United Property & Casualty Says It Is Exploring Potential Sale or Merger

United Insurance coverage Holdings Corp., father or mother firm of considered one of Florida’s largest property insurers – and one which has seen heavy losses within the final two years – introduced that its board of administrators is now exploring a variety of choices to lift capital, together with the sale of the corporate or merger with one other.

Different choices embrace “subsidiary divestiture, formation of a brand new Florida-domiciled reciprocal change, in addition to the sale of fairness, surplus notes or different financing or strategic transactions,” UPC Insurance coverage stated in a information launch posted Wednesday.

The corporate additionally stated it has retained Insurance coverage Advisory Companions, an funding banking and consulting agency as its monetary advisor, and Debevoise & Plimpton, a global regulation agency, as its authorized counsel to help within the evaluate course of.

The bulletins fueled hypothesis that the insurer, which till just lately held greater than 180,000 insurance policies in Florida, is in worse monetary form than anticipated, regardless of important steps that firm leaders have taken within the final 12 months. A sale or merger might convey hundreds of thousands of {dollars} in contemporary capital, much like the restructuring measures adopted by Florida-based FedNat Insurance coverage Co. in Might.

FedNat, after massive storm losses in Louisiana, agreed to a restructuring consent order with Florida regulators, shifting hundreds of insurance policies to a subsidiary, Monarch Nationwide Insurance coverage. Hale Partnership Capital Administration then took a majority stake in Monarch and invested $15 million into it.

The publicly traded UPC reported a $33 million loss for the primary quarter of 2022, on the heels of $60 million in unfavorable web earnings for 2021 and $95 million in losses for the 12 months earlier than, thanks partly to large climate harm in Louisiana. UPC’s mixed ratio topped 120 final 12 months, down barely from the earlier 12 months, however significantly larger than in 2017.

Within the final 9 months, the St. Petersburg-based insurer has undertaken some main efforts to stem the losses. In December, UPC agreed to promote its private strains in Georgia, North Carolina and South Carolina to HCI Group Inc. In January, UPC stopped writing new home-owner enterprise in Florida whereas asking for a fee enhance for some varieties of insurance policies.

In April, the corporate stated it was merging two subsidiaries, Journey Insurance coverage Co. and American Coastal, and would distribute a lot of Journey’s capital to different subsidiaries.

In June, Wright Nationwide Flood Insurance coverage stated it should take over UPC’s flood insurance coverage ebook of enterprise.

UPC firm officers couldn’t be reached for remark Wednesday night and Thursday morning. The corporate’s information launch notes that it was based in 1999 and continues to jot down some insurance policies in Florida, Louisiana, New York and Texas. It additionally wrote in Georgia, South Carolina, and North Carolina, however renewal rights there have been bought and all premiums and losses are ceded, the corporate stated.

The Thursday information launch urged that additional particulars a few potential sale will not be accessible anytime quickly.

“There will be no assurance that this course of will consequence within the firm pursuing a selected transaction and the corporate doesn’t intend to reveal additional developments except and till it determines that additional disclosure is acceptable or obligatory,” UPC stated.

United Insurance coverage Holdings inventory was promoting for $1.37 a share Thursday morning, up barely from the day earlier than, however significantly decrease than a 12 months in the past.

Matters
Mergers & Acquisitions
Property Casualty
Property
Casualty