Property and casualty insurance holding company United (UPC Insurance) has reported a net loss of $33.1 million for the first quarter of 2022, compared to a loss of $17.8 million for the same period last year.
The company attributed the result to actions taken in its ‘transition year’ last year, as well as to inflation and litigation issues.
Total Q1 revenues decreased by 36.7% to $102.4 million due to decreased gross written premiums, partially offset by lower loss and LAE incurred, driven by lower unfavourable prior year loss development in 2022 related to both catastrophe and non-catastrophe losses.
United’s combined ratio deteriorated by 17.2 percentage points to 144.4%, of which 28.4% was attributable to current year catastrophe losses.
Reinsurance costs as a percentage of earned premium also moved from 59.1% in Q1 of last year to 68.4% in Q1 2022.
United said the increase was driven by two additional quota share agreements, the first of which has a cession rate of 25% and covers United Property and Casualty Insurance Company and Family Security Insurance Company, Inc.’s non-catastrophe losses on policies in-force at December 31, 2021 in Florida, Texas and Louisiana.
The second agreement is a quota share agreement with HCPCI and TypTap Insurance Company effective December 31, 2021 through May 31, 2022, which provides 85% reinsurance coverage on in-force, new and renewal policies in Georgia, North Carolina and South Carolina.
“First quarter results reflect the aggressive de-risking and deleveraging activities we’ve taken in personal lines over the last 18 months, with gross earned premium down by 10% and net earned premium down by 30%,” said Dan Peed, CEO of UPC Insurance.
“However, while claims frequency was in line with expectations, claims severity was elevated due to inflation and excessive litigation not yet fully impacted by Senate Bill 76,” he explained.
“With recent rate increases yet to earn through the portfolio, we experienced a first quarter underwriting loss in personal lines. Our commercial lines business performed well and continues to grow. We continue to take decisive corrective actions to reduce expenses, increase revenues, and execute on risk selection.”
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