2009 Third Quarter and Year-to-Date Highlights
-- The Company had 96,300 policies-in-force at September 30, 2009,
reflecting increases of 35% over September 30, 2008, and 20% since
January 1, 2009
-- Gross premiums written decreased 8% over last year's third quarter to
$33.4 million, and increased 20% year-to-date over 2008
-- Overall rate increase of 12.7% for United's homeowner product became
effective on September 15, 2009
-- Book value per share increased 17% to $4.77 at September 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 December 15, 2009 to shareholders of
record on November 30, 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
nine-month periods ended September 30, 2009.
For the third quarter, United reported a net loss of approximately
$734,000, or $0.07 per diluted share, compared to recording net income
of $8.9 million, or $0.75 per diluted share, during the same period last
year. For the nine months ended September 30, 2009, United generated net
income of $5.2 million, or $0.50 per diluted share, compared to
generating net income of $26.6 million, or $2.26 per diluted share,
during the same period last year.
"Our results reflect a significant increase in reinsurance costs coupled
with lower average premiums resulting from the state-mandated wind
mitigation credits," said Don Cronin, United's CEO. The Company took
actions to offset the increase in reinsurance costs. United slowed the
writing of new policies in the third quarter to control risk exposure
that had increased as a result of rapid policy growth late in 2008 and
early in 2009. The Company also filed for an additional 14.3% rate
increase to become effective in January 2010, which is currently pending
with the Florida Office of Insurance Regulation ("OIR"). "We believe
that our persistent efforts to manage our risk exposure and to maintain
stringent underwriting criteria will reinforce our ability to generate
long-term growth and profitability in our business, and allow us to
better serve our policyholders going forward," said Mr. Cronin.
A 12.7% average rate increase, which the OIR already approved, became
effective in mid-September for the Company's homeowner product. While
the increase had a minimal impact on the Company's third quarter
results, United expects that the rate increase will have a greater
impact on its results over the next three fiscal quarters as the Company
writes new policies and renews existing policies.
Mr. Cronin added, "The implementation of the rate increase began to
filter through to our policyholders, and we returned to profitability in
September and in the early weeks of the current fourth quarter. While
the sharp increase in reinsurance costs has affected our short-term
profitability, we believe that these rate increases will allow us to
remain on solid financial footing and adapt to a changing insurance
market in Florida."
2009 Third Quarter Financial Review
-- Gross written premiums decreased to $33.4 million from $36.2 million in
the prior year period, resulting from a planned reduction in new
business due to risk-exposure management.
-- Net premiums earned decreased to $18.4 million from $20.1 million in the
third quarter of 2008 due to the decrease in gross written premiums and
the increase in reinsurance costs. Monthly reinsurance costs have
increased by $2.7 million since the Company entered into its reinsurance
contracts for the 2009 storm season in June 2009.
-- The Company recorded approximately $2.2 million of policy assumption
bonuses from Citizens during the third quarter of 2008, while recording
no such bonuses in 2009.
-- Policy acquisition costs increased to $6.1 million in the third quarter
of 2009 compared to $4.2 million in the prior year period as a result of
an increase in gross earned premiums.
-- Other income decreased by approximately $2.6 million. In the third
quarter of 2008, the Company reversed a $2.6 million liability related
to a put option tied to the membership units of one of its subsidiaries.
The put option ceased to exist by operation of law as a result of the
merger with FMG Acquisition Corp.
-- As a result of the aforementioned factors, the Company reported a net
loss of $734,000, or $0.07 per diluted share, for the third quarter of
2009, compared to net income of $8.9 million, or $0.75 per diluted
share, reported during the same period last year.
2009 Nine Month Financial Review
-- Gross written premiums increased to $128.5 million from $106.8 million
in the prior year period, primarily resulting from the growth in new
business and improved policy retention.
-- Losses and LAE increased by $6.0 million to $30.9 million as a result of
a few large, non-routine fire losses, as well as an increase in
roof-damage claims that occurred during the second quarter.
-- Policy acquisition costs increased to $16.6 million from $12.8 million
in the prior period resulting from the significant growth in new
policies and an increase in gross earned premiums.
-- The Company recorded approximately $6.4 million of policy assumption
bonuses from Citizens during the nine months ended September 30, 2008,
while recording no such bonuses in 2009.
-- In the first quarter of 2009, United incurred an other-than-temporary
impairment charge of $1.9 million related to certain equity investments.
-- Other income decreased by approximately $2.6 million. In the third
quarter of 2008, the Company reversed a $2.6 million liability related
to a put option tied to the membership units of one of its subsidiaries.
The put option ceased to exist by operation of law as a result of the
merger with FMG Acquisition Corp.
-- As a result of the aforementioned factors, United reported net income of
$5.2 million, or $0.50 per diluted share, for the nine months ended
September 30, 2009, compared to net income of $26.6 million, or $2.26
per diluted share, during the same period last year.
Balance Sheet Highlights
United's cash and investment holdings totaled $194.7 million at
September 30, 2009, compared to $157.9 million at December 31, 2008.
United's cash and investment holdings consist primarily of investments
in high-quality money market instruments, securities of the U.S.
Government and its agencies and high-quality corporate debt. Fixed
maturities represented approximately 93% of United's total investments
at September 30, 2009, and at December 31, 2008.
Conference Call
The Company will hold its quarterly conference call to discuss these
results on Friday, November 13, 2009, at 10:00 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
November 18, 2009. Listeners may dial 800-642-1687 (Domestic) or
706-645-9291 (International) and use the code 37854560 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 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 losses 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 Securities and Exchange Commission, 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 Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
REVENUE:
Gross premiums $ 33,350 $ 36,200 $ 128,528 $ 106,808
written
Gross premiums ceded (1,650 ) (2,936 ) (89,624 ) (56,501 )
Net premiums written 31,700 33,264 38,904 50,307
Decrease (increase)
in net unearned (13,278 ) (13,175 ) 22,955 10,067
premiums
Net premiums earned 18,422 20,089 61,859 60,374
Net investment 1,033 1,695 3,716 5,049
income
Net realized 75 278 780 1,156
investment gains
Other-than-temporary
impairment of -- -- (1,878 ) --
investments
Commission and fees 827 732 2,460 2,030
Policy assumption -- 2,159 -- 6,442
bonus
Other revenue 358 1,039 2,082 2,331
Total revenue 20,715 25,992 69,019 77,382
EXPENSES:
Losses and loss 12,193 12,500 30,932 24,974
adjustment expenses
Policy acquisition 6,063 4,229 16,565 12,828
costs
Operating and
underwriting 1,656 1,796 5,520 4,888
expenses
Salaries and wages 738 805 2,788 2,335
General and
administrative 669 (82 ) 2,652 2,296
expenses
Interest expense 823 497 2,360 1,963
Total expenses 22,142 19,745 60,817 49,284
Income (loss) before (1,427 ) 6,247 8,202 28,098
other income
Other income -- 2,564 -- 2,564
Income (loss) before (1,427 ) 8,811 8,202 30,662
income taxes
Provision for
(benefit from) (693 ) (67 ) 2,964 4,092
income taxes
Net income (loss) $ (734 ) $ 8,878 $ 5,238 $ 26,570
Weighted average
shares outstanding
Basic 10,573,932 10,548,932 10,566,331 10,548,932
Diluted 10,573,932 11,830,069 10,566,331 11,782,273
Earnings per share
Basic $ (0.07 ) $ 0.84 $ 0.50 $ 2.52
Diluted $ (0.07 ) $ 0.75 $ 0.50 $ 2.26
Dividends declared $ -- $ -- $ 0.10 $ --
per share
PRO FORMA COMPUTATION OF INCOME TAXES FOR HISTORICAL PERIOD PRIOR TO THE MERGER:
Historical income $ 8,811 $ 30,662
before income taxes
Pro forma provision 3,399 11,828
for income taxes
Pro forma net income $ 5,412 $ 18,834
Pro forma earnings
per share
Basic $ 0.51 $ 1.79
Diluted $ 0.46 $ 1.60
Condensed Consolidated Balance Sheets
In thousands, except share and par value amounts
September 30, December 31,
2009 2008
Unaudited
ASSETS
Investments available for sale, at fair value:
Fixed maturities $ 121,266 $ 117,694
Equity securities 8,722 8,224
Other long-term investments 300 300
Total investments 130,288 126,218
Cash and cash equivalents 64,461 31,689
Accrued investment income 1,093 1,392
Premiums receivable, net of allowances for credit 10,173 10,216
losses of $359 and $305, respectively
Reinsurance recoverable on paid and unpaid losses 22,331 22,604
Prepaid reinsurance premiums 61,283 26,518
Deferred policy acquisition costs, net 11,232 9,075
Property and equipment at cost, net of accumulated
depreciation and amortization of $312 and $254, 249 294
respectively
Capitalized software, net of accumulated 1,192 1,232
amortization of $224 and $53, respectively
Income taxes receivable 189 --
Deferred income tax assets, net 185 2,744
Other assets 1,156 1,139
Total Assets $ 303,832 $ 233,121
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Unpaid losses and loss adjustment expenses $ 42,242 $ 40,098
Unearned premiums 86,195 74,384
Reinsurance payable 64,727 16,694
Advance premiums 4,353 2,152
Accounts payable and accrued expenses 13,942 12,871
Income taxes payable -- 1,366
Other liabilities 291 1,326
Notes payable, net of unamortized debt discount of 41,610 41,303
$997 and $1,304, respectively
Total Liabilities 253,360 190,194
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) 1,799 (1,490 )
Retained earnings 48,597 44,416
Total Stockholders' Equity 50,472 42,927
Total Liabilities and Stockholders' Equity $ 303,832 $ 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