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United Insurance(ACIC) - 2021 Q3 - Quarterly Report
ACICUnited Insurance(ACIC)2021-11-15 22:09
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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 3,471million,comparedto3,471 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,adeclineof23.5162,740, 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,comparedtoalossof14,322, compared to a loss of 74,072 for the same period in 2020[150]. - The book value per share decreased to 7.42from7.42 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),comparedto(0.36), compared to (1.95) for the same period in 2020[149]. - The company reported a total stock-based compensation expense of 495,000fortheninemonthsendedSeptember30,2021,comparedto495,000 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 336,614intotallossesduringtheninemonthsendedSeptember30,2021,comparedto336,614 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 884,940million,withagrossunrealizedlossof884,940 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 29,407million,representingasignificantincreasefrom29,407 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 922,765million,with922,765 million, with 884,940 million classified as fixed maturities[60]. - The company holds 646 fixed maturities securities, with a gross unrealized loss of 10,804million,indicatingasignificantportionofitsportfolioisunderperforming[52].−ThefairvalueofU.S.governmentandagencysecuritieswas10,804 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 130,425millionatDecember31,2020[60].−Approximately85.8130,425 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 14,732,000duetoWinterStormUri[83].−Thecompany’sexcessoflosstreatyprovidescoverageforcatastrophelossesuptoapproximately14,732,000 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].−Reinsurancerecoverableonunpaidlossesincreasedto31,000,000[82]. - Reinsurance recoverable on unpaid losses increased to 1,153,799 as of September 30, 2021, compared to 674,746onDecember31,2020,reflectingasignificantriseof70.8674,746 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 1,082,126attheendof2020,indicatingagrowthof39.41,082,126 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 380,411inthepreviousyear,adeclineof6.5380,411 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 0.06persharepayableonNovember29,2021,tostockholdersofrecordonNovember22,2021[137].−AsofSeptember30,2021,thecompanyhadnotrepurchasedanysharesunderthe0.06 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,adecreaseof11.8322,493, 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,down21.4444,680, 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,or42.1131,863,000, or 42.1%, to 181,441,000 from 313,304,000inQ32020,primarilyduetoadecreaseinlossandLAEexpenses[182].−Operatingexpensesincreasedby313,304,000 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,primarilyduetoincreasedinvestmentsintechnology[197].−Generalandadministrativeexpensesdecreasedby42,133,000, primarily due to increased investments in technology[197]. - General and administrative expenses decreased by 10,712,000, or 20.0%, to 42,934,000,mainlyduetoareductioninsalary−relatedexpenses[197].−Thecompanyexperiencedcashoutflowsof42,934,000, 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].