American Coastal Insurance Corporation · NASDAQ:ACIC
American Coastal Insurance — United Insurance Holdings — Investor Presentation (June 2011)
28 slides from American Coastal Insurance's investor presentation, Jun 24, 2011
Slide 1: Shareholder Update
UNITED INSURANCE HOLDINGS CORP. OTC: UIHC SHAREHOLDER UPDATE JUNE 24, 2011
Slide 2: Safe Harbor
SAFE HARBOR 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 of the foregoing,
Slide 3: Subsidiaries
SUBSIDIARIES United conducts business through four wholly owned subsidiaries 2
Slide 4: Seasoned Management Team
SEASONED MANAGEMENT TEAM • Don Cronin, President & CEO • Joe Peiso, Chief Financial Officer • Mel Russell, SVP and Chief Underwriting Officer • JoAnne Higgins, Claims Manager 3
Slide 5: Business Overview
UIHCZS Business Overview
Slide 6: Overview
OVERVIEW • Founded in 1999, United writes and services homeowners insurance in Florida and South Carolina and is licensed to write in Massachusetts. • The Company had 89,000 Homeowner & Dwelling Fire and 16,400 Flood policies- in-force at March 31, 2011. • The Company distributes its homeowners, dwe
Slide 7: Product Offerings
PRODUCT OFFERINGS Homeowner Coverage Dwelling Fire Coverage Flood Coverage – Write Your Own (WYO) 6
Slide 8: United History Timeline
UNITED HISTORY TIMELINE United remains UPC & UIM profitable formed with throughout 12,000 unprecedented UIHC Expands into policies storm activity becomes publicly Established South Carolina traded in merger with in-house a SPAC claims Expands into September 29, 2008 department Massachusetts 1999 200
Slide 9: Company Milestones
COMPANY MILESTONES • Began operations in 1999 as a virtual company by assuming 12,000 policies from FRPCJUA • Established in-house claims department in 2002 • Significantly strengthened underwriting standards in 2003, shedding more than 18,000 unprofitable policies – 5,000 in sinkhole prone counties
Slide 10: Company Milestones
COMPANY MILESTONES • Added $40 million in surplus in late 2006 by taking advantage of a state matching funds program • In March 2008, contracted with a national third-party policy administrator (CSC) with multi-line, multi-state capabilities • July 2010, assumed $5 million book of business as part o
Slide 11: Culture of Excellence
CULTURE OF EXCELLENCE • Disciplined Underwriting • Rates • Effective Claims & Risk Management • Reinsurance & Modeling • Strong team environment • Consistently high level of operating performance 10
Slide 12: Underwriting Expertise
UNDERWRITING EXPERTISE • Strict underwriting criteria – Took out 64,000 policies over 2 years through 9 takeouts from Citizens – Non-renewed 18,000 policies in 2003 – Pool cage exclusion • Ongoing loss analysis to control non-catastrophic loss results – Credit score entire book – Insurance to value
Slide 13: Claims Management
CLAIMS MANAGEMENT • Extensive claims & risk management expertise – Adjusters average over 10 years of experience – All claims are adjusted in-house • Settle 3,000 claims per year total attritional losses of $282.9 million since inception • Paid more than 33,000 claims related to 2004 – 2005 hurrican
Slide 14: Reinsurance & Modeling
REINSURANCE & MODELING • Substantial reinsurance protection for catastrophic events – Multi-event coverage – Quality reinsurers with an A.M. Best rating of A- or better – Recovered $471 million from reinsurers related to 2004 – 2005 hurricanes • Risk modeling – In-house catastrophe modeling – Monthl
Slide 15: Reinsurance Program
REINSURANCE PROGRAM • Gross reinsurance costs to gross premiums is expected to be approximately 39% during the upcoming contract year compared to 54% for last year’s contract • Total reinsurance protection of $475 million; the private component of our program provides $129 million of protection and
Slide 16: Business Development
BUSINESS DEVELOPMENT • Growth Potential – 1.8% of Florida market – Potential acquisition / assume a book of business – Strategic takeout – Organic growth through more than 300 agency groups representing over 2,000 agents, including strategic partnerships with two national carriers and two large agen
Slide 17: Florida Business Environment
FLORIDA BUSINESS ENVIRONMENT 1 • Indications of economic recovery • Population growth weak, but expected to accelerate in 2011 – 2012 • Slow improvement of unemployment rate • Private housing starts increase for first time since 2008 and home inventories projected to begin decline by end of 2011 • R
Slide 18: Financial Overview
UIHCZS Financial Overview
Slide 19: Financial Highlights
FINANCIAL HIGHLIGHTS In thousands, except per share & policies March 31, Year to Date at December 31, 2011 2010 2009 2008 2007 Gross premiums earned $ 40,366 $ 155,307 $ 156,393 $ 140,222 $ 151,684 Net investment Income 534 3,879 4,831 6,632 7,751 Net income (loss) 1,124 (925) 4,057 33,419 39,642 Ea
Slide 20: Wind Premiums & Mitigation Credits
WIND PREMIUMS & MITIGATION CREDITS 19
Slide 21: Earned Premiums
EARNED PREMIUMS Florida Average Per Policy Earned Premiums in dollars 2,400 2,300 -34.5% Decrease -11.3 % Decrease Peak to Trough Peak to Projected 2,200 End of Year 2011 Wind Mitigation Credits Begin 2,100 2,000 1,900 1,800 15.9% Rate 12.7%Rate Increase 1,700 Increase & Algorithm Change 1,600 14.0%
Slide 22: Improving Rate Environment
IMPROVING RATE ENVIRONMENT • Homeowner rates vary across our 157 rating territories in Florida • Average rate increases implemented by line of business in Florida from 2009 - 2011 Month & Year Homeowners Dwelling Fire September 2009 12.7% October 2009 15% March 2010 14% April 2010 14.7% May 2011 15.
Slide 23: New Business (NB) Averages
1 NEW BUSINESS (NB) AVERAGES 2007 – 2010 Average NB Average NB Average NB Cov. A Rate Year Premium Per Total Insured % Change Cov. A Per $1,000 Policy Value 2007 $ 2,119 $ 258,700 $ 465,660 $ 8.19 n/a 2008 1,476 275,600 496,080 5.36 -34.5% 2009 1,414 272,300 490,140 5.19 -3.5% 2010 1,607 249,300 448
Slide 24: Financial Highlights
FINANCIAL HIGHLIGHTS • Profitable 10 out of the last 11 years – Average annual ROE of 32% and 29% excluding Citizens bonuses in 2007 & 2008 • 2010 Debt retirements – Retired final $4.3 million installment of $33 million 3-year note in February – Retired $18.3 million 11% Merger notes in May – 16 mon
Slide 25: Significant Business Opportunities
SIGNIFICANT BUSINESS OPPORTUNITIES • Expansion in Florida – Approximately 4.8 million policies representing $9 billion in premiums – United currently serves only 1.8% of the market – Larger competitors reducing exposure in Florida – Residual market (Citizens) currently largest writer in the state •
Slide 26: Why UIHC?
WHY UIHC? • Gross written premiums of $1.1 billion and $43 million WYO Flood premiums since inception in 1999 through March 31, 2011 • Cumulative net income of $111.2 million after total federal and state income taxes of $45.6 million. • Net income of $4.2 million and $3 million in storm impacted ye
Slide 27: Why UIHC?
WHY UIHC? • Retired $22.6 million of high interest rate notes in 2010 • Incurred catastrophic losses totaling $533 million and attritional losses of $282.9 million through March 31 • Licensed in South Carolina and assumed $5 million, and growing book of homeowner business • Licensed in Massachusetts
Slide 28: UIHCZS
UIHCZS
United Insurance Holdings — Investor Presentation (June 2011) on 6ix