Business Context and Reporting Period
This Form 8-K was filed by United Insurance Holdings Corp. (doing business as UPC Insurance) on January 5, 2018. The report details the renewal of reinsurance agreements effective December 31, 2017, and January 1, 2018, involving its subsidiaries including American Coastal Insurance Company, United Property and Casualty Insurance Company, Interboro Insurance Company, and Family Security Insurance Company.
Key Financial Metrics
The filing does not provide specific revenue, profit, cash flow, margin, debt, or liquidity figures. The document focuses exclusively on the structural terms of new reinsurance contracts.
Material Changes Versus Prior Period
- Quota Share Agreement: Replaced expiring 15% and 5% quota share agreements with a new 12-month agreement effective December 31, 2017. The new agreement features a 20% cession rate for all subject business, covering both catastrophe perils and attritional losses.
- Aggregate Excess of Loss Agreement: Renewed effective January 1, 2018. Coverage applies to all catastrophe perils except hurricanes, tropical storms, tropical depressions, and earthquakes.
- Retention and Limits: Under the new aggregate excess of loss treaty, the company retains 100% of losses up to 4.75% of gross earned premium. The reinsurer covers losses exceeding this threshold up to a maximum of $20 million.
Guidance, Outlook, and Risks
Management states the new programs are designed to work with existing catastrophe excess of loss coverage to provide broad risk transfer protection and reduce financial volatility. The filing includes forward-looking statements regarding attachment points, total coverage, and costs, noting that actual results may differ based on reinsurer capacity and claim adjustment provisions.
Investor Verification Checklist
- Verify the impact of the increased 20% cession rate on net written premiums and profitability.
- Confirm the specific exclusions (hurricanes, earthquakes) in the aggregate excess of loss treaty and their potential exposure.
- Assess the financial stability of the private reinsurers named in the new agreements.
- Review the attritional loss ratio cap details to understand limits on reinsurer participation for non-catastrophe losses.