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UNITED INSURANCE HOLDINGS CORP. (NASDAQ:UIHC) Files An 8-K Other Events

UNITED INSURANCE HOLDINGS CORP. (NASDAQ:UIHC) Files An 8-K Other Events

Item 8.01 Other Events.

Effective June 1, 2017, UPC Insurance, through its wholly owned
insurance subsidiaries American Coastal Insurance Company, United
Property and Casualty Insurance Company, Family Security Insurance
Company, and Interboro Insurance Company, entered into reinsurance
agreements with private reinsurers and with the Florida State Board
of Administration (SBA), which administers the Florida Hurricane
Catastrophe Fund (FHCF). These agreements provide coverage for
catastrophe losses from named or numbered windstorms and
earthquakes in all states in which UPC Insurance operates, except
for the FHCF agreement, which only provides coverage in Florida
against storms that the National Hurricane Center designates as
hurricanes.
Highlights of the coverage within these contracts include:
More frequency and severity protection than in any prior
year, with an overall program exhaustion point of nearly $2.8
billion;
Sufficient coverage for a single 1-in-400 year event (AIR
Touchstone v3.1 Standard Event Set);
Sufficient coverage for a 1-in-100 year event followed by a
1-in-50 year event in the same season;
Group retention of $55 million for a first event and $30
million for a second and subsequent events including a $5
million retention related to our captive reinsurer BlueLine
Cayman Holding; this represents approximately 11% of group
equity for a first event, lower than in any prior year for
UPC Insurance;
Realized cost synergies by placing a combined program with
American Coastal that surpassed UPC Insurance’s previously
stated goal of $20 million annually;
Coverage from 43 reinsurers with 70% of the open market limit
placed on a fully collateralized basis to mitigate credit
risk; carriers providing uncollateralized limit have minimum
A.M. Best financial strength ratings of A-;
Approximately $87.5 million of multi-year limit; and
Coverage expanded to include the entire life of a hurricane
in lieu of an hours clause.
For the FHCF Reimbursement Contracts effective June 1, 2017, UPC
Insurance has elected a 45% coverage for all its insurance
subsidiaries with Florida exposure. We estimate the total mandatory
FHCF layer will provide approximately $789 million of aggregate
coverage with varying retentions and limits among the three FHCF
contracts that all inure to the benefit of the open market coverage
secured from private reinsurers.
The $1.9 billion of aggregate open market catastrophe reinsurance
coverage is structured into multiple layers with a cascading
feature such that all layers drop down as layers below them are
exhausted. Any remaining unused layer protection drops down for
subsequent events until exhausted, ensuring there are no potential
gaps in coverage up to the $2.8 billion program exhaustion point.
The total cost of the 2017-18 catastrophe reinsurance program is
approximately $314.2 million.
This Item 8.01 may contain forward-looking statements about our
reinsurance program and related attachment point, total coverage
and costs. These statements are subject to the Private Securities
Litigation Reform Act of 1995 and are based on management’s
estimates, assumptions and projections. These forward-looking
statements can generally be identified as such because the context
of the statement includes words such as estimate, expect or words
of similar nature. The actual changes to our reinsurance program
and related attachment point, total coverage and costs may differ
materially from those discussed in this report, depending on
FHCF’s capacity to pay claims and related adjustment provisions in
our agreements with the SBA and private reinsurers.

About UNITED INSURANCE HOLDINGS CORP. (NASDAQ:UIHC)
United Insurance Holdings Corp. is a property and casualty insurance holding company that sources, writes and services residential property and casualty insurance policies using a network of agents and a group of insurance subsidiaries. The Company’s insurance subsidiary is United Property & Casualty Insurance Company. Its other subsidiaries include United Insurance Management, L.C., the managing general agent that manages substantially all aspects of United Property & Casualty Insurance Company’s business; Skyway Claims Services, LLC, which provides services to its insurance affiliate; UPC Re, which provides a portion of the reinsurance protection purchased by its insurance affiliate, and Family Security Holdings, LLC (FSH). The Company’s principal product is homeowners’ insurance, which it offers in Connecticut, Florida, Georgia, Hawaii, Louisiana, Massachusetts, New Jersey, North Carolina, Rhode Island, South Carolina and Texas. UNITED INSURANCE HOLDINGS CORP. (NASDAQ:UIHC) Recent Trading Information
UNITED INSURANCE HOLDINGS CORP. (NASDAQ:UIHC) closed its last trading session up +0.15 at 15.98 with 160,682 shares trading hands.

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