United Insurance Holdings reports 2012 earnings
United Insurance Holdings Corp, a property and casualty insurance holding company, today reported its financial results for the fourth quarter and year ended December 31, 2012. Fourth quarter 2012 net income was $ 1.0 million, or $ 0.09 per share.
Full year 2012 net income was $9.7 million, or $0.91 per share; fourth quarter 2012 gross premiums written increased 37% to $59.5 million; full year gross premiums written increased 25% to 255 million. Cash and investment holdings of $223.4 million at December 31, 2012. Book value per share of $5.70 December 31, 2012.
Full year return on average equity of 16.1% and combined ratio of 94.8%. UPC Insurance reported total revenues for the quarter ended December 31, 2012, of $37.9 million, a 43% increase from $26.5 million reported in the prior year period. The strong growth was primarily due to an increase in net premiums earned to $34.2 million, from $24.8 million for the fourth quarter of 2011.
The growth in net premiums earned for the quarter was driven by continued growth in new business in Florida and other states as well as exceptional retention
at of renewal business. Net investment income, realized gains and other revenues increased to $3.7 million for the quarter compared to $1.6 million in the prior year quarter.
The Company realized gains from its investment portfolio of $2.0 million during the quarter as part of a repositioning of the portfolio towards shorter overall duration. UPC Insurance's overarching investment philosophy is focused on a fixed income portfolio that minimizes risk with low average durations, high credit quality and prudent asset allocation across highly liquid sectors.
During the fourth quarter, the Company implemented new loss reserving practices designed to strengthen UPC Insurance's approach to claim estimation and adjudication. An extensive review of all open and pending claim inventories by the Company's New V.P. of Claims included various upward and downward changes in estimates, but resulted in net case reserve strengthening of approximately $ 1.3 million during the quarter.
The balance of the adverse development experienced for the quarter related primarily to new and reopened claims in the 2010 and 2011 accident years.
Policy acquisition costs increased to $10.3 million for the fourth quarter of 2012 from $ 7.8 million for the fourth quarter of 2011. These costs vary directly with premiums earned and as a percentage of gross premiums earned, were up slightly from 15.8% in the prior year to 16.5% in the current quarter due to higher commissions paid on new and renewal business outside of Florida.
Operating expenses increased to $3.8 million for the fourth quarter of 2012, from $1.1 million during the same period of last year due to the non-recurring assessment levied by the Florida Insurance Guaranty Association ( FIGA) of approximately $1.7 million. Rate filings have been approved and implemented that will allow UPC Insurance to fully recoup this amount from policyholders during 2013 and 2014.
General and administrative expenses increased to $3.6 million for the fourth quarter of 2012, from $2.9 million for the fourth quarter of 2011 as a result of the Company's efforts to strengthen its management team and expansion into new states. Overall, the Company's net expense ratio decreased for both the quarter and the year after backing out the effects of the FIGA assessment.