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United Insurance Holdings Corp. Reports Financial Results FOR ITS QUARTER ENDED SEPTEMBER 30, 2015

The following excerpt is from the company's SEC filing.

October 29, 2015

St. Petersburg, FL -

October 28, 2015

United Insurance Holdings Corp. (NASDAQ: UIHC)

(UPC Insurance or the Company), a property and casualty insurance holding company, today reported its financial results for the

quarter ended

September 30, 2015

($ in thousands, except per share and ratios)

Three Months Ended

Nine Months Ended


Gross premiums written





Gross premiums earned

12 8,733




Ceded premiums earned





Net premiums earned





Total revenues





Earnings before income tax







Net income





Net income per diluted share



Book value per share

Return on average equity, ttm

Loss ratio, net

Expense ratio, net

Combined ratio (CR)

Effect of current year catastrophe losses on CR

Effect of prior year (favorable) development on CR

Underlying combined ratio

Loss ratio, net is calculated as losses and loss adjustment expenses (LAE) relative to net premiums earned.

Expense ratio, net is calculated as the sum of all operating expenses less interest expense relative to net premiums earned.

Combined ratio is the sum of the loss ratio, net and expense ratio, net.

Underlying combined ratio, a measure that is not based on U.S. generally accepted accounting principles (GAAP), is reconciled above to the combined ratio, the most directly comparable GAAP measure. Additional information regarding non-GAAP financial measures presented in this press release is in the

"Definitions of Non-GAAP Measures

" section of this document.

The quarter was marked by excellent progress in all areas," said John Forney, President and Chief Executive Officer of UPC Insurance. "Organic growth and geographic diversification were the main top line themes, with record new business volumne each month, over $500 million in premium in force at quarter's end, and 49% of our written premium coming from outside Florida. On the loss side, our non-cat loss ratio declined each month during the quarter, and as a result we produced our lowest non-cat loss ratio quarter of the year. Our efforts to build an enduring franchise built on a foundation of diversification, financial stability, sound products, and premier customer service are on track. I appreciate all the hard work our associates are doing every day to make our vision a reality."

Quarterly Financial Results

Net income for the quarter was

$8.1 million

per diluted share, compared to

$8.6 million

per diluted share for the

. The decrease in net income was primarily due to increases in losses and loss adjustment expenses (LAE) resulting from multiple catastrophe events totaling

$3.8 million

, or $0.11 per diluted share, and higher operating expenses which were partially offset by strong revenue growth of

and favorable reserve development of

$1.1 million

, or $0.04 per diluted share.

The Company's total gross written premium increased by

$50.9 million

, primarily due to the strong organic growth in new and renewal business generated in all states outside of Florida. The Company's growth in gross written premium in Louisiana continued to benefit from the acquisition of Family Security Holdings, LLC, which closed in the first quarter of 2015. The breakdown of the quarter-over-quarter changes in both written and assumed premiums by state is shown in the table below.

Three Months Ended September 30,

Direct Written and Assumed Premium By State

Growth %

Direct written premium









South Carolina


North Carolina

Rhode Island

New Jersey


Total direct written premium by state




Assumed premium


Total gross written premium


All assumed premiums are written in Florida due to policy assumptions from Citizens Property Insurance Corporation.

Loss and LAE increased

$10.3 million

$40.4 million

$30.1 million

. Loss and LAE expense as a percentage of net earned premiums increased 1.8 points resulting in a net loss ratio of

for the quarter, compared to a net loss ratio of

for the same period last year. Excluding catastrophe losses and reserve development, the Company's gross underlying loss and LAE ratio for the quarter was

, a decrease of 1.4 points from

during the third quarter of 2014.

UPC Insurance experienced

of net catastrophe losses during the quarter, which included $2.4 million of new losses from an August windstorm event in the Northeastern U.S. that was fully retained by the Company as well as $1.4 million of development, net of all reinsurance recoveries, on catastrophe losses previously incurred and reported during 2015.

Policy acquisition costs increased

$6.5 million

$23.8 million

$17.3 million

. These costs vary directly with changes in gross premiums earned and were generally consistent with the Company's growth in premium production and higher average commission rates outside of Florida.

Operating expenses increased to

$4.3 million

, from

$3.1 million

during the same period of last year due to higher underwriting report costs, licensing costs and marketing costs resulting from the Company's continued growth of policies in-force and expansion into new states.

General and administrative expenses increased to

$8.3 million

$4.7 million

primarily due to increases in personnel costs, information technology investments and professional services related to the Company's continued growth. Approximately $1.1 million of general and administrative expense for the third quarter of 2015 was driven by non-recurring charges for legal fees.

Combined Ratio Analysis

The Company's GAAP net combined ratio increased 6.7 points to

for the three months ended

for the same period in

. The net combined ratio increase was caused by 4.5 points, or $3.8 million of non-recurring catastrophe losses and higher operating expenses which were partially offset by lower non-catastrophe loss...