FALSE000140152100014015212023-02-102023-02-10

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K


CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): February 10, 2023

UNITED INSURANCE HOLDINGS CORP.
(Exact name of registrant as specified in its charter)
Delaware001-3576175-3241967
(State or other jurisdiction of incorporation)(Commission File Number)(IRS Employer Identification No.)
800 2nd Avenue S.33701
Saint Petersburg, FL
(Address of principal executive offices)(Zip Code)
(727)895-7737
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common stock, $0.0001 par value per shareUIHCNasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐




Item 2.02. Results of Operations and Financial Condition.

Upon completion of United Insurance Holdings Corporation’s (the “Company”) year-end review of unpaid loss and loss adjustment reserves with our independent actuarial firm, we expect to incur approximately $197 million of net loss and loss adjustment expense related to current accident year catastrophe events for the fourth quarter of 2022, driven primarily by Hurricane Ian development. Gross losses from Hurricane Ian increased from our preliminary estimate of $1 billion on September 30, 2022, to approximately $1.54 billion as of December 31, 2022.

Our Hurricane Ian gross loss estimate related to our personal lines business underwritten by United Property & Casualty Insurance Company, an insurance company organized under the laws of the State of Florida, (“UPC”) increased from $660 million to $864 million resulting in a net increase in loss expense to UPC of $145 million net of reinsurance as of December 31, 2022. UPC’s current loss estimate of $864 million fully exhausts all reinsurance available to UPC for this specific event. In addition, we estimate that UPC will also incur approximately $36 million of net loss and loss adjustment expense related to current accident year non-hurricane catastrophe losses and $61 million of net loss and loss adjustment expense during the fourth quarter of 2022 from adverse prior year reserve development on both catastrophe and non-catastrophe claims.

Our Hurricane Ian gross loss estimate related to our commercial lines business underwritten by American Coastal Insurance Company (“ACIC”), an insurance company organized under the laws of the State of Florida, increased from $340 million to $679 million resulting in a net increase in loss and loss adjustment expense to ACIC of $16 million net of reinsurance inclusive of all current accident year catastrophe losses incurred during the fourth quarter of 2022. ACIC’s current loss estimate leaves approximately $518 million of limit remaining from the Florida Hurricane Catastrophe Fund placed at 90%, leaving a 10% co-participation by ACIC for future loss development related to Hurricane Ian.

Item 2.06. Material Impairments

As a result of the increased net losses incurred by UPC described in Item 2.02 above, UPC is expected to be insolvent as of December 31, 2022. Accordingly, the Company has notified the Florida Office of Insurance Regulation of UPC’s material impairment. Assuming UPC is placed into receivership, the Company would immediately de-consolidate UPC from its operations on the effective date of receivership.

The impact of de-consolidating UPC from the Company’s balance sheet and income statement as if such de-consolidation had occurred for the periods ending September 30, 2022 and December 31, 2021 is included in the pro forma financial statements, which are filed as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.
        
Exhibit No.Description
Pro forma financial statements as of and for the periods ending September 30, 2022 and December 31, 2021.
104Cover Page Interactive Data File (embedded within the Inline XBRL document)


Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
    
  UNITED INSURANCE HOLDINGS CORP.
February 10, 2023By:/s/ B. Bradford Martz
  B. Bradford Martz
President and Chief Financial Officer
Unaudited Pro Forma Condensed Financial Statements The accompanying unaudited pro forma condensed financial statements present the pro forma consolidated financial position and results of United Insurance Holdings Corporation (the “Company” or “UIHC”), after the de-consolidating of its wholly-owned subsidiary, United Property & Casualty Insurance Company, an insurance company organized under the laws of the State of Florida (“UPC”). The Company has determined that UPC is insolvent as defined by Section 631.011, Florida Statutes. Accordingly, UPC has notified the Florida Office of Insurance Regulation of its financial condition and admits that grounds exist for the appointment of a Receiver of UPC for rehabilitation or liquidation, pursuant to Sections 631.051 and 631.061, Florida Statutes. The Company has presented the pro forma effect of de-consolidating UPC from its reported results on September 30, 2022 and December 31, 2021. These pro forma results have also been adjusted to reflect the balance sheet and income statement impacts of the disposal of certain assets related to UPC, the tax impacts of these asset disposals and the re-classification of certain balances on the balance sheet to the proper financial statement presentation. Explanations of each adjustment can be found directly following these financial statements. All amounts presented in these pro forma financial statements are presented in thousands, except for share amounts and per share amounts. No other entities are involved in this transaction. UNITED INSURANCE HOLDINGS CORP.

 
Unaudited Pro Forma Condensed Balance Sheet As of September 30, 2022 Consolidated Less: UPC Plus: Pro Forma Adjustments Pro Forma Consolidated ASSETS Investments, at fair value: Fixed maturities, available-for-sale $ 492,251 $ 206,456 $ — $ 285,795 Equity securities 36,495 22,317 — 14,178 Other investments 16,609 13,472 — 3,137 Total investments $ 545,355 $ 242,245 $ — $ 303,110 Cash and cash equivalents 180,947 99,094 — 81,853 Restricted cash 42,300 4,723 — 37,577 Total cash, cash equivalents and restricted cash $ 223,247 $ 103,817 $ — $ 119,430 Accrued investment income 3,203 1,410 — 1,793 Property and equipment, net 26,709 — (96) a 26,613 Premiums receivable, net 45,214 13,749 — 31,465 Reinsurance recoverable on paid and unpaid losses, net 1,547,282 1,081,452 — 465,830 Ceded unearned premiums 373,558 217,795 — 155,763 Goodwill 59,476 — — 59,476 Deferred policy acquisition costs, net 71,204 (16,473) — 87,677 Intangible assets, net 15,940 — (410) b 15,530 Other assets, net 30,939 32,341 1,402 c — Total Assets $ 2,942,127 $ 1,676,336 $ 896 $ 1,266,687 LIABILITIES AND STOCKHOLDERS’ EQUITY Liabilities: Unpaid losses and loss adjustment expenses $ 1,679,567 $ 1,138,635 $ — $ 540,932 Unearned premiums 612,904 328,276 — 284,628 Reinsurance payable on premiums 200,568 122,223 — 78,345 Payments outstanding 105,200 104,198 — 1,002 Accounts payable and accrued expenses 76,358 (43,065) — 119,423 Operating lease liability 1,416 — — 1,416 Other liabilities 32,996 11,762 1,296 d 22,530 Notes payable, net 152,684 4,412 — 148,272 Total Liabilities $ 2,861,693 $ 1,666,441 $ 1,296 $ 1,196,548 Stockholders’ Equity: Preferred stock, $0.0001 par value $ — $ — $ — $ — Common stock, $0.0001 par value 4 — — 4 Additional paid-in capital 395,192 — — 395,192 Treasury shares, at cost (431) — — (431) Accumulated other comprehensive loss (64,805) (24,518) — (40,287) Retained earnings (deficit) (249,526) 34,413 (400) e (284,339) Total stockholders' equity attributable to United Insurance Holdings Corp. (UIHC) stockholders $ 80,434 $ 9,895 $ (400) $ 70,139 Noncontrolling interests (NCI) — — — — Total Stockholders’ Equity $ 80,434 $ 9,895 $ (400) $ 70,139 Total Liabilities and Stockholders’ Equity $ 2,942,127 $ 1,676,336 $ 896 $ 1,266,687 UNITED INSURANCE HOLDINGS CORP.

 
Unaudited Pro Forma Condensed Consolidated Statement of Comprehensive Income (Loss) Nine Months Ended September 30, 2022 Consolidated Less: UPC Plus: Pro Forma Adjustments Pro Forma Consolidated REVENUE: Gross premiums written $ 894,824 $ 441,625 $ — $ 453,199 Change in gross unearned premiums 32,036 94,659 — (62,623) Gross premiums earned 926,860 536,284 — 390,576 Ceded premiums earned (598,411) (400,339) — (198,072) Net premiums earned 328,449 135,945 — 192,504 Net investment income 9,887 4,408 — 5,479 Net realized investment losses (1,856) (1,811) — (45) Net unrealized losses on equity securities (9,870) (5,813) — (4,057) Management Fee Income — (131,418) — 131,418 Other revenue 15,337 (9,645) — 24,982 Total revenues 341,947 (8,334) — 350,281 EXPENSES: Losses and loss adjustment expenses 298,670 186,526 — 112,144 Policy acquisition costs 93,948 (56,862) — 150,810 Operating expenses 34,882 5,388 — 29,494 General and administrative expenses 56,890 1,936 — 54,954 Interest expense 7,165 84 — 7,081 Total expenses 491,555 137,072 — 354,483 Loss before other income (149,608) (145,406) — (4,202) Other income (loss) 1,599 37 (506) f 1,056 Loss before income taxes (148,009) (145,369) (506) (3,146) Provision (benefit) for income taxes 25,187 9,103 (106) g 15,978 Net loss $ (173,196) $ (154,472) $ (400) $ (19,124) Less: Net loss attributable to NCI (111) — — (111) Net loss attributable to UIHC $ (173,085) $ (154,472) $ (400) $ (19,013) OTHER COMPREHENSIVE LOSS: Change in net unrealized losses on investments (60,232) (22,820) — (37,412) Reclassification adjustment for net realized investment loss 1,856 1,811 — 45 Income tax benefit (expense) related to items of other comprehensive loss 49 (82) — 131 Total comprehensive loss $ (231,523) $ (175,563) $ (400) $ (56,360) Less: Comprehensive loss attributable to NCI (164) — — (164) Comprehensive loss attributable to UIHC $ (231,359) $ (175,563) $ (400) $ (56,196) Basic & Diluted weighted average shares outstanding 43,035,374 43,035,374 Earnings Available to UIHC common stockholders per share (4.02) (0.44) UNITED INSURANCE HOLDINGS CORP.

 
Unaudited Pro Forma Condensed Balance Sheet As of December 31, 2021 Consolidated Less: UPC Plus: Pro Forma Adjustments Pro Forma Consolidated ASSETS Investments, at fair value: Fixed maturities, available-for-sale $ 663,602 $ 316,933 $ — $ 346,669 Equity securities 37,958 21,576 — 16,382 Other investments 18,006 14,844 — 3,162 Total investments $ 719,566 $ 353,353 $ — $ 366,213 Cash and cash equivalents 212,024 98,642 — 113,382 Restricted cash 33,254 421 — 32,833 Total cash, cash equivalents and restricted cash $ 245,278 $ 99,063 $ — $ 146,215 Accrued investment income 3,296 1,748 — 1,548 Property and equipment, net 31,561 — (96) a 31,465 Premiums receivable, net 79,166 25,191 — 53,975 Reinsurance recoverable on paid and unpaid losses, net 997,120 825,182 — 171,938 Ceded unearned premiums 430,631 318,302 — 112,329 Goodwill 73,045 — (13,569) b 59,476 Deferred policy acquisition costs, net 38,520 (59,531) — 98,051 Intangible assets, net 18,375 — (410) c 17,965 Other assets, net 62,015 (75,260) 2,956 d 140,231 Total Assets $ 2,698,573 $ 1,488,048 $ (11,119) $ 1,199,406 LIABILITIES AND STOCKHOLDERS’ EQUITY Liabilities: Unpaid losses and loss adjustment expenses $ 1,084,450 $ 833,808 $ — $ 250,642 Unearned premiums 644,940 386,599 — 258,341 Reinsurance payable on premiums 248,625 207,190 — 41,435 Payments outstanding 114,524 113,476 — 1,048 Accounts payable and accrued expenses 76,258 (4,619) — 80,877 Operating lease liability 1,934 — — 1,934 Other liabilities 39,324 32,216 — 7,108 Notes payable, net 156,561 5,294 — 151,267 Total Liabilities $ 2,366,616 $ 1,573,964 $ — $ 792,652 Stockholders’ Equity: Preferred stock, $0.0001 par value $ — $ — $ — $ — Common stock, $0.0001 par value 4 — — 4 Additional paid-in capital 394,268 — — 394,268 Treasury shares, at cost (431) — — (431) Accumulated other comprehensive loss (6,531) (3,428) — (3,103) Retained earnings (deficit) (74,904) (82,488) (11,119) e (3,535) Total stockholders' equity attributable to United Insurance Holdings Corp. (UIHC) stockholders $ 312,406 $ (85,916) $ (11,119) $ 387,203 Noncontrolling interests (NCI) 19,551 — — 19,551 Total Stockholders’ Equity $ 331,957 $ (85,916) $ (11,119) $ 406,754 Total Liabilities and Stockholders’ Equity $ 2,698,573 $ 1,488,048 $ (11,119) $ 1,199,406 UNITED INSURANCE HOLDINGS CORP.

 
Unaudited Pro Forma Condensed Consolidated Statement of Comprehensive Income (Loss) Year Ended December 31, 2021 Consolidated UPC Plus: Pro Forma Adjustments Pro Forma Consolidated REVENUE: Gross premiums written $ 1,329,445 $ 844,918 $ — $ 484,527 Change in gross unearned premiums 78,998 97,766 — (18,768) Gross premiums earned 1,408,443 942,684 — 465,759 Ceded premiums earned (818,682) (574,052) — (244,630) Net premiums earned 589,761 368,632 — 221,129 Net investment income 13,772 7,871 — 5,901 Net realized investment gains 3,567 3,430 — 137 Net unrealized gains on equity securities 3,237 1,766 — 1,471 Management Fee Income — (243,116) — 243,116 Other revenue 24,190 (13,723) — 37,913 Total revenues 634,527 124,860 — 509,667 EXPENSES: Losses and loss adjustment expenses 422,134 315,401 — 106,733 Policy acquisition costs 173,574 (69,313) — 242,887 Operating expenses 56,257 7,105 — 49,152 General and administrative expenses 57,212 968 13,569 b 69,813 Interest expense 9,391 88 — 9,303 Total expenses 718,568 254,249 13,569 477,888 Loss before other income (84,041) (129,389) (13,569) 31,779 Other income (loss) 184 55 (506) f (377) Income (loss) before income taxes (83,857) (129,334) (14,075) 31,402 Benefit for income taxes (23,989) (23,384) (2,956) g (3,561) Net income (loss) $ (59,868) $ (105,950) $ (11,119) $ 34,963 Less: Net loss attributable to NCI (1,949) — — (1,949) Net income (loss) attributable to UIHC $ (57,919) $ (105,950) $ (11,119) $ 36,912 OTHER COMPREHENSIVE LOSS: Change in net unrealized losses on investments (18,267) (8,611) — (9,656) Reclassification adjustment for net realized investment gains (3,567) (3,430) — (137) Income tax benefit related to items of other comprehensive loss 5,264 2,908 — 2,356 Total comprehensive income (loss) $ (76,438) $ (115,083) $ (11,119) $ 27,526 Less: Comprehensive loss attributable to NCI (2,295) — — (2,295) Comprehensive income (loss) attributable to UIHC $ (74,143) $ (115,083) $ (11,119) $ 29,821 Basic weighted average shares outstanding 42,948,850 42,948,850 Diluted weighted average shares outstanding 42,948,850 43,330,958 Basic Earnings Available to UIHC common stockholders per share (1.35) 0.86 Diluted Earnings Available to UIHC common stockholders per share (1.35) 0.85 UNITED INSURANCE HOLDINGS CORP.

 
Pro Forma Adjustments The pro forma adjustments included in the unaudited pro form condensed financial statements are as follows: September 30, 2022 Adjustments: a. To eliminate historical assets. b. To eliminate historical intangible assets. c. To recognize the deferred tax asset from disposals, and re-class the remaining liability from other assets to other liabilities. d. To re-class the remaining liability from other assets to other liabilities. e. To recognize the income statement impact of the disposals. f. To eliminate the historical assets and intangible assets. g. To recognize the tax impact of the disposals. December 31, 2021 Adjustments: a. To eliminate historical assets. b. To impair historical goodwill. c. To eliminate historical intangible assets. d. To recognize the deferred tax asset from disposals and goodwill impairment. e. To recognize the income statement impact of the disposals and goodwill impairment. f. To eliminate historical assets and intangible assets. g. To recognize the tax impact of the disposals and impairment. UNITED INSURANCE HOLDINGS CORP.