Property and casualty insurance holding company United Insurance Holdings Corp. (UPC) grew its net income by 13%, from $8.4 million to $9.5 million, in the first quarter of 2019, despite comparatively higher catastrophe losses.
Cat losses totalled $11.7 million in Q1 2019, up from $6.3 million for the same period last year.
UPC also experienced $5.6 million of unfavourable prior year reserve development, and its loss and loss adjustment expense (LAE) increased by $27.3 million, or 35.3%, to $104.5 million for the quarter.
The company explained that the growth in its net income was primarily due to an increase in net premiums earned and a net unrealised gain on equity securities, partly offset by the increase in loss and LAE expenses.
Total gross written premium for the period increased by $38.9 million, or 13.9%, to $318.6 million for the first quarter of 2019, up from $279.6 million for the first quarter of 2018, primarily reflecting organic growth in new and renewal business generated in all regions.
However, UPC’s combined ratio increased by 1.6 points to 103.7%, reflecting 10.3 points of growth in the loss ratio (at 57.8%), offset by a lower expense ratio (at 45.9%), which decreased by 8.7 points.
The effect of cat losses on the combined ratio increased by 2.7 points to 6.5% during the quarter.
Excluding UPC’s business for which it cedes 100% of the risk of loss, reinsurance costs in the first quarter of 2019 were 35.6% of gross premiums earned, compared to 39.9% of gross premiums earned for the first quarter of 2018.
The decrease in this ratio was driven primarily by an increase in gross premiums earned in the first quarter of 2019, compared to 2018, UPC explained.
“Premium growth was strong in Q1 across our book of business in both personal lines and commercial lines, and we wrote our first policies in Journey, our newly-formed AM Best-rated carrier,” said John Forney, President & CEO of UPC Insurance.
“While elevated levels of both cat and noncat losses hurt our operating results in Q1,” he added, “I am confident that our earnings power is better than it has ever been, and we are looking forward to the remainder of 2019.”
