UNIVERSAL INSURANCE HOLDINGS, INC. – 10-K – MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management's Discussion and Analysis of Financial Condition and
Results of Operations ("MD&A") is intended to assist in an understanding of our
financial condition and results of operations and should be read in conjunction
with our consolidated financial statements and accompanying notes in "Item
8-Financial Statements and Supplementary Data" below. Except for the historical
information contained herein, the discussions in this MD&A contain
forward-looking statements that involve risks and uncertainties. Our future
results could differ materially from those discussed herein. Factors that could
cause or contribute to such differences include, but are not limited to, those
discussed above under "Cautionary Note Regarding Forward-Looking Statements" and
"Part I- Item 1A-Risk Factors."
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Overview

We are a vertically integrated holding company offering homeowners insurance to
our customers. In addition, we generate revenue from our investment portfolio,
reinsurance brokerage services, the receipt of managing general agency fees from
policy holders and from other sources of revenue (collectively "Other Revenue
Sources"). We develop, market, and underwrite insurance products for consumers
predominantly in the personal residential homeowners lines of business and
perform substantially all insurance-related services for our Insurance Entities,
including risk management, claims management and distribution. Our Insurance
Entities offer insurance products through both appointed independent insurance
agents and through our online distribution channel. We currently sell insurance
policies in 19 states with Florida representing 83.3% of our direct premiums
written, with licenses to write insurance in two additional states. We seek to
produce an underwriting profit (defined as earned premium-net minus losses, LAE,
policy acquisition costs and other operating costs) over the long term, along
with growing our Other Revenue Sources.

Revenues

We generate revenue primarily from the collection of insurance premiums. Other
sources of revenue include: commissions paid by our reinsurers to our
reinsurance intermediary subsidiary BARC on reinsurance it places for the
Insurance Entities; policy fees collected from policyholders by our managing
general agent subsidiary, ERA (formerly Universal Risk Advisors, Inc.); and
financing fees charged to policyholders who choose to defer premium payments
reflected in other income. In addition, our subsidiary Alder receives fees from
the Insurance Entities for claims-handling services. The Insurance Entities are
reimbursed for these fees on claims that are subject to recovery under the
Insurance Entities' respective reinsurance programs. These fees, after expenses,
are recorded in the consolidated financial statements as an adjustment to LAE.
We also generate income by investing our assets.

The nature of our business tends to be seasonal during the year, reflecting
consumer behaviors in connection with the Florida residential real estate market
and the hurricane season. The amount of direct premiums written tends to be
highest in the second and third quarters of our fiscal year and lowest in the
first and fourth quarters.

Trends and Geographical Distribution

Florida Trends

We are currently working through a cycle to improve long-term rate adequacy and
earnings for the Insurance Entities by increasing rates and managing exposures,
while taking advantage of what we believe to be opportunities in a dislocated
market. The Florida personal lines homeowners' market currently can be
characterized as a "hard market", where insurance premium rates are escalating,
insurers are reducing coverages, and underwriting standards are tightening as
insurers closely monitor insurance rates and manage coverage capacity. Due to
conditions in the Florida market and factors more generally affecting the U.S.
and global reinsurance markets, reinsurance capacity in recent years has also
been subject to less favorable pricing and terms. These market forces decrease
competition among admitted insurers, and ultimately result in the increased use
of Citizens Property Insurance Corporation ("Citizens"), which was created to be
the State's residual property insurance market. In recent years, in response to
rising claims costs, increased reinsurance costs and deteriorating conditions in
the Florida residential market, most admitted market competitors have
implemented significant rate increases. Meanwhile, Citizens' rate increases are
limited by law, resulting in its policies, in a hard market, becoming priced
lower than admitted market policies. This causes Citizens to become viewed as a
desirable alternative to the admitted market as admitted market insurers manage
through the hard market challenges. Our Insurance Entities likewise have taken
and continue to take action to manage through this hard market by increasing
rates and prudently managing exposures while also seeking to maintain their
competitive position in the Florida market, supporting our current policyholders
and agents.

While addressing rate adequacy for the Insurance Entities, we continue to
experience increased costs for losses and LAE in the Florida market, where an
industry has developed around the solicitation, filing and litigation of
personal residential claims. These dynamics have been made worse by the
litigation financing industry, which in some cases funds these actions. In
addition, rising inflation, as seen in the cost of labor and material supplies,
has further escalated costs associated with the settlement of claims. These
conditions and the resulting increases in losses and LAE are chief contributing
factors for the rate increases in this market. Adverse actions by public
adjusters and lawyers have resulted in a pattern of continued increases in
year-over-year levels of represented claims, increases in purported claim
amounts, and increased demands for attorneys' fees. Active solicitation of
personal residential claims in Florida by policyholder representatives,
remediation companies and repair companies has led to an increase in the
frequency and severity of personal residential claims in Florida, exceeding
historical levels and levels seen in other jurisdictions. Information prepared
by the Florida Office of Insurance Regulation shows that claims in Florida are
litigated at a substantially disproportionate rate when compared to other
states. This is largely due to a Florida statute in effect prior to December 16,
2022, providing a one-way right of attorneys' fees against insurers which has,
when coupled with certain other statutes and judicial rulings, produced a legal
environment in Florida that encourages litigation, in many cases without regard
to the underlying merits of the claims. The one-way right to attorneys' fees
essentially means that unless an insurer's position is substantially upheld in
litigation, the insurer must pay the plaintiff's attorneys' fees in addition to
its own defense costs. This affects not only claims that are litigated to
resolution, but also the settlement discussions that take place with nearly all
litigated claims. This also affects a large number of claims from inception or
during the adjusting process as a substantial and growing percentage of
policyholders obtain representation early in the process, and sometimes even
before notifying insurers of their claims. These market conditions also add, and
will continue to add, complexity to efforts to efficiently and expeditiously
adjust claims. This is due to an increasing number of policyholders who have one
or more recent prior losses with the Insurance Entities or with other insurers,
which then require evaluation during subsequent claims and

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determinations regarding whether property has been repaired consistently with
the scope and amount of damage previously asserted.

The one-way right to attorney fees creates a nearly risk-free environment, and
incentive, for attorneys to pursue litigation against insurers. The Florida
legislature attempted to curtail these abuses through a series of law changes
beginning in 2019. However, the reforms passed in 2019 and thereafter have not
proven to be effective in reversing or even significantly moderating the trend
of increased losses and loss adjustments expenses and the resulting impact on
premiums for consumers. More recently, in December 2022, the Florida legislature
took more definitive steps to address the primary underlying causes of abuses in
the Florida market. The legislature eliminated the statutory one-way right to
attorneys' fees; prohibited assignments of post-loss benefits under insurance
policies; improved the usefulness of offers of judgment as a means of fostering
resolutions of disputed claims; made incremental adjustments to reduce Citizens'
competitiveness with the private market; and adopted several other related
measures. Governor Ron DeSantis signed the bill into law on December 16, 2022.
Because some of the changes will affect only future policies, the impact of the
new laws on claims and claims-related costs, including litigation, will not be
fully known for some time.

Despite our initiatives in implementing prior law changes and responding to
adverse claims behaviors and trends, our costs to settle claims in Florida have
increased for the reasons noted herein. For example, the Company continues to
adjust its estimate of expected losses and has increased its current year loss
estimates and increased estimates associated with prior years' claims. Over the
past three years, even as we have increased our estimates of prospective losses
each year, we have recorded adverse claim development on prior years' loss
reserves and further strengthened current year losses during the year to address
the increasing impact that Florida's market disruptions, as well as the impact
of rising costs of building materials and labor, have had on the claims process
and the establishment of reserves for losses and LAE. The full extent and
duration of these market disruptions and inflationary pressures are unknown and
still unfolding, and we will monitor the impact of such disruptions on the
recording and reporting of claim costs.

The Company has taken a series of steps over time to mitigate the financial
impact of these negative trends in the Florida market. We also have closely
monitored rate levels, especially in the Florida market, and have submitted rate
filings based upon evolving data. However, because rate filings rely upon past
loss and expense data and take time to develop, file and implement, we can
experience significant delays between identifying needed rate adjustments,
filing the associated rate changes, and ultimately collecting and earning the
resulting increased premiums. This is particularly the case in an era of rising
costs such as the current Florida market, in which the costs of losses and loss
adjustment expenses continue to increase due to Florida's outsized claims
litigation environment and inflationary pressure. In addition, the Company has
implemented several initiatives in its claims department in response to the
adverse market trends. We utilize our process called Fast Track, which is an
initiative to handle straightforward, meritorious claims as promptly as possible
to mitigate the adverse impacts that can be seen with claims that remain open
for longer periods. In addition, we increased our emphasis on subrogation to
reduce our net losses while also recovering policyholders' deductibles when
losses are attributable to the actions of others. We have an internal staff of
trained water remediation experts to address the extraordinary number of
purported water damage claims filed by policyholders and vendors. We developed a
specialized in-house unit for responding to the unique aspects of represented
claims, and we have substantially increased our in-house legal staff in an
effort to address the increase in litigated or represented claims as
cost-effectively as possible.

Additionally, we have taken steps to implement claim settlement rules associated
with the Florida legislation passed in 2019 and subsequently. Following
legislation adopted in Florida's December 2022 special session, we have analyzed
the changes and have initiated efforts to implement the new provisions that the
legislature intends will curtail abuses in the market. Although the recent law
changes mark the legislature's most definitive effort to find effective
solutions to Florida's market problems, it is too early to evaluate the extent
to which the changes will be successful or the time period over which any
benefits will materialize.

Summary of Rate Increases and Cost of Living Adjustments

In May 2022, the Company filed a rate increase with the FLOIR for an overall
14.9% rate increase for UPCIC on Florida personal residential homeowners' line
of business which became effective June 1, 2022, for new business and November
4, 2022, for renewals.

In addition, in November 2022, UPCIC filed a 3.7% rate increase on Florida
personal residential homeowners' line of business, effective February 15, 2023,
for new business and April 1, 2023, for renewals.

During 2022 inflation adjustments averaging 11.9% have been implemented. These
are adjustments to policy coverage amounts designed to facilitate the policies'
adherence to insurance-to-value requirements. The coverage adjustments provide a
degree of protection insureds have against inflationary pressures while also
resulting in additional premium to the Company to cover the increased claim
costs driven by inflation factors.

Changing Climate Conditions

Severe weather events over the last two decades underscore the unpredictability
of climate trends, and changing climate conditions have added to the frequency
and severity of natural disasters and created additional uncertainty as to
future trends and exposures. The insurance industry has experienced increased
catastrophe losses due to a number of potential causal factors, including, in
addition to weather/climate variability, aging infrastructure; more people
living in high-risk areas; population growth in areas with weaker enforcement of
building codes; urban expansion; an increase in the number of amenities included
in, and average size of, a home; and increased inflation, including as a result
of post-pandemic demand surge. Climate studies by government agencies, academic
institutions, catastrophe modeling organizations and other groups indicate that
we are
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experiencing, and are expected to continue to experience over time, an increase
in frequency and/or intensity of hurricanes, heavy precipitation events, flash
flooding, sea level rise, droughts, heat waves and wildfires. Understanding the
potential impacts of changing climate conditions is important to the Company's
business.

Geographical Distribution

Direct premiums written continue to increase across the states in which we
conduct business. As a result of our business strategy, rate changes and
disciplined underwriting initiatives, we have seen a decrease in policy count,
but an increase in in-force premium and total insured value in a majority of
states for the past two years. Direct premiums written for states outside of
Florida increased 8.7%, representing a $24.7 million increase during 2022.
Direct premiums written for Florida increased 10.8%, representing a $149.8
million increase during 2022. The following table provides direct premiums
written for Florida and other states for the years ended December 31, 2022 and
2021 (dollars in thousands):

                                                                                                                               Growth
                                                        For the Years Ended                                                Year Over Year
                                   December 31, 2022                          December 31, 2021
                          Direct Premiums                            Direct Premiums
State                         Written                  %                 Written                  %                     $                     %
Florida                   $   1,538,143                83.3  %       $   1,388,318                83.1  %       $      149,825                10.8  %
Other states                    307,643                16.7  %             282,934                16.9  %               24,709                 8.7  %
Grand total               $   1,845,786               100.0  %       $   1,671,252               100.0  %       $      174,534                10.4  %


We seek to prudently grow and generate long-term rate adequate premium in each
state where we offer policies. Our diversification strategy seeks to increase
business outside of Florida and to improve geographical distribution within
Florida.

The geographical distribution of our policies in force, premium in force and
total insured value across all states were as follows, as of December 31, 2022,
2021 and 2020 (dollars in thousands, rounded to the nearest thousand):

                                                    As of December 31, 2022
                      Policies                       Premium                     Total Insured
State                 In Force           %          In Force           %             Value             %
Florida              615,796           72.5  %    $ 1,547,383        83.4  %    $ 201,237,145        62.4  %
North Carolina        54,988            6.5  %         60,990         3.3  %       23,135,353         7.2  %
Georgia               35,174            4.2  %         53,250         2.9  %       17,684,518         5.5  %
Massachusetts         18,849            2.2  %         28,729         1.5  %       13,886,783         4.3  %
Virginia              20,123            2.4  %         24,622         1.3  %       12,691,444         3.9  %
New Jersey            17,965            2.1  %         23,551         1.3  %       12,434,136         3.9  %
Alabama               14,218            1.7  %         22,794         1.2  %        6,043,021         1.9  %
South Carolina        17,260            2.0  %         20,304         1.1  %        7,344,000         2.3  %
Indiana               14,441            1.7  %         18,804         1.0  %        5,885,207         1.8  %
Minnesota              9,545            1.1  %         18,100         1.0  %        5,456,394         1.7  %
Pennsylvania          11,179            1.3  %         13,700         0.7  %        5,645,993         1.7  %
Maryland               6,840            0.8  %          6,642         0.4  %        3,116,236         1.0  %
New York               3,897            0.5  %          5,963         0.3  %        2,912,117         0.9  %
Michigan               3,497            0.4  %          4,995         0.3  %        1,756,525         0.5  %
Delaware               1,939            0.2  %          2,645         0.1  %        1,220,586         0.4  %
Hawaii                 1,566            0.2  %          1,901         0.1  %          875,158         0.3  %
Illinois               1,057            0.1  %          1,435         0.1  %          588,925         0.2  %
New Hampshire            350            0.1  %            306           -  %          239,970         0.1  %
Iowa                     172              -  %            225           -  %           89,629           -  %
Total                848,856          100.0  %    $ 1,856,339       100.0  %    $ 322,243,140       100.0  %



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                                                    As of December 31, 2021
                      Policies                       Premium                     Total Insured
State                 In Force           %          In Force           %             Value             %
Florida              695,533           73.7  %    $ 1,395,476        83.1  %    $ 203,062,948        63.3  %
North Carolina        58,644            6.2  %         57,534         3.4  %       22,703,801         7.1  %
Georgia               41,097            4.4  %         53,956         3.2  %       19,057,338         5.9  %
Massachusetts         16,793            1.8  %         23,790         1.4  %       11,467,490         3.6  %
Virginia              23,306            2.5  %         21,069         1.3  %       13,854,648         4.3  %
Alabama               14,484            1.5  %         19,966         1.2  %        5,725,381         1.8  %
Indiana               17,744            1.9  %         19,018         1.1  %        6,810,107         2.1  %
Minnesota             11,934            1.2  %         18,216         1.1  %        6,372,221         2.0  %
New Jersey            14,844            1.6  %         18,054         1.1  %        9,523,904         3.0  %
South Carolina        17,563            1.8  %         17,976         1.1  %        6,860,210         2.1  %
Pennsylvania          13,930            1.5  %         14,688         0.9  %        6,528,352         2.0  %
Maryland               6,615            0.7  %          6,003         0.4  %        2,802,756         0.9  %
Michigan               3,476            0.4  %          4,572         0.3  %        1,585,940         0.5  %
New York               2,808            0.3  %          3,814         0.2  %        1,898,297         0.6  %
Delaware               1,819            0.2  %          2,316         0.1  %        1,061,987         0.3  %
Hawaii                 1,773            0.2  %          1,974         0.1  %          903,844         0.3  %
Illinois                 786            0.1  %          1,006           -  %          409,660         0.1  %
New Hampshire            369              -  %            301           -  %          235,154         0.1  %
Iowa                      75              -  %             92           -  %           34,396           -  %
Total                943,593          100.0  %    $ 1,679,821       100.0  %    $ 320,898,434       100.0  %




                                                    As of December 31, 2020
                      Policies                       Premium                     Total Insured
State                 In Force           %          In Force           %             Value             %
Florida              728,211           73.9  %    $ 1,252,916        82.4  %    $ 192,504,430        63.6  %
Georgia               46,678            4.7  %         57,251         3.8  %       20,141,751         6.7  %
North Carolina        62,849            6.4  %         55,307         3.6  %       21,500,109         7.1  %
Virginia              23,546            2.4  %         20,226         1.3  %       12,959,884         4.3  %
Massachusetts         15,090            1.5  %         20,161         1.3  %        9,507,917         3.1  %
Indiana               19,839            2.0  %         18,328         1.2  %        7,171,623         2.4  %
Minnesota             12,730            1.3  %         17,863         1.2  %        6,252,822         2.1  %
Alabama               13,632            1.4  %         17,409         1.2  %        4,953,449         1.6  %
South Carolina        17,877            1.8  %         16,886         1.1  %        6,297,270         2.1  %
Pennsylvania          17,183            1.7  %         14,540         1.0  %        7,394,773         2.4  %
New Jersey            11,576            1.2  %         12,915         0.9  %        6,684,386         2.2  %
Maryland               5,664            0.6  %          4,816         0.3  %        2,226,324         0.7  %
Michigan               3,494            0.4  %          4,290         0.3  %        1,478,595         0.5  %
New York               1,936            0.2  %          2,251         0.2  %        1,159,105         0.4  %
Hawaii                 2,031            0.2  %          1,983         0.1  %          901,401         0.3  %
Delaware               1,581            0.2  %          1,908         0.1  %          870,728         0.3  %
Illinois                 497            0.1  %            580           -  %          235,593         0.1  %
New Hampshire            409              -  %            312           -  %          238,121         0.1  %
Iowa                       7              -  %              7           -  %            2,774           -  %
Total                984,830          100.0  %    $ 1,519,949       100.0  %    $ 302,481,055       100.0  %



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KEY PERFORMANCE INDICATORS

The Company considers the measures and ratios in the following discussion to be
key performance indicators for its businesses. Management believes that these
indicators are helpful in understanding the underlying trends in the Company's
businesses. Some of these indicators are reported on a quarterly basis and
others on an annual basis. Please also refer to "Item 8-Note 2 (Summary of
Significant Accounting Policies)" for definitions of certain other terms we use
when describing our financial results.

These indicators may not be comparable to other performance measures used by the
Company's competitors and should only be evaluated together with our
consolidated financial statements and accompanying notes.

In addition to our key performance indicators and other financial measures
presented in accordance with United States Generally Accepted Accounting
Principles ("GAAP"), management also uses certain non-GAAP financial measures to
evaluate the Company's financial performance and the overall growth in value
generated for the Company's common shareholders. Management believes that
non-GAAP financial measures, which may be defined differently by other
companies, help to explain the Company's results to investors in a manner that
allows for a more complete understanding of the underlying trends in the
Company's business. The non-GAAP measures should not be viewed as a substitute
for those determined in accordance with GAAP. The calculation of these key
financial measures including the reconciliation of non-GAAP measures to the
nearest GAAP measure are found below under "-Non-GAAP Financial Measures."

Definitions of Key Performance Indicators and GAAP and Non-GAAP Measures

Adjusted book value per common share - is a non-GAAP measure, that is calculated
as adjusted common stockholders' equity divided by common shares outstanding at
the end of the period. Management believes this metric is meaningful, as it
allows investors to evaluate underlying book value growth by excluding the
impact of unrealized gains and losses due to interest rate volatility.

Adjusted common stockholders' equity - is a non-GAAP measure, that is calculated
by GAAP common stockholders' equity, excluding accumulated other comprehensive
income (loss). Management believes this metric is meaningful, as it allows
investors to evaluate underlying growth in stockholders' equity by excluding the
impact of unrealized gains and losses due to interest rate volatility.

Adjusted net income (loss) attributable to common stockholders - is a non-GAAP
measure, that is calculated by GAAP net income (loss) attributable to common
stockholders, excluding net realized gains (losses) on investment and net
changes in unrealized gains (losses) of equity securities, net of tax.
Management believes this metric is meaningful, as it allows investors to
evaluate underlying profitability and enhances comparability across periods, by
excluding items that are heavily impacted by investment market fluctuations and
other economic factors and are not indicative of operating trends.

Adjusted operating income (loss) - is a non-GAAP measure, that is computed by
GAAP operating income (loss), excluding net realized gains (losses) on
investment and net changes in unrealized gains (losses) of equity securities.
Management believes this metric is meaningful, as it allows investors to
evaluate underlying profitability and enhances comparability across periods, by
excluding items that are heavily impacted by investment market fluctuations and
other economic factors and are not indicative of operating trends.

Adjusted operating income (loss) margin - is a non-GAAP measure, which is
computed by adjusted operating income (loss) divided by core revenue. Management
believes this metric is meaningful, as it allows investors to evaluate
underlying profitability and enhances comparability across periods, by excluding
items that are heavily impacted by investment market fluctuations and other
economic factors and are not indicative of operating trends.

Adjusted return on common equity (Adjusted "ROCE") - is a non-GAAP measure, that
is calculated by actual or annualized adjusted net income attributable to common
stockholders divided by average adjusted common stockholders' equity, with the
denominator excluding current period income statement net realized gains
(losses) on investments and net changes in unrealized gains (losses) of equity
securities, net of tax. Management believes this metric is meaningful, as it
allows investors to evaluate underlying profitability and enhances comparability
across periods, by excluding items that are heavily impacted by investment
market fluctuations and other economic factors and are not indicative of
operating trends.

Book Value Per Common Share - total stockholders' equity, adjusted for preferred
stock liquidation, divided by the number of common shares outstanding as of a
reporting period. Book value per common share is the excess of assets over
liabilities at a reporting period attributed to each share of stock. Changes in
book value per common share informs shareholders of retained equity in the
Company on a per share basis which may assist in understanding market value
trends for the Company's stock.

Combined Ratio - the combined ratio is a measure of underwriting profitability
for a reporting period and is calculated by dividing total operating costs and
expenses (which is made up of losses and LAE and general and administrative
expenses) by premiums earned, net, which is net of ceded premiums earned.
Changes to the combined ratio over time provide management with an understanding
of costs to operate its business in relation to net premiums it is earning and
the impact of rate, underwriting and other business management actions on
underwriting profitability. A combined ratio below 100% indicates underwriting
profit; a combined ratio above 100% indicates underwriting losses.
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Core Loss Ratio - a common operational metric used in the insurance industry to
describe the ratio of current accident year expected losses and LAE to premiums
earned. Core loss ratio is an important measure identifying profitability trends
of premiums in force. Core losses consists of all other losses and LAE,
excluding weather events beyond those expected and prior years' reserve
development. The financial benefit from the management of claims, including
claim fees ceded to reinsurers, is recorded in the consolidated financial
statements as a reduction to core losses.

Core revenue - is a non-GAAP measure, that is calculated by total GAAP revenue,
excluding net realized gains (losses) on investments and net changes in
unrealized gains (losses) of equity securities. Management believes this metric
is meaningful, as it allows investors to evaluate underlying revenue trends and
enhances comparability across periods, by excluding items that are heavily
impacted by investment market fluctuations and other economic factors and are
not indicative of operating trends.

Debt-to-Equity Ratio - long-term debt divided by stockholders' equity. This
ratio helps management measure the amount of financing leverage in place in
relation to equity and future leverage capacity.

Debt-to-Total Capital Ratio - long-term debt divided by the sum of total
stockholders' equity and long-term debt (often referred to as total capital
resources). This ratio helps management measure the amount of financing leverage
in place (long-term debt) in relation to total capital resources and future
leverage capacity.

Diluted adjusted earnings per common share - is a non-GAAP measure, which is
calculated by adjusted net income available to common stockholders divided by
weighted average diluted common shares outstanding. Management believes this
metric is meaningful, as it allows investors to evaluate underlying revenue
trends and enhances comparability across periods, by excluding items that are
heavily impacted by investment market fluctuations and other economic factors
and are not indicative of operating trends.

Direct Premiums Written ("DPW") - reflects the total value of policies issued
during a period before considering premiums ceded to reinsurers. Direct premiums
written, comprised of renewal premiums, endorsements, and new business, is
initially recorded as unearned premium in the balance sheet which is then earned
pro-rata over the next year or remaining policy term. Direct premiums written
reflects current trends in the Company's sale of property and casualty insurance
products and amounts that will be recognized as earned premiums in the future.

DPW (Florida) - includes only DPW in the state of Florida. This measure allows
management to analyze growth in our primary market and is also a measure of
business concentration risk.

Expense Ratio (Including Policy Acquisition Cost Ratio and Other Operating Cost
Ratio) - calculated as general and administrative expenses as a percentage of
premiums earned, net. General and administrative expenses is comprised of policy
acquisition costs and other operating costs, which includes such items as
underwriting costs, facilities, and corporate overhead. The expense ratio,
including the sub-expense ratios of policy acquisition cost ratio and other
operating cost ratio, are indicators to management of the Company's cost
efficiency in acquiring and servicing its business and the impact of expense
items to overall profitability.

Losses and Loss Adjustment Expense Ratio or Loss and LAE Ratio - a measure of
the cost of claims and claim settlement expenses incurred in a reporting period
as a percentage of premiums earned in that same reporting period. Losses and LAE
incurred in a reporting period includes both amounts related to the current
accident year and prior accident years, if any, referred to as development.
Ultimate losses and LAE are based on actuarial estimates with changes in those
estimates recognized in the period the estimates are revised. Losses and LAE
consist of claim costs arising from claims occurring and settling in the current
period, an estimate of claim costs for reported but unpaid claims, an estimate
of unpaid claim costs for incurred-but-not-reported claims and an estimate of
claim settlement expenses associated with reported and unreported claims which
occurred during the reporting period. The loss and LAE ratio can be measured on
a direct basis, which includes losses and LAE divided by direct earned premiums,
or on a net basis, which includes losses and LAE after amounts have been ceded
to reinsurers divided by net earned premiums (i.e., direct premium earned less
ceded premium earned). The net loss and LAE ratio is a measure of underwriting
profitability after giving consideration to the effect of reinsurance. Trends in
the net loss and LAE ratio are an indication to management of current and future
profitability.

Monthly Weighted Average Renewal Retention Rate - measures the monthly average
of policyholders that renew their policies over the period of a calendar year.
This measure allows management to assess customer retention.

Premiums Earned, Net - the pro-rata portion of current and previously written
premiums that the Company recognizes as earned premium during the reporting
period, net of ceded premium earned. Ceded premiums are premiums paid or payable
by the Company for reinsurance protection. Written premiums are considered
earned and are recognized pro-rata over the policy coverage period. Premiums
earned, net is a measure that allows management to identify revenue trends.

Policies in Force - represents the number of active policies with coverage in
effect as of the end of the reporting period. The change in the number of
policies in force is a growth measure and provides management with an indication
of progress toward achieving strategic objectives. Inherent seasonality in our
business makes this measure more useful when comparing each quarter's balance to
the same quarter in prior years.
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Premium in Force - is the amount of the annual direct written premiums
previously recorded by the Company for policies which are still active as of the
reporting date. This measure assists management in measuring the level of
insured exposure and progress toward meeting revenue goals for the current year,
and provides an indication of business available for renewal in the next twelve
months. Inherent seasonality in our business makes this measure more useful when
comparing each quarter's balance to the same quarter in prior years.

Return on Average Common Equity ("ROCE") - calculated by actual net income
(loss) attributable to common stockholders divided by average common
stockholders' equity. ROCE is a capital profitability measure of how efficiently
management creates profits.

Total Insured Value - represents the amount of insurance limits available on a
policy for a single loss based on all policies active as of the reporting date.
This measure assists management in measuring the level of insured exposure.

Unearned Premiums - represents the portion of direct premiums corresponding to
the time period remaining on an insurance policy and available for future
earning by the Company. Trends in unearned premiums generally indicate
expansion, if growing, or contraction, if reducing, which are important
indicators to management. Inherent seasonality in our business makes this
measure more useful when comparing each quarter's balance to the same quarter in
prior years.

Weather events - an estimate of losses and LAE from weather events occurring
during the current accident year that exceed initial estimates of expected
weather events when establishing the core loss ratio for each accident year.
This metric informs management of factors impacting overall current year
profitability.

REINSURANCE

Reinsurance enables our Insurance Entities to limit potential exposures to
catastrophic events. Reinsurance contracts are typically classified as treaty or
facultative contracts. Treaty reinsurance provides coverage for all or a portion
of a specified group or class of risks ceded by the primary insurer, while
facultative reinsurance provides coverage for specific individual risks. Within
each classification, reinsurance can be further classified as quota share or
excess of loss. Quota-share reinsurance is where the primary insurer and the
reinsurer share proportionally or pro-rata in 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 excess of an agreed upon amount or
retention.

Developing and implementing our reinsurance strategy to adequately protect our
balance sheet and Insurance Entities in the event of one or more catastrophes
while maintaining efficient reinsurance costs has been a key strategic priority
for us. In order to limit the Insurance Entities' potential exposure to
catastrophic events, we purchase significant reinsurance from third-party
reinsurers and the Florida Hurricane Catastrophe Fund ("FHCF"). The Florida
Office of Insurance Regulation ("FLOIR") requires the Insurance Entities, like
all residential property insurance companies doing business in Florida, to have
a certain amount of capital and reinsurance coverage in order to cover losses
upon the occurrence of a single catastrophic event and a series of catastrophic
events occurring in the same hurricane season. The Insurance Entities'
respective 2022-2023 reinsurance programs meet the FLOIR's requirements, which
are based on, among other things, successfully demonstrating cohesive and
comprehensive reinsurance programs that protect the policyholders of our
Insurance Entities as well as satisfying a series of stress test catastrophe
loss scenarios based on past historical events. Similarly, the Insurance
Entities' respective 2022-2023 reinsurance programs meet the stress test and
review requirements of Demotech, Inc., for maintaining Financial Stability
Ratings® of A (Exceptional) and of Kroll for maintaining insurer financial
strength ratings of "A-".

We believe the Insurance Entities' retentions under their respective reinsurance
programs are appropriate and structured to protect policyholders. We test the
sufficiency of the reinsurance programs by subjecting the Insurance Entities'
personal residential exposures to statistical testing using a third-party
hurricane model, RMS RiskLink v18.1 (Build 1945). This model combines
simulations of the natural occurrence patterns and characteristics of
hurricanes, tornadoes, earthquakes and other catastrophes with information on
property values, construction types and occupancy classes. The model outputs
provide information concerning the potential for large losses before they occur,
so companies can prepare for their financial impact. Furthermore, as part of our
operational excellence initiatives, we continually look to enable new technology
to refine our data intelligence on catastrophe risk modeling.

Effective June 1, 2022, the Insurance Entities entered into multiple reinsurance
agreements comprising our 2022-2023 reinsurance program. See "Item 1-Note 4
(Reinsurance)."

UPCIC's 2022-2023 Reinsurance Program

•First event All States retention of $45 million.

•All States first event tower extends to $3.012 billion with no co-participation
in any of the layers, no limitation on loss adjustment expenses for the
non-catastrophe bond Cosaint Re Pte. Ltd. traditional reinsurance and no
accelerated deposit premiums.

•Assuming a first event completely exhausts the $3.012 billion tower, the second
event exhaustion point would be $1.183 billion.

•Full reinstatement available on $1.138 billion of the $1.288 billion of
non-FHCF first event catastrophe coverage for guaranteed second event coverage.
For all layers purchased between $111 million and the projected FHCF retention,
to the extent that all of our coverage or a portion thereof is exhausted in a
catastrophic event and reinstatement premium
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is due, we have purchased enough reinstatement premium protection ("RPP") limit
to pay the premium necessary for the reinstatement of these coverages.

•First event layer of 100% of $66 million in excess of $45 million established
by UIH in a captive insurance arrangement. While the Company retains the risk
that otherwise would be transferred to third party-reinsurers for this layer,
the additional risk is substantially offset by the savings in premiums that
would otherwise have been paid to third-party reinsurers.

•Specific 2nd event private market excess of loss coverage of $66 million in
excess of $45 million sitting behind captive arrangement.

•Specific 3rd and 4th event private market catastrophe excess of loss coverage
of $86 million in excess of $25 million provides frequency protection for
multiple events during the treaty period including a $20 million reduction in
retention for a 3rd and 4th event.

•For the FHCF Reimbursement Contracts effective June 1, 2022, UPCIC has
continued the election of the 90% coverage level. We estimate the total
mandatory FHCF layer will provide approximately $1.679 billion of coverage for
UPCIC, which inures to the benefit of the open market coverage secured from
private reinsurers and Cosaint Re Pte. Ltd.

•To further insulate for future years, UPCIC has secured $383 million of
catastrophe capacity with contractually agreed limits that extend coverage to
include the 2022 and 2023 wind seasons and $277 million of the $383 million
extends through the 2024 wind season and is all capacity which sits below the
Florida Hurricane Catastrophe Fund. UPCIC's catastrophe bond, secured leading up
to the 2021-2022 renewal, Cosaint Re Pte. Ltd, continues to provide one limit of
$150 million in this year's program and it may also include the 2023 wind
season, depending on loss activity in the 2022 wind season.

Reinsurers

The table below provides the A.M. Best and S&P financial strength ratings for
each of the largest rated third-party reinsurers in UPCIC's 2022-2023
reinsurance program:

            Reinsurer                                         A.M. Best       S&P
            Allianz Risk Transfer AG. Bermuda Branch             A+           AA-
            Chubb Tempest Reinsurance Ltd.                       A++          AA
            Everest Re                                           A+           A+
            Munich Re                                            A+           AA-
            Renaissance Reinsurance Ltd.                         A+           A+
            Various Lloyd's of London Syndicates                  A           A+
            Florida Hurricane Catastrophe Fund (1)               N/A          N/A

(1)No rating is available, because the fund is not rated.

APPCIC's 2022-2023 Reinsurance Program

•First event All States retention of $3.5 million.

•All States first event tower of $50.5 million with no co-participation in any
of the layers, no limitation on loss adjustment expenses and no accelerated
deposit premiums.

•Full reinstatement available for all private market first event catastrophe
layers for guaranteed second event coverage. For the layer purchased between
$3.5 million and the projected FHCF retention, to the extent that all of our
coverage or a portion thereof is exhausted in a catastrophic event and
reinstatement premium is due, we have purchased enough RPP limit to pay the
premium necessary for the reinstatement of this coverage.

•APPCIC also purchases extensive multiple line excess per risk reinsurance with
various reinsurers due to the high-value risks it insures in both the personal
residential and commercial multiple peril lines of business. Under this multiple
line excess per risk contract, APPCIC has coverage of $8.5 million in excess of
$0.5 million ultimate net loss for each risk and each property loss, and $1
million in excess of $0.3 million for each casualty loss. A $19.5 million
aggregate limit applies to the term of the contract for property-related losses
and a $2.0 million aggregate limit applies to the term of the contract for
casualty-related losses. This contract also contains a profit-sharing feature if
specific performance measures are met.

•For the FHCF Reimbursement Contracts effective June 1, 2022, APPCIC has
continued the election of the 90% coverage level. We estimate the total
mandatory FHCF layer will provide approximately $24.2 million of coverage for
APPCIC, which inures to the benefit of the open market coverage secured from
private reinsurers.
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Reinsurers

The table below provides the A.M. Best and S&P financial strength ratings for
each of the largest rated third-party reinsurers in APPCIC's 2022-2023
reinsurance program:

              Reinsurer                                     A.M. Best       S&P
              Chubb Tempest Reinsurance Ltd.                   A++          AA
              DaVinci Reinsurance Limited                       A           A+
              Lancashire Insurance Company Limited              A           A-
              Renaissance Reinsurance Ltd.                     A+           A+
              Various Lloyd's of London Syndicates              A           A+
              Florida Hurricane Catastrophe Fund (1)           N/A          N/A

(1)No rating is available, because the fund is not rated.

The cost of the 2022-2023 reinsurance programs for UPCIC and APPCIC is projected
to be $696 million, prior to any potential reinstatement premiums due and
represents approximately 37.6% of estimated direct premium earned for the
12-month treaty period for UPCIC and APPCIC.