 United
Insurance Holdings Corp. Follow-On Roadshow
November 2012
Filed Pursuant to Rule 433
Issuer Free Writing Prospectus dated November 30, 2012
Relating to Preliminary Prospectus dated November 29, 2012
Registration Statement No. 333-184555 |
 2
Cautionary Statements
The
issuer
has
filed
a
registration
statement
(including
a
prospectus)
with
the
SEC
for
the
offering
to
which
this
communication
relates.
Before
you
invest,
you
should
read
the
prospectus
in
that
registration
statement
and
other
documents
the
issuer
has
filed
with
the
SEC
for
more
complete
information
about
the
issuer
and
this
offering.
You
may
get
these
documents
for
free
by
visiting
EDGAR
on
the
SEC
Web
site
at
www.sec.gov.
Alternatively,
the
issuer,
any
underwriter
or
any
dealer
participating
in
the
offering
will
arrange
to
send
you
the
prospectus
if
you
request
it
by
calling
toll-free
1-800-248-8863.
This
prospectus
is
available
at
Statements
in
this
presentation
that
are
not
historical
facts
are
forward-looking
statements
that
are
subject
to
certain
risks
and
uncertainties
that
could
cause
actual
events
and
results
to
differ
materially
from
those
discussed
herein.
Without
limiting
the
generality
of
the
foregoing,
words
such
as
“may,”
“will,”
“expect,”
“believe,”
“anticipate,”
“intend,”
“could,”
“would,”
“estimate,”
“or
“continue”
or
the
other
negative
variations
thereof
or
comparable
terminology
are
intended
to
identify
forward-looking
statements.
The
forward-looking
statements
in
this
presentation
include
statements
regarding
the
completion
of
the
proposed
public
offering,
participation
of
selling
stockholders
in
the
offering,
participation
of
directors
and
employees
in
the
directed
share
program,
listing
of
the
Company’s
common
stock
on
NASDAQ
and
other
statements
regarding
Company’s
or
management’s
plans,
objectives,
goals,
strategies,
expectations,
estimates,
beliefs
or
projections,
or
any
other
statements
concerning
future
performance
or
events.
The
risks
and
uncertainties
that
could
cause
our
actual
results
to
differ
from
those
expressed
or
implied
herein
include,
without
limitation,
the
success
of
the
Company’s
marketing
initiatives,
inflation
and
other
changes
in
economic
conditions
(including
changes
in
interest
rates
and
financial
markets);
the
impact
of
new
regulations
adopted
in
the
states
in
which
we
do
business
which
affect
the
property
and
casualty
insurance
market;
the
costs
of
reinsurance
and
the
collectability
of
reinsurance,
assessments
charged
by
various
governmental
agencies;
pricing
competition
and
other
initiatives
by
competitors;
or
ability
to
obtain
regulatory
approval
for
requested
rate
changes,
and
the
timing
thereof;
legislative
and
regulatory
developments;
the
outcome
of
litigation
pending
against
us,
including
the
terms
of
any
settlements;
risks
related
to
the
nature
of
our
business;
dependence
on
investment
income
and
the
composition
of
our
investment
portfolio;
the
adequacy
of
our
liability
for
loss
and
loss
adjustment
expense;
insurance
agents;
claims
experience;
ratings
by
industry
services;
catastrophe
losses;
reliance
on
key
personnel;
weather
conditions
(including
the
severity
and
frequency
of
storms,
hurricanes,
tornadoes
and
hail);
changes
in
loss
trends;
acts
of
war
and
terrorist
activities;
court
decisions
and
trends
in
litigation;
and
other
matters
described
from
time
to
time
by
us
in
our
filings
with
the
SEC,
including,
but
not
limited
to,
the
risks
and
uncertainties
described
under
“Risk
Factors”
in
the
Company’s
Registration
Statement
filed
November
29,
2012.
In
addition,
investors
should
be
aware
that
generally
accepted
accounting
principles
prescribe
when
a
company
may
reserve
for
particular
risks,
including
litigation
exposures.
Accordingly,
results
for
a
given
reporting
period
could
be
significantly
affected
if
and
when
a
reserve
is
established
for
a
major
contingency.
Reported
results
may
therefore,
appear
to
be
volatile
in
certain
accounting
periods.
The
information
contained
in
this
presentation
is
as
of
September
30,
2012
and
the
forward-looking
statements
made
in
this
presentation
are
only
made
as
of
the
date
of
this
presentation.
The
Company
undertakes
no
obligations
to
update,
change
or
revise
any
forward-looking
statement,
whether
as
a
result
of
new
information,
additional
or
subsequent
developments
or
otherwise. |
 3
Offering Size
5,000,000 primary shares and 300,075 secondary shares
Approximately $30 million at recent share price
Last Trade
$5.38
as
of
November
27
th
,
2012
Type
Follow-on public offering of common stock
Over-Allotment
15% (Primary)
Exchange
and
Symbol
Currently traded on OTCBB under “UIHC”
Concurrent with this offering, United will list on the NASDAQ Capital
Market under “UIHC”
Use of Proceeds
General corporate purposes including statutory capital in support of
growth
Expected Pricing Date
Week
of
December
10
th
,
2012
(1)
Source: SNL Financial LC
Offering Summary
(1) |
   4
Directed Share Program
Estimated
Shares
Shares to be
Pro Forma
Participants
Currently Owned
Purchased
Shares Owned
Greg Branch
1,527,530
263,488
1,791,018
Alec Poitevint
355,938
61,397
417,335
Kent Whittemore
221,009
38,123
259,132
Bill Hood
208,542
35,972
244,514
Kern Davis
204,152
35,215
239,367
John Forney
91,629
15,805
107,434
Employees
NA
50,000
NA
Total
2,608,800
500,000
3,058,800
•
United Directors and Employees expect to purchase the maximum amount, 10%, of
primary shares sold in this offering
•
Certain
United
shareholders
associated
with
the
formation
of
FMG
Acquisition
Corp
in
May 2007 have elected to exercise piggyback registration rights to sell a portion
of their shares in this offering
Selling Shareholders
Shares
Shares to be
Pro Forma
Participants
Currently Owned
Sold
Shares Owned
FMG Investors LLC
932,231
233,058
699,173
John Petry
31,339
31,339
-
David Sturgess
17,839
17,839
-
Thomas Sargent
17,839
17,839
-
Total
999,248
300,075
699,173
Directed Share Program and Selling Shareholders |
 5
Compelling
Market
Opportunity
Strong
Financial
Performance
Superior
Insurance
Capabilities
Exceptional
Management
Team
Attractive
Valuation
UIHC Investment Highlights |
 6
Gregory C. Branch
Chairman
•
Chairman of United since inception in 1999
•
Former Chairman of Summit Holding Southeast, Inc.
•
Prior Member of Lloyd’s of London for over 20 years
•
President/Owner,
Branch
Properties
–
Parent
company
of
Seminole
Feed
John L. Forney
CEO
•
Joined United in June 2012
•
Former
Managing
Director,
Raymond
James
–
Advised
state
government
agencies
in
Florida,
California,
Texas and Louisiana on property catastrophe risks
•
Advised major national industry consortium led by State Farm and
Allstate on issues relating to managing
residential natural catastrophe risk
B. Bradford Martz
CFO
•
Joined United in September 2012
•
Former
CFO/CAO,
Bankers
Financial
Corporation
–
FL-based
P&C
insurance
holding
company
that
insures
across multiple lines and states with approximately $700 million
in assets and $350 million of premiums
•
Former
Managing
Partner,
Lake,
Martz
&
Company,
P.A.
–
Regional
accounting
firm
Melvin A. Russell, Jr.
President of UPC
•
Joined United at its inception in 1999
•
Prior positions: Chief Underwriting Officer, SVP and Secretary
•
35+ years of experience in the P&C market; 23+ years in the Florida insurance
market •
Prior experience in both commercial and personal lines underwriting, as well as in
management with two large, national carriers
Jay Williams
VP of Marketing
•
Joined United in July 2012
•
Former
Managing
Director,
FAIA
Member
Services
–
“For-profit”
subsidiary
of
the
Florida
Association
of
Insurance Agents
•
33+ years of insurance experience; served in various new business development and
marketing roles for a number of FL-based insurance agencies including
Bankers Financial Corporation John Langowski
VP of Claims
•
Joined United in October 2012
•
Former
VP
and
Chief
Claims
Officer,
Cypress
Insurance
Group
–
FL-based
homeowners
and
business
insurer with over 100,000 policies in-force
•
Former Regional Director of Claims, Farmers Insurance Group
•
22+ years of industry-related experience; 10+ years spent at Fortune 100
companies specializing in P&C insurance
Exceptional Management Team |
 7
An insurance holding company that sources,
writes and services residential property and
casualty insurance policies using a network
of independent agents and a group of wholly-
owned insurance subsidiaries.
UIHC is……….. |
 8
•
Focused strategy
–
Opportunity
is
homeowners’
market
in
wind-exposed
areas
from
Texas
to
Maine
•
Well established relationships with distribution channels
–
Total active network includes approximately 2,000 agents
–
Key strategic relationships: FAIA and Allstate
•
Strong and careful underwriting
–
Zip code level analysis of individual policies to optimize premium vs. PML
–
Avoided sinkhole problems that have plagued Florida companies
•
Experienced claims management
–
Adjusters (all in-house) average over 10 years experience
•
Conservative reinsurance program
–
Buy to 1-100 years loss and multiple event coverage
•
Successfully managed catastrophe risk since 1999
–
Maintained
profitability
through
unprecedented
storm
activity
of
2004
&
2005
Business Overview |
 9
(1)
Policy numbers exclude flood line of business
Data as of September 30, 2012
Premium In-Force by
Line of Business
Policies In-Force
Total policies in-force: 124,496
(1)
Total premium in-force: $241,956
UIHC –
What and Where We Write
8%
3%
2%
Florida
South Carolina
Massachusetts
Rhode Island
91%
5%
4%
Homeowners
Fire
Flood
88% |
 10
UIHC Has a Successful Operating History
United has been profitable in all but one of its thirteen years of operations
and is well-positioned to grow rapidly in Florida and other markets
1999
2002
2004
2005
2008
2009
2010
2011
PHASE 1: 1999-2007
United begins operations in Florida in
1999 and records profits every year,
even in the wake of 8 hurricanes in
2004-2005
PHASE 2: 2008-2011
United becomes a public company;
growth slows as regulatory and
market changes impact Florida, but
underlying operations remain strong
and expansion outside Florida
commences
PHASE 3: 2012-
Growth and profitability resume
upward trajectory with revamped
Board and management team leading
business expansion in Florida and
other states
UPC & UIM
formed
with 12,000
policies
Established
in-house
claims
department
United remains
profitable
throughout
unprecedented
storm activity
Hurricanes
Charley
Frances
Ivan
Jeanne
Dennis
Rita
Katrina
Wilma
Wind mitigation
credits and rising
reinsurance rates
affect industry
UIHC becomes
publicly traded in
FMG acquisition
9/29/2008
Expands into
South Carolina
Expands into
Massachusetts
Approved for
rate increases,
currently
affecting new
and renewal
business
Expands into
Rhode Island
2012 |
 11
Source: Insurance Information Institute
$2-$3B
$3-$4B
$4-$5B
$5-$10B
$10-$20B
$20B+
TX
$13.4
LA
$7.9
MS
$4.1
AL
$4.9
SC
$3.1
NC
$4.1
NJ
$2.1
MA
$4.4
NY
$3.7
FL
$54.6
100 Year Residential
PML By State
Increased perception of risk and resulting dislocation in property
insurance markets creates an opportunity to establish a successful
and defensible market position for UIHC
FAIR/Beach Plan Earned Premium as
% of Overall Property Market
(Top 5 States) 2002 vs. 2010
Market Opportunity
0%
2%
4%
6%
8%
10%
12%
14%
16%
Texas (TWIA)
Rhode Island
Louisiana
Massachusetts
Florida
2010
2002 |
 12
Source: SNL Financial
UIHC’s Percentage of 2011
Homeowner’s Market
S. Carolina
Massachusetts
Rhode Island
UIHC can achieve scale with a diverse book spread across various
states
2.18%
0.65%
0.01%
NA
Market Opportunity
Florida
2011 Homeowner’s Market – Direct Premiums Written (Premiums in
$000’s) |
 13
UIHC is Growing in the Right Way
Not Dependent on “Takeouts”
from Citizens
Strong independent agent distribution channels
The Right Rate for the Right Risk
Not competing on price for new business
Conservative Risk Metrics
Stringent portfolio optimization process for each policy added
Robust, Comprehensive Reinsurance Program
Buy to one-in-100 year single event plus multiple event coverage
|
 14
Quality Growth Reflected in Portfolio Metrics
Total Insured Value and
Policies In-Force
Avg. Annual Loss to
Premium In-Force
$ in thousands,
except policy data
Nine Months Ended
Years Ended December 31,
Sept. 30, 2012
2011
2010
2009
Number of Policies In-Force (PIF)
124,496
101,754
80,514
93,022
Growth of PIF
22.4%
26.4%
-13.4%
15.6%
Total Insured Value (TIV)
$55,325,100
$46,032,280
$36,312,297
$43,846,415
Growth of TIV
20.2%
26.8%
-17.2%
25.3%
Probable Maximum Loss (PML)
$497,950
$472,620
$500,628
$618,206
Growth of PML
5.4%
-5.6%
-19.0%
11.1%
Note: AAL and PML are modeled using AIR assuming long-term and no demand
surge 0
20
40
60
80
100
120
140
$-
$10
$20
$30
$40
$50
$60
$70
2009
2010
2011
2012YTD
26.6%
22.4%
18.5%
17.2%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
22.0%
24.0%
26.0%
28.0%
2009
2010
2011
2012YTD |
 15
2012 Reinsurance Program
•
$103 million cost for
•
Cover includes a
diverse and strong
group of 24 separate
reinsurers
•
Horizontal and vertical
coverage: one-in-100
year single event plus
multiple event coverage
Total $552.6M
First Event Coverage
over $536 million of
coverage
Private
Layer 4
(INCR)
$38,551,403
x
$150,666,720
Private Layer 5 (Top and Drop)
$10,000,000 x $189,218,123
Private Layer 3
$87,333,392 x $63,333,328
Company Retention
$10,000,000
Private Layer 2
$38,333,328 x $25,000,000
Private Layer 1 (Prepaid Reinstatement)
$10,000,000 x $15,000,000
Florida Hurricane Catastrophe Fund
Mandatory Layer
90% of $392,334,274 x $153,332,209
Captive Layer (Prepaid Reinstatement)
$5,000,000 x $10,000,000 |
  16
UIHC Financial Highlights
Note: AAL and PML are modeled using AIR assuming long-term and no demand
surge $ in thousands, except ratios, policy data and per share amounts
YTD
Years Ended December 31,
9/30/2012
2011
2010
2009
Gross Written Premiums
195,385
$
203,806
$
158,637
$
155,840
$
Net Premiums Earned
87,735
90,080
66,855
78,181
Average Gross Written Premium In-Force per Policy
1,858
1,894
1,878
1,664
Net Income
8,722
$
8,088
$
(925)
$
4,057
$
Earnings per Share
0.84
0.77
(0.09)
0.38
Dividends per Share
0.05
0.05
0.05
0.15
Total Equity
64,993
$
54,989
$
45,293
$
48,071
$
Total Statutory Surplus
44,528
48,188
48,495
50,345
Book Value Per Share
6.22
5.31
4.28
4.55
Ratios:
Loss and LAE Ratio (based on GPE)
24.1%
21.5%
27.4%
26.1%
Loss and LAE Ratio (based on NPE)
44.9%
43.1%
63.6%
52.1%
Combined Ratio (based on GPE)
48.4%
45.8%
51.3%
50.5%
Combined Ratio (based on NPE)
90.3%
92.0%
119.1%
101.0%
Other:
Total Insured Value (TIV)
55,325,100
$
46,032,280
$
36,312,297
$
43,846,415
$
Probable Maximum Loss (PML)
497,950
472,620
500,628
618,206
Number of Policies In-Force (PIF)
124,496
101,800
80,500
93,000
PML to Premium In-Force
2.20x
2.45x
3.31x
3.99x
AAL to Premium In-Force
17.2%
18.5%
22.4%
26.6% |
 17
Historical Income Statement
Historical Underwriting Ratios
$ in thousands, except per share data
For the Nine Months Ended
September 30,
For the Years Ended December 31,
2012
2011
2011
2010
2009
2008
2007
Gross premiums written
195,385
$
160,337
$
203,806
$
158,637
$
155,840
$
141,556
$
145,050
$
Gross premiums earned
163,683
131,752
180,837
155,307
156,393
140,223
151,684
Net premiums earned
87,735
65,267
90,080
66,855
78,181
81,144
85,358
Other revenue
5,604
4,689
6,338
13,136
10,288
19,918
27,243
Total Revenue
93,339
$
69,956
$
96,418
$
79,991
$
88,469
$
101,062
$
112,601
$
Losses and loss adjustment expenses
39,401
29,399
38,861
42,533
40,755
28,063
25,662
Other operating expenses
39,519
32,024
43,818
36,373
38,210
31,149
31,296
Interest expense
283
453
548
1,767
3,177
2,811
6,078
Total Expenses
79,203
$
61,876
$
83,227
$
80,673
$
82,142
$
62,023
$
63,036
$
Net Income
8,722
$
4,863
$
8,088
$
(925)
$
4,057
$
33,419
$
39,642
$
Earnings Per Common Share
0.84
$
0.46
$
0.77
$
(0.09)
$
0.38
$
3.08
$
3.37
$
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
140.0%
160.0%
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
Loss Ratio
Expense Ratio
Combined Ratio |
 18
Historical Balance Sheet
Growth of Book Value Per Share
LTM growth of 24.4%
$ in thousands
As of September 30,
As of December 31,
2012
2011
2011
2010
2009
2008
2007
Cash and invested assets
219,391
$
185,583
$
165,898
$
126,242
$
160,110
$
155,712
$
170,634
$
Reinsurance recoverable on paid and unpaid losses
3,013
6,643
4,458
27,304
25,477
22,604
16,816
Prepaid reinsurance premiums
77,774
63,152
40,968
38,307
40,285
26,518
26,345
Total Assets
336,895
$
286,133
$
240,215
$
213,621
$
247,758
$
232,065
$
242,426
$
Unpaid losses and loss adjustment expenses
35,801
$
39,857
$
33,600
$
47,414
$
44,112
$
40,098
$
36,005
$
Unearned premiums
131,832
105,746
100,130
77,161
73,831
74,384
73,051
Reinsurance payable
72,679
55,665
16,571
14,982
28,162
16,694
10,852
Notes payable
16,176
17,353
17,059
18,235
41,428
41,303
43,833
Total Liabilities
271,902
$
234,345
$
185,226
$
168,328
$
199,687
$
189,138
$
196,327
$
Total Stockholders' Equity
64,993
$
51,788
$
54,989
$
45,293
$
48,071
$
42,927
$
46,099
$
Statutory Surplus
44,528
$
47,599
$
48,188
$
48,495
$
50,345
$
54,675
$
51,699
$
$4.55
$4.21
$4.27
$4.36
$4.28
$4.39
$4.50
$5.00
$5.31
$5.75
$6.09
$6.22
$3.00
$3.50
$4.00
$4.50
$5.00
$5.50
$6.00
$6.50
$7.00
$7.50
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12 |
   19
Investment Portfolio
•
Designed to preserve capital, maximize after-tax investment income, maintain
liquidity and minimize risk
•
As of September 30, 2012, 100% of the Company’s fixed maturity portfolio was
rated investment grade
–
Average Duration:
5.1 years
–
Average S&P Rating:
A
Securities Portfolio
Securities Portfolio
Value
($MMs)
%
Cash
90.9
$
41.4%
Corporate Debt Securities
55.4
25.3%
U.S. Government & Agency Securities
49.6
22.6%
States, Municipalities & Political Subdivisions
19.0
8.7%
Common Stocks
3.5
1.6%
Preferred Stocks
0.7
0.3%
Other Long-Term Investments
0.3
0.1%
219.4
$
100.0%
Historical Return on Investments
(1)
2008
2009
2010
2011
2012
1 Year
5.99%
5.52%
6.99%
4.21%
5.97%
3 Year
6.17%
5.57%
5.72%
5 Year
5.74%
(1)
Includes investment income and realized and unrealized gains
Data as of September 30, 2012
Cash
$90.9
41%
Corporates
$55.4
25%
Gov. &
Agencies
$49.6
23%
Munis
$19.0
9%
Stocks
$3.5
2%
Preferreds
$0.7
0%
Other
$0.3
0% |
  20
Valuation Parameters are Favorable
Market
Price /
LTM
Price/
Cap
LTM EPS
ROAE
Book
Ticker
($MMs)
(x)
(%)
(%)
Homeowners Choice, Inc.
HCI
208.2
8.1x
28.0
201
Universal Insurance Holdings, Inc.
UVE
173.3
7.8x
15.0
105
Federated National Holding Company
FNHC
42.7
8.6x
8.6
65
United Insurance Holdings Corp.
UIHC
56.2
4.5x
20.2
86
Florida’s Publicly-Held Homeowners Insurance Companies
Source:
SNL
Financial
LC;
market
data
as
of
November
27
th
,
2012 |
 21
Compelling
Market
Opportunity
Strong
Financial
Performance
Superior
Insurance
Capabilities
Exceptional
Management
Team
Attractive
Valuation
UIHC Investment Highlights |