United Insurance Holdings Corp.

Greetings, and welcome to the United Insurance Holdings Corp. fourth quarter and full year 2022 earnings conference call and webcast. At this time, all participants are in a listen-only mode. Please note, this conference is being recorded. I will now turn the conference call over to Karen Daly, United Insurance Holdings Corp. Investor Relations Representative and Vice President at the Equity Group. You may begin, Karen.

Thank you, Kevin, and good afternoon, everyone. UPC Insurance has also made this broadcast available on its website at www.upcinsurance.com. A replay will be available for approximately 30 days following the call. Additionally, you can find copies of UPC's earnings release and presentation in the investor section of the company's website. Speaking today will be Chairman of the Board and Chief Executive Officer, R. Daniel Pede, and President and Chief Financial Officer, Bennett Bradford-Mark. On behalf of the company, I'd like to note that statements made during this call that are not historical facts are forward-looking statements. The company believes these statements are based on reasonable estimates, assumptions, and plans. However, if these estimates, assumptions, or plans underlying the forward-looking statements prove inaccurate, or if other risks or uncertainties arise, actual results could differ materially from those expressed in or implied by the forward-looking statements. Factors that could cause actual results to differ materially may be found in the company's filings with the U.S. Securities and Exchange Commission, in the risk factor section on their most recent annual report on Form 10-K, and subsequent quarterly reports on Form 10-Q. Forward-looking statements speak only as of the date on which they are made, and except as required by applicable law, the company undertakes no obligation to update or revise any forward-looking statements. With that, it's my pleasure to turn the call over to Mr. Daniel Pede. Dan, you may begin.

Thanks, Karen. Hello, and thanks for joining us on our fourth quarter earnings call. I'm Dan Pede, Chairman and CEO of United Inspirants Holding Corp. I'm planning to overview the continuing withdrawal from personal lines, then focus on the operating results in our commercial lines business. Brad Martz will then touch on our corporate activities and results at UIHC, as well as provide some information on RCAT Reinsurance Tower. Over the last two years, we've been exiting UPC's personal lines business, first through the sale of renewal rights in the Northeast at the end of 2020, then the sale of the renewal rights in the Southeast at the end of 2021, and finally, in August of 22, we announced a plan of withdrawal of UPC personal lines in the remaining states of Florida, Texas, Louisiana, and New York. Throughout this time, we worked closely with the Florida OIR and our other regulators. In mid-November, we amended our plan of withdrawal due to severe losses incurred in Hurricanes Ian and Nicole, combined with emergency orders which prohibited non-renewals. In early December, we entered into administrative supervision with the OIR, including a requirement to continue looking for a carrier that could offer replacement policies for some or all of our policyholders. As a subsequent event and effective February 1, 2023, with the approval of the Office of Insurance Regulation, we entered into an agreement with Slide Insurance Company to offer at least 72,000 policyholders a replacement policy, which will be further described in Brad's remarks. Due to our year-end review in February, our gross loss estimate from Hurricane Ian increased, which resulted in the Ian UPC loss exceeding the UPC reinsurance limits available. And on February 27th, United PNC Insurance Company was placed in receivership with the Florida Department of Financial Services. Brad will provide more information, and we have provided unaudited pro forma financials as of December 31st in the investor supplement to help describe the resulting deconsolidated United Insurance Holding Corp. financials. I'd like to turn now to the ongoing operations of our commercial lines business written in American Coastal Insurance Company. Results are broken out for personal lines and commercial lines in our earnings release as well as in the investor supplement. First, a brief description of the underwriting metrics for commercial lines. We continue to reduce the PML to premium ratio by over 20% per year. We are executing on our plan to reduce PML exposure between 10% to 20% by peak hurricane season 2023. The average risk adjusted rate was up over 40% in Q4 to the highest they've been in 15 years, and rates continued to accelerate even further in 2023. The average building valuation was up 11% year over year. The average hurricane deductible increased from 4.3% to 5.0% year over year across the portfolio, and retention rates remained in the 80% though, in the 80s. Results are further described in our earnings release and investor supplement, but I'd like to point out key performance indicators in our commercial lines business. Pre-tax earnings were 3.7 million for the fourth quarter and 35.8 million for the year. Pre-tax earnings for 2022 excluding EM losses would have been $79.2 million. Gross written premium for the quarter was $122 million, up 30.4%. Gross written premium for the year was $508 million, up 20.4%. The combined ratio for the quarter was 89.5%. with an underlying combined ratio of 68.5%. The underlying combined ratio reflects 3.9% of favorable prior year development and 24.9% of CAT losses. The combined ratio for the year was 83% with an underlying combined ratio of 66.8%. The underlying combined ratio reflects 3.6% favorable prior year development and 19.8% for CAT losses, including Hurricane Ian, one of the most costly hurricanes to ever hit Florida. We were deeply disappointed with the fourth quarter developments that ultimately resulted in receivership of United PNC, working diligently with the Department of Financial Services to support policyholders and complete the separation and runoff of UPC. Forward, we are mostly a specialty commercial lines business. which we expect will reflect the strong historical performance of American Coastal. American Coastal has a high-quality portfolio with a proven track record since its inception 15 years ago. With an underlying combined ratio below 70%, the portfolio is designed to be able to absorb the expected Florida catastrophe losses while continuing to yield an underwriting profit. The Florida cat market is significantly harder than it was in 2006 and 2007, and remains as hard as it's been in over 20 years. While this creates challenges, including cat reinsurance placements, it also creates excellent opportunities for both reinsurers and insurers to improve pricing and the quality of the portfolio. I expect these market conditions to continue to be hard for at least the foreseeable future. With that, I'll turn it over to Brad Marks.