American Coastal Insurance Corporation · NASDAQ:ACIC
American Coastal Insurance — United Insurance Holdings — Q4 2020 Earnings Presentation
29 slides from American Coastal Insurance's earnings presentation, Feb 24, 2021
Slide 1: United Insurance Holdings Corporation Investor Presentation
United Insurance Holdings Corporation (NASDAQ: UIHC) Investor Presentation February 24, 2021
Slide 2: Table of Contents
Table of Contents 2 Content Pages Q4 2020 Supplemental Information 3-12 Strategic Overview 13-27 Cautionary Statements 28
Slide 3: Supplement to Fourth Quarter 2020 Results
Supplement to Fourth Quarter 2020 Results
Slide 4: Q4-2020 Executive Summary
Q4-2020 Executive Summary 4 Underlying Results Improving Reducing CAT Retentions • Core income excluding named windstorms $3.3m or $0.08/share, up $18m y/y • Underlying gross loss ratio of 21.5% improved 10.7 points y/y • Underlying combined ratio of 88.5% improved 14.6 points y/y • Ceding more prem
Slide 5: Q4-2020 Results
Q4-2020 Results 5 Underlying results improved nearly $18m y/y excluding named storms Improvement due primarily to $33m decline in underlying loss costs Q4-20 Q4-19 Change Core income (loss) $ (58,093) $ (15,235) -281.3% per diluted share (CEPS) $ (1.35) $ (0.36) Included the following items Net curr
Slide 6: Results Improved Each Quarter vs. 2019
Results Improved Each Quarter vs. 2019 6 We have positive core earnings momentum excluding the noise from named storms +203% +475% +433% +123% $0.07 $0.21 $(0.08) $0.30 $(0.11) $0.35 $(0.34) $0.08 $(0.49) $0.94 $(0.60) $(0.40) $(0.20) $- $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 Q1-19 Q1-20 Q2-19 Q2-20 Q3
Slide 7: FY-2020 Results
FY-2020 Results 7 Underlying results improved over $61m y/y excluding named storms FY20 FY19 Change Core income (loss) $ (123,995) $ (46,173) -168.5% per diluted share (CEPS) $ (2.89) $ (1.08) Included the following items Net current year catastrophe loss & LAE incurred $ 294,536 $ 96,874 Net (favor
Slide 8: Controlling Expenses
Controlling Expenses 8 Significant investments in people and technology have been made 28.9% 26.2% 26.1% 25.7%
Slide 9: Improvements in 2020 Masked by CAT
Improvements in 2020 Masked by CAT 9 Underlying loss ratio and gross expense ratio at 5-year lows 2016 2017 2018 2019 2020 Income (loss) before tax 7,003$ 910$ (4,239)$ (32,606)$ (132,103)$ Deduct: investment (gains)/losses (547)$ (67)$ 7,645$ (25,989)$ (39,129)$ Add: CAT loss & LAE from named winds
Slide 10: Leverage Increased in 2020 Due to CAT Losses
Leverage Increased in 2020 Due to CAT Losses 10 Capital erosion of ~$107m (-21.3%) and loss reserve increases in 2020 driven by the unprecedented frequency of named windstorms Quota share reinsurance, exposure reduction and lower retention of risk will reduce net premiums and operating leverage furt
Slide 11: Action Taken & Planned to Improve Results
Action Taken & Planned to Improve Results 11 Hard market allows us to be more selective and limit exposure growth while increasing premiums Underwriting Improvements • 2019 rate actions averaged 8.3% across personal lines portfolio • 2020 rate actions approximately 11.0% across personal lines portfo
Slide 12: Exposure Management Reducing Operating Leverage
Exposure Management Reducing Operating Leverage 12 The renewal rights sale and underwriting action expected to also improve efficiency State Product Count Premium TIV CT HO-3 8,788 11,090,424$ 5,884,521,500$ MA DP-3, HO-3, HO-4, HO-5, HO-6 29,973 52,745,705$ 23,816,052,972$ NJ DP-3, HO-3, HO-4, HO-5
Slide 13: Strategic Overview
UPCES INSURANCE Strategic Overview
Slide 14: Company Overview
Company Overview 14 UPC Insurance is a specialty underwriter of catastrophe exposed property insurance in the U.S. United Insurance Holding Corp. (NASDAQ: UIHC) was founded in 1999 and is the insurance holding company for 5 P&C carriers and operating affiliates operating under the brand UPC Insuranc
Slide 15: Purpose & Vision
Purpose & Vision 15 To serve society by offering valuable insurance protection for people’s homes against the risk of loss from natural catastrophes and other perils Our Purpose To be the premier provider of property insurance in catastrophe-exposed areas Our Vision
Slide 16: Our Competitive Advantages
16 Our Competitive Advantages UPC is different because of our long-term track record of successfully sourcing & underwriting property risk UPC Insurance Differentiators Specialized Coastal Property Underwriting Expertise Rigid Underwriting Process / Proprietary Technology Innovative Reinsurance/Capi
Slide 17: UIHC Snapshot
UIHC Snapshot 17 $- $200,000.0 $400,000.0 $600,000.0 $800,000.0 $1,000,000.0 $1,200,000.0 $1,400,000.0 $1,600,000.0 2018 2019 2020 Gross Premium Earned Personal Lines Commercial Lines E&S Gross Premium Revenue UPC Insurance has maintained a strong position in the personal and commercial residential
Slide 18: Our Strategy to Create Shareholder Value
Our Strategy to Create Shareholder Value 18 o Rates – increased focus, rigid schedule, and pro-active approach to stay ahead of trends o Best-in-Class Risks - low frequency, with manageable and consistent severity o Underwriting rules: deductible changes, increased inspections (HSI tool) & focus on
Slide 19: Focused Underwriting
Focused Underwriting 19 • Forced ranked all policies using Profitability Framework to target non-renewal business in bottom decile by state • Robust home self inspection (HSI) process • Implementing new underwriting specific selection requirements and coverage restrictions • Point of Sale tools in p
Slide 20: De-Risk and Simplify
De-Risk and Simplify • Exposure Reduction • Reduced geographic exposure from 12 states to 7 states • Reducing TIV through targeted non-renewals of PML drivers while increasing average premium per risk • Focus on Efficiency • Discontinued 33 of 58 products in states that lack scale and profitability
Slide 21: Leveraging Technology
Leveraging Technology • Skyway Technologies is a newly formed InsurTech MGA that will focus on the direct-to-consumer channel • Powered by proprietary technology built around the Duck Creek Technology platform • Leveraging significant investments in systems and software that have already been made •
Slide 22: UPC Product & Market Strategy
UPC Product & Market Strategy 22 Our target risk portfolio involves growth in specialty commercial with less personal lines over time 67% 33% Personal Lines Commercial Lines 50% 50% Personal Lines Commercial Lines 31% 17% 8% 44% FL Northeast Southeast Gulf Premiums at 12.31.20 Premiums at Target Tot
Slide 23: A Closer Look at Underlying Results
A Closer Look at Underlying Results 23 Specialty commercial residential property maintained its earning power in 2020 despite record named storm activity and is well positioned to grow in the current hard market A key component of UPC’s product strategy is to unlock the profit potential in Commercia
Slide 24: Developing Direct E&S Underwriting Capabilities
Developing Direct E&S Underwriting Capabilities 24 UIHC is forming a new E&S carrier named Journey Specialty Insurance Company UIHC maintains its 66.7% ownership Journey Specialty Insurance Company ¹ (E&S) Journey Insurance Company (Admitted) Tokio Marine maintains its 33.3% non- controlling interes
Slide 25: Commercial Underwriting Approach is Unique
Commercial Underwriting Approach is Unique 25 Underwriting Expertise • Underwriters average 17+ years in industry • Teams organized around product specialization Large Capacity • $300 million CAT capacity per risk transaction. AmRisc provides a single "Basket of Securities" solution to meet the cove
Slide 26: Compelling Case for UIHC
Compelling Case for UIHC 26 Underlying fundamentals, enhanced by new strategic initiatives, expected to grow book value over time Factors supporting UIHC value proposition include: ✓ Strong product demand in a hard market ✓ Proprietary risk analytics/selection/underwriting tools ✓ Shifting toward hi
Slide 27: Final Thoughts
Final Thoughts 27 Hard market in property expected for at least 2-3 years Reduction in net premium risk expected to improve capital adequacy Much lower CAT retentions expected to limit downside Growth in E&S commercial property expected to improve returns on capital UIHC’s valuation may be near the
Slide 28: Cautionary Statements
Cautionary Statements 28 This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements include expectations regarding our diversification, growth opportunities, retention rates, liquidity, investme
Slide 29: UPC Insurance
UPCZ® INSURANCE
United Insurance Holdings — Q4 2020 Earnings Presentation on 6ix