-United Insurance Holdings Corp. (Nasdaq: UIHC) (UPC Insurance or the Company), a property and casualty insurance holding company, newly stated its fiscal results for the 3rd-quarter finished September 30, 2k19.
Quarterly Financial Results
Net loss attributable to the Company for the 3rd-quarter of 2k19 was $28.30M, or $0.660 for each diluted share, contrast to $11.70M, or $0.270 for each diluted share, for the 3rd-quarter of 2k18. The incline in net loss was mainly because of a boost in loss and loss adjustment costs (LAE) throughout the 3rd-quarter of 2k19 contrast to the 3rd-quarter of 2k18.
The Company’s total gross written premium increased by $21.30M, or 7.20 percent, to $317.20M for the 3rd-quarter of 2k19, from $295.90M for the 3rd-quarter of 2k18, mainly reflecting organic growth in new and renewal business generated in all regions.
Loss and LAE increased by $27.50M, or 22.80 percent, to $148.10M for the 3rd-quarter of 2k19, from $120.60M for the 3rd-quarter of 2k18. Loss and LAE cost as a percentage of net earned premiums increased 6.40 points to 76.80 percent for the 3rd-quarter of 2k19, contrast to 70.40 percent for the 3rd-quarter of 2k18. Apart From catastrophe losses and reserve development, the Company’s gross underlying loss and LAE ratio for the 3rd-quarter of 2k19 would have been 24.90 percent, a decline of 4.30 points from 29.20 percent throughout the 3rd-quarter of 2k18.
Policy acquisition costs increased by $7.60M, or 14.00 percent, to $61.80M for the 3rd-quarter of 2k19, from $54.20M for the 3rd-quarter of 2k18. The primary driver of the incline in costs was a boost in agent commissions which were generally consistent with the Company’s growth in premium production and higher average market commission rates outside of Florida.
Operating and underwriting costs increased by $1.20M, or 10.90 percent, to $12.20M for the 3rd-quarter of 2k19, from $11.00M for the 3rd-quarter of 2k18, mainly because of increased investments in technology.
General and administrative costs increased by $3.70M, or 24.00 percent, to $19.10M for the 3rd-quarter of 2k19, from $15.40M for the 3rd-quarter of 2k18, mainly because of a boost in salaries and related benefits as the number of personnel has increased and a boost in amortization cost related to our capitalized software.
Reinsurance Costs as a Percentage of Earned Premium
Apart From the Company’s business for which it cedes 100.00 percent of the risk of loss, reinsurance costs in the 3rd-quarter of 2k19 were 42.30 percent of gross premiums earned, contrast to 42.00 percent of gross premiums earned for the 3rd-quarter of 2k18. The incline in this ratio was driven by the Company’s quota share agreement that was renewed on June 1, 2k19. The Company modified the terms of its quota share agreement in 2k19 to include its partner, Family Security Insurance Company, Inc. in addition to its partner United Property & Casualty Insurance Company. Also, the ceding percentage increased from 20.00 percent in 2k18 to 22.50 percent in 2k19.
Investment Portfolio Highlights
The Company’s cash, restricted cash and investment holdings increased 21.60 percent to $1.40B at September 30, 2k19 from $1.10B at December 31, 2k18. UPC Insurance’s cash and investment holdings consist of investments in U.S. government and agency securities, corporate debt and 100.00 percent investment grade money market instruments. Fixed maturities represented about 88.90 percent of total investments at September 30, 2k19, contrast to 90.60 percent at December 31, 2k18. At September 30, 2k19 our fixed maturity investments had a modified duration of 3.40 years, contrast to 3.50 years at December 31, 2k18.
Book Value Analysis
Book value for each share reduced 1.40 percent from $12.10 at December 31, 2k18, to $11.930 at September 30, 2k19. Underlying book value for each share reduced 5.70 percent from $12.310 at December 31, 2k18 to $11.610 at September 30, 2k19. A decline in the Company’s retained earnings as the result of a net loss in 2k19 drove the decline in our book value for each share.