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UPC Insurance's Q4 Earnings Beat Estimates, Revenues Miss - Analyst Blog

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United Insurance Holdings Corp. ( UIHC ), better known as UPC Insurance, reported fourth-quarter 2014 net earnings per share of 55 cents that surpassed the Zacks Consensus Estimate by 19.6% and improved 22.2% year over year.

Increase in gross premiums earned and a reduction in losses as a percentage of gross premiums earned led to the upside.

Quarterly Operational Update

Quarterly revenues of $76.2 million missed the Zacks Consensus Estimate of $78 million. However, revenues increased 20.1% mainly on account of solid growth in gross premiums earned.

UPC Insurance's gross premiums earned increased 17.2% to $107.6 million while net premiums improved 18.6% year over year to $71.5 million.

Investment income came in at $1.9 million, up 55.2% year over year.

Total expenses on the other hand increased 16.9% to $58.5 million due to rise in losses and loss adjustment expenses, policy acquisition costs, operating expenses, and general and administrative expenses.

Increase in expenses being less than that of revenues, led to margin improvement.

UPC Insurance's underlying net combined ratio increased to 83.7% in the reported quarter from 80.2% in the fourth quarter of 2013. This was due to the effect of favorable loss development on prior accident years in 2014 against an unfavorable development on prior accident years in the year-ago quarter.

Full-Year Highlights

UPC Insurance reported 2014 net earnings per share of $2.05 that surpassed the Zacks Consensus Estimate of $1.97 and improved 62.7% year over year.

The improvement is mainly attributable to premium growth, lower ceded reinsurance premium percentage and a reduction in losses as a percentage of gross premiums earned.

Revenues in 2014 came in at $280.2 million which were almost in line with the Zacks Consensus Estimate. However, revenues were higher than the year-ago figure of $208.1 million.

Financial Update

UPC Insurance exited 2014 with total cash and investments of $443 million, up from $326.5 million at the end of 2013.

At 2014-end, debt was $13.5 million, lower than $14.7 million as of Dec 31, 2103.

UPC Insurance's underlying book value per share as of Dec 31, 2014 came in at $9.56, up 44.2% year over year, driven by the equity capital raised in the first quarter of 2014, increase in net income, and higher accumulated other comprehensive income.

Performance by Other P&C Insurers

The bottom lines at RLI Corporation ( RLI ), ACE Limited ( ACE ) and The Travelers Companies Inc. ( TRV ) outperformed their respective Zacks Consensus Estimate in the fourth quarter.

Zacks Rank

UPC Insurance currently holds a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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