United Insurance Holdings Corp. Reports 2011 Third Quarter And Nine-Month Financial Results; Announces Quarterly Dividend

United Insurance Holdings Corp. (OTCBB: UIHC) (United or the Company), a property and casualty insurance holding company, today reported its financial results for the third quarter and nine months ended September 30, 2011.

2011 Third Quarter

Net income for the third quarter totaled $3.7 million, or $0.35 per diluted share, compared to a net loss of $316,000 or $0.03 per diluted share, during the same period last year. Net premiums earned increased to $23.9 million from $17.9 million for the third quarter 2010. Net investment income and other revenues decreased to $1.6 million for the quarter from $2.1 million in the prior year quarter.

Losses and loss adjustment expenses decreased to $8.4 million for the quarter from $11.5 million during the same period last year. Policy acquisition costs increased to $7.6 million from $6.2 million for the third quarter 2010. Operating expenses increased to $1.1 million from $769,000 during the same period last year. General and administrative expenses increased to $2.4 million from $1.9 million for the third quarter of last year.

2011 Year-to-Date

For the year-to-date period, net income was $4.9 million, or $0.46 per diluted share, compared to a net loss of $3.8 million, or $0.36 per diluted share for the same period last year. The Company's net premiums earned increased to $65.3 million, from $48.9 million during the same period of last year. Net investment income and other revenues decreased to $4.7 million for the year-to-date period from $7.5 million during the same period of last year.

Losses and loss adjustment expenses decreased to $29.4 million from $32.5 million while policy acquisition costs increased to $21.3 million from $18.8 million for the same period last year. Operating expenses increased to $3.9 million from $3.1 million during the same period of last year. General and administrative expenses increased to $6.8 million from $5.7 million while interest expense decreased to $453,000 from $1.6 million for the nine months ended September 30, 2010.

Balance Sheet Highlights

United's cash and investment holdings totaled $185.6 million at September 30, 2011 compared to $126.2 million at December 31, 2010. United’s cash and investment holdings consist primarily of investments in high-quality money market instruments, U.S. Government and agency securities and high-quality corporate debt. Fixed maturities represented approximately 97% and 93% of United's total investments at September 30, 2011, and December 31, 2010, respectively.

“We are pleased to report positive third-quarter results,” said Don Cronin, United’s Chief Executive Officer. “Our results continue to be positively impacted by our new business writings while achieving an appropriate rate for risk.” Net premiums earned increased $6 million to $23.9 million for the quarter, or 34% over the same period last year because the Company continues to benefit from an increase in new business, policyholder retention, and three rate increases implemented over the prior two years.

The Company’s losses and loss adjustment expenses decreased $3 million to $8.4 million for the quarter from the same period last year. The frequency and severity of current accident year claims has decreased in comparison to the same period of the prior year. Additionally, the Company continues to see improvement in its current year non-catastrophe loss ratios as a result of the rate increases which have been implemented. The decreases in frequency and severity mitigated the impact of the increase in policies written.

United Property and Casualty Insurance Company (UPC), one of the Company’s wholly-owned subsidiaries, began writing policies in Massachusetts on November 1, 2011. During the third quarter, the Rhode Island Department of Business Regulation approved UPC to write property and casualty insurance in the state as an admitted carrier and UPC plans to begin writing policies during the first quarter of 2012. UPC currently has applications pending in two additional states.

On November 1, the Company implemented an additional 7.5% average increase for its homeowner product and 14.9% average increase on its dwelling fire product that was approved by the Florida Office of Insurance Regulation.

Conference Call Details
November 10, 2011 - 10:00 A.M. ET
Participant Dial-In Numbers:
(United States): 877-407-0782
(International): 201-689-8567
 

Webcast

To listen to the live webcast, please go to www.upcic.com (“Events and Presentations”) and click on the conference call link, or go to: http://www.investorcalendar.com/IC/CEPage.asp?ID=166311.

About United Insurance Holdings Corp.

Founded in 1999, United Property and Casualty Insurance Company, a subsidiary of United Insurance Holdings Corp., writes and services property and casualty insurance in Florida, South Carolina and Massachusetts, and was recently licensed to write property and casualty insurance in Rhode Island. From its headquarters in St. Petersburg, United's team of dedicated employees manages a completely integrated insurance company, including sales, underwriting, customer service and claims. The Company distributes its homeowners, dwelling fire and flood products through many agency groups and conducts business through four wholly-owned subsidiaries. Homeowners insurance constitutes the majority of United's premiums and policies.

Forward-Looking Statements

Statements in this press release that are not historical facts are forward-looking statements that are subject to certain risks and uncertainties that could cause actual events and results to differ materially from those discussed herein. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “would,” “estimate,” “or “continue” or the other negative variations thereof or comparable terminology are intended to identify forward-looking statements. The forward-looking statements in this press release include statements regarding: the impact of the additional rate increases, and the expansion into other states. The risks and uncertainties that could cause our actual results to differ from those expressed or implied herein include, without limitation, the success of the Company's marketing initiatives, inflation and other changes in economic conditions (including changes in interest rates and financial markets); the impact of new Federal and State regulations that affect the property and casualty insurance market; the costs of reinsurance and the collectability of reinsurance, assessments charged by various governmental agencies; pricing competition and other initiatives by competitors; our ability to obtain regulatory approval for requested rate changes, and the timing thereof; legislative and regulatory developments; the outcome of litigation pending against us, including the terms of any settlements; risks related to the nature of our business; dependence on investment income and the composition of our investment portfolio; the adequacy of our liability for losses and loss adjustment expense; insurance agents; claims experience; ratings by industry services; catastrophe losses; reliance on key personnel; weather conditions (including the severity and frequency of storms, hurricanes, tornadoes and hail); changes in loss trends; acts of war and terrorist activities; court decisions and trends in litigation, and health care; and other matters described from time to time by us in our filings with the Securities and Exchange Commission, including, but not limited to, the Company's Annual Report on Form 10-K for the year ended December 31, 2010. In addition, investors should be aware that generally accepted accounting principles prescribe when a company may reserve for particular risks, including litigation exposures. Accordingly, results for a given reporting period could be significantly affected if and when a reserve is established for a major contingency. Reported results may therefore, appear to be volatile in certain accounting periods. The Company undertakes no obligations to update, change or revise any forward-looking statement, whether as a result of new information, additional or subsequent developments or otherwise.
 
Consolidated Statements of Income
(Unaudited)
 
    Three Months Ended   Nine Months Ended
September 30, September 30,
2011   2010 2011   2010
REVENUE:
Gross premiums written $ 44,266 $ 36,017 $ 160,337 $ 127,259
Decrease (increase) in gross unearned premiums 2,861   3,440   (28,585 ) (11,472 )
Gross premiums earned 47,127 39,457 131,752 115,787
Ceded premiums earned (23,267 ) (21,592 ) (66,485 ) (66,929 )
Net premiums earned 23,860 17,865 65,267 48,858
Net investment income 807 1,037 2,041 3,053
Net realized gains 206 112 234
Other revenue 826   891   2,536   4,171  
Total revenue 25,493 19,999 69,956 56,316
EXPENSES:
Losses and loss adjustment expenses 8,414 11,451 29,399 32,466
Policy acquisition costs 7,568 6,185 21,293 18,801
Operating expenses 1,146 769 3,946 3,114
General and administrative expenses 2,368 1,910 6,785 5,669
Interest expense 142   155   453   1,637  
Total expenses 19,638 20,470 61,876 61,687
Income (loss) before other (income) expenses 5,855 (471 ) 8,080 (5,371 )
Other (income) expenses (23 )   256   726  
Income (loss) before income taxes 5,878 (471 ) 7,824 (6,097 )
Provision for (benefit from) income taxes 2,228   (155 ) 2,961   (2,277 )
Net income (loss) $ 3,650   $ (316 ) $ 4,863   $ (3,820 )
OTHER COMPREHENSIVE INCOME (LOSS):
Change in net unrealized gain on investments 2,441 2,362 3,470 4,158
Reclassification adjustment for net realized investment gains (206 ) (112 ) (234 )
Income tax expense related to items of other
comprehensive income (941 ) (831 ) (1,295 ) (1,513 )
Total comprehensive income (loss) $ 5,150   $ 1,009   $ 6,926   $ (1,409 )
 
Weighted average shares outstanding
Basic and Diluted 10,361,849   10,573,932   10,469,056   10,573,932  
 
Earnings (loss) per share
Basic and Diluted $ 0.35   $ (0.03 ) $ 0.46   $ (0.36 )
 
Dividends declared per share $   $   $   $ 0.05  
 

Consolidated Balance Sheets
 
    September 30,   December 31,
2011 2010
ASSETS (Unaudited)
Investments available for sale, at fair value:
Fixed maturities (amortized cost of $128,995 and $50,984, respectively) $ 132,070 $ 50,683
Equity securities (adjusted cost of $3,579 and $3,666, respectively) 3,510 3,615
Other long-term investments 300   300  
Total investments 135,880 54,598
Cash and cash equivalents 49,703 71,644
Accrued investment income 904 414
Premiums receivable, net of allowances for credit losses of $72 and
$61, respectively 12,010 7,825
Reinsurance recoverable on paid and unpaid losses 6,643 27,304
Prepaid reinsurance premiums 63,152 38,307
Deferred policy acquisition costs 13,088 9,342
Other assets 4,753   4,187  
Total Assets $ 286,133   $ 213,621  
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Unpaid losses and loss adjustment expenses $ 39,857 $ 47,414
Unearned premiums 105,746 77,161
Reinsurance payable 55,665 14,982
Other liabilities 15,724 10,536
Notes payable 17,353   18,235  
Total Liabilities 234,345   168,328  
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none
issued or outstanding for 2011 and 2010
Common stock, $0.0001 par value; 50,000,000 shares authorized; 10,573,932
issued for 2011 and 2010, respectively; 10,361,849 and 10,573,932
outstanding for 2011 and 2010, respectively 1 1
Additional paid-in capital 75 75
Treasury shares, at cost; 212,083 and 0 shares, respectively (431 )
Accumulated other comprehensive income 1,847 (216 )
Retained earnings 50,296   45,433  
Total Stockholders' Equity 51,788   45,293  
Total Liabilities and Stockholders' Equity $ 286,133   $ 213,621  

Copyright Business Wire 2010

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