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United Insurance(ACIC) - 2023 Q1 - Quarterly Report
ACICUnited Insurance(ACIC)2023-05-19 21:00
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Financial Performance - Gross premiums written for Q1 2023 were 187.123million,anincreasefrom187.123 million, an increase from 142.414 million in Q1 2022, representing a growth of 31.4%[181] - Net premiums earned in Q1 2023 were 87.324million,comparedto87.324 million, compared to 57.746 million in Q1 2022, reflecting a growth of 51.3%[181] - Consolidated net income attributable to United Insurance Holdings Corp. for Q1 2023 was 260.878million,asignificantincreasefromalossof260.878 million, a significant increase from a loss of 33.172 million in Q1 2022[181] - Earnings from continuing operations before income tax for Q1 2023 were 40.428million,upfrom40.428 million, up from 5.627 million in Q1 2022[181] - Core income for Q1 2023 was 30.906million,comparedto30.906 million, compared to 5.953 million in Q1 2022, indicating a growth of 418.5%[181] - Book value per share increased to 1.93inQ12023,comparedtoanegative1.93 in Q1 2023, compared to a negative 4.21 in Q1 2022[181] - Total revenue decreased to 104,047,000inQ12023from104,047,000 in Q1 2023 from 117,361,000 in Q1 2022, a decline of 11.3%[182] - Net income from continuing operations increased to 30,573,000inQ12023,upfrom30,573,000 in Q1 2023, up from 4,647,000 in Q1 2022[182] - The combined ratio improved to 70.5% in Q1 2023 from 191.7% in Q1 2022, indicating enhanced operational efficiency[182] - The loss ratio, net, improved to 21.9% in Q1 2023 from 56.3% in Q1 2022, reflecting better loss management[182] - Net income attributable to United Insurance Holdings Corp. for Q1 2023 increased by 294,050,000,or886.4294,050,000, or 886.4%, to 260,878,000 from a net loss of 33,172,000inQ12022[220]PolicyandOperations−Thenumberofpoliciesin−forcedecreasedby51.333,172,000 in Q1 2022[220] Policy and Operations - The number of policies in-force decreased by 51.3% from 48,152 at March 31, 2022, to 23,473 at March 31, 2023, due to the receivership of the former subsidiary UPC[178] - The company ceased writing commercial residential insurance in South Carolina and Texas effective May 1, 2022, and divested ownership of UPC on February 27, 2023[172][173] - A quota share reinsurance agreement was entered into with TypTap Insurance Company, ceding 100% of UPC's in-force policies in Georgia, North Carolina, and South Carolina effective June 1, 2022[175] - The company has historically grown through strategic acquisitions, including the merger of Journey Insurance Company into American Coastal Insurance Company effective June 1, 2022[178] - Gross written premiums for personal lines decreased by 3,968,000, or 27.5%, to 10,482,000forQ12023from10,482,000 for Q1 2023 from 14,450,000 in Q1 2022[231] - Gross written premiums for commercial lines increased by 48,677,000,or38.048,677,000, or 38.0%, to 176,641,000 in Q1 2023 from 127,964,000inQ12022[241]ExpensesandCostManagement−Totalexpensessignificantlyreducedto127,964,000 in Q1 2022[241] Expenses and Cost Management - Total expenses significantly reduced to 64,207,000 in Q1 2023 compared to 113,067,000inQ12022,adecreaseof43.2113,067,000 in Q1 2022, a decrease of 43.2%[182] - Loss and LAE decreased by 13,445,000, or 41.3%, to 19,073,000inQ12023,withthelossratioasapercentageofnetearnedpremiumsdroppingto21.919,073,000 in Q1 2023, with the loss ratio as a percentage of net earned premiums dropping to 21.9% from 56.3% in Q1 2022[227] - Policy acquisition costs fell by 25,225,000, or 48.4%, to 26,927,000inQ12023,primarilyduetodecreasesinagentcommissionsandpolicyadministrationfees[228]−Generalandadministrativeexpensesdecreasedby26,927,000 in Q1 2023, primarily due to decreases in agent commissions and policy administration fees[228] - General and administrative expenses decreased by 5,598,000, or 36.3%, to 9,837,000inQ12023,drivenbyareductioninsalary−relatedexpensesduetodecreasedheadcount[229]−Totaloperatingexpensesroseby9,837,000 in Q1 2023, driven by a reduction in salary-related expenses due to decreased headcount[229] - Total operating expenses rose by 7,909,000, or 39.3%, to 28,016,000forQ12023comparedto28,016,000 for Q1 2023 compared to 20,107,000 in Q1 2022[247] Reinsurance and Catastrophe Management - The company purchased catastrophe excess of loss reinsurance protection up to an exhaustion point of approximately 2,500,000,000forthe2022hurricaneseason[198]−AfterHurricaneIan,thecompanyhasapproximately2,500,000,000 for the 2022 hurricane season[198] - After Hurricane Ian, the company has approximately 993 million of aggregate limit remaining, with reinstatement premiums of approximately 15.4million[199]−Thecompanyagreedtoterminateareinsuranceagreementresultinginapproximately15.4 million[199] - The company agreed to terminate a reinsurance agreement resulting in approximately 1,300,000 of ceded premium savings[200] - Reinsurance costs as a percentage of gross earned premium decreased from 53.0% in 2022 to 39.6% in 2023[203] - The exhaustion point of the company's catastrophe reinsurance program is approximately 200,000,000witharetentionof200,000,000 with a retention of 3,000,000 per occurrence[198] - Unpaid losses and LAE decreased from 842,958,000asofDecember31,2022to842,958,000 as of December 31, 2022 to 748,365,000 as of March 31, 2023, primarily due to ongoing claims settlements related to Hurricane Ian[215] - The company incurred 3,071,000incatastrophelossesforthethreemonthsendedMarch31,2023,withacombinedratioimpactof3.53,071,000 in catastrophe losses for the three months ended March 31, 2023, with a combined ratio impact of 3.5%[210] Investment and Market Conditions - Cash, cash equivalents, and restricted cash totaled 372,721,000 as of March 31, 2023, up from 340,905,000atDecember31,2022[193]−TheFederalReserve′sinterestratehikesmaynegativelyimpactthemarketvalueofthecompany′sinvestmentportfolioandrateofreturnoninvestments[218]−Netpurchasesofinvestmentstotaled340,905,000 at December 31, 2022[193] - The Federal Reserve's interest rate hikes may negatively impact the market value of the company's investment portfolio and rate of return on investments[218] - Net purchases of investments totaled 195,082,000 in Q1 2023, compared to net sales of $70,134,000 in Q1 2022[258] Future Outlook and Concerns - The company has substantial doubt about its ability to continue as a going concern within the next twelve months[253] - Management plans to explore raising additional capital for UIHC and ACIC to strengthen statutory risk-based capital if necessary[253]