UNITED INSURANCE HOLDINGS CORP. – 10-Q – Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our Unaudited Condensed
Consolidated Financial Statements and related notes appearing elsewhere in this
Form 10-Q, as well as with the Consolidated Financial Statements and related
footnotes under Part II. Item 8 of our Annual Report on Form 10-K for the year
ended December 31, 2020. This discussion and analysis contains forward-looking
statements that involve risks, uncertainties and assumptions. Actual results may
differ materially from those expressed or implied in these forward-looking
statements as a result of certain known and unknown risks and uncertainties. See
"Forward-Looking Statements."

EXECUTIVE SUMMARY

Overview

  United Insurance Holdings Corp. (referred to in this document as we, our, us,
the Company or UPC Insurance) is a holding company primarily engaged in personal
residential and commercial residential property and casualty insurance in the
United States. We conduct our business principally through four wholly-owned
insurance subsidiaries and one majority-owned insurance subsidiary: United
Property & Casualty Insurance Company (UPC); American Coastal Insurance Company
(ACIC); Family Security Insurance Company, Inc. (FSIC); Interboro Insurance
Company (IIC); and Journey Insurance Company (JIC). Collectively, we refer to
the holding company and all our subsidiaries, including non-insurance
subsidiaries, as "UPC Insurance," which is the preferred brand identification
for our Company.

Our Company's primary source of revenue is generated from writing insurance in
Florida, Georgia, Louisiana, New York, North Carolina, South Carolina and Texas.
The Company also writes policies in Connecticut, Massachusetts, New Jersey, and
Rhode Island where renewal rights have been sold and all premiums and losses are
ceded. Effective January 1, 2021, we no longer write in the state of Hawaii. We
are also licensed to write property and casualty insurance in an additional six
states; however, we have not commenced writing in these states. Our target
market in such areas consists of states where the perceived threat of natural
catastrophe has caused large national insurance carriers to reduce their
concentration of policies. We believe an opportunity exists for UPC Insurance to
write profitable business in such areas.

Our Company, together with our wholly-owned subsidiaries UPC and UIM, entered
into a Renewal Rights Agreement, dated as of January 18, 2021 with HCPCI and HCI
Group, Inc. (HCI), pursuant to which our Company, UPC and UIM agreed to sell,
and HCPCI agreed to purchase, the renewal rights to UPC's personal lines
homeowners business in Connecticut, Massachusetts, New Jersey and Rhode Island.
The transfer of policies is subject to regulatory approval. The sale was also
consummated on January 18, 2021.

Effective June 1, 2021, we entered into a quota share reinsurance agreement with
HCPCI and TypTap in connection with the renewal rights agreement described
above. Under the terms of this agreement, we will cede 100% of our in-force,
new, and renewal policies in the states of Connecticut, New Jersey,
Massachusetts, and Rhode Island. The cession of these policies is 50% to HCPCI
and 50% to TypTap.

As part of the sale of the renewal rights, HCI issued to UPC 100,000 shares of
HCI common stock, no par value, which were subject to a six-month contractual
lock-up period.

We have historically grown our business through strong organic growth
complemented by strategic acquisitions and partnerships, including our
acquisitions of AmCo Holding Company, LLC (AmCo) and its subsidiaries, including
ACIC, in April 2017, IIC in April 2016, and Family Security Holdings, LLC (FSH),
including its subsidiary FSIC, in February 2015, and our strategic partnership
with a subsidiary of Tokio Marine Kiln Group Limited, which formed JIC in August
2018. As a result of underwriting actions implemented during the fourth quarter
of 2020 and throughout 2021, our policies in-force decreased by 18.0% from
641,633 policies in-force at September 30, 2020 to 525,969 policies in-force at
September 30, 2021.

The following discussion highlights significant factors influencing the
consolidated financial position and results of operations of UPC Insurance. In
evaluating our results of operations, we use premiums written and earned,
policies in-force and new and renewal policies by geographic concentration. We
also consider the impact of catastrophe losses and prior year development on our
loss ratios, expense ratios and combined ratios. In monitoring our investments,
we use credit quality, investment income, cash flows, realized gains and losses,
unrealized gains and losses, asset diversification and portfolio duration. To
evaluate our financial condition, we consider our liquidity, financial strength,
ratings, book value per share and return on equity.

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                        UNITED INSURANCE HOLDINGS CORP.


Impact of COVID-19

We are committed to maintaining a stable and secure business for our employees,
agents, customers and stockholders. During the second half of 2020, we were able
to resume hiring activities, despite the limits on in-person interviews and
on-boarding procedures resulting from COVID-related protocols. In addition, we
have converted to virtual sales processes to enable our agents to continue their
activities. We believe these activities, collectively, help ensure the health
and safety of our employees through adherence to CDC, state and local government
work guidelines.

We have not experienced a material impact from COVID-19 on our business
operations, financial position, liquidity or our ability to service our
policyholders to date, with the exception of fluctuations in our investment
portfolios due to volatility of the equity securities markets, as further
described in this Part I, Item 2. "Management's Discussion and Analysis of
Financial Condition and Results of Operations" of this Form 10-Q. The COVID-19
pandemic and resulting global disruptions did not have a material impact on our
access to credit and capital markets needed to maintain sufficient liquidity for
our continued operating needs during the quarter ended September 30, 2021.

We did not incur material claims or significant disruptions to our business for
the three and nine-months ended September 30, 2021. At this time, it is not
possible to reasonably estimate the extent of the impact of the economic
uncertainties on our business, results of operations and financial condition in
future periods, due to uncertainty regarding the duration of the COVID-19
pandemic, but we will continue to respond to the COVID-19 pandemic and take
reasonable measures to make sure customers continue to be served without
interruption.

2021 Highlights

                               Three Months Ended September         Nine 

Months Ended September 30,

                                            30,
                                    2021             2020                2021                2020

Gross premiums written $ 322,493 $ 365,819 $ 1,060,555 $ 1,140,653

 Gross premiums earned             353,461          353,991              

1,066,557 1,042,749

 Net premiums earned               153,271          188,741                444,680           565,819
 Total revenues                    162,740          212,733                479,983           605,434

Income (loss) before income

 tax                               (18,600)        (100,553)               

(77,655) (86,875)

Consolidated net income

 (loss) attributable to UIHC       (14,322)         (74,072)               

(55,603) (62,521)

Net income (loss) available

to UIHC stockholders per

 diluted share                $      (0.33)       $   (1.73)     $          

(1.29) $ (1.46)

Reconciliation of net income

(loss) to core income

(loss):

Plus: Non-cash amortization

 of intangible assets         $        812        $   1,043      $           2,744       $     3,224
 Less: Realized gains
 (losses) on investment
 portfolio                           5,537           24,968                  5,916            24,959
 Less: Unrealized gains
 (losses) on equity
 securities                         (3,293)         (11,552)                 1,709           (17,456)
 Less: Net tax impact (1)             (301)          (2,598)                (1,025)             (898)
 Core income (loss) (2)            (15,453)         (83,847)               (59,459)          (65,902)
 Core income (loss) per
 diluted share(2)             $      (0.36)       $   (1.95)     $           (1.38)      $     (1.54)

 Book value per share                                            $            7.42       $     10.54


(1) In order to reconcile the net income (loss) to the core income (loss)
measure, we included the tax impact of all adjustments using the 21% corporate
federal tax rate.
(2) Core income (loss), a measure that is not based on U.S. generally accepted
accounting principles (GAAP), is reconciled above to net income (loss), the most
directly comparable GAAP measure. Additional information regarding non-GAAP
financial measures presented in this Form 10-Q is in "Definitions of Non-GAAP
Measures" below.




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