American Coastal Insurance Corporation · NASDAQ:ACIC
American Coastal Insurance — United Insurance Holdings — Investor Presentation (August 2013)
26 slides from American Coastal Insurance's investor presentation, Aug 27, 2013
Slide 1: United Insurance Holdings Corp. Investor Presentation August 2013
United Insurance Holdings Corp. NASDAQ: UIHC Investor Presentation August 2013
Slide 2: Safe Harbor
Safe Harbor – At a Glance 2 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
Slide 3: Business Model: Mission, Vision, Strategy
Business Model 3 To produce superior risk-adjusted returns for investors by building a sustainable franchise that delivers quality homeowners insurance products in select markets. MISSION To be the premier provider of property insurance in catastrophe exposed areas. VISION To grow selectively in tar
Slide 4: Corporate Structure
Corporate Structure 4 United Property & Casualty Insurance Company United Insurance Management UPC Re United Insurance Holdings Corp. (NASDAQ : UIHC) Insurance subsidiary that writes policies and bears risk of loss Managing general agency that provides personnel and management services for the combi
Slide 5: Why UPC Insurance?
5 Why UPC Insurance? • Profitable in 13 of 14 years since inception in 1999 • YTD 6/30/13 results: $191 million written & $8.9 million of net income • TTM ROAE of 14.7% despite nearly $4 million of catastrophe losses Strong Financial Performance • Continued de-concentration of risk by major national
Slide 6: Exceptional Management Team
Exceptional Management Team 6 Gregory C. Branch Chairman • Chairman of United since inception in 1999 • Prior Member of Lloyd’s of London for over 20 years • Former Chairman of Summit Holding Southeast, Inc. (acquired by Liberty Mutual) John L. Forney, CFA President & CEO • 25+ year successful caree
Slide 7: Historical Highlights
Historical Highlights 7 PHASE 1: 1999-2007 UPC Insurance begins operations in FL in 1999 and records profits every year, even in the wake of 8 hurricanes in 2004-2005 PHASE 2: 2008-2011 UPC Insurance becomes a public company; growth slows as market changes impact FL, but underlying operations remain
Slide 8: Current Portfolio Composition
92% 4% 4% Homeowners Fire Flood 84% 4% 4% 4% 0% Florida Rhode Island South Carolina Massachusetts North Carolina (1) Premium in thousands. Data as of June 30, 2013. (2) Policy numbers exclude flood line of business. Data as of June 30, 2013 Total policies in-force: 168,075 (2) Total premium in-force
Slide 9: State Expansion Status
9 State Expansion Status Continued Growth in Existing States (FL, NC, SC, RI, MA) New Growth in Coastal States (TX, NJ, NH) Licensed App. Pending Future No Plans DC
Slide 10: Increasing Geographic Diversification
Increasing Geographic Diversification 10 103,429 8,447 1,889 988 11,324 FL SC MA RI 142,311 12,981 6,200 6,323 260 25,764 FL SC MA RI NC Policies in-force at 6/30/2013 Policies in-force at 6/30/2012 Total PIF: 114,753 Total PIF: 168,075 90% 7% 1% 2% 8% 4% 4% 85%
Slide 11: Huge Super Regional Opportunity
Huge Super Regional Opportunity Florida = 20% of DWP in UPC Insurance’s Target Markets Scale ($ Bil ) 0.00 to 0.25 0.25 to 0.50 0.50 to 1 1 to 2 2 to 3 3 to 4 4 to 5 FL 20% 5 to 6 NON-FL 80% 6 to 7 7+ Source: SNL Homeowners Direct Written Premium 2012 DC 11 Targeted Mix in 5 Years ~ 60% in Florida /
Slide 12: Operational Excellence
Operational Excellence • Strong Marketing Presence • Growing independent agent distribution channels and aggregator relationships (Allstate, FAIA) • State marketing directors with strong agency relationships and extensive local market knowledge • Strategic partnerships with established carriers to b
Slide 13: Marketing Highlights
Marketing Highlights 13 $0 $20 $40 $60 $80 $100 $ Mil lio n s 0 50 100 150 200 Tho u sa nd s PIF GPE Y/Y Growth = 37.6% Y/Y Growth = 46.5% Q2 GPE: $74.9M
Slide 14: Achieving Desired Balance
Achieving Desired Balance 14 0 50 100 150 200 250 300 350 400 Polic y Co u n t NC RI MA SC FL New Business Writing by State 31% of new business in Q2 from outside FL Writing in 8 states by 2014
Slide 15: UPC Insurance Florida Average Earned Premium Trend
UPC Insurance Florida Average Earned Premium Trend 15
Slide 16: Quality Growth Reflected in Portfolio Metrics
10.0% 12.0% 14.0% 16.0% 18.0% 20.0% 22.0% 24.0% 26.0% 28.0% YE 2009 YE 2010 YE 2011 YE 2012 June 2013 Quality Growth Reflected in Portfolio Metrics Modeled Cat Avg. Annual Loss to Premium In-Force $ in thousands, except policy data Six Mos. Ended June 30, Years Ended December 31, 2013 2012 2011 2010
Slide 17: Historical Non-CAT Loss Experience
• UPC Insurance claims adjusters (all in- house) average 10+ years experience • UPC Insurance avoided sinkhole losses by non-renewing policies in sinkhole prone zones starting back in 2003 • Current Non-CAT loss ratio: 29.0% (only 1.1% attributable to sinkhole) Case Ultimate Accident Paid Loss &LAE
Slide 18: UPC Insurance's Reinsurance Philosophy
UPC Insurance’s Reinsurance Philosophy Here Today, Here Tomorrow We try to balance vertical coverage, horizontal coverage, and reinsurance spend 18 Consistent risk transfer is an integral part of our capital strategy View reinsurers as long-term partners, not short-term commodity relationships Orien
Slide 19: 2013-14 Catastrophe Reinsurance Program
2013-14 Catastrophe Reinsurance Program $20.0M LAYER 4 $150.0M xs $20.0M $677.8M LAYER 1 $30M xs $20.0M LAYER 2 $60.0M xs $20.0M $187.2M FHCF 90% of $490.6M xs $187.2M ($441.5M Limit) $14.0M RETENTION $110.0M $7M RETENTION 1st EVENT 2nd EVENT $50.0M LAYER 3 $100.0M xs $20.0M $415.0M $801.6M 30% QS 3
Slide 20: UPC Insurance is Well-Positioned Financially
- 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 Gross Earned Net Earned $3.31 $5.98 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 $6.50 $7.00 24,113 46,099 42,927 48,071 45,293 54,989 87,986 96,932 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 110,000 FY'06 FY'07 FY'08 FY'09
Slide 21: June 2013 YTD Financial Highlights
June 2013 YTD Financial Highlights 21 P&L Balance Sheet Ratios CY PY CY PY CY PY Gross Loss Ratio 30.1% 21.4% Net Loss Ratio 49.3% 39.0% Gross Expense Ratio 24.0% 24.2% Net Expense Ratio 39.4% 44.2% EPS 0.55$ 0.75$ Book Value per Share 5.98$ 6.09$ Return on Average Equity 14.7% 26.6% Shareholders' E
Slide 22: Components of Operating Return on Equity
Components of Operating Return on Equity 1 22 ROAE 8.4% ROAE -2.0% ROAE 16.1% ROAE 16.1% ROAE 26.6% ROAE 14.7% -$10,000 -$5,000 $0 $5,000 $10,000 $15,000 $20,000 YE 2009 YE 2010 YE 2011 YE 2012 YTD 6/30/12 YTD 6/30/13 Underwriting G/L Inv Income CAT Losses PY Dev Fav/(Unfav) Core UW Results Improvin
Slide 23: Investment Portfolio
Investment Portfolio 1 • Designed to preserve capital, maximize after-tax investment income, maintain liquidity and minimize risk • As of June 30, 2013, 100% of the Company’s fixed maturity portfolio was rated investment grade – Average duration: 3.63 years – Composite rating: A+ – Average coupon: 2
Slide 24: Company Highlights
Company Highlights 1 Compelling Market Opportunity Strong Financial Performance Unique Insurance Capabilities Exceptional Management Team Proven Access to Capital Markets 24
Slide 25: Definitions of Non-GAAP Measures
Definitions of Non-GAAP Measures 25 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 26: UPC Insurance
UPCZA® INSURANCE
United Insurance Holdings — Investor Presentation (August 2013) on 6ix