UNITED INSURANCE(UIHC) - 2025 Q1 - Quarterly Results

Press Release Overview Financial Highlights American Coastal Insurance Corporation reported its Q1 2025 financial results, showing a 7.2% increase in gross premiums written and an 8.4% increase in total revenue, but consolidated net income decreased by 9.5% to $21.3 million, and diluted EPS fell by 10.4% to $0.43, while book value per share increased by 26.5% year-over-year Q1 2025 vs. Q1 2024 Key Financial Data | Metric | Q1 2025 ($ thousands) | Q1 2024 ($ thousands) | Change (%) | | :--------------------------------- | :-------------------- | :-------------------- | :--------- | | Gross premiums written | 197,852 | 184,601 | 7.2 % | | Net premiums earned | 68,272 | 62,631 | 9.0 % | | Total revenue | 72,202 | 66,598 | 8.4 % | | Consolidated net income | 21,348 | 23,599 | (9.5)% | | Net income per diluted share (Total) | 0.43 | 0.48 | (10.4)% | | Core income | 20,651 | 24,390 | (15.3)% | | Book value per share | 5.40 | 4.27 | 26.5 % | CEO Commentary CEO B. Bradford Martz highlighted achieving a target combined ratio of 65% and a return on equity over 30% in Q1 2025, attributing the 9% increase in net premiums earned and slight decrease in net loss and LAE to strong account retention, selective new business, and a strategy to retain more business, emphasizing disciplined underwriting for sustainable profitability - Achieved target combined ratio of 65% and return on equity over 30% in the first quarter of 2025[5] - Net premiums earned increased 9% and net loss and loss adjustment expenses decreased slightly compared to the same period last year, driven by strong account retention, selective new business production, and a strategy to retain more business[5] - The Company remains focused on disciplined underwriting to support sustainable profitability and value creation for shareholders[5] Key Performance Ratios Return on Equity and Core Return on Equity The company's GAAP return on equity based on consolidated net income decreased significantly from 67.7% in Q1 2024 to 35.4% in Q1 2025, with core return on equity similarly declining from 70.0% to 34.2% year-over-year Return on Equity (Annualized) | Metric | Q1 2025 | Q1 2024 | | :--------------------------------------------------- | :------ | :------ | | Return on equity based on GAAP income from continuing operations, net of tax | 32.7 % | 68.0 % | | Return on equity based on GAAP net income | 35.4 % | 67.7 % | | Core return on equity | 34.2 % | 70.0 % | Combined Ratio and Underlying Ratio The consolidated combined ratio increased by 11.8 points to 65.0% in Q1 2025, primarily driven by a 15.0 point increase in the net expense ratio, partially offset by a 3.2 point decrease in the net loss ratio, with the underlying combined ratio also increasing by 15.3 points to 68.2% Combined Ratio Metrics | Metric | Q1 2025 | Q1 2024 | Change (pts) | | :----------------------------------------- | :------ | :------ | :----------- | | Loss ratio, net | 16.7 % | 19.9 % | (3.2) | | Expense ratio, net | 48.3 % | 33.3 % | 15.0 | | Combined ratio (CR) | 65.0 % | 53.2 % | 11.8 | | Underlying combined ratio | 68.2 % | 52.9 % | 15.3 | Loss Ratios Net loss and LAE decreased by $1.1 million to $11.4 million in Q1 2025, resulting in a 3.2 point decrease in the net loss ratio to 16.7%, while the underlying loss and LAE as a percentage of net earned premiums increased slightly by 0.3 points to 19.9% Loss and LAE Analysis | Metric | Q1 2025 ($ thousands) | Q1 2024 ($ thousands) | Change ($ thousands) | | :-------------------------------------------------- | :-------------------- | :-------------------- | :------------------- | | Loss and LAE | 11,389 | 12,474 | (1,085) | | % of Net earned premiums (Loss ratio, net) | 16.7 % | 19.9 % | (3.2) pts | | Underlying loss and LAE | 13,583 | 12,239 | 1,344 | | % of Net earned premiums (Underlying loss ratio) | 19.9 % | 19.6 % | 0.3 pts | Expense Ratios Total operating expenses increased significantly by $12.1 million to $33.0 million in Q1 2025, primarily driven by a substantial $13.9 million rise in policy acquisition costs, leading to a 15.0 point increase in the net expense ratio to 48.3% Operating Expenses Analysis | Metric | Q1 2025 ($ thousands) | Q1 2024 ($ thousands) | Change ($ thousands) | | :-------------------------- | :-------------------- | :-------------------- | :------------------- | | Policy acquisition costs | 23,466 | 9,595 | 13,871 | | General and administrative | 9,506 | 11,252 | (1,746) | | Total Operating Expenses | 32,972 | 20,847 | 12,125 | | % of Net earned premiums | 48.3 % | 33.3 % | 15.0 pts | Detailed Financial Results (Quarter to Date) Quarter to Date Financial Results - Net Income Net income attributable to the Company for Q1 2025 was $21.3 million ($0.43 per diluted share), down from $23.6 million ($0.48 per diluted share) in Q1 2024, primarily due to increased policy acquisition costs, partially offset by higher gross premiums earned, decreased ceded premiums earned, and lower losses and LAE and G&A expenses, with income from discontinued operations contributing $1.6 million - Net income attributable to the Company for Q1 2025 was $21.3 million, or $0.43 per diluted share, compared to $23.6 million, or $0.48 per diluted share, for Q1 2024[13] - Drivers included increased gross premiums earned and decreased ceded premiums earned, offset by increased policy acquisition costs, partially offset by decreased losses and LAE and general and administrative expenses[13] - Net income attributable to discontinued operations was $1.6 million in Q1 2025, compared to a net loss of $110 thousand in Q1 2024[13] Quarter to Date Financial Results - Premiums Total gross written premium increased by 7.2% to $197.9 million for Q1 2025, primarily driven by a $13.3 million increase in direct premium Gross Written Premium | Metric | Q1 2025 ($ thousands) | Q1 2024 ($ thousands) | Change ($ thousands) | Change (%) | | :---------------------------------- | :-------------------- | :-------------------- | :------------------- | :--------- | | Direct premium | 197,902 | 184,601 | 13,301 | 7.2 % | | Assumed premium | (50) | — | (50) | 100.0 % | | Total commercial property gross written premium | 197,852 | 184,601 | 13,251 | 7.2 % | Quarter to Date Financial Results - Losses and LAE Loss and LAE decreased by 8.8% to $11.4 million for Q1 2025, with the percentage of net earned premiums decreasing by 3.2 points to 16.7%, though the gross underlying loss and LAE ratio increased by 0.8 points to 8.4% - Loss and LAE decreased by $1.1 million, or 8.8%, to $11.4 million for Q1 2025[15] - Loss and LAE expense as a percentage of net earned premiums decreased 3.2 points to 16.7% for Q1 2025[15] - Excluding catastrophe losses and reserve development, the Company's gross underlying loss and LAE ratio for Q1 2025 would have been 8.4%, an increase of 0.8 points[15] Quarter to Date Financial Results - Operating Expenses Total operating expenses increased significantly, primarily due to a substantial rise in policy acquisition costs, partially offset by a decrease in general and administrative expenses Policy Acquisition Costs Policy acquisition costs surged by 144.8% to $23.5 million for Q1 2025, mainly due to a decrease in ceding commission income from reduced quota share reinsurance coverage (40% to 20%) and increased external management fees - Policy acquisition costs increased by $13.9 million, or 144.8%, to $23.5 million for Q1 2025[16] - Primarily due to a decrease in ceding commission income as a result of the Company's decrease in quota share reinsurance coverage from 40% to 20%, effective June 1, 2024[16] - External management fees also increased due to a one percent increase in the management fee agreed to in the contract renewal with AmRisc in 2024 and the increase in direct written premiums[16] General and Administrative Expenses General and administrative expenses decreased by 15.9% to $9.5 million for Q1 2025, primarily due to a non-recurring employee retention tax credit refund received and reduced external spending for audit, actuarial, and legal services - General and administrative expenses decreased by $1.8 million, or 15.9%, to $9.5 million for Q1 2025[17] - Driven by a non-recurring employee retention tax credit refund received during the first quarter of 2025[17] - External spending for audit, actuarial and legal services decreased quarter-over-quarter[17] Reinsurance Costs as a Percentage of Gross Earned Premium The total ceding ratio decreased from 61.0% in Q1 2024 to 57.9% in Q1 2025, primarily due to a reduction in quota share reinsurance coverage from 40% to 20%, which led to the purchase of additional, more cost-effective excess-of-loss coverage Reinsurance Costs as a Percentage of Gross Earned Premium | | 2025 | 2024 | | :--- | :--- | :--- | | Non-at-Risk | (0.3)% | (0.2)% | | Quota Share | (16.2)% | (31.5)% | | All Other | (41.4)% | (29.3)% | | Total Ceding Ratio | (57.9)% | (61.0)% | - Ceded premiums earned related to catastrophe excess of loss contracts increased year-over-year, driven by a decrease in quota share reinsurance coverage from 40% to 20% effective June 1, 2024, which then required additional excess-of-loss coverage to be purchased[19] - The decrease in quota share reinsurance coverage lowered the Company's overall ceding ratio, as replacement excess of loss coverage was more cost effective[19] Investment Portfolio Highlights The company's cash, restricted cash, and investment holdings increased by $28 million to $568.8 million at March 31, 2025, primarily due to positive cash flows from operations, with fixed maturities constituting 84.3% of total investments and a modified duration of 2.0 years - Cash, restricted cash and investment holdings increased from $540.8 million at December 31, 2024, to $568.8 million at March 31, 2025, driven by positive cash flows from operations[20] - Fixed maturities represented approximately 84.3% of total investments at March 31, 2025, compared to 82.3% at December 31, 2024[20] - The Company's fixed maturity investments had a modified duration of 2.0 years at March 31, 2025, compared to 2.2 years at December 31, 2024[20] Book Value Analysis Book value per common share increased by 10.4% from $4.89 at December 31, 2024, to $5.40 at March 31, 2025, driven by an increase in retained earnings from net income, with underlying book value per common share (excluding AOCI) also increasing by 8.8% to $5.67 Book Value per Common Share | Metric | March 31, 2025 | December 31, 2024 | | :------------------------------------ | :------------- | :---------------- | | Book Value Per Common Share | $5.40 | $4.89 | | Underlying Book Value Per Common Share | $5.67 | $5.21 | - An increase in the Company's retained earnings as a result of net income for the quarter ended March 31, 2025, drove the increase in the Company's book value per share[21] Company Information & Non-GAAP Measures Conference Call Details & Presentation The company hosted a quarterly conference call on May 8, 2025, at 5:00 P.M. ET, with an earnings presentation available on its investor relations website - Quarterly conference call held on May 8, 2025, at 5:00 P.M. ET[23] - Earnings presentation is available on the Company's website at investors.amcoastal.com/Presentations[24] About American Coastal Insurance Corporation American Coastal Insurance Corporation, founded in 2007, is a property and casualty insurance holding company specializing in insuring Condominium and Homeowner Association properties and Apartments in Florida, holding an "A" Financial Stability Rating from Demotech and an "A-" insurance financial strength rating from Kroll - American Coastal Insurance Corporation (ACIC) is a property and casualty insurance holding company, founded in 2007, for the purpose of insuring Condominium and Homeowner Association properties, and Apartments in the state of Florida[25] - Has an exclusive partnership for distribution of Condominium Association properties in Florida with AmRisc Group[25] - Earned a Financial Stability Rating of "A", "Exceptional" from Demotech, and maintains an "A-" insurance financial strength rating with a Stable outlook by Kroll[25] Definitions of Non-GAAP Measures This section defines and reconciles several non-GAAP financial measures, including core income, core return on equity, underlying combined ratio, underlying loss and LAE, and underlying book value per common share, used to provide a clearer view of operating performance by excluding non-indicative items - Core income (loss) is a non-GAAP measure computed by adjusting net income (loss) for amortization of intangible assets, discontinued operations, and realized/unrealized investment gains/losses, net of tax, to focus on normal operations[29] - Core return on equity is a non-GAAP ratio calculated using core income to evaluate underwriting and operating results, as excluded items are not necessarily indicative of operating trends[30] - Underlying combined ratio and underlying loss and LAE are non-GAAP measures that exclude current year catastrophe losses and prior year reserve development to highlight business trends obscured by these volatile items[31][32] - Underlying book value per common share is a non-GAAP measure that excludes accumulated other comprehensive loss to analyze the change in net worth attributable to management efforts, eliminating the effect of interest rates[33][34] Discontinued Operations The company completed the sale of its subsidiary, Interboro Insurance Company (IIC), to Forza Insurance Holdings, LLC on April 1, 2025, for approximately $26.5 million in cash proceeds, with the gain or loss from deconsolidation not anticipated to be material - On April 1, 2025, the Company completed the sale of its subsidiary, Interboro Insurance Company (IIC), to Forza Insurance Holdings, LLC[35] - The Company received cash proceeds totaling approximately $26.5 million from the sale[35] - The gain or loss from the deconsolidation of IIC is not anticipated to be material to the financial statements[35] Forward-Looking Statements This section contains a standard disclaimer regarding forward-looking statements, noting that actual results may differ materially from expectations due to various risks and uncertainties detailed in SEC filings, and the company undertakes no obligation to update these statements - Statements that are not historical facts are "forward-looking statements" based on reasonable estimates, assumptions and plans[36] - Actual results could differ materially from those expressed in, or implied by, the forward-looking statements if estimates, assumptions, or plans prove inaccurate or if other risks or uncertainties arise[36] - The Company undertakes no obligation to update or revise any forward-looking statements, except as required by applicable law[36] Consolidated Financial Statements Consolidated Statements of Comprehensive Income For Q1 2025, total revenues increased to $72.2 million from $66.6 million, but total expenses rose significantly to $47.1 million from $36.0 million due to higher policy acquisition costs, resulting in decreased income from continuing operations to $19.7 million (from $23.7 million) and net income of $21.3 million (from $23.6 million), while total comprehensive income slightly increased to $24.2 million Consolidated Statements of Comprehensive Income (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 ($ thousands) | Q1 2024 ($ thousands) | | :---------------------------------------- | :-------------------- | :-------------------- | | Gross premiums written | 197,852 | 184,601 | | Net premiums earned | 68,272 | 62,631 | | Total revenues | 72,202 | 66,598 | | Losses and loss adjustment expenses | 11,389 | 12,474 | | Policy acquisition costs | 23,466 | 9,595 | | General and administrative expenses | 9,506 | 11,252 | | Total expenses | 47,078 | 36,040 | | Income from continuing operations, net of tax | 19,711 | 23,709 | | Income (loss) from discontinued operations, net of tax | 1,637 | (110) | | Net income | 21,348 | 23,599 | | Total comprehensive income | 24,178 | 23,401 | | Diluted EPS (Total) | 0.43 | 0.48 | Consolidated Balance Sheets As of March 31, 2025, total assets decreased to $1,159.6 million from $1,216.1 million, largely due to decreases in reinsurance recoverable and ceded unearned premiums, while total liabilities also decreased to $898.8 million from $980.5 million, driven by lower unpaid losses and LAE and reinsurance payable, and stockholders' equity increased to $260.9 million from $235.7 million due to retained earnings Consolidated Balance Sheets (March 31, 2025 vs. December 31, 2024) | Metric | March 31, 2025 ($ thousands) | December 31, 2024 ($ thousands) | | :------------------------------------ | :----------------------------- | :------------------------------ | | Total investments | 335,787 | 341,418 | | Cash and cash equivalents | 167,155 | 137,036 | | Reinsurance recoverable on paid and unpaid losses | 202,391 | 263,419 | | Ceded unearned premiums | 121,138 | 160,893 | | Total Assets | 1,159,646 | 1,216,112 | | Unpaid losses and loss adjustment expenses | 256,289 | 322,087 | | Unearned premiums | 321,105 | 285,354 | | Reinsurance payable on premiums | 53,761 | 83,130 | | Total Liabilities | 898,766 | 980,452 | | Total Stockholders' Equity | 260,880 | 235,660 |