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 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 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 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].
United Insurance(ACIC) - 2021 Q4 - Annual Report