AMERICAN COASTAL INSURANCE (ACIC) 15 May 232023 Q1 Earnings call transcript

Hello, and welcome to the United Insurance Holdings Corp., First Quarter 2023 Financial Results Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded.

It's now my pleasure to turn the call over to your host, Karin Daly, Investor Relations with The Equity Group. Please go ahead, Karin.

Thank you, Kevin, and good afternoon, everyone. Corp. Holdings Insurance United this on made www.upcinsurance.com. website broadcast also its available at has replay approximately for be days A available call. XX will following the

can UIHC's of the the find and website. you Company's in of Investors earnings presentation section Additionally, release copies

Board Speaking Officer Chief and Financial R. of Martz. Bradford President Executive Officer, and and Bennett today Peed; Chairman will Chief be the Daniel

The statements not On during this made based behalf that historical are estimates, plans. note facts statements assumptions of these the to Company, Company forward-looking reasonable on statements. that are I'd are believes like and call

the However, in could expressed forward-looking risks differ or assumptions or if prove other those from or estimates, the implied or plans if results materially statements by underlying uncertainties the actual arise, statements. inaccurate forward-looking

actual in Form reports to be report recent U.S. results may on Risk in the with most XX-K cause the quarterly filings and section and materially found on Exchange Securities Commission annual XX-Q. Form Factors the differ that Factors our Company's in could subsequent

only no and undertakes except Forward-looking statements by statements. made, they or any Company required the forward-looking as which on speak revise law, applicable to as are update obligation date the of

With the to Daniel call Dan, to pleasure Mr. begin. that, you over may my Peed. it's turn

the first Hello, the Brad and results overview earnings continuing expand our quarter. the our will activities I'll thanks our our I from United touching of Karin. first lines Peed, in placement comment operations specifically, reinsurance us Chairman Martz CEO to on first joining the operating financial then the results on call. including for on on also commercial and Thanks, and for quarter and Dan Corp. I'm Insurance plan quarter, Holdings segment.

on Insurance culminated exiting two by February years, XX. lines This Company United we've in eventually Over Company. personal P&C written our Insurance of the last been business receivership UPC

We the of of support diligently complete the with and Company. separation Financial Insurance are Department to policyholders Services UPC working

as numbers the drive million $XXX net February financial of in effective The date quarter income our such as extreme deconsolidation of some of first of XX, the UPC results.

well continuing lines portfolio, of you'll However, our if the as you the focus our of current results business. of results operations better as get picture a and future on commercial

the it's and half noting an year last of pre-suit way changes the made loss of dozen benefits to fees prove intent the rates reduced to through elimination The time. do their changes Florida the the time last believe that in subsequently attorney of litigate, to First, insurance year, legislative will effective system the May work years. assignment December worth excessive to the to in over other premium as we litigation well of will over and one-way litigation issues some notification and report of reduce one the that of as be costs

XX% seem be loss reduction a estimates that rates. will reductions approximately to these Industry suggest in

time take surrounding but do will changes of these to have sentiment work future appear through negative for the it their they some and However, reinsurer to way investor exposure. some the Florida the system, mitigated

quarter first to Back our results.

specifically the As the reported lines continuing our and commercial are of in the quarter mentioned, results numbers operations segment. useful first most

first operations premium XX% with approximately income the XX% For up million, was and up year-over-year. earned quarter, pretax $XX continuing premium net gross year-over-year written

lines commercial premiums with segment, up gross was an favorable million, income ratio by approximately lines the portfolio. lines development combined of net driven ratio pretax and the underlying underlying demonstrating loss profitability commercial was of XX% produced XX% commercial combined of the XX%, For year-over-year; $XX written ratio by XX% The strong a X.X%.

quarter first was our side, XX%. underwriting retention the rate On

up XX% year-over-year. maximum with Our is average exposure probable X% materially year-to-date. down portfolio the Valuations loss are improving valuation

has cat as capacity, are expected. increases program. The up core Turning been to with market our rate supportive although reinsurance X June risk-adjusted

in outlined of Coastal, the done the effectively our investor are we XXX% over with authorized American supplement. For structure limit and

will This the event limited hurricane reduced exposure. our exceeding Florida, basis. American Coastal creates we event a footprint significantly Also, to with return first on period have XXX-year first protection frequency

Reinsurance and our higher provides dilutes structure residential rate capacity includes the much to in than event two private cornerstone greater limits, of Coastal's Florida quota FHCF Florida that point of our It than typical sits is impact share first American books increases. partners. important and the XX% which out market

we of be Our $XX is ACIC our through group use captive. retention to modestly occurrence expected expect retention to million the expand although

It for Florida exposures investors time the In the market and Florida conclusion, offers. will challenges take the comfortable with reinsurers hard. remains cat residential to and extremely get some that

an number also expect one exposure I our intermediate and the for in Coastal hard remain challenges share market and both creates to While our placement, creates both for American reinsurance in Florida. near reinsurers the the market opportunity this for admitted residential terms. excellent the it with commercial

With it that, Brad Martz. I'll turn over to

to and Dan, President the This Thank and review investor presentation press you, Company's but and of and for regarding results our financial K Brad hello. forms, CFO our everyone more pleased Martz, to is the XX-Q encourage I'm information release, review UIHC. performance.

share summary X of March from $X.XX quarter GAAP million our a Page & $XXX.X investor operations United which or provides our of million XX, million the a from last or or supplement a compared included $X.XX $XX.X share XXXX, loss Property deconsolidation share gain Company. of presentation a year. a This Insurance included $X.XX resulting the of affiliate, of net discontinued Casualty a to ending of income former net non-recurring $XXX.X

prior we certain have amounts consistent discontinued year. improve for for operations, Last operations requirements recast, so the disclosure have XXXX between helped with not been that discontinued year, did comparability the

tax, to tax is last million. before year, period, of as million That or to compared operations a After favorably this from $X.X the $X.X income increase share earnings a was million year share, ago. Most an $X.XX which XXX% favorably net approximately meaningful operations a year-over-year. compared $XX.X or million of from continuing also $X.XX mentioned, continuing Dan results $XX.X

assets. of believe income, core non-GAAP of is comparability losses from net periods we and as operations Page intangible to X in investments between well as gains a a by excluding metric provides presentation which income measure of our non-cash discontinued the best the investor of reconciliation amortization is

million the $X.XX XXXX for or a share was only $XX.X compared to quarter income million share a first Core last or year. $X $X.XX

dropped Our combined reserve improvement $X.X catastrophe losses over to were XXX.X% by resulting XXX% in year. year, XX.X%, underlying development, favorable year. a ratio current of XX.X% to $X.X last million significant last year of offset from In combined group ratio of prior compared an for our million

Skyway provides the nonrecurring our which year show operating nature, presentation financial mostly earned Services in is that longer Page revenue by breakdown X of statements. consolidated of UPC XXXX the and United Insurance related impact and in to investor of results amounts, recast other affiliates, our our a current against amounts eliminate the no Claims Management UIHC's

down a loss investor presentation million pretax to expense. $X.X our with profit results pretax by our which of interest Page is segment commercial million lines, from reduced lines, $XX personal X of primarily from by $X.X breaks million related

We personal current not also lines lines expense it's included the segment, here the combined period. call out for useful making the ratios personal revenue those in segment's or in the other less because ratios

revenue follow down periods. earned provided the services at runoff over also Since Management to fees to we in to personal support that wind But lines future time. expenses by operating expect revenue suit with UPC, in Insurance being slower most albeit a will this associated UPC's related other of rate United decline is as management as

loss some per book highlights value or included presentation XXXX, balance other as stockholders' income underlying $XX.X of $X.XX accumulated comprehensive our $X.XX million million $X.XX losses Page share, provides X investor sheet an those a portfolio of our Unrealized losses that equity or included share. in of of a on XX, indicating unrealized of March excluding or share. bond $XX.X

billion. assets UIHC's total million Company. largest not component over UPC. to and Coastal million reinsurance yet of assets amount million $XXX payments increased Coastal nearly in $XX.X the second recoverable. recoverable total required our American to to by affiliate Cash UPC behalf and paid of made assets is reinsurance former Insurance million on include over invested American during premium of $XX of quarter of recovered approximately due reinsurance by totaled Included with approximately reinsurance The $X.XX $XXX This

However, management operating of assets. UPC value carryforwards Coastal loss net on to certain no stand-alone opportunity deferred of of UPC and due an realization the American Services the are Florida to Financial holds basis. significant all a tax balances Department that to settle see via

net However, UIHC has losses and certain UPC's a conditions, operating create the win-win scenario. opportunity utilize to subject to

Coastal Accordingly, being time. result UIHC fully fair believe Department American the over a work amounts of Florida and Financial continue towards Services collected we and solution to due all in to equitable will

the date in While we current solution percent our of zero either. Form Financial the for period this with filing XX-Q is of a intends the is of remote, X-K believe the disclose proposed Department probability Services not before details UIHC or isn't on Form to Florida occurring the the our risk filed.

for of X American Coastal projected investor our XXXX, shows program XXXX and Interboro presentation catastrophe details the both X Insurance Pages Company. and reinsurance

As ACIC billion, Dan long-term AIR retention exhaustion demand a the calculation. over $XX is is mentioned, in $X.X a using which the projecting of return program XXX-year with point period million approximately surge

to ratio sufficient also overall portion share that underwriting is and risk protection ceding one-in-XXX of ceded from of highly first rated expenses more statutory adequacy. will come A help event Reinstatement period of that reinsurers, have by limit expense premiums, the event. for expected the ensures offset quota the reinsurance the benefit would which XX-year second followed capacity which will decreasing two ACIC via improve premium a a be in net capital form incomes overall statutory have by will commission lower

is includes with and point for also million exhaustion American $X one and also Coastal. years Company expected to of with reinstatement surge. or demand long-term Insurance an very It AIR to period retention return million XXX-year protection its events, the similar to multiple approximately using Interboro prior similar maintain look $XX

from are market mentioned, fair participation the terms. American UPC reasonable Dan including XX we substantially finalizing lines on working our private Interboro Re. placement the are of allocation secured captive of and the for with capacity still to possible of But needed we Coastal, the all renewal and reinsurers, complete As the having on

a renewals of XXXX early are completed. to the expect reinsurance We June issue all details catastrophe filing Form program our of in X-K once

conclusion, during of concern to in cautiously we management we demonstrate expressed in significant ability performance opinion optimistic In improvements our going XXXX, Form rectified and XXXX. believes regarding are financial the substantially Company's remainder the UIHC's have XX-K for the

thank in remarks, interest your prepared and continued we our That UIHC. you completes for