United Insurance Holdings Corp. (NASDAQ:UIHC) Q2 2020 Earnings Conference Call - Final Transcript
Aug 05, 2020 • 05:00 pm ET
R. Daniel Peed
focusing our generation of a significant non cat underrating profit. We expect our underwriting expense to strengthen our exposure units, all given, rate increases, we could continue to see top line growth. I'm very excited to be here and excited to work with this management team.
As of the end of July, we crossed over 1 billion premium in force on our personal lines book, which is beginning to reflect the rate increases we've taken over the last couple of years and has the potential to generate significant underwriting profitability forward.
We have American Coastal, a premier market-leading Florida commercial residential insurer, which generates solid operating cost. And we continue to grow our commercial specialty disclosures within Journey, our best-rated subsidiary. We've launched an excellent technology platform called Agent Connect, which will enable us to reduce expenses and potentially to expand our distribution channels. So as I said, I'm excited to be here and looking forward to working with the team.
With that, I'd like to turn it over to Brad Martz, and then we'll be happy to address your questions.
Bennett Bradford Martz
Thank you, Dan, and hello, this is Brad Martz, President and CFO of UPC Insurance. I'm pleased to review UPC's financial results but also encourage everyone to review our press release, Form 10-Q and investor presentation for more information regarding the Company's performance. Highlights for the second quarter ended June 30th include, core income of $8.8 million or $0.20 a share versus a loss of $3.5 million or $0.08 a share last year; gross premiums earned of approximately $344 million, an increase of $14 million or a little over 4%; a combined ratio of 99.4%, an 8.8% improvement year-over-year, which included 16 points of current year catastrophe losses, totaling $29.8 million, approximately $0.57 a share after tax; a modest favorable reserve development of $823,000, leading to an underlying combined ratio of 83.7%, which compares very favorably to 91.8% last year. Improvements were fueled by favorable non-cat loss frequency and lower policy acquisition costs.
Premiums for the quarter decreased $10 million, approximately 2.2% from a year ago, driven by first, increases in direct premiums written of $32.9 million, offset by a $43 million decrease in assumed E&S premiums written. The direct premium growth was a combination of almost $22 million or 8% growth in personal lines and $11 million or 10% growth in commercial lines.
The decline in assumed E&S premiums written was driven by the termination of a quota share reinsurance agreement on a cut-off basis, effective June 1st, 2020. UPC is still assuming commercial E&S business via one remaining quota share treaty we renewed at June 1st, and is expected to produce approximately $50 million during the treaty period, ending May 31st, 2021. Florida premium written grew modestly at 8.2% and accounted for over 60% of the total premium growth year-over-year, while the Gulf region grew 16.3%, the Southeast grew 10% and the North East region was down 1%.
Ceding on our premiums were 46.1% of gross premiums