American Coastal Insurance Corporation · NASDAQ:ACIC
American Coastal Insurance — United Insurance Holdings — Q4 2019 Earnings Presentation
17 slides from American Coastal Insurance's earnings presentation, Feb 20, 2020
Slide 1: Investor Presentation Supplement to Fourth Quarter 2019 Results
Investor Presentation Supplement to Fourth Quarter 2019 Results February 20, 2020 St. Petersburg, FL
Slide 2: Summary of Operating Results
Summary of Operating Results ($ in thousands, except per share amounts) Q419 Q418 Variance FY19 FY18 Variance Selected Income Statement Data Gross Premiums Earned $ 347,005 $ 308,414 12.5% $ 1,333,526 $ 1,180,961 12.9% Income (loss) before income taxes (5,260) (19,416) 72.9% (32,606) (4,239) -669.2%
Slide 3: Q4-2019 Financial Commentary
Q4-2019 Financial Commentary I. REVENUE HIGHLIGHTS • Gross Premiums Written of $294.8m: • Up +0.9% (+$2.6m) y/y • Personal Lines +7.8% (+$9.9m) | Commercial up +11.5% (+$7.1m) | E&S down -62.9% (-$14.4m) • Excluding E&S, Florida +6.7% (+$10.1m) | Non-Florida +5.7% (+$6.8m) • Gross Premiums Earned (G
Slide 4: Q4-2019 vs. Q4-2018
Q4-2019 vs. Q4-2018 Net loss in the quarter driven by higher NonCat severity & reserve strengthening $ in millions Q4-19 PY Change Gross Premiums Earned $ 347.0 $ 308.4 $ 38.6 +12.5% Ceded Premiums Earned (158.7) (126.7) (32.0) Net Premiums Earned 188.4 181.7 6.6 Investment & Other Income 22.1 (0.7)
Slide 5: Q4-19 Cause of Loss
Q4-19 Cause of Loss Fire & liability severity was the primary driver of poor underlying results Loss Ratio Loss & DCC Severity A&O Severity Frequency Loss Cost Q417 Q418 Q419 Q417 Q418 Q419 Q417 Q418 Q419 Q417 Q418 Q419 Q417 Q418 Q419 Fire 5.7% 4.7% 12.4%$ 101,405 $ 86,081 $ 176,672 $ 3,736 $ 4,767
Slide 6: FY2019 vs. FY2018
FY2019 vs. FY2018 Net loss for the year also hurt by reserve strengthening & prior year development $ in millions FY19 FY18 Change Gross Premiums Earned $ 1,333.5 $ 1,181.0 $ 152.6 +12.9% Ceded Premiums Earned (581.1) (491.7) (89.4) Net Premiums Earned 752.4 689.3 63.1 Investment & Other Income 72.7
Slide 7: Expense Analysis YTD 12/31/19
Expense Analysis YTD 12/31/19 Gross Expense Ratio In-line with Prior Year 2019 % GPE 2018 % GPE Change Gross Premiums Earned (GPE)$ 1,333,526 $ 1,180,961 152,565 I Policy acquisition costs (PAC) 238,268 17.9% 203,140 17.2% 35,128 0.7% II Operating and underwriting 44,310 3.3% 40,590 3.4% 3,720 -0.1%
Slide 8: Why We Are Optimistic
Why We Are Optimistic • RATES • Significant improvements in average premiums on new & renewal business • Retention rates are holding steady and market is moving with us • Biggest 2019 increases just beginning to flow through book • Hardening Commercial market • RESERVES • Strengthening efforts helpe
Slide 9: Rate Increases are Starting to Have a Material Impact
Rate Increases are Starting to Have a Material Impact Represents over $62 million of additional annual premium based just on actual December renewals 9
Slide 10: 2019 Reserve Strengthening Minimizes 2020 Reserve Risk
2019 Reserve Strengthening Minimizes 2020 Reserve Risk +52% Increase in Net Loss & LAE Reserves Y/Y Outpaced Premium & Exposure Growth Loss & LAE Reserves @ 12/31/2018 Loss & LAE Reserves @ 12/31/2019 NonCAT CASE IBNR TOTAL CASE IBNR TOTAL Gross$ 81,601,183 $ 110,973,000 $ 192,574,183 $ 131,616,251
Slide 11: Average Case Loss Reserve Increased
Average Case Loss Reserve Increased Average Case Loss Reserve Jumped +40.4% while Pending Claims Increased +23.2% NonCAT Average Case Reserve 18,000 17,053 16,000 14,774 13,814 14,000 12,684 12,147 12,000 10,000 8,000 5,979 6,000 4,855 4,552 4,361 4,000 2,644 2,000 - 2015 2016 2017 2018 2019 Avg End
Slide 12: June Reinsurance Renewal Is Almost Done
June 1 Reinsurance Renewal Is Almost Done UPC’s exposure to reinsurance cost increases in 2020 is substantially lower than the industry overall due to advance planning and strong partnerships with reinsurers. 2020 Projected Total Limit Needed$ 3,331,409,774 Less: 1st Event Retention$ (50,000,000) Le
Slide 13: 2020 Reinsurance Programs Total Over $4 Billion
2020 Reinsurance Programs Total Over $4 Billion . Quota Share Reinsurance Program – Effective June 1, 2019 - May 31, 2020 United P&C and ‒ 22.5% Cession rate covering all perils and all states ground up Family Security ‒ World class reinsurance panel of A+ markets or better ‒ Includes significant ag
Slide 14: Balance Sheet Remains Strong
Balance Sheet Remains Strong Dec. 31, Dec. 31, ($ in thousands, except per share amounts) 2019 2018 Variance Selected Balance Sheet Data Cash & investments $ 1,298,780 $ 1,135,956 14.3% • Liquidity of ~$1.3 billion increased 14.3% y/y Financial debt 158,932 160,118 -0.7% Stockholders' equity attribu
Slide 15: Book Value Per Share Growth Over Time
Book Value Per Share Growth Over Time CAGR +10.8% (Q4-2012 - Q4-2019) $14.00 $11.69 $13.00 $12.00 $11.00 $10.00 $9.00 UIHC incurred ~$370 million of net retained catastrophe losses $8.00 from FY16-FY19 on $2.48 billion of net premiums earned (~15 points on the combined ratio) with minimal impact to
Slide 16: Cautionary Statements
Cautionary Statements 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, investment
Slide 17: UPC Insurance - Keep the Promises
UPC INSURANCE’ Keep the Promises
United Insurance Holdings — Q4 2019 Earnings Presentation on 6ix