Unless the context in any other case requires, all references to "we," "us," "our," and "Company" check withUniversal Insurance Holdings, Inc. ("UVE") and its wholly-owned subsidiaries. You ought to learn the next dialogue collectively with our unaudited condensed consolidated monetary statements ("Financial Statements") and the related notes thereto included in "Part I, Item 1-Financial Statements," and our audited condensed consolidated monetary statements and the associated notes thereto included in "Part II, Item 8-Financial Statements and Supplementary Data" in our Annual Report on Form 10-Okay for the yr endedDecember 31, 2021 . Operating outcomes for anyone quarter are usually not essentially indicative of outcomes to be anticipated for every other quarter or for the yr.
Cautionary Note Regarding Forward-Looking Statements
In addition to historic info, this report might include "ahead-wanting statements" inside the which means of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The ahead-wanting statements anticipate outcomes based mostly on our estimates, assumptions and plans which might be topic to uncertainty. These ahead-wanting statements could also be recognized by their use of phrases like "plans," "seeks," "expects," "will," "should," "anticipates," "estimates," "intends," "believes," "likely," "targets," and different phrases with comparable meanings. These statements might tackle, amongst different issues, our technique for progress, disaster publicity and different threat administration, product growth, funding outcomes, regulatory approvals, market place, bills, monetary outcomes, litigation and reserves. We imagine that these statements are based mostly on cheap estimates, assumptions and plans. However, if the estimates, assumptions or plans underlying the ahead-wanting statements show inaccurate or if different dangers or uncertainties come up, precise outcomes might differ materially from these communicated in these ahead-wanting statements because of the dangers set forth under, that are a abstract of these set forth in our Annual Report on Form 10-Okay for the yr endedDecember 31, 2021 . We undertake no obligation to replace or revise publicly any ahead-wanting statements, whether or not because of new info, future occasions, or in any other case.
Risks and uncertainties which will have an effect on, or have affected, our monetary
situation and working outcomes embrace, however are usually not restricted to, the next:
•Unanticipated will increase within the severity or frequency of claims, together with these regarding catastrophes, extreme climate occasions and altering local weather situations, which, in some cases, have exceeded, and sooner or later might exceed our reserves established for claims; •Failure of our threat mitigation methods, together with failure to precisely and adequately worth the dangers we underwrite and to incorporate efficient exclusions and different loss limitation strategies in our insurance coverage insurance policies;
•Loss of impartial insurance coverage brokers and incapacity to draw new impartial
brokers;
•Reliance on fashions, that are inherently unsure, as a software to guage
dangers;
•The continued availability of reinsurance at present ranges and costs, and our
capability to gather funds due from our reinsurers;
•Changes in business traits, together with adjustments as a result of cyclical nature of the
business and elevated competitors;
•Geographic focus of our enterprise in
our progress and diversification technique in new markets;
•Loss of key personnel and incapacity to draw and retain proficient workers;
•Failure to adjust to current and future pointers, insurance policies and authorized and
regulatory requirements;
•The capability of our claims professionals to successfully handle claims;
•Litigation or regulatory actions that might lead to vital damages,
fines or penalties;
•A downgrade in our Financial Stability Rating® and its impression on our
aggressive place, the marketability of our product choices, our liquidity
and profitability;
•The impression on our enterprise and popularity of knowledge and safety breaches attributable to
cyber-assaults or our incapacity to successfully adapt to adjustments in expertise;
•Our dependence on the returns of our funding portfolio, that are topic to
market threat;
•Legal, regulatory or tax adjustments that improve our working prices and reduce
our profitability, similar to limitations on price adjustments or necessities to
take part in loss sharing;
•Our dependence on dividends and permissible funds from our subsidiaries;
•The capability of our Insurance Entities to adjust to statutory capital and
surplus minimums and different regulatory and licensing necessities; and
•The ongoing impression of the COVID-19 pandemic on our enterprise and the economic system in
common.
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Table of Contents OVERVIEW We are a vertically built-in holding firm providing property and casualty insurance coverage and worth-added insurance coverage providers. We develop, market and underwrite insurance coverage merchandise for shoppers predominantly within the private residential householders' line of enterprise and carry out considerably all different insurance coverage-associated providers for our major insurance coverage entities, together with threat administration, claims administration, and distribution. Our major insurance coverage entities,Universal Property & Casualty Insurance Company ("UPCIC") andAmerican Platinum Property and Casualty Insurance Company ("APPCIC" and along with UPCIC, the "Insurance Entities"), provide insurance coverage merchandise by means of each our appointed impartial agent community and our on-line distribution channels throughout 19 states (primarily inFlorida ), with licenses to put in writing insurance coverage in two further states. The Insurance Entities search to provide an underwriting revenue (outlined as earned premium minus losses, loss adjustment expense ("LAE"), coverage acquisition prices and different working prices) over the long run; keep a conservative stability sheet to organize for years during which the Insurance Entities are usually not in a position to obtain an underwriting revenue; and generate funding earnings on property. The following Management's Discussion and Analysis ("MD&A") is meant to help in an understanding of our monetary situation and outcomes of operations. This MD&A ought to be learn at the side of our Financial Statements and accompanying Notes showing elsewhere on this Report (the "Notes"). In addition, reference ought to be made to our audited Consolidated Financial Statements and accompanying Notes to Consolidated Financial Statements and "Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-Okay for the yr endedDecember 31, 2021 . Except for the historic info contained herein, the discussions on this MD&A include ahead-wanting statements that contain dangers and uncertainties. Our future outcomes might differ materially from these mentioned herein. Factors that might trigger or contribute to such variations embrace, however are usually not restricted to, these mentioned above below "Cautionary Note Regarding Forward-Looking Statements."
Trends
Florida Trends
We are presently working by means of a cycle to enhance lengthy-time period price adequacy and earnings for the Insurance Entities by rising charges and managing exposures, whereas making the most of what we imagine to be alternatives in a dislocated market. TheFlorida private traces householders' market presently could be characterised as a "hard market", the place insurance coverage premium charges are escalating, insurers are decreasing coverages, and underwriting requirements are tightening as insurers carefully monitor insurance coverage charges and handle protection capability. Due to situations within theFlorida market and components extra typically affecting theU.S. and international reinsurance markets, reinsurance capability in recent times has additionally been topic to much less favorable pricing or phrases. These market forces lower competitors amongst admitted insurers, and in the end end result within the elevated use ofCitizens Property Insurance Corporation ("Citizens"), which was created to be the State's residual property insurance coverage market. In current years, in response to antagonistic behaviors and situations within theFlorida residential market, most admitted market rivals have sought and infrequently acquired approval for vital price will increase. Meanwhile, Citizens' price will increase are restricted by legislation, leading to its insurance policies, in a tough market, changing into priced decrease than admitted market insurance policies. This causes Citizens to change into seen as a fascinating various to the admitted market as admitted market insurers handle by means of the laborious market challenges. Our Insurance Entities likewise have taken and proceed to take motion to handle by means of this difficult market by rising charges and prudently managing exposures whereas additionally sustaining their aggressive place available in the market and supporting our present policyholders and brokers. While addressing price adequacy for the Insurance Entities, we proceed to expertise inflated prices for losses and LAE within theFlorida market, the place an business has developed across the solicitation, submitting and litigation of private residential claims. These dynamics have been made worse by the litigation financing business which in some instances funds these actions. These behaviors are a chief contributing issue for the speed will increase on this market. These behaviors lead to a sample of continued will increase in yr-over-yr ranges of represented claims, the inflation of purported declare quantities, and elevated calls for for attorneys' charges. Active solicitation of non-public residential claims inFlorida by policyholder representatives, remediation corporations and restore corporations has led to a rise within the frequency and severity of non-public residential claims inFlorida exceeding historic ranges and ranges seen in different jurisdictions. Information ready by theFlorida Office of Insurance Regulation additionally exhibits that claims inFlorida are litigated at a considerably disproportionate price when in comparison with different states. This is largely attributable to aFlorida statute offering a one-method proper of attorneys' charges in opposition to insurers which has, when coupled with sure different statutes and judicial rulings, produced a authorized surroundings inFlorida that encourages litigation, in lots of instances with out regard to the underlying deserves of the claims. The one-method proper to attorneys' charges primarily signifies that until an insurer's place is fully upheld in litigation, the insurer should pay the plaintiff's attorneys' charges along with its personal protection prices. This impacts not solely claims which might be litigated to decision, but in addition the settlement discussions that happen with practically all litigated claims. This additionally impacts a big variety of claims from inception or throughout the adjusting course of as a considerable and rising proportion of policyholders receive illustration early within the course of, and typically even earlier than notifying insurers of their claims. These market situations additionally add, and can proceed so as to add, complexity to efforts to effectively and expeditiously alter claims. This is because of an rising quantity of policyholders who've a number of current prior losses with the Insurance Entities or with different insurers, which then require analysis throughout subsequent claims and determinations concerning whether or not property has been repaired persistently with the scope and quantity of harm beforehand asserted. The one-method proper to legal professional charges creates an almost threat-free surroundings, and incentive, for attorneys to pursue litigation in opposition to insurers. The end result has been a considerable improve in represented and litigated claims inFlorida , far outpacing ranges skilled in different states. InApril 2021 , theFlorida legislature handed a invoice desiring to curtail the antagonistic declare traits impacting theFlorida householders' insurance coverage market. Most provisions of the invoice went into impact onJuly 1, 2021 . Among its provisions, the invoice creates a brand new pre-go well with discover requirement whereby an insured should make a proper financial demand of a residential property insurer earlier than commencing go well with. The Company has established an inner group to evaluate and reply to those pre-go well with calls for 33
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Table of Contents in an additional effort to resolve disputes earlier than litigation ensues. Another provision of the brand new legislation reduces the time interval during which to file a brand new or reopened declare to 2 years following the date of loss. Other adjustments embrace trying to curtail the solicitation of sure roof claims and to restrict referral charges in reference to sure sorts of claims. Opponents of the reforms have challenged sure elements of the brand new legislation, together with acquiring an injunction in opposition to provisions that restrict the solicitation of roof claims. In gentle of the current enactment of those reforms and the litigation that has ensued, it's untimely to evaluate whether or not the reforms could have their supposed impact. Whether these adjustments are useful to shoppers, insurers, insurance coverage firm holding programs or the residential property insurance coverage market as a complete might not be absolutely recognized for a while. Even after the 2021 laws, theFlorida property market has been distressed and continues to expertise rising price ranges coupled with lowered underwriting capability amongst admitted insurers. Although theFlorida legislature thought of further potential reforms in its 2022 common session, it didn't cross any of these reforms.Florida's Governor subsequently known as a particular legislative session, anticipated to be held in late May, throughout which the legislature once more will think about property insurance coverage reforms. It is unclear whether or not the legislature will cross further reforms in the particular session, and if that's the case, whether or not these reforms will probably be efficient. History has proven that reforms that don't tackle the underlying reason behind issues in theFlorida market and as a substitute solely tackle signs such because the proliferation of mould, sinkhole or roof claims at greatest present solely short-term reduction and finally end result within the underlying trigger manifesting by means of different perils. Despite our initiatives, similar to these talked about above, our prices to settle claims inFlorida have elevated for the explanations talked about above. For instance, the Company has beforehand elevated its present yr loss estimates and elevated estimates related to prior years' claims. Over the previous three years, at the same time as we've got elevated our estimates of potential losses annually, we've got recorded antagonistic declare growth on prior years' loss reserves and additional strengthened present yr losses throughout the yr to deal with the rising impressionFlorida's market disruptions, in addition to the impression of rising prices of constructing supplies and labor, have had on the claims course of and the institution of reserves for losses and LAE. The full extent and period of these market disruptions and inflationary pressures are unknown and nonetheless unfolding, and we'll monitor the impression of such disruptions on the recording and reporting of declare prices. The Company has taken a sequence of steps over time to mitigate the monetary impression of those unfavourable traits within theFlorida market. We even have carefully monitored price ranges, particularly within theFlorida market, and have submitted price filings based mostly upon evolving information. However, as a result of price filings rely on previous loss and expense information and take time to develop, file and implement, we are able to expertise vital delays between figuring out wanted price changes, gaining approval of price adjustments, and in the end accumulating and incomes the ensuing elevated premiums. This is especially the case in an period of rising prices similar to the presentFlorida market, during which the prices of losses and loss adjustment bills proceed to extend attributable toFlorida's outsized claims litigation surroundings and inflationary stress. In addition, the Company has carried out a number of initiatives in its claims division in response to the antagonistic market traits. We make the most of our course of known as Fast Track, which is an initiative to deal with easy, meritorious claims as promptly as doable to mitigate the antagonistic impacts that may be seen with claims that stay open for longer durations. In addition, we elevated our emphasis on subrogation to scale back our web losses whereas additionally recovering policyholders' deductibles when losses are attributable to the actions of others. We have an inner employees of skilled water remediation specialists to deal with the extraordinary variety of purported water injury claims filed by policyholders and distributors. We developed a specialised in-home unit for responding to the distinctive facets of represented claims, and we've got considerably elevated our in-home authorized employees in an effort to deal with the rise in litigated or represented claims as value-successfully as doable. Additionally, we've got taken steps to implement declare settlement guidelines related with theFlorida laws handed in 2019 designed to scale back the unfavourable results of claims involving assignments of advantages ("AOB"). See "Part I- Item 1-Business-Government Regulation" in our Annual Report on Form 10-Okay for the yr endedDecember 31, 2021 . An AOB is a doc signed by a policyholder that permits a 3rd social gathering to be paid for providers carried out for an insured home-owner who would usually be reimbursed by the insurance coverage firm straight after making a declare. Prior to the AOB reform laws, the Company skilled an improve in AOB-associated litigation initiated by distributors, in lots of instances unbeknownst to policyholders. Claims paid below an AOB typically contain pointless litigation, with the Company required to pay each its personal protection prices and these of the plaintiff, and, because of this, value the Company considerably extra than claims settled when an AOB will not be concerned. In 2019, theFlorida legislature handed laws designed to extend client protections in opposition to AOB abuses and scale back AOB-associated litigation. While theFlorida laws addressing abuses related to AOBs could also be useful in decreasing one side of the considerations affecting theFlorida market, the general impression of the deterioration in claims-associated techniques and behaviors, together with different first-social gathering litigation, to this point has continued to outpace advantages arising from the 2019 AOB reform laws. More just lately, following laws adopted inFlorida's 2021 legislative session, we've got established procedures and devoted personnel to a brand new pre-go well with discover and provide course of. The new course of requires policyholders or their attorneys to inform insurers no less than ten days earlier than commencing litigation and permits insurers a possibility to make pre-go well with settlement affords. The policyholders' capability to get well attorneys' charges is decided based on a scale that compares the last word outcomes of the instances to the insurers' pre-go well with affords. Although this new course of is meant to scale back claims litigation and encourage settlements, it's too early to guage whether or not it will likely be profitable in limiting the sorts of settlement calls for and litigation which have plagued theFlorida market or in offsetting different components adversely affecting the market similar to elevated prices of constructing supplies and labor. Impact of COVID-19 Subsequent toMarch 2020 , we've got not seen a direct materials impression from COVID-19 on our enterprise, our monetary place, our liquidity, or our capability to service our policyholders and keep vital operations. Indirectly, inflationary pressures, partially attributable to provide chain and labor constraints throughout the pandemic, have affected and proceed to have an effect on claims prices and, to a lesser diploma, different bills. As a supplier of providers which have been deemed important below most directives and pointers, we're assured in our capability to take care of constant operations and imagine we are able to proceed to handle with our distant workforce because of our catastrophe preparedness planning, with little impression on our enterprise and repair ranges and our requirements of take care of 34
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Table of Contents each underwriting and claims. We proceed to observe native, state and federal steerage and can alter workforce actions as acceptable. Although we've got not skilled a direct materials impression from COVID-19 since its onset in 2020, the last word impression of the COVID-19 pandemic, or future pandemics, on our enterprise and on the economic system normally can't be predicted.
KEY PERFORMANCE INDICATORS
The Company considers the measures and ratios within the following dialogue to be key efficiency indicators for its companies. Management believes that these indicators are useful in understanding the underlying traits within the Company's companies. Some of those indicators are reported on a quarterly foundation and others on an annual foundation. These indicators might not be similar to different efficiency measures utilized by the Company's rivals and may solely be evaluated along with our condensed consolidated monetary statements and accompanying notes.
Definitions of Key Performance Indicators
Book Value Per Common Share - whole stockholders' fairness, adjusted for most popular inventory liquidation, divided by the variety of widespread shares excellent as of a reporting interval. Book worth per widespread share is the surplus of property over liabilities at a reporting interval attributed to every share of inventory. Changes in ebook worth per widespread share informs shareholders of retained fairness within the Company on a per share foundation which can help in understanding market worth traits for the Company's inventory. Combined Ratio - the mixed ratio is a measure of underwriting profitability for a reporting interval and is calculated by dividing whole working prices and bills (which is made up of losses and LAE and common and administrative bills) by premiums earned, web, which is web of ceded premiums earned. Changes to the mixed ratio over time present administration with an understanding of prices to function its enterprise in relation to web premiums it's incomes and the impression of price, underwriting and different enterprise administration actions on underwriting profitability. A mixed ratio under 100% signifies underwriting revenue; a mixed ratio above 100% signifies underwriting losses. Core Loss Ratio - a standard operational metric used within the insurance coverage business to describe the ratio of present accident yr anticipated losses and LAE to premiums earned. Core loss ratio is a vital measure figuring out profitability traits of premiums in drive. Core losses consists of all different losses and LAE, excluding climate occasions past these anticipated and prior years' reserve growth. The monetary profit from the administration of claims, together with declare charges ceded to reinsurers, is recorded within the condensed consolidated monetary statements as a discount to core losses.
Debt-to-Equity Ratio – lengthy-time period debt divided by stockholders’ fairness. This
ratio helps administration measure the quantity of financing leverage in place in
relation to fairness and future leverage capability.
Debt-to-Total Capital Ratio – lengthy-time period debt divided by the sum of whole
stockholders’ fairness and lengthy-time period debt (also known as whole capital
assets). This ratio helps administration measure the quantity of financing leverage
in place (lengthy-time period debt) in relation to whole capital assets and future
leverage capability.
Direct Premiums Written ("DPW") - displays the full worth of insurance policies issued throughout a interval earlier than contemplating premiums ceded to reinsurers. Direct premiums written, comprised of renewal premiums, endorsements and new enterprise, is initially recorded as unearned premium within the stability sheet which is then earned professional-rata over the subsequent yr or remaining coverage time period. Direct premiums written displays present traits within the Company's sale of property and casualty insurance coverage merchandise and quantities that will probably be acknowledged as earned premiums sooner or later.
DPW (
administration to research progress in our major market and can be a measure of
enterprise focus threat.
Expense Ratio (Including Policy Acquisition Cost Ratio and Other Operating Cost Ratio) - calculated as common and administrative bills as a proportion of premiums earned, web. General and administrative bills is comprised of coverage acquisition prices and different working prices, which incorporates such objects as underwriting prices, amenities and company overhead. The expense ratio, together with the sub-expense ratios of coverage acquisition value ratio and different working value ratio, are indicators to administration of the Company's value effectivity in buying and servicing its enterprise and the impression of expense objects to general profitability. Losses and Loss Adjustment Expense Ratio or Loss and LAE Ratio - a measure of the price of claims and declare settlement bills incurred in a reporting interval as a proportion of premiums earned in that very same reporting interval. Losses and LAE incurred in a reporting interval contains each quantities associated to the present accident yr and prior accident years, if any, known as growth. Ultimate losses and LAE are based mostly on actuarial estimates with adjustments in these estimates acknowledged within the interval the estimates are revised. Losses and LAE encompass declare prices arising from claims occurring and settling within the present interval, an estimate of declare prices for reported however unpaid claims, an estimate of unpaid declare prices for incurred-however-not-reported claims and an estimate of declare settlement bills related to reported and unreported claims which occurred throughout the reporting interval. The loss and LAE ratio could be measured on a direct foundation, which incorporates losses and LAE divided by direct earned premiums, or on a web foundation, which incorporates losses and LAE after quantities have been ceded to reinsurers divided by web earned premiums (i.e., direct premium earned much less ceded premium earned). The web loss and LAE ratio is a measure of underwriting profitability after giving consideration to the impact of reinsurance. Trends in the online loss and LAE ratio are a sign to administration of present and future profitability. Monthly Weighted Average Renewal Retention Rate - measures the month-to-month common of policyholders that renew their insurance policies over the interval of a calendar yr. This measure permits administration to evaluate buyer retention. 35
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Table of Contents Premiums Earned, Net - the professional-rata portion of present and beforehand written premiums that the Company acknowledges as earned premium throughout the reporting interval, web of ceded premium earned. Ceded premiums are premiums paid or payable by the Company for reinsurance safety. Written premiums are thought of earned and are acknowledged professional-rata over the coverage protection interval. Premiums earned, web is a measure that permits administration to determine income traits. Policies in Force - represents the variety of lively insurance policies with protection in impact as of the top of the reporting interval. The change within the variety of insurance policies in drive is a progress measure and gives administration with a sign of progress towards reaching strategic aims. Inherent seasonality in our enterprise makes this measure extra helpful when evaluating every quarter's stability to the identical quarter in prior years. Premium in Force - is the quantity of the annual direct written premiums beforehand recorded by the Company for insurance policies that are nonetheless lively as of the reporting date. This measure assists administration in measuring the extent of insured publicity and progress towards assembly income targets for the present yr, and gives a sign of enterprise accessible for renewal within the subsequent twelve months. Inherent seasonality in our enterprise makes this measure extra helpful when evaluating every quarter's stability to the identical quarter in prior years. Return on Average Equity ("ROAE") - calculated by dividing earnings (loss) per widespread share by common ebook worth per widespread share. Average ebook worth per widespread share is computed because the sum of ebook worth per widespread share on the starting and the top of a interval, divided by two. ROAE is a capital profitability measure of how successfully administration creates earnings per widespread share. Total Insured Value - represents the quantity of insurance coverage limits accessible on a coverage for a single loss based mostly on all insurance policies lively as of the reporting date. This measure assists administration in measuring the extent of insured publicity. Unearned Premiums - represents the portion of direct premiums comparable to the time interval remaining on an insurance coverage coverage and accessible for future incomes by the Company. Trends in unearned premiums typically point out growth, if rising, or contraction, if decreasing, that are necessary indicators to administration. Inherent seasonality in our enterprise makes this measure extra helpful when evaluating every quarter's stability to the identical quarter in prior years. Weather occasions - an estimate of losses and LAE from climate occasions occurring throughout the present accident yr that exceed preliminary estimates of anticipated climate occasions when establishing the core loss ratio for every accident yr. This metric informs administration of things impacting general present yr profitability.
REINSURANCE
Reinsurance permits our Insurance Entities to restrict potential exposures to catastrophic occasions. Reinsurance contracts are usually categorized as treaty or facultative contracts. Treaty reinsurance gives protection for all or a portion of a specified group or class of dangers ceded by the first insurer, whereas facultative reinsurance gives protection for particular particular person dangers. Within every classification, reinsurance could be additional categorized as quota share or extra of loss. Quota-share reinsurance is the place the first insurer and the reinsurer share proportionally or professional-rata within the direct premiums and losses of the insurer. Excess-of-loss reinsurance indemnifies the direct insurer or reinsurer for all or a portion of the loss in extra of an agreed upon quantity or retention. Developing and implementing our reinsurance technique to adequately defend our stability sheet and Insurance Entities within the occasion of a number of catastrophes whereas sustaining environment friendly reinsurance prices has been a key strategic precedence for us. In order to restrict the Insurance Entities' potential publicity to catastrophic occasions, we buy vital reinsurance from third-social gathering reinsurers and theFlorida Hurricane Catastrophe Fund ("FHCF").The Florida Office of Insurance Regulation ("FLOIR") requires the Insurance Entities, like all residential property insurance coverage corporations doing enterprise inFlorida , to have a certain quantity of capital and reinsurance protection with a view to cowl losses upon the prevalence of a single catastrophic occasion and a sequence of catastrophic occasions occurring in the identical hurricane season. The Insurance Entities' respective 2021-2022 reinsurance packages meet the FLOIR's necessities, which are based mostly on, amongst different issues, efficiently demonstrating cohesive and complete reinsurance packages that defend the policyholders of our Insurance Entities in addition to satisfying a sequence of stress take a look at disaster loss eventualities based mostly on previous historic occasions. Similarly, the Insurance Entities' respective 2021-2022 reinsurance packages meet the stress take a look at and evaluate necessities ofDemotech, Inc. , for sustaining Financial Stability Ratings® of A (Exceptional). We imagine the Insurance Entities' retentions below their respective reinsurance packages are acceptable and structured to guard policyholders. We take a look at the sufficiency of the reinsurance packages by subjecting the Insurance Entities' private residential exposures to statistical testing utilizing a 3rd-social gathering hurricane mannequin, RMS RiskHyperlink v18.1 (Build 1945). This mannequin combines simulations of the pure prevalence patterns and traits of hurricanes, tornadoes, earthquakes and different catastrophes with info on property values, building varieties and occupancy courses. The mannequin outputs present info in regards to the potential for giant losses earlier than they happen, so corporations can put together for his or her monetary impression. Furthermore, as a part of our operational excellence initiatives, we frequently look to allow new expertise to refine our information intelligence on disaster threat modeling.
Effective
agreements comprising our 2021-2022 reinsurance program.
See “Item 1-Note 4 (Reinsurance).”
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UPCIC’s 2021-2022 Reinsurance Program
•First occasion All States retention of
hurricane season, first occasion Non-Florida retention of
•All States first occasion reinsurance safety extends to
co-participation in any of the layers and no limitation on loss adjustment
bills for the non-disaster bond
reinsurance whereas sustaining the identical favorable historic deposit premium
cost schedules.
•Assuming a primary occasion fully exhausts the
occasion exhaustion level can be
•Full reinstatement accessible on$1.06 billion of the$1.356 billion of non-FHCF first occasion disaster protection for assured second occasion protection. For all layers bought between$45 million and the projected FHCF retention, to the extent that each one of our protection or a portion thereof is exhausted in a catastrophic occasion and reinstatement premium is due, we've got bought sufficient reinstatement premium safety ("RPP") restrict to pay the premium obligatory for the reinstatement of those coverages.
•Specific third and 4th occasion personal market disaster extra of loss protection
of
a number of occasions throughout the treaty interval.
•For the FHCF Reimbursement Contract efficientJune 1, 2021 , UPCIC has continued the election of the 90% protection degree. We estimate the FHCF layer will present roughly$1.963 billion of protection for UPCIC, which inures to the profit of the open market protection secured from personal reinsurers. •Secured$383 million of latest disaster capability with contractually agreed limits that stretch protection to incorporate the 2022 and 2023 wind seasons. This quantity doesn't embrace the one restrict of$150 million of safety for named windstorm occasions, which now definitively contains the 2022 wind season and doubtlessly might embrace the 2023 wind season relying on loss exercise within the 2022 wind season, that UPCIC obtained inMarch 2021 when it entered right into a three-yr reinsurance settlement withCosaint Re Pte. Ltd. , a reinsurance entity included inSingapore that correspondingly issued notes in a Rule 144A providing to lift proceeds to collateralize its obligations below this settlement. The first occasion All States program described above for UPCIC contains protection from a captive insurance coverage association that UVE established which inures to the advantage of UPCIC. This intercompany transaction gives UPCIC roughly$13.2 million of reinsurance safety on the primary layer of UPCIC's first occasion All States program. This transaction eliminates in consolidation successfully rising the primary occasion retention famous above to$58.2 million for the consolidated group within the occasion this restrict is exhausted. The captive insurance coverage association efficientJune 1, 2021 by means ofMay 31, 2022 was terminated efficientDecember 1, 2021 , pursuant to the phrases of the settlement. In reference to the termination of the settlement, and based on its phrases, sure funds held in belief have been launched to the beneficiary (i.e., UPCIC) and the stability was remitted to the grantor (i.e., UVE) inDecember 2021 . The termination of the settlement leads to a primary-occasion All States retention of$58.2 million for UPCIC for the interval ofDecember 1, 2021 toMay 31, 2022 , which is exterior of the normalAtlantic hurricane season.
Reinsurers
The desk under gives theA.M. Best and S&P monetary energy rankings for every of the biggest third-social gathering reinsurers in UPCIC's 2021-2022 reinsurance program: Reinsurer A.M. Best S&P Allianz Risk Transfer A+ AA- Everest Re A+ A+ Chubb Tempest Reinsurance Ltd. A++ AA Munich Re A+ AA- Renaissance Re A+ A+ Various Lloyd's of London Syndicates A A+
(1)No ranking is offered, as a result of the fund will not be rated.
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APPCIC’s 2021-2022 Reinsurance Program
•First occasion All States retention of
•All States first occasion tower of$38 million with no co-participation in any of the layers and no limitation on loss adjustment bills whereas sustaining the similar favorable historic deposit premium cost schedules. •Full reinstatement accessible for all personal market first occasion disaster layers for assured second occasion protection. For the layer bought between$2.5 million and the projected FHCF retention, to the extent that each one of our protection or a portion thereof is exhausted in a catastrophic occasion and reinstatement premium is due, we've got bought sufficient RPP restrict to pay the premium obligatory for the reinstatement of this protection. •APPCIC additionally purchases in depth a number of line extra per threat reinsurance with numerous reinsurers as a result of excessive-worth dangers it insures in each the private residential and industrial a number of peril traces of enterprise. Under this a number of line extra per threat contract, APPCIC has protection of$8.5 million in extra of$0.5 million final web loss for every threat and every property loss, and$1 million in extra of$0.3 million for every casualty loss. A$19.5 million combination restrict applies to the time period of the contract for property-associated losses and a$2.0 million combination restrict applies to the time period of the contract for casualty-associated losses. This contract additionally comprises a revenue-sharing characteristic if particular efficiency measures are met. •For the FHCF Reimbursement Contract efficientJune 1, 2021 , APPCIC has continued the election of the 90% protection degree. We estimate the FHCF layer will present roughly$18.4 million of protection for APPCIC, which inures to the good thing about the open market protection secured from personal reinsurers.
Reinsurers
The desk under gives theA.M. Best and S&P monetary energy rankings for every of the biggest third-social gathering reinsurers in APPCIC's 2021-2022 reinsurance program: Reinsurer A.M. Best S&P Chubb Tempest Reinsurance Ltd. A++ AA Lancashire Insurance Company Limited A A- Various Lloyd's of London Syndicates A A+
(1)No ranking is offered, as a result of the fund will not be rated.
The whole value of the 2021-2022 reinsurance packages for UPCIC and APPCIC,
excluding inner reinsurance mentioned above, is projected to be
representing roughly 35% of estimated direct premium earned for the
12-month treaty interval.
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RESULTS OF OPERATIONS AND ANALYSIS OF FINANCIAL CONDITION
Highlights for the quarter ended
•Approved price filings are rising written and earned premium as they take
impact and earn in over the coverage interval
•Rate will increase for
numerous price filings underway
•Exposure administration efforts designed to enhance underwriting outcomes are
leading to a discount in coverage rely and associated charges
•Net funding earnings elevated as market rates of interest rise, nonetheless the rising rates of interest have lowered the market worth of our investments ensuing in unrealized losses •Losses and LAE, web have been larger this quarter in comparison with the identical interval final yr primarily attributable to the next price of accrual for the present accident yr reserves to deal with traits inFlorida
•Expense administration efforts lowered the expense ratio together with decrease fee
charges on renewals and spending self-discipline
•The firm continued to return shareholder worth with quarterly dividends and
modest share repurchases
•Demotech, Inc. affirmed the Financial Stability Rating® of A, Exceptional for
every of the Insurance Entities
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First quarter of fiscal 2022 outcomes of operations comparisons are
to first quarter of fiscal 2021 (until in any other case specified).
Results of Operations – Three Months Ended
Months Ended
Net earnings for the three months endedMarch 31, 2022 , was$17.5 million in contrast to$26.4 million for a similar interval in 2021. Weighted common diluted widespread shares excellent for the three months endedMarch 31, 2022 have been decrease by 0.2% to 31.2 million shares from 31.3 million shares for a similar interval of the prior yr. Diluted EPS for the three months endedMarch 31, 2022 was$0.56 in contrast to$0.84 for a similar interval in 2021. Benefiting the quarter have been will increase in premiums earned, web, a rise in fee income, and a rise in web funding earnings, partially offset by a rise in working prices and bills, a lower in realized good points and a rise in unrealized losses on fairness securities. Direct premium earned and premiums earned, web have been up 10.4% and 10.6%, respectively, attributable to premium progress in 15 of the 19 states during which we're licensed and writing throughout the previous 12 months because of price will increase carried out throughout 2021 and 2022. The web loss and LAE ratio was 68.8% for the three months endedMarch 31, 2022 , in comparison with 59.2% for a similar interval in 2021 reflecting larger core losses, a rise in extra climate occasions past these anticipated, and better prior years' reserve growth. As a end result of the above and additional defined under, the mixed ratio for the three months endedMarch 31, 2022 was 97.9% in comparison with 93.1% for the three months endedMarch 31, 2021 . Also see the dialogue above below "Overview-Trends."
An in depth dialogue of our outcomes of operations follows the desk under (in
hundreds, besides per share information).
Three Months Ended March 31, Change 2022 2021 $ % PREMIUMS EARNED AND OTHER REVENUES Direct premiums written$ 396,481 $ 365,314 $ 31,167 8.5 % Change in unearned premium 18,122 10,292 7,830 76.1 % Direct premium earned 414,603 375,606 38,997 10.4 % Ceded premium earned (145,539) (132,301) (13,238) 10.0 % Premiums earned, web 269,064 243,305 25,759 10.6 % Net funding earnings 4,042 2,986 1,056 35.4 % Net realized good points (losses) on investments 58 542 (484) (89.3) % Net change in unrealized good points (losses) of fairness securities (3,396) (494) (2,902) 587.4 % Commission income 11,161 9,126 2,035 22.3 % Policy charges 4,779 5,387 (608) (11.3) % Other income 1,774 1,905 (131) (6.9) % Total premiums earned and different revenues 287,482 262,757 24,725 9.4 % OPERATING COSTS AND EXPENSES Losses and loss adjustment bills 185,106 143,963 41,143 28.6 % General and administrative bills 78,297 82,423 (4,126) (5.0) % Total working prices and bills 263,403 226,386 37,017 16.4 % Interest and amortization of debt issuance prices 1,608 20 1,588 7,940.0 % INCOME (LOSS) BEFORE INCOME TAXES 22,471 36,351 (13,880) (38.2) % Income tax expense (profit) 4,934 9,943 (5,009) (50.4) % NET INCOME (LOSS)$ 17,537 $ 26,408 $ (8,871) (33.6) %
Other complete earnings (loss), web of taxes (42,910) (16,910)
(26,000) 153.8 % COMPREHENSIVE INCOME (LOSS)$ (25,373) $ 9,498 $ (34,871) NM DILUTED EARNINGS (LOSS) PER SHARE DATA: Diluted earnings (loss) per widespread share$ 0.56 $ 0.84 $ (0.28) (33.3) % Weighted common diluted widespread shares excellent 31,227 31,277 (50) (0.2) % NM - Not Meaningful Direct premiums written elevated by$31.2 million , or 8.5%, for the quarter endedMarch 31, 2022 , pushed by premium progress inside ourFlorida enterprise of$27.4 million , or 8.9%, and premium progress in our different states enterprise of$3.7 million , or 6.4%, as in comparison with the identical interval of the prior yr. Rate will increase accepted in 2020 and 2021 forFlorida and for sure different states, as mentioned under, have been the principal driver of upper written premiums. In whole insurance policies in drive declined 26,848, or 40
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Table of Contents 2.8%, from 943,593 atDecember 31, 2021 to 916,745 atMarch 31, 2022 . A abstract of the current price will increase that are driving will increase in written premium are as follows: •InDecember 2020 , the FLOIR accepted an general 7.0% price improve for UPCIC onFlorida private residential householders' line of enterprise, efficientDecember 2020 for brand new enterprise andMarch 2021 for renewals.
•In
on
•InDecember 2021 , the FLOIR accepted an general 3.9% price improve for UPCIC onFlorida private residential householders' line of enterprise, efficientJanuary 2022 for brand new enterprise andMarch 2022 for renewals.
•In addition, throughout the previous yr, price will increase for UPCIC have been accepted in
These price will increase are utilized on new enterprise submissions and renewals from the efficient date of their renewal after which are earned subsequently over the coverage interval. The current price will increase inFlorida are in response to rising declare prices pushed by larger prices of fabric and labor related to claims, the price of climate occasions, the rising value of disaster and different reinsurance defending policyholders and, extra importantly, the impression of "social inflation" on claims as declare settlements more and more have concerned inflated calls for, illustration and litigation. In addition, the Insurance Entities' insurance policies present for protection limits to be adjusted at renewal based mostly on third-social gathering information sources that monitor components similar to adjustments in prices for residential constructing supplies and labor. During 2022, administration continued efforts to prudently handle coverage counts and exposures supposed to gradual the expansion of written premiums regarding new enterprise in comparison with prior years whereas the above price will increase are taking impact. Reduced new enterprise writings, declines in renewal retentions throughout 2022 and the impression of chosen coverage non-renewals, has resulted in a lower in insurance policies in drive of 26,848, or 2.8%, from 943,593 atDecember 31, 2021 to 916,745 atMarch 31, 2022 . Direct premiums written proceed to extend throughout the vast majority of states during which we conduct enterprise. As a results of our enterprise technique, price adjustments and disciplined underwriting initiatives, we've got seen a lower in coverage rely, however a rise in in-drive premium and whole insured worth in a majority of states for the previous three years. In whole, we wrote insurance policies in 19 states throughout every of the primary quarters of 2022 and 2021. In addition, we're licensed to do enterprise inTennessee andWisconsin and are continuing with product filings in these states. AtMarch 31, 2022 , insurance policies in drive decreased 59,505 insurance policies, or 6.1%, premium in drive elevated$154.5 million , or 10.0%, and whole insured worth elevated$13.8 billion , or 4.5%, in comparison withMarch 31, 2021 . The following desk gives direct premiums written forFlorida and Other States for the three months endedMarch 31, 2022 and 2021 ({dollars} in hundreds): For the Three Months Ended Growth March 31, 2022 March 31, 2021 yr over yr Direct Direct Premiums State Premiums Written % Written % $ % Florida$ 334,437 84.4 %$ 307,011 84.0 %$ 27,426 8.9 % Other states 62,044 15.6 % 58,303 16.0 % 3,741 6.4 % Total$ 396,481 100.0 %$ 365,314 100.0 %$ 31,167 8.5 % We search to prudently develop and generate lengthy-time period price ample premium in every state the place we provide insurance policies. Our diversification technique seeks to extend enterprise exterior ofFlorida and to enhance geographical distribution insideFlorida . Premium progress exteriorFlorida is a measure monitored by administration in its efforts to satisfy that goal.
Direct premium earned elevated by
ended
12 months together with the good thing about price adjustments.
Reinsurance permits our Insurance Entities to restrict potential exposures to catastrophic occasions and different lined occasions. Ceded premium represents premiums paid to reinsurers for this safety and is a price which reduces web written and web earned premiums. Ceded premium earned elevated$13.2 million , or 10.0%, for the quarter endedMarch 31, 2022 , as in comparison with the identical interval of the prior yr. The improve in reinsurance prices displays a rise within the worth of exposures we insure; elevated pricing when in comparison with the expired reinsurance program and variations within the construction and design of the respective packages. Reinsurance prices, as a proportion of direct premium earned, decreased from 35.2% for the three months endedMarch 31, 2021 to 35.1% for the three months endedMarch 31, 2022 , primarily attributable to$2.6 million of reinstatement premiums associated to Hurricane Sally recorded within the prior yr quarter. Reinsurance prices related to annually's reinsurance program are earned over the annual coverage interval which generally runs fromJune 1st to May 31s.. See the dialogue above for the Insurance Entities' 2021-2022 reinsurance packages and "Item 1-Note 4 (Reinsurance)." 41
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Premiums earned, web of ceded premium earned, grew by 10.6%, or
to
improve in direct premium earned offset by elevated prices for reinsurance.
Net funding earnings was$4.0 million for the three months endedMarch 31, 2022 , in comparison with$3.0 million for a similar interval in 2021, a rise of$1.1 million , or 35.4%. In the fourth quarter of 2021, we noticed will increase in funding yields because theFederal Reserve took motion to deal with the market considerations of inflation and employment. As a end result, liquidity generated by our portfolio from curiosity funds, principal repayments and new investments are being invested at larger charges, leading to general elevated funding returns on our portfolio. Total invested property have been$1,085.6 million as ofMarch 31, 2022 in comparison with$1,093.7 million as ofDecember 31, 2021 . The lower is attributable to unrealized losses, which elevated throughout the three months endedMarch 31, 2022 and decrease money balances. Cash and money equivalents have been$165.4 million atMarch 31, 2022 in comparison with$250.5 million atDecember 31, 2021 , a lower of 34.0%. This lower is basically attributable to adjustments in operational money flows since yr finish. Cash and money equivalents are invested brief time period till wanted to settle loss and LAE funds, reinsurance premium funds and working money wants or till they're deployed by our funding advisors. Yields from money and money equivalents, brief-time period investments and the accessible-for-sale debt portfolio are depending on the composition of the portfolio, future market forces, financial coverage and rate of interest coverage from theFederal Reserve . During most of 2021, theFederal Reserve broadly maintained decrease rates of interest, which impacted the efficient yields on newly bought accessible-for-sale debt securities and in a single day money purchases and brief-time period investments. This general pattern modified in late 2021 and into 2022 as inflation worries started to impression the monetary markets, together with the markets' concern over futureFederal Reserve actions of price hikes and different actions to deal with inflation considerations. As a end result, we noticed elevated yields on securities bought in late 2021 and 2022 and elevated unrealized losses on our portfolio, mirrored after-tax within the fairness part of our stability sheet as elevated market yields negatively impacted the truthful worth of a lot of our accessible-for-sale debt securities. We promote investments, together with securities, from our funding portfolio from time to time to satisfy our funding aims or benefit from market alternatives. During the three months endedMarch 31, 2022 , gross sales of accessible-for-sale debt securities resulted in web realized losses of$0.2 million and gross sales of fairness securities resulted in web realized good points of$0.3 million , producing whole web realized good points of$0.1 million throughout the first quarter of 2022. During the three months endedMarch 31, 2021 , gross sales of accessible-for-sale debt securities resulted in web realized losses of$0.2 million , gross sales of fairness securities resulted in web realized good points of$0.3 million and the sale of an funding actual property property resulted in a realized acquire of$0.4 million , in whole producing web realized good points of$0.5 million . See "Item 1-Note 3 (Investments)." There was a$3.4 million web unrealized loss in fairness securities throughout the three months endedMarch 31, 2022 in comparison with a$0.5 million web unrealized loss in fairness securities throughout the three months endedMarch 31, 2021 . Net change in unrealized good points or losses mirrored on the earnings assertion are the results of adjustments within the truthful market worth of our fairness securities throughout the interval for securities nonetheless held on the finish of the reported interval and the reversal of unrealized good points or losses for securities offered throughout the interval. See "Item 1-Note 3 (Investments)." Commission income is comprised principally of brokerage commissions we earn from third-social gathering reinsurers (excluding the FHCF) on reinsurance positioned for the Insurance Entities. Commission income is earned professional-rata over the reinsurance coverage interval which runs fromJune 1st to May thirty first of the next yr. For the three months endedMarch 31, 2022 , fee income was$11.2 million , in comparison with$9.1 million for the three months endedMarch 31, 2021 . The improve in fee income of$2.0 million , or 22.3%, for the three months endedMarch 31, 2022 was primarily attributable to elevated commissions from third-social gathering reinsurers earned on elevated reinsurance premiums which is attributable attributable to progress in our insured values for this yr's reinsurance program in addition to the distinction in pricing and construction related to our reinsurance program when in comparison with the prior yr. Policy charges have been$4.8 million for the three months endedMarch 31, 2022 in contrast to$5.4 million for a similar interval in 2021. The lower of$0.6 million , or 11.3%, was the results of a lower within the mixed whole variety of new and renewal insurance policies written throughout the three months endedMarch 31, 2022 in contrast to the identical interval in 2021 in states the place we're permitted to cost this charge.
Other income, representing income from coverage installment charges, premium
financing and different miscellaneous earnings, was
ended
42
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Table of Contents The following desk presents losses and LAE incurred on a direct, ceded and web foundation expressed in {dollars} and as a % of the respective quantities of premiums earned. These quantities are additional categorized as i) core losses, ii) climate occasions for the present accident yr and iii) prior years' reserve growth ({dollars} in hundreds): Three Months Ended March 31, 2022 Direct Loss Ratio Ceded Loss Ratio Net Loss Ratio Premiums earned$ 414,603 $ 145,539 $ 269,064 Loss and loss adjustment bills: Core losses$ 179,950 43.4 %$ 44 - %$ 179,906 66.9 % Weather occasions* 4,545 1.1 % - - % 4,545 1.7 % Prior years' reserve growth 10,660 2.6 % 10,005 6.9 % 655 0.2 % Total losses and loss adjustment bills$ 195,155 47.1 %$ 10,049 6.9 %$ 185,106
68.8 %
*Includes solely present yr climate occasions past these anticipated.
Three Months Ended March 31, 2021 Direct Loss Ratio Ceded Loss Ratio Net Loss Ratio Premiums earned$ 375,606 $ 132,301 $ 243,305 Loss and loss adjustment bills: Core losses$ 145,228 38.7 %$ 28 - %$ 145,200 59.7 % Weather occasions* - - - - - - Prior years' reserve growth 92,070 24.5 % 93,307 70.5 % (1,237) (0.5) % Total losses and loss adjustment bills$ 237,298 63.2 %$ 93,335 70.5 %$ 143,963
59.2 %
*Includes solely present yr climate occasions past these anticipated.
See “Item 1-Note 6 (Liability for Unpaid Losses and Loss Adjustment Expenses)”
for change in legal responsibility for unpaid losses and LAE.
Management seems to be at losses and LAE in three areas, as described under and represented within the tables above, every of which has completely different drivers that impression reported outcomes. As a end result, these parts of losses and LAE are described individually. Overall losses and LAE, web of reinsurance recoveries, have been$185.1 million leading to a 68.8% web loss and LAE ratio for the quarter endedMarch 31, 2022 . This compares to$144.0 million leading to a 59.2% web loss and LAE ratio for the quarter endedMarch 31, 2021 .
The components impacting losses and LAE are as follows:
•Core losses
•Our core losses encompass all losses and LAE for the present yr excluding each climate occasions for the present yr past these anticipated in our common accrual course of and prior years' reserve growth. Core losses have been 43.4% of direct premium earned for the quarter endedMarch 31, 2022 in comparison with 38.7% for the identical interval in 2021. These losses and loss ratios profit from the potential earnings generated by means of the administration of claims by our claims adjusting affiliate, together with declare charges ceded to reinsurers, that are described under, decreasing core losses. The core loss ratio for 2021 and 2022 displays actions taken by administration to extend its loss choose to accrue for present accident yr reserves. The pattern in core losses and LAE is rising yr over yr as the claims surroundings inFlorida continues to deteriorate. Also see the dialogue above below "Overview-Trends." Core losses additionally improve as premium quantity will increase yr over yr.
•Weather occasions past these anticipated
•There have been
the core losses throughout the quarter ended
•There have been no climate occasions past these anticipated throughout the quarter ended
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•Prior years’ reserve growth
•Two drivers affect the quantities recorded as prior years’ reserve growth,
specifically: (i) adjustments to prior estimates of direct and web final losses on
prior accident years excluding main hurricanes and (ii) adjustments to prior
estimates of direct and web final losses on hurricanes.
?During the quarter ended
totaled
growth after the good thing about reinsurance.
•For hurricanes, prior years' reserve growth for the quarter endedMarch 31, 2022 was the results of a direct improve within the final losses of$10.7 million offset by ceded hurricane losses of$10.0 million leading to web unfavorable growth of$0.7 million . Direct and web losses elevated for Hurricanes Irma and Matthew. Hurricane Irma direct losses elevated$10.6 million and web losses elevated$0.6 million . Hurricane Matthew direct and web losses elevated$0.1 million .
•Excluding hurricanes, there was no prior years’ reserve growth for the
quarter ended
?For the quarter ended
of
growth.
•Prior years' reserve growth for the quarter endedMarch 31, 2021 was the results of a gross improve within the final losses for Hurricane Sally of$92 million . Changes to ceded reserves on prior years' hurricanes exceeded gross growth by$1.2 million , leading to web favorable growth on prior years' reserve growth. There was a rise in ceded reserves on Hurricane Sally because of recoveries on losses exterior ofFlorida , which have a decrease attachment level, offset by a discount in Hurricane Irma recoveries representing beforehand ceded losses not topic to restoration. As a end result, web prior years' reserve growth was favorable.
•Excluding hurricanes, there was no prior years’ reserve growth for the
quarter ended
The monetary profit generated by our claims adjusting affiliate from the administration of claims, together with declare charges ceded by our Insurance Entities to reinsurers, was$2.1 million for the three months endedMarch 31, 2022 , in contrast to$8.1 million throughout the three months endedMarch 31, 2021 , pushed by the recoveries from reinsurers and inner declare providers. The profit was recorded within the condensed consolidated monetary statements as a discount to losses and LAE. For the three months endedMarch 31, 2022 , common and administrative bills have been$78.3 million in comparison with$82.4 million throughout the identical interval in 2021, as follows ({dollars} in hundreds): Three Months Ended March 31, Change 2022 2021 $ % $ Ratio $ Ratio Premiums earned, web$ 269,064 $ 243,305 $ 25,759 10.6 % General and administrative bills: Policy acquisition prices 54,723 20.3 % 56,458 23.2 % (1,735) (3.1) % Other working prices 23,574 8.8 % 25,965 10.7 % (2,391) (9.2) % Total common and administrative bills$ 78,297 29.1 %$ 82,423 33.9 %$ (4,126) (5.0) % General and administrative bills decreased by$4.1 million , which was the results of a lower in coverage acquisition prices of$1.7 million and different working prices of$2.4 million . The whole common and administrative expense ratio was 29.1% for the three months endedMarch 31, 2022 in comparison with 33.9% for the identical interval in 2021. •The lower in coverage acquisition prices of$1.7 million displays a discount within the fee price paid to brokers on the renewal ofFlorida insurance policies which was lowered by 2 proportion factors to 10% efficientApril 1, 2021 . The fee price paid to brokers on the renewal ofFlorida polices will probably be lowered by an extra 2 proportion factors to eight% efficientMay 1, 2022 , which is able to profit future durations as the brand new price construction applies prospectively. The lower in coverage acquisition prices as a proportion of premiums earned, web throughout the quarter is primarily as a result of discount in commissions paid to brokers. •The lower in different working prices of$2.4 million primarily displays decrease worker advantages and efficiency bonus accruals. The different working value ratio was 8.8% for the three months endedMarch 31, 2022 , in comparison with 10.7% for the similar interval in 2021. This discount displays a number of components together with economies of scale as we proceed to develop premium, and efficiencies gained from leveraging expertise and spending self-discipline. 44
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Table of Contents As a results of the above, the mixed ratio for the primary quarter endedMarch 31, 2022 was 97.9% in comparison with 93.1% for a similar interval in 2021. The improve was the results of a lower within the common and administrative expense ratio offset by a rise within the loss and LAE ratio as described above. Interest and amortization of debt issuance prices elevated$1.6 million for the three months endedMarch 31, 2022 . The improve in curiosity and amortization of debt issuance prices is the results of a rise within the excellent debt as a results of our fourth quarter of 2021 borrowing. See "Item 1-Note 7 (Long-term debt)" for extra particulars. Income tax expense was$4.9 million for the quarter endedMarch 31, 2022 in comparison with an earnings tax expense of$9.9 million for the quarter endedMarch 31, 2021 . Our efficient tax price ("ETR") decreased to 22.0% for the three months endedMarch 31, 2022 , as in comparison with 27.4% for the three months endedMarch 31, 2021 . The ETR decreased because of a decrease ratio of everlasting objects relative to the quantity of earnings earlier than taxes, principally non-deductible compensation, and the next degree of discrete tax advantages primarily due an improve within theFlorida company earnings tax price enacted onJanuary 1, 2022 .
Other complete loss, web of taxes for the three months ended
2022
for a similar interval in 2021, reflecting after-tax adjustments in truthful worth of
accessible-for-sale debt securities held in our funding portfolio and
reclassifications out of amassed different complete earnings for
accessible-for-sale debt securities offered. See “Item 1-Note 11 (Other
Comprehensive Income (Loss))” for extra details about the quantities
comprising different complete earnings (loss), web of taxes for these durations.
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Analysis of Financial Condition-As of
2021
We imagine that money flows generated from operations will probably be enough to satisfy our working capital necessities for no less than the subsequent twelve months. We make investments quantities thought of to be in extra of present working capital necessities.
The following desk summarizes, by sort, the carrying values of investments as
of the dates offered (in hundreds):
As of March 31, December 31, Type of Investment 2022 2021
Available-for-sale debt securities
Equity securities 65,126 47,334 Investment actual property, web 5,845 5,891 Total$ 1,085,648 $ 1,093,680
See “Item 1-Condensed Consolidated Statements of Cash Flows” and “Item 1-Note 3
(Investments)” for explanations on adjustments in investments.
Prepaid reinsurance premiums symbolize the portion of unearned ceded written premium that will probably be earned professional-rata over the protection interval of our reinsurance program, which runs fromJune 1st to May thirty first of the next yr. The lower of$131.6 million to$109.4 million as ofMarch 31, 2022 was as a result of amortization of ceded written premium for the reinsurance prices regarding our 2021-2022 disaster reinsurance program earned throughout the interval.
Reinsurance recoverable represents the estimated quantity of paid and unpaid
losses, LAE and different bills which might be anticipated to be recovered from
reinsurers. The lower of
was primarily as a result of collections of quantities recoverable from reinsurers
regarding settled claims from hurricanes and lined by our reinsurance
contracts.
Premiums receivable, web, represents quantities receivable from policyholders. The lower in premiums receivable, web of$3.3 million to$61.7 million as ofMarch 31, 2022 pertains to client cost habits of our enterprise. The quantity of direct premiums written throughout a calendar yr tends to extend simply prior to the second quarter and tends to lower approaching the fourth quarter. Deferred coverage acquisition prices ("DPAC") decreased by$5.2 million to$103.6 million as ofMarch 31, 2022 , which is in keeping with the seasonal premium traits of written premium. In addition DPAC was impacted by the discount toFlorida renewal commissions carried out throughout 2021 and different adjustments to the Company's fee construction. See "Item 1-Note 5 (Insurance Operations)" for a roll-ahead within the stability of our DPAC. Income taxes recoverable represents the distinction between estimated tax obligations and tax funds made to taxing authorities. As ofMarch 31, 2022 , the stability recoverable was$2.3 million , representing quantities due from taxing authorities at that date, in comparison with a stability recoverable of$16.9 million as ofDecember 31, 2021 . Income taxes recoverable as ofMarch 31, 2022 will both be refunded or utilized to future durations to offset future federal and state earnings tax obligations. Deferred earnings taxes symbolize the estimated tax asset or tax legal responsibility prompted by short-term variations between the tax return foundation of sure property and liabilities and quantities recorded within the monetary statements. During the three months endedMarch 31, 2022 , deferred tax property elevated by$23.7 million to$40.1 million primarily attributable to a rise in unrealized losses on investments and a lower in unearned premiums web of pay as you go reinsurance premiums. Deferred earnings taxes reverse in future years because the short-term variations between ebook and tax reverse. See "Item 1-Note 6 (Liability for Unpaid Losses and Loss Adjustment Expenses)" for a roll-ahead within the stability of our unpaid losses and LAE. Unpaid losses and LAE decreased by$101.7 million to$244.5 million as ofMarch 31, 2022 . The majority of the lower is from the settlement of losses from prior hurricanes and prior massive climate occasions. Overall, unpaid losses and LAE decreased, as declare settlements exceeded new rising claims. Unpaid losses and LAE are web of estimated subrogation recoveries. Unearned premiums symbolize the portion of direct premiums written that will probably be earned professional-rata sooner or later. The lower of$18.1 million fromDecember 31, 2021 to$839.6 million as ofMarch 31, 2022 displays the seasonality of our enterprise, which varies from month to month. Advance premium represents premium funds made by policyholders forward of the efficient date of the insurance policies. The improve of$31.4 million to$85.1 million as ofMarch 31, 2022 displays buyer cost habits and the cost habits of mortgage escrow service suppliers. 46
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Table of Contents We keep a brief-time period money funding technique sweep to maximise funding returns on money balances. There have been no ebook overdrafts as ofMarch 31, 2022 in comparison with ebook overdrafts totaling$26.8 million as ofDecember 31, 2021 . The lower of$26.8 million is the results of larger money balances accessible for offset as ofMarch 31, 2022 in comparison withDecember 31, 2021 . See "-Liquidity and Capital Resources" for extra info. Reinsurance payable, web, represents the unpaid reinsurance premium installments owed to reinsurers, unpaid reinstatement premiums attributable to reinsurers and money advances acquired from reinsurers, if any. OnJune 1st of every yr, we renew our core disaster reinsurance program and document the estimated annual value of our reinsurance program. These estimated annual prices are elevated or decreased throughout the yr based mostly on premium changes or because of new placements throughout the yr. The annual value initially will increase reinsurance payable, which is then lowered as installment funds are revamped the coverage interval of the reinsurance, which generally runs fromJune 1st to May thirty first . The stability decreased by$175.9 million to$12.7 million as ofMarch 31, 2022 because of the timing of the above objects.
Other liabilities and accrued bills elevated by
million
income and different liabilities as a result of timing of funds.
Capital assets, web, decreased by$33.7 million for the three months endedMarch 31, 2022 , reflecting a web lower in whole stockholders' fairness and lengthy-time period debt. The change in stockholders' fairness was principally the results of will increase coming from our 2022 web earnings and share-based mostly compensation, offset by declines within the after-tax adjustments within the truthful worth of our accessible-for-sale debt securities, treasury share purchases and dividends to shareholders. Available-for-sale debt securities decline in truthful worth of$56.9 million (earlier than tax) within the first quarter of 2022, prompted the online unrealized loss place of$20.2 million atDecember 31, 2021 to extend to$77.2 million atMarch 31, 2022 . Current market outlooks are signaling additionalFederal Reserve tightening which might proceed to have a unfavourable impression on the valuation of accessible-for-sale debt securities. See "Item 1-Condensed Consolidated Statements of Stockholders' Equity" and "Item 1-Note 8 (Stockholders' Equity)" for clarification of adjustments in treasury inventory.
The discount in debt of
debt throughout 2022. See “-Liquidity and Capital Resources” for extra info.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
Liquidity is a measure of an organization's capability to generate enough money flows to satisfy its brief and lengthy-time period obligations. Funds generated from operations have been enough and we count on them to be enough to satisfy our present and long run liquidity necessities. The stability of money and money equivalents, excluding restricted money, as ofMarch 31, 2022 was$165.4 million , in comparison with$250.5 million atDecember 31, 2021 . See "Item 1-Condensed Consolidated Statements of Cash Flows" for a reconciliation of the stability of money and money equivalents betweenMarch 31, 2022 andDecember 31, 2021 . The lower in money and money equivalents was pushed by money flows utilized in working actions, investing and financing actions. Our money funding technique at instances contains money investments the place the best of offset in opposition to different financial institution accounts doesn't exist. A ebook overdraft happens when aggregating the ebook stability of all accounts at a monetary establishment, for accounts which have the best of offset, and if the aggregation leads to a web unfavourable ebook stability, that stability is reclassified from money and money equivalents in our Condensed Consolidated Balance Sheet to ebook overdraft. Cash and money equivalents balances can be found to settle ebook overdrafts, and to pay reinsurance premiums, bills and claims. Reinsurance premiums are paid in installments throughout the reinsurance coverage interval, which runs fromJune 1st to May thirty first of the next yr. The FHCF reimbursement premiums are paid in three installments onAugust 1st ,October 1st , andDecember 1st , and third-social gathering reinsurance premiums are typically paid in 4 installments onJuly 1st ,October 1st ,January 1st andApril 1st , leading to vital funds at these instances. See "Item 1-Note 12 (Commitments and Contingencies)" and extra dialogue under below the caption "-Material Cash Requirements" for extra info. The stability of restricted money and money equivalents as ofMarch 31, 2022 andDecember 31, 2021 represents money equivalents on deposit with sure regulatory businesses within the numerous states during which our Insurance Entities do enterprise. Liquidity is required on the holding firm for us to cowl the cost of holding firm common working bills and contingencies, dividends to shareholders (if and when licensed and declared by our Board of Directors), cost for the doable repurchase of our widespread inventory (if and when licensed by our Board of Directors), cost of our tax obligations to taxing authorities, settlement of taxes between subsidiaries in accordance with our tax sharing settlement, capital contributions to subsidiaries, if wanted, and curiosity and principal funds on excellent debt obligations of the holding firm. See "Item 1-Note 5 (Insurance Operations)." The declaration and cost of future dividends to our shareholders, and any future repurchases of our widespread inventory, will probably be on the discretion of our Board of Directors and can rely upon many components, together with our working outcomes, monetary situation, debt covenants and any regulatory constraints. New laws or adjustments to current laws imposed on the Company and its associates might also impression the quantity and timing of future dividend funds to the father or mother. Principal sources of liquidity for the holding firm embrace dividends paid by our service entities generated from earnings earned on charges paid by the Insurance Entities to affiliated corporations for common company, inspections and claims adjusting providers. Dividends are additionally paid from earnings earned from brokerage commissions earned on reinsurance contracts positioned by our wholly-owned subsidiary,Blue Atlantic Reinsurance Corporation , and coverage charges. We additionally keep top quality investments in our portfolio as a supply of liquidity together with ongoing curiosity and dividend earnings from these 47
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Table of Contents investments. As mentioned in "Item 1-Note 5 (Insurance Operations)," there are limitations on the dividends the Insurance Entities might pay to their speedy father or mother firm,Protection Solutions, Inc. ("PSI", previously generally known asUniversal Insurance Holding Company of Florida ). The most quantity of dividends that may be paid byFlorida insurance coverage corporations with out prior approval of the FLOIR is topic to restrictions as referenced under and in "Item 1-Note 5 (Insurance Operations)." Dividends from the Insurance Entities can solely be paid from amassed unassigned funds derived from web working earnings and web realized capital good points. Subject to such amassed unassigned funds, the utmost dividend which may be paid by the Insurance Entities to PSI with out prior approval (an "ordinary dividend") is additional restricted to the lesser of statutory web earnings from operations of the previous calendar yr or statutory unassigned surplus as of the previous yr finish. During the three months endedMarch 31, 2022 and the yr endedDecember 31, 2021 , the Insurance Entities didn't pay dividends to PSI. As ofMarch 31, 2022 , the Insurance Entities didn't have the capability to pay extraordinary dividends. OnNovember 23, 2021 , we entered into Note Purchase Agreements with sure institutional accredited buyers and certified institutional consumers pursuant to which we issued$100 million of 5.625% Senior Unsecured Notes due 2026. We intend to make use of the online proceeds to help the Insurance Entities' statutory capital necessities and for common company functions. If obligatory, the Company additionally has quantities accessible below our unsecured revolving mortgage as mentioned in "Item 1-Note 7 (Long-term debt)." Liquidity for the Insurance Entities is primarily required to cowl funds for reinsurance premiums, claims funds together with potential funds of disaster losses (offset by restoration of any reimbursement quantities below our reinsurance agreements), charges paid to associates for managing common company providers, inspections and claims adjusting providers, agent commissions, premium and earnings taxes, regulatory assessments, common working bills, and curiosity and principal funds on debt obligations. The principal supply of liquidity for the Insurance Entities consists of the income generated from the assortment of premiums earned, web, curiosity and dividend earnings from the funding portfolio, the gathering of reinsurance recoverable and financing charges. Our insurance coverage operations present liquidity as premiums are typically acquired months and even years earlier than potential losses are paid below the insurance policies written. In the occasion of catastrophic occasions, lots of our reinsurance agreements present for "cash advance" whereby reinsurers advance or prepay quantities to us, thereby offering liquidity, which we make the most of within the declare settlement course of. In addition, the Insurance Entities keep substantial investments in extremely liquid, marketable securities, which might generate funds upon sale. The common credit standing on our accessible-for-sale securities was A+ as ofMarch 31, 2022 andDecember 31, 2021 . Credit rankings are a measure of assortment threat on invested property. Credit rankings are supplied by third social gathering nationally acknowledged ranking businesses and are periodically up to date. Management establishes pointers for minimal credit standing and general credit standing for all investments. The period of our accessible-for-sale securities was 4.5 years atMarch 31, 2022 in comparison with 4.4 years atDecember 31, 2021 . Duration is a measure of a bond's sensitivity to rate of interest adjustments and is utilized by administration to restrict the potential impression of longer-time period investments. The Insurance Entities are accountable for losses associated to catastrophic occasions in extra of protection supplied by the Insurance Entities' reinsurance packages and retentions earlier than our reinsurance safety commences. Also, the Insurance Entities are accountable for all different losses that in any other case might not be lined by the reinsurance packages and any quantities arising within the occasion of a reinsurer default. Losses or a default by reinsurers might have a fabric antagonistic impact on both of the Insurance Entities, on our enterprise, monetary situation, outcomes of operations and liquidity. Capital Resources Capital assets present safety for policyholders, furnish the monetary energy to help the enterprise of underwriting insurance coverage dangers and facilitate continued enterprise progress. The following desk gives our stockholders' fairness, whole lengthy-time period debt, whole capital assets, debt-to-whole capital ratio and debt-to-fairness ratio for the durations offered ({dollars} in hundreds): As of March 31, December 31, 2022 2021 Stockholders' fairness$ 396,341 $ 429,702 Total lengthy-time period debt 103,384 103,676 Total capital assets$ 499,725 $ 533,378 Debt-to-whole capital ratio 20.7 % 19.4 % Debt-to-fairness ratio 26.1 % 24.1 % The debt-to-whole capital ratio is whole lengthy-time period debt divided by whole capital assets, whereas the debt-to-fairness ratio is whole lengthy-time period debt divided by stockholders' fairness. These ratios assist administration measure the quantity of financing leverage in place in relation to fairness and future leverage capability. 48
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Table of Contents As described in our Annual Report on Form 10-Okay for the yr endedDecember 31, 2021 , UPCIC entered right into a surplus observe with theState Board of Administration of Florida belowFlorida's Insurance Capital Build-Up Incentive Program onNovember 9, 2006 . The surplus observe has a twenty-yr time period, with quarterly funds of principal and curiosity that accrue per the phrases of the observe settlement. AtMarch 31, 2022 , UPCIC was in compliance with the phrases of the surplus observe. Total adjusted capital and surplus, which incorporates the excess observe, was in extra of regulatory necessities for each UPCIC and APPCIC. As mentioned in "Item 1-Note 7 (Long-term Debt)," we entered right into a credit score settlement and associated revolving mortgage withJPMorgan Chase Bank, N.A . inAugust 2021 which makes accessible an unsecured revolving credit score facility with an combination dedication to not exceed$35.0 million . Borrowings below the Revolving Loan mature 364 days after the date of the mortgage. The Revolving Loan comprises customary monetary covenants. As ofMarch 31, 2022 , the Company was in compliance with all relevant covenants, together with monetary covenants. We had not drawn any quantities below the Revolving Loan as ofMarch 31, 2022 . InNovember 2021 , we accomplished a personal placement providing by means of which we issued and offered$100 million of 5.625% Senior Unsecured Notes due 2026 (the "Notes") to sure institutional accredited buyers and certified institutional consumers. The Notes mature onNovember 26, 2026 , at which era the total$100 million of principal is due and payable. At any time on or afterNovember 23, 2023 , the Company might redeem all or a part of the Notes. See "Item 1-Note 7 (Long-term debt)" for extra particulars. As ofMarch 31, 2022 , we have been in compliance with all relevant covenants, together with monetary covenants of this observe settlement. We can even proceed to guage alternatives to entry the debt capital markets to lift further capital. We anticipate any proceeds can be used for common company functions, together with investing within the capital and surplus of the Insurance Entities. In addition to the liquidity typically supplied from operations, we keep a conservative, effectively-diversified funding portfolio, predominantly comprised of mounted earnings securities with a mean credit standing of A+, that focuses on capital preservation and offering an ample supply of liquidity for potential declare funds and different money wants. The portfolio's secondary funding goal is to supply a complete price of return with emphasis on funding earnings. Historically, we've got persistently generated funds from operations, permitting our money and invested property to develop. We haven't needed to liquidate funding holdings to fund both operations or financing actions.
Impact of the COVID-19 Pandemic
The impression of the COVID-19 pandemic on the credit score markets stays a key threat as the world continues to navigate its penalties and the efforts taken by governments to speed up and stimulate a monetary restoration. We stay in common contact with our advisors to observe the credit score high quality of the issuers of the securities in our portfolio and focus on acceptable responses to credit score downgrades or adjustments in corporations' credit score outlook. We imagine these measures, when mixed with the inherent liquidity generated by our enterprise mannequin and in our funding portfolio, will permit us to proceed to satisfy our short- and lengthy-time period obligations.
Looking Forward
We proceed to observe a variety of monetary metrics associated to our enterprise. Although we've got not but skilled materials antagonistic impacts on our enterprise or liquidity, situations are topic to alter relying on the extent of the financial downturn and the tempo and extent of an financial restoration. Significant uncertainties exist with the potential lengthy-time period impression of the COVID-19 pandemic, together with unexpected newly rising dangers that might have an effect on us and future financial adjustments because theFederal Reserve addresses the rising financial considerations of inflation, employment and recession. We will proceed to observe the broader financial impacts of the COVID-19 pandemic and its impression on our operations and monetary situation together with liquidity and capital assets.
Common Stock Repurchases
OnNovember 3, 2020 , we introduced that our Board of Directors licensed a share repurchase program below which we might repurchase within the open market as much as$20 million of excellent shares of our widespread inventory by means ofNovember 3, 2022 . We might repurchase shares once in a while at our discretion, based mostly on ongoing assessments of our capital wants, the market worth of our widespread inventory and common market situations. We will fund the share repurchase program with money from operations. During the three months endedMarch 31, 2022 , we repurchased an combination of 320,528 shares of our widespread inventory within the open market at an combination buy worth of$3.9 million . Also, see "Part II, Item 2-Unregistered Sales ofEquity Securities and Use of Proceeds" for share repurchase exercise throughout the three months endedMarch 31, 2022 .
Off-Balance Sheet Arrangements
The Company doesn’t have any off-stability sheet preparations which might be moderately
prone to have a fabric impact on the monetary situation, outcomes of
operations, liquidity, or capital assets of the Company, apart from
multi-yr reinsurance contract commitments for future years that will probably be
recorded on the graduation of the protection interval. See “Item 1-Note 12
(Commitments and Contingencies)” for extra info.
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Table of Contents Cash Dividends The following desk summarizes the dividends declared by the Company in 2022: Cash Dividend Dividend Shareholders Dividend Per Common Share 2022 Declared Date Record Date Payable Date Amount First Quarter February 10, 2022 March 10, 2022 March 17, 2022 $ 0.16
MATERIAL CASH REQUIREMENTS
The following desk represents our materials money necessities for which money
flows are mounted or determinable as of
Total Next 12 Months Beyond 12 Months Reinsurance payable and multi-yr commitments (1)$ 303,658 $ 92,893 $ 210,765 Unpaid losses and LAE, direct (2) 244,482 137,888 106,594 Long-term debt (3) 134,981 7,188 127,793 Total materials money necessities$ 683,121 $
237,969 $ 445,152
(1)Amount represents the cost of reinsurance premiums payable below
multi-yr commitments. See “Item 1-Note 12 (Commitments and Contingencies).”
(2)There are typically no notional or said quantities associated to unpaid losses and LAE. Both the quantities and timing of future loss and LAE funds are estimates and topic to the inherent variability of authorized and market situations affecting the obligations and make the timing of money outflows unsure. The final quantity and timing of unpaid losses and LAE might differ materially from the quantities within the desk above. Further, the unpaid losses and LAE don't symbolize all of the obligations that can come up below the contracts, however moderately solely the estimated legal responsibility incurred by means ofMarch 31, 2022 . Unpaid losses and LAE are web of estimated subrogation recoveries. In addition, these balances exclude quantities recoverable from the Company's reinsurance program. See "Item 1-Note 4 (Reinsurance)."
(3)Long-term debt consists of a Surplus observe and 5.625% Senior unsecured notes.
See “Item 1-Note 7 (Long-term debt).”
Impact of Inflation and Changing Prices
The monetary statements and associated information offered herein have been ready in accordance withU.S. GAAP, which require the measurement of monetary place and working outcomes when it comes to historic {dollars} with out contemplating adjustments within the relative buying energy of cash over time attributable to inflation. Our major property are financial in nature. As a end result, rates of interest have a extra vital impression on our efficiency than the results of the final ranges of inflation. Interest charges don't essentially transfer in the identical path or with the identical magnitude as the price of paying losses and LAE. Insurance premiums are established earlier than we all know the quantity of loss and LAE and the extent to which inflation might have an effect on such bills. Consequently, we try to anticipate the long run impression of inflation when establishing price ranges. While we try and cost ample charges, we could also be restricted in elevating premium ranges for aggressive and regulatory causes. Inflation additionally impacts the market worth of our funding portfolio and the funding price of return. Any future financial adjustments which lead to extended and rising ranges of inflation might trigger will increase within the greenback quantity of incurred loss and LAE and thereby materially adversely have an effect on future legal responsibility necessities.
Arrangements with Variable Interest Entities
We entered right into a reinsurance captive association with a VIE within the regular
course of enterprise, and consolidated the VIE since we’re the first
beneficiary.
For an additional dialogue of our involvement with the VIE, see “Item 1-Note 14
(Variable Interest Entities).”
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
There have been no materials adjustments throughout the interval lined by this Quarterly Report on Form 10-Q to Critical Accounting Policies and Estimates beforehand disclosed in "Part II, Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-Okay for the yr endedDecember 31, 2021 .