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, 2021. 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
and commercial property and casualty insurance business with investments 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, Louisiana, New York and Texas. The Company also writes policies in
Georgia, Massachusetts, North Carolina and South Carolina where renewal rights
have been sold and all premiums and losses are ceded. Effective January 15,
2022, we no longer write in the state of New Jersey. Effective January 1, 2021,
we no longer write in the state of Hawaii, and effective December 1, 2021, we no
longer write in the states of Connecticut or Rhode Island, though we are still
licensed to write in these states. 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 wholly-owned subsidiaries UPC and United Insurance
Management, L.C. (UIM), entered into a Renewal Rights Agreement (Southeast
Renewal Agreement), dated as of December 30, 2021 with Homeowners Choice
Property and Casualty, Inc. (HCPCI), 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 Georgia, South Carolina and North
Carolina. The transfer of policies is subject to regulatory approval. The sale
was consummated on December 30, 2021.

Effective December 31, 2021, we entered into a quota share reinsurance agreement
with HCPCI in connection with the Southeast Renewal Agreement. Under the terms
of this agreement, we cede 85% of our in-force, new, and renewal policies in the
states of Georgia, North Carolina and South Carolina. When coupled with the 15%
cessions from our third-party quota share reinsurance agreement, we will no
longer retain any risk associated with these states.

Our Company, together with wholly-owned subsidiaries UPC and UIM, entered into a
Renewal Rights Agreement (Northeast Renewal 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 Rhode Island, Connecticut, and New
Jersey policies was completed as of March 31, 2022.

Effective June 1, 2021, we entered into a quota share reinsurance agreement with
HCPCI and TypTap Insurance Company (TypTap) in connection with the Northeast
Renewal Agreement. Under the terms of this agreement, we 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 the transfer of each state is completed under the
Northeast Renewal Agreement, the quota share coverage for the transitioned state
will no longer be in effect.

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

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                        UNITED INSURANCE HOLDINGS CORP.

of underwriting actions implemented during the fourth quarter of 2020 and
throughout 2021, as well as the transfer of Rhode Island, Connecticut, and New
Jersey policies to HCPCI, our policies in-force decreased by 36.6% from 605,753
policies in-force at March 31, 2021 to 384,117 policies in-force at March 31,
2022.

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.

Impact of COVID-19

We did not experience a material impact from COVID-19 on our business
operations, financial position, liquidity or our ability to service our
policyholders during the quarter ended March 31, 2022. In addition, 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 March 31, 2022.

During the quarter ended March 31, 2022 we continued to staff at a normal pace.
Additionally, during the fourth quarter of 2021 we implemented our new flexible
work policy. This policy allows all employees to work remotely permanently, with
the return to our offices being completely voluntary at this time. We will
continue to respond to the COVID-19 pandemic and take reasonable measures to
make sure customers continue to be served without interruption.

2022 Highlights
                                                          Three Months Ended March 31,
                                                                              2022           2021

Gross premiums written                                                     $ 279,475      $ 311,638
Gross premiums earned                                                        319,206        356,663
Net premiums earned                                                          100,857        145,949
Total revenues                                                               102,366        161,789
Earnings before income tax                                                   (44,307)       (26,282)
Consolidated net loss attributable to UIHC                                   (33,172)       (17,771)

Net loss available to UIHC stockholders per diluted
share

                                                                      $   (0.77)     $   (0.41)

Reconciliation of net loss to core loss:

Plus: Non-cash amortization of intangible assets                           $     812      $   1,043
Less: Realized gains (losses) on investment
portfolio                                                                     (1,769)           503
Less: Unrealized gains (losses) on equity
securities                                                                    (2,268)         2,564
Less: Net tax impact (1)                                                       1,018           (425)
Core loss (2)                                                                (29,341)       (19,370)
Core loss per diluted share(2)                                             $   (0.68)     $   (0.45)

Book value per share                                                       $    5.96      $    8.32

(1) In order to reconcile the net loss to the core loss measure, we included the
tax impact of all adjustments using the 21% corporate federal tax rate.
(2) Core loss, a measure that is not based on U.S. generally accepted accounting
principles (GAAP), is reconciled above to net 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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