2009 Fourth Quarter and Year-to-Date Highlights
* The Company had 93,000 policies-in-force at December 31, 2009,
reflecting a 16% increase over December 31, 2008, and a 3% decrease over
September 30, 2009
* Gross premiums written for 2009 were $155.8 million representing at
10% year-over-year increase, and were $27.3 million for the fourth
quarter representing a 21% decrease over last year's fourth quarter
* Book value per share increased 12% to $4.55 at December 31, 2009,
compared to $4.07 at December 31, 2008
* Cash and investment holdings increased to $160.1 million at December
31, 2009, compared to $155.7 million at December 31, 2008
ST. PETERSBURG, Fla.--(BUSINESS WIRE)--
United Insurance Holdings Corp. (OTCBB: UIHC)(OTCBB: UIHCW)(OTCBB: UIHCU)
("United" or "the Company"), a property and casualty insurance
holding company, today reported its financial results for the fourth
quarter and for the year ended December 31, 2009.
For the fourth quarter, United reported a net loss of $1.2 million, or
$0.11 per diluted share, compared to recording net income of $6.8
million, or $0.65 per diluted share, during the same period last year.
For the year ended December 31, 2009, United generated net income of
$4.1 million, or $0.38 per diluted share, compared to generating net
income of $33.4 million, or $3.08 per diluted share, during 2008.
"While the state of Florida did not sustain a hurricane in 2009, we were
dealt a perfect storm," said Don Cronin, United's CEO. "The combination
of the impact of the wind-mitigation credits mandated by the State, a
change in the Florida Hurricane Catastrophe Fund attachment point which
required us to purchase additional private reinsurance, an overall
increase in reinsurance rates and lower investment returns contributed
to the decline in income in 2009."
The Company took actions to reduce the downward pressure on earnings
caused by the wind-mitigation credits and the increase in reinsurance
costs. First, United filed for a rate increase on its homeowner product
to offset the effects of the wind-mitigation credits, and the Florida
Office of Insurance Regulation ("OIR") approved the average 12.7%
increase which took effect on September 15, 2009. Then the Company filed
for another rate increase on its homeowner product to offset the effects
of the increase in reinsurance costs, and the OIR approved the average
14.0% increase which took effect on March 15, 2010. Additionally, United
slowed the writing of new policies in the second half of 2009 to control
risk exposure that increased as a result of strong policy growth in late
2008 and early 2009. "We have acted to reverse the downward pressure on
our results, and we should begin to see an improvement in our margins in
2010," said Mr. Cronin.
2009 Fourth Quarter Financial Review
-- Gross written premiums decreased to $27.3 million from $34.7 million
during the fourth quarter of 2008. The Company did not assume policies
from Citizens during the fourth quarter of 2009, whereas it assumed
policies from Citizens during the fourth quarter of 2008 totaling $5.7
million of premiums.
-- Net premiums earned decreased to $16.3 million from $20.8 million in the
fourth quarter of 2008 due to the decrease in gross written premiums and
the increase in monthly reinsurance costs. Reinsurance costs have
increased since the Company entered into its reinsurance contracts in
June 2009 for the 2009 storm season, and that increase includes a $1.0
million charge in the fourth quarter for the Florida Hurricane
Catastrophe Fund.
-- Losses and LAE increased to $9.8 million from $3.1 million during the
fourth quarter of 2008. The fourth quarter of 2008 benefited from a $4.0
million reduction in losses and LAE related to favorable loss
development on claims submitted and paid during 2008, whereas the 2009
redundancy was recognized more smoothly throughout that year.
-- Policy acquisition costs increased to $6.9 million in the fourth quarter
of 2009 compared to $4.8 million in the prior year period primarily as a
result of the increase in polices written in late 2008 and early 2009.
-- Operating and underwriting expenses increased $0.9 million to $2.5
million due to a $1.0 million assessment from the Florida Insurance
Guaranty Association ("FIGA"). The FIGA assessment raised funds to cover
ongoing losses that FIGA continues to incur related to claims from the
policyholders of insolvent insurers. In February, the Company began
collecting a surcharge from policyholders that it believes will allow
for full recovery of this assessment in the coming months.
-- As a result of the aforementioned factors, the Company reported a net
loss of $1.2 million for the fourth quarter of 2009, compared to net
income of $6.8 million reported during 2008.
2009 Year End Financial Review
-- Gross written premiums increased to $155.8 million from $141.6 million
in the prior year period, primarily resulting from the growth in new
business and improved policy retention.
-- Net premiums earned decreased $2.9 million to $78.2 million primarily
due to the increase in reinsurance costs for the June 2009 - May 2010
reinsurance contract period.
-- United incurred an other-than-temporary impairment charge of $1.9
million in the first quarter of 2009 related to certain equity
investments. The Company did not incur any additional impairment charges
during the year.
-- The Company recorded approximately $6.5 million of policy assumption
bonuses from Citizens during 2008, while no such bonus was available
during 2009.
-- Losses and LAE increased by $12.7 million to $40.8 million primarily due
to the 16% year-over-year increase in policies-in-force.
-- Policy acquisition costs increased to $23.5 million from $17.6 million
in the prior year resulting from the significant growth in new policies.
-- Other income decreased by approximately $2.6 million. In the third
quarter of 2008, United reversed a $2.6 million liability related to a
put option which ceased to exist by operation of law as a result of the
Company's merger with United Insurance Holdings, L.C.
-- As a result of the aforementioned factors, United reported net income of
$4.1 million for the year ended December 31, 2009, compared to net
income of $33.4 million during 2008.
Balance Sheet Highlights
United's cash and investment holdings totaled $160.1 million at December
31, 2009, compared to $155.7 million at December 31, 2008. United's cash
and investment holdings consist primarily of investments in high-quality
money market instruments, U.S. Government and agency securities and
high-quality corporate debt. Fixed maturities represented approximately
96% and 93% of United's total investments at December 31, 2009, and
2008, respectively.
Conference Call
The Company will hold its quarterly conference call to discuss these
results on Friday, March 26, 2010, at 10:00 a.m. ET.
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
March 31, 2010. Listeners may dial 800-642-1687 (Domestic) or
706-645-9291 (International) and use the code 55217732 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: the
impact of the additional rate increases, 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 Federal and State regulations that
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 for the year ended
December 31, 2009. 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
In thousands, except share and per share amounts
Three Months Ended Year Ended
December 31, December 31,
2009 2008 2009 2008
(unaudited)
REVENUE:
Gross premiums $ 27,312 $ 34,748 $ 155,840 $ 141,556
written
Gross premiums ceded (2,355 ) (2,750 ) (91,979 ) (59,251 )
Net premiums written 24,957 31,998 63,861 82,305
Decrease (increase)
in net unearned (8,635 ) (11,228 ) 14,320 (1,161 )
premiums
Net premiums earned 16,322 20,770 78,181 81,144
Net investment 1,115 1,583 4,831 6,632
income
Net realized
investment gains 1,057 (40 ) 1,837 1,116
(losses)
Other-than-temporary
impairment of -- -- (1,878 ) --
investments
Commission and fees 720 748 3,180 2,778
Policy assumption -- 51 -- 6,493
bonus
Other revenue 236 568 2,318 2,899
Total revenue 19,450 23,680 88,469 101,062
EXPENSES:
Losses and loss 9,823 3,089 40,755 28,063
adjustment expenses
Policy acquisition 6,917 4,788 23,482 17,616
costs
Operating and
underwriting 2,490 1,572 8,010 6,460
expenses
Salaries and wages 685 1,131 3,473 3,466
General and
administrative 593 1,311 3,245 3,607
expenses
Interest expense 817 848 3,177 2,811
Total expenses 21,325 12,739 82,142 62,023
Income (loss) before (1,875 ) 10,941 6,327 39,039
other income
Other income -- -- -- 2,564
Income (loss) before (1,875 ) 10,941 6,327 41,603
income taxes
Provision for
(benefit from) (694 ) 4,092 2,270 8,184
income taxes
Net income (loss) $ (1,181 ) $ 6,849 $ 4,057 $ 33,419
OTHER COMPREHENSIVE
INCOME:
Change in net
unrealized holding
gain (loss) on
investments 2,182 (1,685 ) 4,152 (2,465 )
Reclassification
adjustment for net
realized investment
(gains) and losses (1,057 ) 40 (1,837 ) (1,116 )
Reclassification
adjustment for
recognized
other-than-
temporary -- -- 1,878 --
impairments
Income tax benefit
(expense) related to
items of other
comprehensive income (434 ) 619 (1,595 ) 1,347
Total comprehensive $ (490 ) $ 5,823 $ 6,655 $ 31,185
income (loss)
Weighted average
shares outstanding
Basic 10,573,932 10,548,932 10,568,247 10,548,932
Diluted 10,573,932 10,548,932 10,568,247 10,854,743
Earnings per share
Basic $ (0.11 ) $ 0.65 $ 0.38 $ 3.17
Diluted $ (0.11 ) $ 0.65 $ 0.38 $ 3.08
Dividends declared $ 0.05 $ -- $ 0.15 $ --
per share
PRO FORMA COMPUTATION OF INCOME TAXES FOR HISTORICAL
PERIOD PRIOR TO THE MERGER (Unaudited):
Historical income $ 41,603
before income taxes
Pro forma provision 16,048
for income taxes
Pro forma net income $ 25,555
Pro forma earnings
per share
Basic $ 2.42
Diluted $ 2.35
Condensed Consolidated Balance Sheets
In thousands, except share and par value amounts
December 31, December 31,
2009 2008
ASSETS
Investments available for sale, at fair value:
Fixed maturities (amortized cost of $125,920 and $ 128,020 $ 117,694
$116,845, respectively)
Equity securities (cost of $5,000 and $11,462, 4,704 8,224
respectively)
Other long-term investments 300 300
Total investments 133,024 126,218
Cash and cash equivalents 27,086 29,494
Accrued investment income 1,119 1,392
Premiums receivable, net 7,544 10,216
Reinsurance recoverable on paid and unpaid losses 25,477 22,604
Prepaid reinsurance premiums 40,285 26,518
Deferred policy acquisition costs, net 9,256 10,214
Property and equipment at cost, net 322 294
Capitalized software, net 1,203 1,232
Income tax receivable 1,605 --
Deferred income tax assets, net -- 2,744
Other assets 837 1,139
Total Assets $ 247,758 $ 232,065
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Unpaid losses and loss adjustment expenses $ 44,112 $ 40,098
Unearned premiums 73,831 74,384
Reinsurance payable 28,162 16,694
Advance premiums 3,824 2,152
Accounts payable and accrued expenses 6,761 10,676
Income taxes payable -- 1,366
Deferred tax liabilities, net 106 --
Other liabilities 1,463 2,465
Notes payable, net 41,428 41,303
Total Liabilities 199,687 189,138
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 1 1
issued and outstanding for 2009 and 2008,
respectively
Additional paid-in capital 75 --
Accumulated other comprehensive income (loss) 1,108 (1,490 )
Retained earnings 46,887 44,416
Total Stockholders' Equity 48,071 42,927
Total Liabilities and Stockholders' Equity $ 247,758 $ 232,065
Source: United Insurance Holdings Corp.
Contact: United Insurance Holdings Corp.
Joe Peiso, 727-895-7737
jpeiso@upcic.com
Chief Financial Officer
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