Business Context and Reporting Period
This Form 8-K was filed by United Insurance Holdings Corp. (operating as UPC Insurance) on January 4, 2019. The report details the extension and renewal of several key reinsurance agreements effective December 31, 2018, and January 1, 2019, covering in-force, new, and renewal business for its wholly owned insurance subsidiaries.
Key Financial Metrics and Reinsurance Structure
The filing does not provide specific revenue, profit, cash flow, or debt figures. Instead, it outlines the following reinsurance coverage limits and retention terms:
- Quota Share Agreement: Extended through May 31, 2019, with a 20% cession to reinsurers rated A+ or better by A.M. Best.
- Aggregate Excess of Loss: Retention of 100% of losses up to 5.75% of gross earned premium; coverage up to $30 million for non-hurricane/tropical storm/earthquake perils.
- AOP CAT Agreement: $85 million limit excess of $15 million per occurrence for non-windstorm and non-earthquake catastrophes.
- Personal Lines Excess Per Risk: $2.5 million limit excess of $1.5 million per claim; maximum aggregate liability of $7.5 million.
Material Changes Versus Prior Period
The primary material change is the extension of the 20% quota share agreement, which was set to expire on December 31, 2018, now extended to May 31, 2019. The terms and coverage for this extension remain unchanged. Additionally, the aggregate, AOP CAT, and personal lines excess per risk agreements were renewed effective January 1, 2019 (noted as 2018 in the text for the latter two, likely a clerical error in the source given the filing date and context of renewal).
Guidance, Outlook, and Risks
Management intends to disclose future changes to the quota share agreement concurrently with the renewal of other catastrophe reinsurance programs on or about June 1, 2019. The filing includes forward-looking statements regarding attachment points, total coverage, and costs, which are subject to the Private Securities Litigation Reform Act of 1995. Key risks include the potential for actual coverage and costs to differ materially from estimates due to reinsurers' capacity to pay claims and adjustment provisions in private reinsurance agreements.
Investor Verification Checklist
- Verify the effective dates of the AOP CAT and personal lines agreements, as the text cites "January 1, 2018" while the filing date is January 2019.
- Confirm the financial impact of the 5.75% retention threshold on the aggregate excess of loss treaty.
- Monitor the June 1, 2019 renewal date for potential changes to the quota share agreement terms.
- Review the credit ratings of the private reinsurers involved in the fully collateralized aggregate agreement.