United In­surance Hold­ings re­ports 2012 earn­ings

The Pak Banker - - COMPANIES/BOSS -

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.

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