American Coastal Insurance Corporation · NASDAQ:ACIC
American Coastal Insurance — United Insurance Holdings — Investor Presentation (August 2014)
29 slides from American Coastal Insurance's investor presentation, Aug 29, 2014
Slide 1: United Insurance Holdings Corp. Investor Presentation
United Insurance Holdings Corp. NASDAQ: UIHC Presentation to the
Slide 2: Presenters
Presenters 2 Mr. John Forney, CFA Chief Executive Officer (727) 280-4155 jforney@upcinsurance.com Mr. Brad Martz Chief Financial Officer (727) 280-4157 bmartz@upcinsurance.com
Slide 3: Mission-Vision-Strategy
Mission-Vision-Strategy 3 To build a sustainable franchise that delivers quality insurance products in select markets in order to produce superior risk-adjusted returns for investors. MISSION To be the premier provider of property insurance in catastrophe exposed areas. VISION To grow selectively in
Slide 4: UPC Investment Thesis
4 UPC Investment Thesis •Proven leader in the world’s peak exposure zone for hurricane risk •Cumulative written premiums since inception $2.2 billion; cumulative claims paid over $1 billion •Anti-fragility demonstrated during 16 different catastrophe events since 1999 Deep Experience •Significant, p
Slide 5: UPC Has Longevity & Experience
UPC Has Longevity & Experience 5 Company Founded in 1999 Sole focus from inception until 2012 was residential property insurance in Florida Focus + conservatism + experience = consistent profits More than 10 companies became insolvent in the historic 2004-2005 hurricane seasons (including th
Slide 6: Opportunity
OPPORTUNITY UPCZS 6 INSURANCE
Slide 7: UPC's Huge Market Opportunity Relative U.S. Hurricane Risk
UPC’s Huge Market Opportunity 7 Relative U.S. Hurricane Risk¹ ¹ Source: AIR Worldwide ² Source: Karen Clark & Company Exposed Property Values ($ billions) ² All TIV Coastal TIV Peak Coastal Area State 1 New York 6,989 4,938 2,132 2 Florida 4,227 3,305 608 3 Texas 5,421 1,446 1,072 4 Massachusetts 2,
Slide 8: Leadership
LEADERSHIP UPCZS 3 INSURANCE
Slide 9: Chairman, CEO and CFO biographies
Gregory C. Branch Chairman • Chairman of UPC Insurance since inception in 1999 • Prior Member of Lloyd’s of London for over 20 years • Former Chairman of Summit Holding Southeast, Inc. (acquired by Liberty Mutual) John L. Forney, CFA President & CEO • 25+ year successful career in investment banking
Slide 10: Significant Internal Capabilities
Significant Internal Capabilities 10 All key functional areas are controlled by experienced UPC employees Board of Di recto rs & CEO/ P re siden t Claims IT Operations Finance Legal Sales/Marketing Strong internal team recently augmented by first UPC actuarial manager All loss adjustment decisions a
Slide 11: Financial Strength
FINANCIAL STRENGTH UPCZS 7 INSURANCE
Slide 12: UPC is Conservatively Capitalized
UPC is Conservatively Capitalized 12 in thousands 6/30/2014 6/30/2013 % Chg Assets Investments $ 347,403 $ 241,963 43.6% Cash 79,738 50,815 56.9% Receivables 39,357 33,089 18.9% Current Assets 466,498 325,867 43.2% Other Assets 170,367 141,272 20.6% Total Assets 636,865 467,139 36.3% Liabilities Los
Slide 13: Investments Avoid Asset Risk
Investments Avoid Asset Risk 1 • Designed to preserve capital, maximize after-tax investment income, maintain liquidity and minimize asset risk • As of June 30, 2014, 100% of the Company’s fixed maturity portfolio was rated investment grade – Average duration: 3.46 years – Composite rating: A – Aver
Slide 14: Reserve Metrics Compare Favorably
Reserve Metrics Compare Favorably 14 Great loss experience PLUS higher average reserves, less pending & more paid Source: SNL & Company Statutory Filings Gross Loss & LAE Ratio Average Gross Loss & LAE Reserve AY UIHC HCI FNHC UVE HRTG AY UIHC HCI FNHC UVE HRTG 2008 21.2% 34.3% 25.2% 34.7% 2008 $ 4,
Slide 15: 2014-15 Catastrophe Reinsurance Program
2014-15 Catastrophe Reinsurance Program 15 $25.0M LAYER 3 $150M xs $25M LAYER 1 $100M xs $25M 50% 1-year term / 50% 2-year term LAYER 2 $125M xs $25M $125.0M $422.8M $955.2M $17.5M RETENTION FHCF 90% of $616.9M xs $230.8M $847.7M $230.8M LAYER 4 $150M xs $25M $1,105.2M 3.17YR 8.58YR 17.12YR 107.53YR
Slide 16: Historical Events Effects on UPC's Portfolio
Historical Events Effects on UPC’s Portfolio 16 ¹AIR estimated insured industry loss includes losses from automobiles, personal lines and commercial lines Estimated Industry Est. UPC Est. UPC Historical S.S. Industry Loss Return Gross Loss Net Loss Event Year Landfall Category ($ billion) ¹ Period (
Slide 17: Execution
EXECUTION UPCZS\ 7 INSURANCE
Slide 18: State Expansion Status
18 State Expansion Status Strategy not limited to just one or a few select markets Licensed App. Pending Future DC No need for huge market share (reduces concentration risk) Organic growth not dependent or focused on take-outs
Slide 19: Executing Geographic Diversification
Executing Geographic Diversification 19 Policies in-force at 6/30/2014 Policies in-force at 6/30/2013 Total PIF: 168,075 (1) Total PIF: 215,387 (1) (1) Policy numbers exclude flood line of business. Data as of June 30, 2014 & 2013. 159,221 17,236 16,279 12,256 10,395 56,166 FL SC MA RI Other (NC, NJ
Slide 20: UPC's Proprietary Product Offering
UPC’s Proprietary Product Offering 20 Refine AOP Rating Variables - Structure, Location & Occupant Credit Scoring CAT Banding UPC Risk Scoring Model UPC 1.0 AOP WIND
Slide 21: Cat Banding – A Technical Approach to Pricing
Cat Banding – A Technical Approach to Pricing 21 Developed over 4 million grid points using distance to coast factors, ISO rating territories, counties and zips that provide a unique market segmentation that’s highly correlated to the catastrophe risk and reinsurance costs (optimal rate-to-risk) RMS
Slide 22: Newest Markets Evolving Well
Newest Markets Evolving Well 22 ¹ UPC policies in-force during June 2014 Young portfolios with good spread on coast as well as inland ¹ Texas exposures focused on Tier 1 & 2 TX Launched Nov 2013 NJ Launched Aug 2013 NC Launched Apr 2013
Slide 23: Total Insured Value and Policies In-Force
Total Insured Value and Policies In-Force Quality Growth Reflected in Portfolio Metrics Modeled Cat Avg. Annual Loss to Premium In-Force $ in thousands, except policy data Quarter Ended June 30th, Years Ended December 31, 2014 2013 2012 2011 Number of Policies In-Force (PIF) 215,387 202,454 135,297
Slide 24: Results
RESULTS UPCZS\ 24 INSURANCE
Slide 25: Operating Highlights
Operating Highlights 25 in thousands Q2-14 Q2-13 % Chg YTD 2014 YTD 2013 % Chg Revenue Gross Earned $ 97,223 $ 74,900 29.8% $ 192,234 $ 144,776 32.8% Ceded Earned (33,039) (28,929) 14.2% (64,016) (56,508) 13.3% Net Earned 64,184 45,971 39.6% 128,218 88,268 45.3% Investment Income 1,617 831 94.6% 3,0
Slide 26: Core UW Results Driving Returns
-10,000 -5,000 0 5,000 10,000 15,000 20,000 25,000 YE 2010 YE 2011 YE 2012 YE 2013 YTD 2014 Underwriting G/L Investment Income Current Year CAT Losses PY CAT Development Other PY Development Components of Operating Return on Equity 1 26 Core UW Results Driving Returns ROAE ROAE ROAE ROAE ROAE -2.0%
Slide 27: Safe Harbor – At a Glance
Safe Harbor – At a Glance 27 Statements in this presentation 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 o
Slide 28: Definitions of Non-GAAP Measures
Definitions of Non-GAAP Measures 28 We believe that investors’ understanding of UPC Insurance’s performance is enhanced by our disclosure of the following non-GAAP measures. Our methods for calculating these measures may differ from those used by other companies and therefore comparability may be li
Slide 29: United Insurance Holdings Corp.
United Insurance Holdings Corp. NASDAQ: UIHC Presentation to the
United Insurance Holdings — Investor Presentation (August 2014) on 6ix