)
Equity securities (cost of $10,991 and $14,229, 10,046 10,586
respectively)
Other long-term investments (cost of $300) 300 300
Total investments 95,257 126,218
Cash and cash equivalents 100,908 31,689
Accrued investment income 1,112 1,392
Premiums receivable, net of allowances for credit losses 15,095 10,216
of $403 and $305, respectively
Reinsurance recoverable on paid and unpaid losses 22,716 22,604
Prepaid reinsurance premiums 82,232 26,518
Deferred policy acquisition costs, net 12,566 9,075
Property and equipment at cost, net of accumulated
depreciation and amortization of $293 and $254, 255 294
respectively
Capitalized software, net of accumulated amortization of 1,204 1,232
$166 and $53, respectively
Deferred income tax assets, net 578 2,744
Other assets 1,519 1,139
Total Assets $ 333,442 $ 233,121
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Unpaid losses and loss adjustment expenses $ 41,443 $ 40,098
Unearned premiums 93,866 74,384
Reinsurance payable 85,281 16,694
Advance premiums 5,453 2,152
Accounts payable and accrued expenses 15,275 12,871
Current portion of notes payable 5,209 4,621
Income taxes payable 107 1,366
Other liabilities 542 1,326
Long-term notes payable 36,296 36,682
Total Liabilities 283,472 190,194
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $0.0001 par value; 1,000,000 shares -- --
authorized; none issued or outstanding for 2009 and 2008
Common stock, $0.0001 par value; 50,000,000 shares
authorized; 10,573,932 and 10,548,932 issued and 1 1
outstanding for 2009 and 2008, respectively
Additional paid-in capital 75 --
Accumulated other comprehensive income (loss) 34 (1,490 )
Retained earnings 49,860 44,416
Total Stockholders' Equity 49,970 42,927
Total Liabilities and Stockholders' Equity $ 333,442 $ 233,121
Source: United Insurance Holdings Corp.
Contact: United Insurance Holdings Corp.
Don Cronin, 727-895-7737
Chief Executive Officer
dcronin@upcic.com
or
John Rohloff, 727-895-7737
SEC Reporting Manager
jrohloff@upcic.com
or
INVESTOR RELATIONS:
The Equity Group Inc.
Adam Prior, 212-836-9606
Vice President
aprior@equityny.com