UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _______________________ FORM 10-Q _______________________ ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission File Number 001-35761 ____________________ United Insurance Holdings Corp. (Exact Name of ...

Financial Data and Key Metrics Changes - The company reported a core loss of $29.3 million for Q1 2022, reflecting a reduced net earned premium and elevated catastrophe losses from 10 PCS events [4] - Gross earned premium decreased by approximately 10% year-over-year, primarily due to the sale of Northeast renewal rights [4] - Net earned premium declined just over 30%, attributed to 100% quota share treaties related to the sale of Northeast and Southeast renewal rights [5] - GAAP net loss was $33.2 million or $0.77 per share, compared to a net loss of $17.8 million or $0.41 per share last year [12] - Ceding ratios increased from 59% to 68%, with quota share up 5.8 points [6] Business Line Data and Key Metrics Changes - In personal lines, average rate increases of 17.9% were achieved in Q1 2022, on top of 11.5% in 2021 [7] - The Commercial Lines portfolio generated a pre-tax income of $11.6 million for the quarter, with premiums up by 22.7% year-to-date [8] - The non-CAT loss ratio slightly decreased from 32.4% to 32.3%, while CAT loss ratio significantly dropped from 29% to 13% [6][7] Market Data and Key Metrics Changes - The company continues to see a significant reduction in the number of initial lawsuits in Florida, although pre-suit notifications of intent to litigate are increasing [9][10] - The company is progressing towards a 50-50 balance between personal lines and commercial lines, moving from 63-37 to 61-39 [9] Company Strategy and Development Direction - The company is focused on de-risking and deleveraging its portfolio, resulting in decreased gross and net earned premiums [10] - Continued compounding rate actions and risk selection are being implemented, with expectations for rate increases to persist through at least mid-2023 [11] - The company is working on merging Journey Insurance Company into American Coastal Insurance Company to better allocate capital [8] Management's Comments on Operating Environment and Future Outlook - Management noted that the first quarter results reflect the transition to de-risk and deleverage the portfolio, with elevated catastrophe losses impacting performance [10] - There is uncertainty regarding the excessive litigation in Florida, but a growing consensus exists that legislative action is needed to address the issue [36][37] - Management expressed optimism about the Commercial Lines business, which is positioned for profitable growth in a challenging market [11] Other Important Information - The company received regulatory approval to terminate its intercompany pooling agreement, enhancing its ability to raise additional capital [24] - Total assets as of March 31, 2022, were $2.4 billion, with cash and investments of approximately $909 million [23] Q&A Session Summary Question: What is the expected rate of change in the shrinkage of policy count? - Management indicated that a personal line adjusted decline of 6.6% is likely in line with the run rate, but premium will not drop at the same rate due to rate increases [27] Question: Can you provide insight into reinsurance costs as a percentage of gross earned premium? - Management refrained from commenting on future costs due to ongoing negotiations and uncertainty surrounding the Florida special session [30] Question: What items are on the agenda for the upcoming special session in Florida? - Management mentioned potential changes to the Florida Hurricane Catastrophe plan and issues related to roof covering and litigation [34]

Business Operations and Financial Performance - The company did not experience a material impact from COVID-19 on its business operations or financial position for the year ended December 31, 2021[18]. - Personal residential property policies generated written premium of $884,019,000, accounting for 66.5% of total gross written premium in 2021[30]. - Commercial policies produced written premium of $422,238,000, representing 31.8% of total gross written premium in 2021[34]. - The total number of policies in-force decreased to 471,724 in 2021 from 630,991 in 2020, reflecting a strategic focus on lower exposure to loss activity[43]. - The total insured value (TIV) of all policies in-force was $310,181,753 in 2021, down from $377,039,094 in 2020[46]. - The company increased rates in each state where actuarial data supported a rate change, aiming to enhance profitability[22]. - Financial leverage was reported at 33% as of December 31, 2021, indicating a conservative financial approach[25]. - The investment portfolio had a fair value of $719,566,000 at December 31, 2021, down from $995,051,000 at December 31, 2020[26]. - Approximately 43.3% of the company's policies in-force and 52.3% of total insured value were concentrated in Florida as of December 31, 2021, highlighting the geographical risk exposure[99]. - The relationship with Allstate Insurance Company accounted for approximately 13.5% of gross personal lines written premium for the year ended December 31, 2021, emphasizing reliance on key partnerships[108]. - The company's exposure in Louisiana and Texas represented approximately 23.3% of policies in-force and 15.7% of total insured value as of December 31, 2021, indicating significant regional risk[103]. - The company faces increased costs of claims due to one-way attorney fees in Florida, which could impact future financial performance[102]. Technology and Innovation - The company launched a direct-to-consumer platform in 2021, allowing customers to quote and bind policies online[41]. - The company utilizes proprietary inspection technology and risk scoring to enhance risk selection during the underwriting process[22]. - The company has made substantial investments in new technology to gain a competitive advantage in the insurance market[50]. - The company has experienced threats to its data and information technology systems, including malware and unauthorized access, which could lead to significant reputational damage and financial losses[119]. - The company relies on third-party vendors for critical services, and any failure or disruption from these vendors could adversely affect its operations and financial condition[123]. - The company is subject to evolving privacy and cybersecurity laws, which impose significant compliance costs and could restrict service offerings[121]. Human Resources and Diversity - As of December 31, 2021, the company employed 472 individuals, with 203 in Claims, 96 in the Client Experience Center, and 9 in Underwriting[80]. - The gender diversity among Executive Officers was 42.9%, with a change of 28.6 points from December 31, 2020, while racial diversity was 28.6% with a change of 14.3 points[81]. - United Insurance Holdings Corp. reported a voluntary attrition rate of 20.2% for the year ended December 31, 2021, indicating the effectiveness of its employee retention initiatives[86]. - The company’s ability to attract and retain senior management is critical, as the loss of key executives could adversely affect its business and financial condition[124]. Regulatory and Compliance Risks - The company is subject to extensive regulation primarily at the state level, affecting areas such as insurer solvency and rate setting[51]. - The insurance industry is heavily regulated, and further restrictive regulations may reduce profitability and limit growth[145]. - Compliance with state regulations is critical, as failure to comply may materially affect operations and financial condition[148]. - The company may face increased compliance costs due to changes in insurance laws or regulations, which could adversely affect results of operations and future growth prospects[154]. Investment and Financial Strategy - The company has invested $3,364,000 in a BlackRock ESG exchange-traded fund as of December 31, 2021[75]. - The company aims to achieve net-zero carbon emissions in its operations and through its value chain by no later than 2030[75]. - The investment policy limits investments in non-investment grade debt securities and restricts the type and concentration of investments[333]. - The investment portfolio is primarily in fixed income securities, and changes in interest rates can negatively impact net investment income and fair value[162]. - The company’s investment strategy includes diversifying its portfolio to mitigate credit risk[337]. - The company’s equity investments are primarily managed through industry and issuer diversification[340]. Risk Management - The inherent uncertainty in estimating loss reserves could lead to overstatement of earnings if actual claims exceed reserves, posing a financial risk[112]. - The company remains primarily liable for claims despite using reinsurance, exposing it to counterparty risk if reinsurers dispute claims or face financial difficulties[158]. - Market conditions beyond the company's control can affect the availability and cost of reinsurance, potentially leading to increased risk exposure[156]. - Legal actions and emerging claims may increase litigation costs and loss exposure, potentially impacting operating results and financial condition[169]. - A downgrade in financial strength ratings could adversely impact business volume and access to additional financing[173]. - The company is subject to assessments levied by governmental entities, which may adversely affect results of operations in specific reporting periods[114]. Corporate Governance - The company has registered up to 101,000,000 of its securities authorized for issuance, which could lead to substantial dilution for existing stockholders[177]. - The ability to pay dividends is uncertain and may be constrained by the holding company structure, affecting liquidity and obligations[178]. - As of December 31, 2021, R. Daniel Peed beneficially owned approximately 32% of the company's common stock, allowing him significant control over corporate decisions[182]. - The company is subject to restrictive covenants that may limit opportunities for expansion and growth potential in the commercial property insurance market[183].

Financial Data and Key Metrics Changes - Core income improved year-over-year from a loss of $58 million in Q4 2020 to a loss of $1 million in Q4 2021, and quarter-over-quarter from a loss of $15.5 million in Q3 2021 to a loss of $1 million in Q4 2021 [6] - GAAP net loss for Q4 2021 was $2.3 million or $0.05 per share, compared to a loss of $33.9 million or $0.79 per share in the previous year [13] - Ceded earned premiums increased by $32.4 million or 20% year-over-year to $196.8 million due to more business being ceded via reinsurance programs [16] Business Line Data and Key Metrics Changes - Personal lines premium mix improved from 75% to 63% in 2021, with a target of achieving a 50-50 balance with commercial lines in three years [8] - Commercial lines premium ended the year up nearly 20%, with exposure approximately flat [10] - Average rate increases in personal lines were 11.3% in Q4 and 11.5% for the year 2021, with expectations for continued significant rate increases throughout 2022 [9] Market Data and Key Metrics Changes - The company has reduced personal lines total insured value (TIV) by 44% through the sale of renewal rights and ongoing exposure management [8] - The underlying loss and loss adjustment expense was $76.5 million, down $1.6 million or 2% year-over-year, resulting in an underlying net loss ratio of 52.7% [18] Company Strategy and Development Direction - The company aims to achieve a balanced risk portfolio between personal and commercial lines, with ongoing exposure management and risk selection [11] - The strategic plan includes a focus on underwriting profitability in 2022 and targeted return on equity (ROE) in the mid-teens by 2023 [7][32] - The company is transitioning away from certain regions, impacting gross premiums earned and net premiums earned [30] Management Comments on Operating Environment and Future Outlook - Management noted a downward trend in the frequency of new lawsuits filed in Florida, which may improve the operating environment [21] - The company is actively monitoring legislative changes in Florida that could impact the homeowners market [26][27] - Management expressed confidence in achieving underwriting profit in 2022, with a focus on de-risking and deleveraging the portfolio [32] Other Important Information - Total assets were reported at $2.7 billion, with cash and investments of $965 million [23] - Operating expenses decreased by 26% year-over-year to $72.9 million, driven by higher ceding commission income [22] Q&A Session Summary Question: Insights on Florida homeowners market legislative changes - Management noted a reduction in new litigant lawsuits and mentioned ongoing monitoring of legislative proposals that could improve the environment [26][27] Question: Underwriting actions for 2022 and 2023 - Management highlighted approximately 60 material underwriting actions taken over the last 18 months, including improved assessment of roof conditions and withdrawal from non-scalable products [28][29] Question: ROE targets and expectations for 2022 - Management confirmed ROE targets in the mid-teens by 2023, with a focus on achieving underwriting profit in 2022 [32] Question: Impact of reinsurance and modeling underlying loss ratio - Management indicated that the June 1 reinsurance renewal will be key for 2022, with expectations to fare better than most regarding potential cost increases [33][34] Question: Expected RBC levels and capital contributions - Management stated that all carriers are expected to have RBC in excess of 300%, with some needing additional capital contributions prior to filing annual statements [35]

COVID-19 Impact - The company has not experienced a material impact from COVID-19 on its business operations or financial position as of September 30, 2021[34]. - There were no material claims or significant disruptions to the business for the three and nine months ended September 30, 2021[35]. - The company continues to respond to the COVID-19 pandemic and is taking measures to ensure uninterrupted service to customers[35]. - The company has not experienced a material impact from COVID-19 on its business operations or financial position as of September 30, 2021[146]. Financial Performance - Net investment income for the three months ended September 30, 2021, was $3,471 million, compared to $6,010 million for the same period in 2020[47]. - Total revenues for the three months ended September 30, 2021, were $162,740, a decline of 23.5% compared to $212,733 for the same period in 2020[150]. - Consolidated net income attributable to UIHC for the three months ended September 30, 2021, was a loss of $14,322, compared to a loss of $74,072 for the same period in 2020[150]. - The book value per share decreased to $7.42 from $10.54 year-over-year[149]. - The loss ratio for the three months ended September 30, 2021, was 67.1%, significantly improved from 115.8% for the same period in 2020[150]. - The combined ratio for the three months ended September 30, 2021, was 116.9%, down from 164.8% for the same period in 2020[150]. - Core income loss per diluted share for the three months ended September 30, 2021, was $(0.36), compared to $(1.95) for the same period in 2020[149]. - The company reported a total stock-based compensation expense of $495,000 for the nine months ended September 30, 2021, compared to $582,000 for the same period in 2020, reflecting a decrease of approximately 15%[129]. - The company incurred $336,614 in total losses during the nine months ended September 30, 2021, compared to $423,182 in the same period of 2020, reflecting a decrease of 20.5%[90]. Investment Portfolio - Total fixed maturities as of September 30, 2021, amounted to $884,940 million, with a gross unrealized loss of $11,073 million[41]. - The estimated fair value of total equity securities as of September 30, 2021, was $29,407 million, representing a significant increase from $7,445 million as of December 31, 2020[42]. - The fair value of total investments as of September 30, 2021, was $922,765 million, with $884,940 million classified as fixed maturities[60]. - The company holds 646 fixed maturities securities, with a gross unrealized loss of $10,804 million, indicating a significant portion of its portfolio is underperforming[52]. - The fair value of U.S. government and agency securities was $102,216 million as of September 30, 2021, down from $130,425 million at December 31, 2020[60]. - Approximately 85.8% of fixed maturities were U.S. Treasuries or corporate bonds rated "A" or better as of September 30, 2021[162]. - The company decreased its equity portfolio from 9.1% of total invested assets at June 30, 2020, to 0.6% at December 31, 2020, and began increasing investments in equities in Q1 2021[163]. Reinsurance and Losses - During the nine months ended September 30, 2021, the company ceded $91,127,000 in reinsurance, incurring reinstatement premiums of $14,732,000 due to Winter Storm Uri[83]. - The company’s excess of loss treaty provides coverage for catastrophe losses up to approximately $2,900,000,000, with a maximum retention of $31,000,000[82]. - Reinsurance recoverable on unpaid losses increased to $1,153,799 as of September 30, 2021, compared to $674,746 on December 31, 2020, reflecting a significant rise of 70.8%[88]. - The total reserve for unpaid losses and loss adjustment expenses (LAE) at September 30, 2021, was $1,509,477, up from $1,082,126 at the end of 2020, indicating a growth of 39.4%[90]. - The net balance for unpaid losses decreased to $355,678 as of September 30, 2021, from $380,411 in the previous year, a decline of 6.5%[90]. - The company experienced adverse development in 2021 related to prior year losses due to increased litigation claims in Florida, leading to higher loss payments compared to the previous year[92]. - Catastrophe losses incurred for named and numbered storms during the three months ended September 30, 2021, totaled $30,925,000, with a combined ratio impact of 20.1%[172]. Regulatory Compliance and Governance - The company met all regulatory requirements for its insurance subsidiaries as of September 30, 2021[118]. - The company was in compliance with the financial covenants of its Senior Notes as of September 30, 2021[99]. - The company has implemented processes and controls to ensure the appropriate valuation of its assets and liabilities[62]. Shareholder Actions - The company declared a quarterly cash dividend of $0.06 per share payable on November 29, 2021, to stockholders of record on November 22, 2021[137]. - As of September 30, 2021, the company had not repurchased any shares under the $25,000,000 stock repurchase plan authorized in July 2019[125]. Policy and Premiums - Gross premiums written for the three months ended September 30, 2021, were $322,493, a decrease of 11.8% from $365,819 for the same period in 2020[148]. - Net premiums earned for the nine months ended September 30, 2021, were $444,680, down 21.4% from $565,819 for the same period in 2020[148]. - The number of policies in-force decreased by 18.0% from 641,633 policies at September 30, 2020, to 525,969 policies at September 30, 2021[143]. - Total new and renewal policies written decreased by 21.5% to 408,631 for the nine months ended September 30, 2021, down from 520,654 in the same period in 2020[191]. Expenses and Cash Flow - Total expenses for Q3 2021 decreased by $131,863,000, or 42.1%, to $181,441,000 from $313,304,000 in Q3 2020, primarily due to a decrease in loss and LAE expenses[182]. - Operating expenses increased by $3,969,000, or 10.4%, to $42,133,000, primarily due to increased investments in technology[197]. - General and administrative expenses decreased by $10,712,000, or 20.0%, to $42,934,000, mainly due to a reduction in salary-related expenses[197]. - The company experienced cash outflows of $109,573,000 during the nine months ended September 30, 2021, compared to cash inflows of $164,592,000 in the same period in 2020[204].

Financial Data and Key Metrics Changes - For Q3 2021, the company reported a GAAP net loss of $14.3 million or $0.33 per share, compared to a loss of $74.1 million or $1.73 per share in the previous year, indicating significant improvement [13] - The core loss was $15.5 million or $0.36 per share, which declined roughly $6 million or $0.14 per share year-over-year, primarily due to higher reinsurance costs [13][14] - Operating expenses decreased by $16.1 million or 17% year-over-year to $76.3 million, driven mainly by higher ceding commission income [18] Business Line Data and Key Metrics Changes - Gross premiums written for the quarter declined by $43.3 million or approximately 12% due to intentional exposure reduction in personal lines [14] - Commercial lines premiums increased nearly 19% year-to-date, while personal lines exposure decreased [8] - The company achieved a record average rate increase of 13.8% across the personal lines renewal business portfolio in Q3 [7] Market Data and Key Metrics Changes - The Florida insurance market remains firm, with expectations of continued hard market conditions, especially for personal lines and commercial residential [10] - The company anticipates a 10% decline in total insured value (TIV) for personal lines next year [7] Company Strategy and Development Direction - The company aims to achieve a 50-50 balance between commercial and personal lines over the next three years [8][22] - The strategy includes increased reinsurance, exposure management, and reduced catastrophe retention levels to protect capital [5][6] - The implementation of advanced risk measurement algorithms and increased physical inspections is part of the underwriting improvement initiatives [9][16] Management's Comments on Operating Environment and Future Outlook - Management expects to return to profitability in Q4 2021 and aims for strong underwriting profit in 2022, targeting return on equity (ROE) in 2023 [11] - The company is cautiously optimistic about the impact of Florida Senate Bill 76, which has led to a reduction in lawsuits [10][17] Other Important Information - The company's assets totaled $3.3 billion, with cash and investments of $1.160 billion [19] - GAAP equity attributable to stockholders declined approximately 19% from year-end to $320.4 million, with a book value per share of $7.42 [19] Q&A Session Summary Question: What is the plan for achieving a 50-50 mix of personal and commercial lines? - The company plans to achieve this balance in approximately three years [22] Question: Are there other operations or states being considered for more aggressive actions? - The company has various exposure management strategies tailored to different states and has significantly reduced exposure in the Northeast [24] Question: How does the company plan to handle potential losses from smaller storms? - The company is negotiating its reinsurance renewals and is comfortable with its current retention levels [38][42] Question: What is the outlook for the expense ratio next year? - The net expense ratio is expected to remain comparable to the current quarter, while the direct expense ratio may see slight improvement [46][48]

United Insurance Holdings Corp. (UIHC) Q2 2021 Results Conference Call August 4, 2021 5:00 PM ET Company Participants Adam Prior - SVP, The Equity Group Dan Peed - CEO Brad Martz - President and CFO Conference Call Participants Greg Peters - Raymond James Elyse Greenspan - Wells Fargo Operator Greetings. Welcome to the United Insurance Holdings Corporation's Second Quarter 2021 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your ...