Property and casualty holding company UPC Insurance has announced a first quarter pre-tax loss of $26.3 million, a further deterioration from the $15.8 million reported in the prior year period.
Net loss attributable to UPC stood at $17.8 million, compared to $12.7 million in first quarter of 2020.
This increase was primarily driven by a fall in net premiums earned due to underwriting actions implemented during the fourth quarter of 2020, as well as an increase in the ceded premiums earned
UPC also experienced an increase in loss and loss adjustment expenses due to catastrophe losses from Winter Storm Uri and the rise in litigation-related claims in the state of Florida.
This increase in net loss was offset by an increase in net unrealised gains on equity securities due to improved market conditions in the first quarter of 2021 compared to the first quarter of 2020.
UPC’s total gross written premium decreased by $23.5 million, or 7.0%, to $311.6 million for the first quarter of 2021, from $335.2 million for the first quarter of 2020.
This decrease was driven primarily by a decrease in assumed premiums due to the termination of a contract which included commercial property business assumed from unaffiliated insurers.
“The first quarter yielded an Underlying Combined Ratio of 90.4%, a small improvement on a year-over-year basis but not yet where we want to be,” said Dan Peed, CEO of UPC Insurance.
“Premium rate increases continued very strong, with an average 10.4% renewal business and nearly 19% new business achieved in personal lines.
“Our first quarter catastrophes, including winter storm Uri, caused losses near $24 million net of reinsurance, somewhat better than expectations.
“Our Commercial Residential business fared well and we’re on track with a second half roll out of our E&S insurance company and Direct to Consumer Technology platforms.
“However, due to unusual loss development patterns in February and March, at the end of the first quarter we did an analysis of our exposure to the accelerating litigation trend in Florida.
“This resulted in a $30 million strengthening of both catastrophe and non-catastrophe Prior Year Reserves for Florida personal lines exposures, driving a core after tax loss for the quarter of approximately $19.4 million,” he added.
“We are very encouraged with last Friday’s Florida legislative changes and believe they will mitigate the accelerating litigation trends, although it is too early to quantify the improvement.
“The property catastrophe market remains firm, especially the Florida personal lines market which is expected to remain very firm for the foreseeable future. As stated previously, we expect 2021 to be a transition year, but we remain on track to continue expanding our underlying margin while also significantly cutting our net catastrophe retentions.”
