American Coastal Insurance Corporation · NASDAQ:ACIC
American Coastal Insurance — United Insurance Holdings — IPO Roadshow (February 2014)
30 slides from American Coastal Insurance's IPO roadshow presentation, Feb 26, 2014
Slide 1: United Insurance Holdings Corp. Follow-on Offering
Filed Pursuant to Rule 433 Issuer Free Writing Prospectus dated February 26, 2014 Registration No. 333-191472 United Insurance Holdings Corp. NASDAQ: UIHC Follow-on Offering February 2014
Slide 2: Presenters
Presenters Mr. John Forney, CFA Mr. Brad Martz Chief Executive Officer Chief Financial Officer (727) 280-4155 (727) 280-4157 jforney@upcinsurance.com bmartz@upcinsurance.com 2
Slide 3: Safe Harbor – At a Glance
Safe Harbor – At a Glance The issuer has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC f
Slide 4: Offering Summary
Offering Summary Offering Size $50 million th Last Trade $14.10as of February26 , 2014 Type Follow-on public offering of common stock Over-Allotment 15% (Primary) Exchange and Symbol NASDAQ Capital Market stock exchange under the ticker symbol “UIHC” Use of Proceeds General corporate purposes includ
Slide 5: Business Model
Business Model To build a sustainable franchise that delivers quality homeowners MISSION insurance products in select markets in order to produce superior risk-adjusted returns for investors. To be the premier provider of property insurance in catastrophe VISION exposed areas. To grow selectively in
Slide 6: Corporate Structure
Corporate Structure United Insurance Holdings Corp. (NASDAQ : UIHC) Four wholly-owned subsidiaries United Property & Casualty United Insurance Skyway Claims UPC Re Insurance Management Services Company Managing general agency that Claims subsidiary that provides Reinsurance subsidiary that Insurance
Slide 7: Why UPC Insurance? Strong Financial Performance
Why UPC Insurance? Strong Financial • Profitable in 14 of 15 years since inception in 1999 • YTD 12/31/13 results: $381.4 million written & $20.3 million of net income Performance • TTM ROAE of 20.8% despite nearly $8 million of catastrophe and development expense Compelling Market •• Significant di
Slide 8: Exceptional Management Team
Exceptional Management Team Gregory C. Branch • Chairman of UPC Insurance since inception in 1999 Chairman • 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 • 25+ year successful career in invest
Slide 9: Historical Highlights
Historical Highlights TIMELINE PHASE 1: 1999-2007 PHASE 2: 2008-2011 PHASE 3: 2012 & Beyond UPC Insurance begins UPC Insurance becomes a Growth and profitability operations in FL in 1999 and public company; growth slows resume upward trajectory with records profits every year, even as market changes
Slide 10: Key Strategies
Key Strategies 1. Build world-class leadership team • Top six officers all joined company in last 18 months • Diverse group with large company, multi-state experience 2. Geographic diversification to capitalize on market opportunity • Target mix of 55% FL / 45% Non-FL in 5 years • Minimize concentra
Slide 11: Current Portfolio Composition
Current Portfolio Composition Premium In-Force Policies In-Force By Line of Business 97% 80% 5% 8% 5% 3% 2% Homeowners Fire FL RI SC MA Other (NC, NJ & TX) (1) (2) Total Premium in-force: $380,692 Total policies in-force: 202,454 Total premium in-force: $380,692 (1) Premium in thousands. Excludes fl
Slide 12: State Expansion Status
State Expansion Status Continued Growth in Existing States (FL, MA, NC, NJ, SC, RI, TX) Future Growth Planned in All Coastal States (TX to ME) 12
Slide 13: Target Market Competitive Landscape
Target Market Competitive Landscape Company Name State SNL Group Name Total Mkt Share 1 State Farm Mutl Automobile Ins (SNL P&C Group) IL State Farm Mutl Automobile Ins (SNL P&C Group) 7,399,552 17.3% 2 Allstate Corp. (SNL P&C Group) IL Allstate Corp. (SNL P&C Group) 4,076,862 9.6% • UPC is 32nd lar
Slide 14: Huge Super Regional Opportunity
Huge Super Regional Opportunity Homeowners Direct Written Premium 2012 Ideal Mix in 5 Years ~ 55% in Florida / 45% Coastal DC Scale ($ 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 Florida = 20% of DWP in UPC Insurance’s Target M
Slide 15: Regulatory & Political Environment
Regulatory & Political Environment • Favorable Conditions for Homeowners Carriers • Continued de-concentration/optimization fueling hard market in many cat-exposed areas. • Florida market softeningdue to lowerreinsuranceand loss costs as wellas severalyears of rate increases. • Market fragmentation
Slide 16: Marketing Highlights
Marketing Highlights Y/Y Growth = 46.7% GPE $100 $91.8 $80.1 $80 $74.9 $69.9 $62.6 $58.6 $60 $47.1 $49.1 $50.7 $54.4 Q4 GPE: $40 $91.8M $20 $0 PIF Y/Y Growth = 49.6% 250 202 200 179 168 157 135 150 115 124 Q4 PIF: 102 108 98 100 202,454 50 - 16
Slide 17: Increasing Geographic Diversification
Increasing Geographic Diversification Policies in-force at 12/31/2012 Policies in-force at 12/31/2013 10,569 8% 15,186 8% 87% 117,233 18,064 80% 163,314 39,140 10,900 5% 4,247 3% 9,990 5% 3,248 2% 2% 3,064 FL SC MA RI FL SC MA RI Other (NC, NJ & TX) Total PIF: 135,297(1) Total PIF: 202,454(1) (1) Po
Slide 18: Strong Retention Rates
Strong Retention Rates FL Rate Changes +15.9% +7.6% +9.5% 100% 95% 90% 85% 80% 75% 70% 65% 60% Retained At Renewal Retained Through Full Policy Term Annual Average % 2011 2012 2013 Retained At Renewal 90% 93% 91% Retained Through Full Policy Term 78% 82% 86% 18
Slide 19: Quality Growth Reflected in Portfolio Metrics
Quality Growth Reflected in Portfolio Metrics Years Ended December 31, $ in thousands, except policy data 2013 2012 2011 2010 Number of Policies In-Force (PIF) 202,454 135,297 101,754 80,514 Growth of PIF 49.6% 33.2% 26.4% -13.4% Total Insured Value (TIV) $89,532,383 $62,094,925 $46,032,280 $36,312,
Slide 20: 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 21: Historical Non-CAT Loss Experience
Historical Non-CAT Loss Experience Gross Earned Case Ultimate Accident Earned House Paid Loss & LAE IBNR Ultimate Ultimate Loss & LAE Year (AY) Premiums Years Loss & LAE Reserves Reserves Loss & LAE Loss Ratio per Exposure 2007 $143,475,314 66,313 $26,307,616 $ 187,440 $ 47,877 $26,542,933 18.5% $ 4
Slide 22: UPC Insurance's Reinsurance Philosophy
UPC Insurance’s Reinsurance Philosophy Consistent risk transfer is an integral part of our capital strategy We try to View reinsurers as long-term partners, not balance short-term commodity relationships vertical coverage, horizontal coverage, Oriented toward long-term solvency, even at and the expe
Slide 23: 2013-14 Catastrophe Reinsurance Program
2013-14 Catastrophe Reinsurance Program (expires June 1, 2014) $801.6M Remaining Limit after $202.8M Loss LAYER 4 (Approx. 20 YR Event) $150.0M xs $20.0M $677.8M Total Limit = $788M Cascading Limit = $340M 1:100 YR $611M * Cascading Structure (Layers 1-4): FHCF FHCF 90% of 90% of • Attachment point
Slide 24: UPC Insurance is Well-Positioned Financially
UPC Insurance is Well-Positioned Financially Earned Premiums ($000s) • Positive Net Income For 14 of Past 15 Years Gross Earned Net Earned • Profitable in both 2004 and 2005, despite paying out over $521 100,000 In-force premium has grown over 154% in past two years, from million in claims from 8 se
Slide 25: December 2013 & 2012 YTD Financial Highlights
December 2013 & 2012 YTD Financial Highlights 2013 2012 2013 2012 2013 2012 Gross Written Premiums $ 381,352 $ 254,909 Cash and Equivalents $ 34,888 $ 71,205 Ceding Ratio 34.5% 43.5% Gross Loss Ratio 31.2% 25.8% Gross Earned Premiums $ 316,708 $ 226,254 Investments $ 288,926 $ 152,180 Net Loss Ratio
Slide 26: Components of Operating Return on Equity
Components of Operating Return on Equity ROAE ROAE ROAE ROAE ROAE 8.4% -2.0% 16.1% 16.1% 20.8% 25,000 20,000 15,000 10,000 5,000 Core UW Results 0 Improving -5,000 -10,000 YE YE YE YE YE 2009 2010 2011 2012 2013 Underwriting G/L Investment Income Current Year CAT Losses PY CAT Development Other PY D
Slide 27: Investment Portfolio
Investment Portfolio U.S Government • Designed to preserve capital, maximize after-tax & Agency Cash & Cash Securities Equivalents investment income, maintain liquidity and 30.1% 10.7% minimize risk Other Long- Term Investments • As of December 31, 2013, 100% of the 0.1% Company’s fixed maturity por
Slide 28: Company Highlights
Company Highlights Strong Financial Performance Excellent Risk Compelling Management Market Capabilities Opportunity Exceptional Proven Access to Management Capital Markets Team 28 1
Slide 29: Definitions of Non-GAAP Measures
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 other companies and therefore comparability may be limit
Slide 30: UPC Insurance
UPCC® INSURANCE
United Insurance Holdings — IPO Roadshow (February 2014) on 6ix