Financial and Operational Highlights
* The Company had 90,000 in-force policies at March 31, 2010, reflecting
a 5% increase over March 31, 2009, and a 3% decrease from December 31,
2009
* Gross premiums written decreased $1.4 million, or 4%, from last year’s
first quarter to $35.6 million; and increased $8.3 million, or 30.2%,
over the fourth quarter of 2009
* Cash and investment holdings were $159.6 million at March 31, 2010,
compared to $160.1 million at December 31, 2009
* Book value per share decreased 7% to $4.21 at March 31, 2010, compared
to $4.55 at December 31, 2009
* Early retirement of the Company’s $18.3 million, 11% notes originally
scheduled to mature on September 29, 2011
ST. PETERSBURG, Fla.--(BUSINESS WIRE)--
United Insurance Holdings Corp. (OTCBB: UIHC; UIHCW; UIHCU)(United
or the Company), a property and casualty insurance holding company,
announced unaudited financial results for its first quarter ended March
31, 2010.
For the first quarter, United reported a net loss of $3.7 million, or
$0.35 per diluted share, compared to recording net income of $3.1
million, or $0.30 per diluted share, during the same period last year.
“The unusually high reinsurance costs from last season’s contracts,
several large losses and Florida’s unseasonably cold winter impacted our
first quarter results,” said Don Cronin, United’s CEO. “We remain
confident that the additional rate increases we received last year and
our thoughtful approach to risk management will improve our bottom line
results.” The Florida Office of Insurance Regulation approved the 12.7%
and 14% average rate increases for the Company’s homeowner product which
became effective on September 15, 2009, and March 15, 2010,
respectively. United continued to manage its future risk exposure as
in-force policies decreased 3% to 90,000 at March 31, 2010 compared to
93,000 at December 31, 2009.
The Company retired two of its notes during the quarter. On May 5, 2010,
United retired its $18.3 million, 11% notes that were due to mature on
September 29, 2011. The early debt retirement is expected to improve net
income by approximately $0.4 million and $1 million in 2010 and 2011,
respectively. In addition to the early debt retirement, the Company paid
its $4.3 million note payable to Columbus Bank & Trust in full when it
matured on February 20, 2010. As a result of the use of cash to retire
these notes and the increasingly uncertain environment regarding
regulation, rating agencies, and reinsurance costs, United’s Board of
Directors (Board) suspended quarterly dividend payments until further
notice. The Board will consider future dividend payments in view of
operating results and capital requirements for growth.
2010 First Quarter Financial Review
Gross premiums written decreased to $35.6 million from $37 million in
the first quarter of 2009, primarily the result of the 3% decrease in
the number of in-force polices during the first quarter of 2010.
Net premiums earned decreased to $14.7 million from $21.5 million in the
first quarter of 2009, primarily the result of higher reinsurance costs
associated with the 2009 – 2010 reinsurance contracts, which increased
$33.8 million over the 2008 – 2009 reinsurance contracts. The higher
reinsurance costs will continue to impact net premiums earned until May
2010, when the current contracts expire. The Company is currently
negotiating its 2010 – 2011 reinsurance program and the financial impact
of the program on the Company’s results for the remainder of the year is
unknown.
Losses and LAE increased to $12.5 million in the current quarter from
$7.2 million in the first quarter of 2009 because losses related to
fires, sinkholes and water damage increased. Water losses accounted for
$2.1 million of the increase as the Company experienced a spike in
broken or burst water pipe claims as a result of the abnormally cold
Florida winter. Fire losses increased approximately $1.3 million in the
quarter. United experienced a $0.3 million increase in sinkhole losses,
including some in counties not known to be prone to sinkholes. Finally,
the remaining $1.6 million increase was due to losses from other claim
types that were individually insignificant.
Policy acquisition costs increased to $5.7 million in the first quarter
compared to $4.9 million in the comparable period of the prior year
primarily due to the increase in policy administration fees and agents’
commissions. Policy administration fees increased because in the first
quarter of 2009, United’s former policy administrator was still
processing policies for the Company and their costs were less than what
the current policy administrator charges to maintain United’s policies.
Agents’ commissions increased due to the strong growth in premium
writings that occurred in the first half of 2009.
Operating, general and administrative expenses decreased $344,000 to
$3.7 million, from $4.1 million in the first quarter of 2009, because
the Company did not accrue any bonuses in the first quarter of 2010,
whereas it accrued for bonuses in the first quarter of 2009.
The aforementioned factors combined to cause a net loss of $3.7 million
for the first quarter of 2010, compared to net income of $3.1 million
reported for the first quarter of 2009.
Balance Sheet Highlights
United’s cash and investment holdings remained essentially unchanged at
$159.6 million at March 31, 2010, compared to $160.1 million at December
31, 2009. The Company’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% of United’s total investments at March 31,
2010, and December 31, 2009, respectively.
Conference Call
The Company will discuss these results in a conference call on Thursday,
May 13, 2010 at 10:00 a.m. Eastern Daylight Time.
|
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. Eastern
Daylight Time on May 18, 2010. Listeners may dial 800-642-1687
(Domestic) or 706-645-9291 (International) and use the code 69997699 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 agencies and 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 rate increases and the early debt retirement on our future
results, our future results of operations, 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 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.
|
|
CondensedConsolidated Statements of Income (Unaudited) In thousands, except share and per share amounts |
|
|
|
| Three Months Ended |
| | March 31, |
| | 2010 |
| 2009 |
|
REVENUE:
| | | | | | |
|
Gross premiums written
| |
$
|
35,567
| | |
$
|
37,031
| |
|
Gross premiums ceded
| |
|
(1,525
|
)
| |
|
(1,901
|
)
|
| | | | | |
|
|
Net premiums written
| | |
34,042
| | | |
35,130
| |
|
Decrease (increase) in net unearned premiums
| |
|
(19,349
|
)
| |
|
(13,588
|
)
|
| | | | | |
|
|
Net premiums earned
| | |
14,693
| | | |
21,542
| |
|
Net investment income (loss), including net realized gains (losses)
| | |
1,034
| | | |
(1,291
|
)
|
|
Other revenue
| |
|
1,221
|
| |
|
1,733
|
|
| | | | | |
|
|
Total revenue
| |
|
16,948
|
| |
|
21,984
|
|
| | | | | |
|
|
EXPENSES:
| | | | | | |
|
Losses and loss adjustment expenses
| | |
12,469
| | | |
7,201
| |
|
Policy acquisition costs
| | |
5,654
| | | |
4,928
| |
|
Operating, general and administrative expenses
| | |
3,756
| | | |
4,100
| |
|
Interest expense
| |
|
1,091
|
| |
|
754
|
|
| | | | | |
|
|
Total expenses
| |
|
22,970
|
| |
|
16,983
|
|
| | | | | |
|
|
Income (loss) before income taxes
| | |
(6,022
|
)
| | |
5,001
| |
|
Provision for (benefit from) income taxes
| |
|
(2,323
|
)
| |
|
1,876
|
|
| | | | | |
|
|
Net income (loss)
| |
$
|
(3,699
|
)
| |
$
|
3,125
|
|
| | | | | |
|
|
OTHER COMPREHENSIVE INCOME (LOSS):
| | | | | | |
|
Change in net unrealized holding gain (loss) on investments
| | |
1,112
| | | |
(1,436
|
)
|
|
Reclassification adjustment for net realized investment losses
| | |
14
| | | |
808
| |
|
Reclassification adjustment for recognized other-than-temporary
impairments
| | |
—
| | | |
1,878
| |
|
Income tax expense related to items of other comprehensive income
| |
|
(435
|
)
| |
|
(460
|
)
|
|
Total comprehensive income (loss)
| |
$
|
(3,008
|
)
| |
$
|
3,915
|
|
| | | | | |
|
|
Weighted average shares outstanding
| | | | | | |
| | | | | |
|
|
Basic and diluted
| |
|
10,573,932
|
| |
|
10,550,876
|
|
| | | | | |
|
|
Earnings (loss) per share
| | | | | | |
|
Basic and diluted
| |
$
|
(0.35
|
)
| |
$
|
0.30
|
|
| | | | | |
|
| | | | | |
|
|
Dividends declared per share
| |
$
|
0.05
|
| |
$
|
—
|
|
|
|
|
|
Condensed Consolidated Balance Sheets In thousands, except share and par value amounts |
|
| |
| |
| | March 31, | | December 31, |
| | 2010 | | 2009 |
| | Unaudited | | | |
|
ASSETS
| | | | | | |
|
Investments available for sale, at fair value:
| | | | | | |
|
Fixed maturities (amortized cost of $112,247 and $125,920,
respectively)
| |
$
|
115,343
| |
$
|
128,020
|
|
Equity securities (adjusted cost of $5,000)
| | |
4,834
| | |
4,704
|
|
Other long-term investments
| | |
300
| | |
300
|
| |
|
| |
|
|
|
Total investments
| |
|
120,477
| |
|
133,024
|
| | | | | |
|
|
Cash and cash equivalents
| | |
39,171
| | |
27,086
|
|
Accrued investment income
| | |
1,025
| | |
1,119
|
|
Premiums receivable, net of allowances for credit losses of $377 and
$370, respectively
| | |
8,067
| | |
7,544
|
|
Reinsurance recoverable on paid and unpaid losses
| | |
30,135
| | |
25,477
|
|
Prepaid reinsurance premiums
| | |
18,417
| | |
40,285
|
|
Deferred policy acquisition costs
| | |
8,696
| | |
9,256
|
|
Other assets
| | |
6,401
| | |
3,967
|
| |
|
| |
|
|
|
Total Assets
| |
$
|
232,389
| |
$
|
247,758
|
| | | | | |
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
| | | | | | |
|
Liabilities:
| | | | | | |
|
Unpaid losses and loss adjustment expenses
| |
$
|
48,652
| |
$
|
44,112
|
|
Unearned premiums
| | |
71,312
| | |
73,831
|
|
Reinsurance payable
| | |
15,309
| | |
28,162
|
|
Other liabilities
| | |
15,663
| | |
12,154
|
|
Notes payable, net of unamortized debt discount of $773 and $885,
respectively
| | |
36,919
| | |
41,428
|
| |
|
| |
|
|
|
Total Liabilities
| |
|
187,855
| |
|
199,687
|
| | | | | |
|
|
Commitments and contingencies
| | | | | | |
|
Stockholders’ Equity:
| | | | | | |
|
Preferred stock, $0.0001 par value; 1,000,000 shares authorized;
none issued or outstanding for 2010 and 2009
| | |
—
| | |
—
|
|
Common stock, $0.0001 par value; 50,000,000 shares authorized;
10,573,932 issued and outstanding for 2010 and 2009
| | |
1
| | |
1
|
|
Additional paid-in capital
| | |
75
| | |
75
|
|
Accumulated other comprehensive income
| | |
1,799
| | |
1,108
|
|
Retained earnings
| | |
42,659
| | |
46,887
|
| |
|
| |
|
|
|
Total Stockholders’ Equity
| |
|
44,534
| |
|
48,071
|
| | | | | |
|
|
Total Liabilities and Stockholders’ Equity
| |
$
|
232,389
| |
$
|
247,758
|
Source: United Insurance Holdings Corp.
Contact:
United Insurance Holdings Corp.
Joe Peiso, 727-895-7737
Chief
Financial Officer
jpeiso@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