American Coastal Insurance Corporation · NASDAQ:ACIC
American Coastal Insurance — United Insurance Holdings — Investor Presentation (March 2016)
33 slides from American Coastal Insurance's investor presentation, Mar 8, 2016
Slide 1: United Insurance Holdings Corp. Investor Presentation March 2016
United Insurance Holdings Corp. NASDAQ: UIHC Investor Presentation March 2016 “Growing Gains”
Slide 2: Who We Are
2 MARCH 2016 INVESTOR PRESENTATION “Growing Gains” Who We Are UPC Insurance is a specialized personal and commercial property cat writer with a geographically diversified book of business and a long track record of consistent underwriting profitability and strong returns on invested capital.
Slide 3: Vision and Implications
3 MARCH 2016 INVESTOR PRESENTATION “Growing Gains” Vision and Implications To be the premier provider of property insurance in catastrophe exposed areas. VISION Intrinsic volatility must – and can – be managed while generating strong returns for shareholders
Slide 4: How to Manage Volatility and Win in the Long Term
4 MARCH 2016 INVESTOR PRESENTATION “Growing Gains” How to Manage Volatility and Win in the Long Term Strategically Financially Operationally - Diversify - Write multiperil - Generate fee income Shareholder Value Creation - Low operating and financial leverage - Conservative investments - Strong rein
Slide 5: How Have We Done? – Key Metrics
5 MARCH 2016 INVESTOR PRESENTATION “Growing Gains” How Have We Done? – Part 1 UPC Insurance Key Metrics 2013-2015 Year ended 12/31/13 Year ended 12/31/14 Year ended 12/31/15 TTM gross premium earned (000's) 316,708$ 400,695$ 504,216$ TTM net income (000's) 20,342$ 41,013$ 27,071$ TTM EPS 1.26$ 2.05$
Slide 6: How Have We Done? – Consistent Dividend & Book Value Growth
6 MARCH 2016 INVESTOR PRESENTATION “Growing Gains” How Have We Done? – Part 2 Consistent Dividend & Book Value Growth Strong Performance Relative to Indices 2012 2013 2014 2015 UIHC $198.68 $469.44 $737.16 $581.00 Russell 2000 $108.38 $148.49 $153.73 $144.95 NASDAQ Insr Index $117.01 $150.69 $163.56
Slide 7: Why UIHC is a Good Investment
7 MARCH 2016 INVESTOR PRESENTATION “Growing Gains” Why UIHC is a Good Investment •Cumulative written premiums over $3 billion; cumulative claims paid over $1.2 billion •Anti-fragility demonstrated during 34 different catastrophe events since 1999 •Business model has produced strong returns on invest
Slide 8: Opportunity and Execution
MARCH 2016 INVESTOR PRESENTATION OPPORTUNITY AND EXECUTION
Slide 9: UPC Has a Huge Market Opportunity Relative to U.S. Hurricane Risk
9 MARCH 2016 INVESTOR PRESENTATION “Growing Gains” UPC Has a Huge Market Opportunity Relative U.S. Hurricane Risk¹ ¹ Source: AIR Worldwide ² Source: Karen Clark & Company Export capabilities to all cat-exposed areas Exposed Property Values ($ billion) ² Coastal Peak State All TIV TIV Coastal TIV 1 N
Slide 10: UPC is Licensed in all Target States Except Maine
10 MARCH 2016 INVESTOR PRESENTATION “Growing Gains” UPC is Licensed in all Target States Except Maine Strategy not limited to just one or a few select markets (writing in 11 states) No need for huge market share (avoids concentration risk) Organic growth not limited to coastal areas (good spread of
Slide 11: UPC is Achieving Growth and Geographic Diversification
11 MARCH 2016 INVESTOR PRESENTATION “Growing Gains” UPC is Achieving Growth and Geographic Diversification Policies in-force at 12/31/2015 Policies in-force at 12/31/2014 Total PIF: 252,104 Total PIF: 347,015 Y/Y PIF growth +38%
Slide 12: Where We Stand
12 MARCH 2016 INVESTOR PRESENTATION “Growing Gains” Where We Stand Source: NAIC 2015 Homeowners Market Share By Countrywide Direct Premiums Written 2015 Rank GROUP / COMPANY NAME 2015 DPW $000 Share % 1 STATE FARM GRP 17,516,715 22.73% 2 ALLSTATE GRP 7,926,984 10.28% 3 LIBERTY MUT GRP 5,923,431 7.68
Slide 13: Powerful Distribution System Gaining Momentum
13 MARCH 2016 INVESTOR PRESENTATION “Growing Gains” Powerful Distribution System Gaining Momentum 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 2015 2014 Hit Ratio (Quote/Bind) Quote Bind 16.1% 17.6% 58% Increase in Quotes Increased quoting activity allows UPC to be more
Slide 14: Quality Business is Sticking
14 MARCH 2016 INVESTOR PRESENTATION “Growing Gains” Quality Business is Sticking Strong Retention Supports UPC’s First Mover Advantage 2013 2014 2015 Retained At Renewal 91% 90% 92% Retained Through Full Policy Term 86% 81% 83% 76% 78% 80% 82% 84% 86% 88% 90% 92% 94% 2013 2014 2015 Annual Retention
Slide 15: Diversification Producing Consistent Loss Results
15 MARCH 2016 INVESTOR PRESENTATION “Growing Gains” Diversification Producing Consistent Loss Results Quarterly Underlying Loss Ratios from 2013-2015: 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Non-CAT Loss Ratios 0.0% 5.0% 10.0%
Slide 16: UPC Has Four Proven Pathways for Growth
16 MARCH 2016 INVESTOR PRESENTATION “Growing Gains” UPC Has Four Proven Pathways for Growth Organic Underwriting Carrier Partnerships Depopulation Initiatives Merger & Acquisition 7,000 Appointed Independent Agencies & MGA’s Nationally 75% 17% 4% 4% 2015 Contribution
Slide 17: UPC's Product Offerings
17 MARCH 2016 INVESTOR PRESENTATION “Growing Gains” UPC’s Product Offerings - Residential only but Diversified Homeowners Dwelling Fire Condo Owners Renters Federal Flood (not at-risk, fee based, CAT hedge) Commercial Residential 85% 6% 2% 1% 3% 2%
Slide 18: Operational Strength
MARCH 2016 INVESTOR PRESENTATION OPERATIONAL STRENGTH
Slide 19: UPC Has Invested in Key Functional Areas
19 MARCH 2016 INVESTOR PRESENTATION “Growing Gains” UPC Has Invested in Key Functional Areas •Fully transitioned to new claims system in June 2015 •Roughly 60 full-time associates supplemented by strong relationships with national adjusting firms providing multiple layers of response (CAT & NonCAT)
Slide 20: Financial Strength
MARCH 2016 INVESTOR PRESENTATION FINANCIAL STRENGTH
Slide 21: UPC is Conservatively Capitalized
21 MARCH 2016 INVESTOR PRESENTATION “Growing Gains” UPC is Conservatively Capitalized Strong liquidity relative to loss reserves and potential net retained catastrophe loss exposure Underwriting leverage¹ is about 1.4x equity despite significant premium growth 1Underwriting leverage = net earned pre
Slide 22: Investments Avoid Asset Risk
22 MARCH 2016 INVESTOR PRESENTATION “Growing Gains” Investments Avoid Asset Risk • Designed to preserve capital, maximize after- tax investment income, maintain liquidity and minimize asset risk • As of December 31, 2015, 100% of the Company’s fixed maturity portfolio was rated investment grade – Av
Slide 23: 2015-16 Catastrophe Reinsurance Program Structure
23 MARCH 2016 INVESTOR PRESENTATION “Growing Gains” 2015-16 Catastrophe Reinsurance Program Structure LAYER 1 $20.0M xs $25.0M (Single Shot) $45.0M $928.2M $1.18B $1.05B LAYER 2 $100.0M xs $25.0M (Single Shot) $376.4M $230.4M LAYER 6 $125.0M xs $25.0M (Single Shot) $145.0M L A Y E R 3 $ 1 0 0 .0 M x
Slide 24: Conservative Risk Retention Reduces Potential Volatility
24 MARCH 2016 INVESTOR PRESENTATION “Growing Gains” Conservative Risk Retention Reduces Potential Volatility Catastrophe Losses Non-Catastrophe Losses Named Windstorm ¹ All Other Events ² All Other Perils (AOP) per risk Limit Personal Lines Commercial Lines Occurrence $1,180,000,000 $22,000,000 $2,0
Slide 25: Impact of Historical CAT Events on UPC's Portfolio
25 MARCH 2016 INVESTOR PRESENTATION “Growing Gains” Impact of Historical CAT Events on UPC’s Portfolio All modeled events are likely earnings events NOT capital events Modeled losses for the costliest historical storms if they recurred in 2016: ¹ Source: AIR Worldwide ² Estimated modeled loss using
Slide 26: Results
MARCH 2016 INVESTOR PRESENTATION RESULTS
Slide 27: Key Operating Metrics
27 MARCH 2016 INVESTOR PRESENTATION “Growing Gains” Key Operating Metrics 27.6% Revenue Growth 12.4% ROAE 13.9% BVPS Growth 86.2% Underlying Combined Ratio ¹ Results for the year ended December 31, 2015: ¹ “Underlying” results exclude losses incurred from catastrophes and prior year reserve developm
Slide 28: Underwriting Profits Drive Returns
28 MARCH 2016 INVESTOR PRESENTATION “Growing Gains” Underwriting Profits Drive Returns Core Results Driving Returns 20.8% 27.2% 12.4% ROAE 2013 2014 2015 $28.6m of CAT loss still produced a solid ROAE -30,000 -10,000 10,000 30,000 50,000 70,000 90,000 2013 2014 2015 Underwriting Gain Investment Inco
Slide 29: Operating Expenses Manageable Despite Large Investments
29 MARCH 2016 INVESTOR PRESENTATION “Growing Gains” Operating Expenses Manageable Despite Large Investments Infrastructure investments required to build a scalable, more efficient operating model are mostly complete. 15.3% 16.0% 16.7% 17.1% 15.8% 16.7% 17.5% 18.5% 16.7% 2.5% 2.6% 2.9% 3.1% 3.1% 3.1%
Slide 30: Compelling Valuation
30 MARCH 2016 INVESTOR PRESENTATION “Growing Gains” Compelling Valuation Source: KBW P&C Data Table - Underwriters – Week of February 22, 2016 2016 E NWP Comb. Target Company Ticker Growth Ratio ROE P / B P / E Price Upside Allstate Corp. ALL 3.2% 94.5% 11.2% 1.35x 11.6x $ 72.00 14.6% Berkshire Hath
Slide 31: Safe Harbor – At a Glance
31 MARCH 2016 INVESTOR PRESENTATION “Growing Gains” Safe Harbor – At a Glance 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 di
Slide 32: Definitions of Non-GAAP Measures
32 MARCH 2016 INVESTOR PRESENTATION “Growing Gains” Definitions of Non-GAAP Measures 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 othe
Slide 33: UPC Insurance – Keep the Promise
SS UPCZ® INSURANCE Keep the Promise
United Insurance Holdings — Investor Presentation (March 2016) on 6ix