American Coastal Insurance Corporation · NASDAQ:ACIC
American Coastal Insurance — United Insurance Holdings — Q4 2018 Earnings Presentation
21 slides from American Coastal Insurance's earnings presentation, Feb 19, 2019
Slide 1: Investor Presentation Fourth Quarter 2018 Results
Investor Presentation Fourth Quarter 2018 Results February 19, 2019
Slide 2: Company Overview
Company Overview UIHC as of December 31, 2018 United Insurance Holding Corporation (NASDAQ: UIHC) is an insurance holding company focused exclusively on residential Premium in-Force: $1.14 billion and commercial property insurance in the United States. Total Assets: $2.32 billion UIHC’s 5 P&C carrie
Slide 3: UPC's Vision, Foundations, and Core Values
UPC’s Vision, Foundations, and Core Values OUR VISION: TO BE THE PREMIER PROVIDER OF PROPERTY INSURANCE IN CATASTROPHE-EXPOSED AREAS Our financial strength assures “A single arrow is easily broken, but our ability to pay claims not ten together.” - Japanese proverb “If you don’t trust the people you
Slide 4: UPC is a Specialty Underwriter
UPC is a Specialty Underwriter We are focused on exporting our highly specialized underwriting capabilities to all areas in need of quality alternatives for residential and commercial property insurance Relative U.S. Hurricane Risk¹ Our opportunity is much bigger than Florida and Hurricane. ¹ Source
Slide 5: UPC is Growing & Diversifying by Design
UPC is Growing & Diversifying by Design Premium In-force by Line of Business Premium In-force by Region as of 12.31.2018 as of 12.31.2018 29% 176,238 14% 650,664 593,140 101,262 8% 208,178 52% 48% 17% 71% 107,462 9% Personal Lines Commercial Lines FL Northeast Southeast Gulf E&S / Other 1,400,000 Gr
Slide 6: 2018 Summary - We Are Well Positioned
2018 Summary - We Are Well Positioned I. UNDERLYING RESULTS IMPROVING • Items distorting comparability with prior year include: • Favorable tax adjustments in both periods (FOCUS ON PRE-TAX) • Unrealized gains/losses on equities was not a component of earnings in prior years • Hurricane Michael in Q
Slide 7: 2018 Financial Highlights
2018 Financial Highlights 12.31.18 12.31.17 Total Assets $2.32 billion $2.06 billion BVPS excluding AOCI $12.31 $12.35 Gross Written Premium $1.25 billion $1.04 billion Core Income $16.5 million $34.9 million Core Income excluding hurricane $55.9 million $89.6 million Core ROAE excluding hurricane 1
Slide 8: 2018 4th Quarter Results
2018 4th Quarter Results Q4-18 Q4-17 % Chg Comments: Revenue Gross Earned $ 308,414 $ 274,373 12.4% Ceded Earned (126,674) (108,178) 17.1% No quota share in December 2017 Net Earned 181,740 166,195 9.4% Investment Income 7,536 5,323 41.6% Net realized gain(loss) 2,329 621 275.0% Net unrealized gain(
Slide 9: 2018 4th Quarter Analysis
2018 4th Quarter Analysis in thousands ($000) 4Q-2018 4Q-2017 Change Gross premiums written $ 292,187 $ 252,440 15.7% Solid y/y revenue growth Income (loss) before tax $ (19,416) $ 27,809 Pre-tax is a better comparable measure due to favorable tax adjustments in both periods Less: realized gains (lo
Slide 10: 2018 Full Year Results
2018 Full Year Results 2018 2017 % Chg Comments: Revenue Gross Earned $ 1,180,961 $ 986,023 19.8% Organic growth still double digit Ceded Earned (491,685) (400,533) 22.8% Net Earned 689,276 585,490 17.7% Investment Income 27,201 17,812 52.6% Net realized gain(loss) 1,655 67 2370.0% Net unrealized ga
Slide 11: 2018 Full Year Analysis
2018 Full Year Analysis in thousands ($000) FY-2018 FY-2017 Change Gross premiums written $ 1,252,401 $ 1,040,848 20.3% Pre-tax is a better comparable measure due Income (loss) before tax $ (4,239) $ 910 to favorable tax adjustments in both periods Less: realized gains (losses) $ 1,655 $ 67 Less: no
Slide 12: NonCAT Loss Ratio Trends by Accident Year
NonCAT Loss Ratio Trends by Accident Year Personal Lines Seeing Improvements Overall & in Florida Personal Lines (PL) 900,000,000 40.0% 800,000,000 37.2% 700,000,000 37.1% 38.0% 600,000,000 35.4% 35.0% 36.0% 500,000,000 Lowest loss ratio 400,000,000 32.8% 34.0% since 2014 300,000,000 200,000,000 32.
Slide 13: 5-Year Underwriting Results
5-Year Underwriting Results Our underlying combined ratio target is 85.0% 2014 2015 2016 2017 2018 Combined ratio (CR) 81.4 % 94.0 % 104.9 % 111.1 % 104.2 % Effect of current year 5 Hurricanes 0.3 % 8.5 % 12.2 % 19.8 % 14.5 % catastrophe losses on CR in 25 months Effect of prior year (favorable) (1.
Slide 14: Strong Capital Position
Strong Capital Position Balance Sheet at December 31, in thousands ($000) 2018 2017 % Chg Assets Investments $ 951,836 $ 854,531 11.4% Liquidity Cash 184,120 276,275 -33.4% Receivables 101,833 80,852 25.9% Short duration, high quality investments Reinsurance recoverable 625,998 395,774 58.2% Prepaid
Slide 15: Conservative Investment Approach
Conservative Investment Approach Investment Income & Yield ¹ Investment Allocation at 12.31.18 35,000 3.0% 30,000 2.5% 25,000 9% 2.0% 1% Corporate bonds 7% Mortgage backed securities 20,000 34% Municipal bonds 1.5% 11% Government & agency 15,000 Asset backed securities 1.0% Other investments Investm
Slide 16: Components of Earnings Before Tax
Components of Earnings Before Tax Core Underwriting & Investments Drive Returns in the Long-term 130,000 80,000 30,000 -20,000 -70,000 -120,000 2012 2013 2014 2015 2016 2017 2018 Core Underwriting Gain Investment Income CAT Losses Reserve Development Unrealized Losses on Equities 16
Slide 17: 2019 Reinsurance Programs Total Over $4 Billion
2019 Reinsurance Programs Total Over $4 Billion ▪ Quota Share Reinsurance Program – Extended to May 31, 2019 (moving to June 1st renewal cycle) United Property ‒ 20% Cession that will add Family Security Insurance Co. at renewal & Casualty ‒ World class reinsurance panel of Munich Re (A+), Trans Re
Slide 18: 2018-19 Core Catastrophe Reinsurance Program
2018-19 Core Catastrophe Reinsurance Program Proven Frequency & Severity Protection $3.127B Exhaustion @ 1:400 Year Event CAT BOND: $100M xs $35M $3.027B LAYER 5 $535M xs $35M NIL $2.616B $2.391B LAYER 4 $500M xs $35M NIL 1928 Okeechobee (CAT 4) $1.70B PROJ (Worst Historical Modeled Event) FHCF $1.4
Slide 19: Growing Book Value Over Time
Growing Book Value Over Time Book Value Per Share Growth Slowed by Major Hurricanes $14.00 5-Yr CAGR 12.8% (Q4-2013 - Q4-2018) $13.00 $12.10 $12.00 $11.00 Hurricanes Hurricanes Florence Harvey $10.00 Michael Hurricane Irma Matthew $9.00 $8.00 $7.00 $6.64 $6.00 $5.00 $4.00 19
Slide 20: Value Creation Initiatives
Value Creation Initiatives ENHANCE THE CUSTOMER EXPERIENCE • New Policy & Claims systems • Insource customer-facing functions • Claims TPA • Explore AI and machine learning solutions BROADEN THE CUSTOMER BASE • Leverage the AM Best Rating • Open new markets & distribution channels • Seek new and exp
Slide 21: 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
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