UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549  
_______________________

FORM 10-Q/A10-Q
_______________________

(Amendment No. 1)
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 20232024
OR
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________

Commission File Number 001-35761 
____________________
American Coastal Insurance Corporation
(Exact Name of Registrant as Specified in its Charter)
Delaware75-3241967
(State or Other Jurisdiction of
Incorporation or Organization)
(IRS Employer Identification Number)
800 2nd Avenue S.33701
St. Petersburg, Florida
(Address of Principle Executive Offices)(Zip Code)
727-895-7737727-633-0851
(Registrant's telephone number, including area code)
United Insurance Holdings Corp.
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common Stock, $0.0001 par value per shareACICNasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filerEmerging growth company
Non-accelerated filerSmaller reporting company
If an emerging growth company, indicate by check mark if the registrant has elected to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. £
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐   No  R
As of May 15, 2023, 43,287,5733, 2024, 47,828,491 shares of common stock, par value $0.0001 per share, were outstanding.




EXPLANATORY NOTE

American Coastal Insurance Corporation (formerly known as United Insurance Holdings Corp.) (the “Company”) is filing this amendment to its Quarterly Report on Form 10-Q (the “Amended Report”) for the three months ended March 31, 2023 originally filed with the Securities and Exchange Commission (“SEC”) on May 19, 2023 (the “Original Report”). The purpose of this Amended Report is to restate the Company’s unaudited condensed consolidated financial statements for the three months ended March 31, 2023 (the “First Quarter 2023 10-Q”). Except as described below, no other information included in the Original Report is being amended or updated by this Amendment and this Amendment does not purport to reflect any information or events subsequent to the Original Form 10-Q.

Restatement Background

The Company has identified certain errors related to the reporting of the discontinued operations for the previously issued unaudited condensed consolidated financial statements for the three months ended March 31, 2023, as included in the Original Report, which errors had the effect of understating the net income for the three months ended March 31, 2023 by approximately $6.4 million. These errors were discovered in the course of preparing the Company’s interim financial statements for the fiscal quarter ended June 30, 2023, and included errors in the Company’s accounting for income tax expense primarily relating to the deconsolidation of the Company’s former subsidiary, United Property & Casualty Insurance Company.

As a result, on August 17, 2023, the Company’s management determined that the Company’s previously issued unaudited condensed financial statements as of and for the quarterly periods ended March 31, 2023, should no longer be relied upon solely as a result of the above-described errors.

Restatement

This Amended Report includes restated unaudited interim financial information for the quarterly period ended March 31, 2023.

This Amended Report also amends and restates the following items included in the Original Report as appropriate to reflect the restatement and revision of the relevant periods: Part I — Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation; Part I — Item 4. Controls and Procedures; Part II — Item 1A. Risk Factors and Part II — Item 6. Exhibits.

In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company is also including with this Amended Report currently dated certifications of the Company’s Chief Executive Officer and Chief Financial Officer (attached as Exhibits 31.1, 31.2, 32.1, and 32.2).

Except as discussed above and as further described in the Notes to the unaudited condensed consolidated financial statements, the Company has not modified or updated the disclosures presented in this Amended Report. Accordingly, this Amended Report does not reflect events occurring after the Original Report or modify or update those disclosures affected by subsequent events. Information not affected by the restatement is unchanged and reflects disclosures made at the time of the filing of the Original Report.

Control Considerations

In connection with the restatement, management has reassessed the effectiveness of the Company’s internal control over financial reporting. Based on this assessment, the Company identified a material weakness in its internal control over financial reporting due to a design deficiency in controls related to the review of significant unusual transactions, including the impact to income tax expense from those transactions, resulting in the conclusion by our principal executive officer and principal financial officer, that the internal control over financial reporting and disclosure controls and procedures were not effective as of March 31, 2023. Management has begun to take steps towards remediating the material weakness in the Company’s internal control over financial reporting. For additional information related to the material weakness in internal control over financial reporting and the related remedial measures, see “Part II – Item 4. Controls and Procedures.”


UNITEDAMERICAN COASTAL INSURANCE HOLDINGS CORP.CORPORATION
PART I. FINANCIAL INFORMATION
Item 1. Restated Financial Statements
    Restated    Condensed Consolidated Balance Sheets (Unaudited)
    Restated    Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
    Restated    Condensed Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited)
    Restated    Condensed Consolidated Statements of Cash Flows (Unaudited)
    Notes to Restated Unaudited Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
Signatures
 
Throughout this Quarterly Report on Form 10-Q (Form 10-Q), we present amounts in all tables in thousands, except for share amounts, per share amounts, policy counts or where more specific language or context indicates a different presentation. In the narrative sections of this Form 10-Q, we show full values rounded to the nearest thousand.
2

UNITEDAMERICAN COASTAL INSURANCE HOLDINGS CORP.CORPORATION
FORWARD-LOOKING STATEMENTS

This Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements about anticipated growth in revenues, gross written premium, earnings per share, estimated unpaid losses on insurance policies, investment returns, and diversification and expectations about our liquidity, our ability to meet our investment objectives, our ability to manage and mitigate market risk with respect to our investments and our ability to continue as a going concern. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “endeavor,” “project,” “believe,” “plan,” “anticipate,” “intend,” “could,” “would,” “estimate,” or “continue” or the negative variations thereof or comparable terminology are intended to identify forward-looking statements. These statements are based on current expectations, estimates and projections about the industry and market in which we operate, and management's beliefs and assumptions. Forward-looking statements are not guarantees of future performance and involve certain known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. The risks and uncertainties include, without limitation:

our exposure to catastrophic events and severe weather conditions;
the regulatory, economic and weather conditions present in Florida and New York the states in which we are most concentrated;write business;
our ability to cultivate and maintain agent relationships, particularly our relationship with AmRisc, LLC;LLC (AmRisc);
the possibility that actual claims incurred may exceed our loss reserves for claims;
assessments charged by various governmental agencies;
our ability to implement and maintain adequate internal controls over financial reporting;reporting, including our ability to remediate any existing material weakness in our internal controls over financial reporting and the timing of any such remediation, as well as our ability to reestablish effective internal controls over financial reporting and disclosure controls and procedures;
our ability to maintain information technology and data security systems, and to outsource relationships;
our reliance on key vendor relationships, and the ability of our vendors to protect the personally identifiable information of our customers, claimants or employees;
our ability to attract and retain the services of senior management;
risks and uncertainties relating to our acquisitions, mergers, dispositions and other strategic transactions;
risks associated with investments in which we share ownership or management with third parties;
our ability to generate sufficient cash to service all of our indebtedness and comply with covenants and other requirements related to our indebtedness;
our ability to maintain our market share;
changes in the regulatory environment present in the states in which we operate;
the impact of new federal or state regulations that affect the insurance industry;
the cost, viability and availability of reinsurance;
our ability to collect from our reinsurers or others on our reinsurance claims;
dependence on investment income and the composition of our investment portfolio and related market risks;
the possibility of the pricing and terms for our products to decline due to the historically cyclical nature of the property and casualty insurance and reinsurance industry;
the outcome of litigation pending against us, including the terms of any settlements;
downgrades in our financial strength or stability ratings;
the impact of future transactions of substantial amounts of our common stock by us or our significant stockholders on our stock price;
our ability to meet the standards for continued listing on Nasdaq;
substantial doubt about our ability to continue as a going concern, including the impact on future financing and reinsurance coverage;
our ability to pay dividends in the future, which may be constrained by our holding company structure;
the ability of our subsidiaries to pay dividends in the future, which may affect our liquidity and our ability to meet our obligations;
the ability of R. Daniel Peed and his affiliates to exert significant control over us due to substantial ownership of our common stock, subject to certain restrictive covenants that may restrict our ability to pursue certain opportunities;
the impact of transactions by R. Daniel Peed and his affiliates on the price of our common stock;
provisions in our charter documents that may make it harder for others to obtain control of us; and
other risks and uncertainties described in the section entitled "Risk Factors" in Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 20222023 and in Part II, Item 1A of this Form 10-Q.

We caution you not to rely on these forward-looking statements, which are valid only as of the date they were made. Except as may be required by applicable law, we undertake no obligation to update or revise any forward-looking statements to reflect new information, the occurrence of unanticipated events or otherwise.
3

UNITEDAMERICAN COASTAL INSURANCE HOLDINGS CORP.CORPORATION
PART I. FINANCIAL INFORMATION
Item 1. Restated Financial Statements

Restated Condensed Consolidated Balance Sheets (Unaudited)
March 31,
2023
December 31, 2022
March 31,
2024
March 31,
2024
December 31, 2023
ASSETSASSETS ASSETS 
Investments, at fair value:Investments, at fair value:  Investments, at fair value: 
Fixed maturities, available-for-sale (amortized cost of $239,473 and $237,735, respectively)$210,733 $204,682 
Fixed maturities, available-for-sale (amortized cost of $198,750 and $200,951, respectively)
Equity securitiesEquity securities16,181 15,657 
Other investments (amortized cost of $2,917 and $3,072, respectively)3,550 3,675 
Other investments (amortized cost of $14,121 and $16,118, respectively)
Total investments
Total investments
Total investmentsTotal investments$230,464 $224,014 
Cash and cash equivalents Cash and cash equivalents92,586 70,903 
Restricted cashRestricted cash49,671 45,988 
Total cash, cash equivalents and restricted cashTotal cash, cash equivalents and restricted cash$142,257 $116,891 
Accrued investment incomeAccrued investment income1,818 1,605 
Property and equipment, netProperty and equipment, net4,723 5,293 
Premiums receivable, net (credit allowance of $27 and $32, respectively)48,120 39,301 
Reinsurance recoverable on paid and unpaid losses, net (credit allowance of $150 and $333, respectively)792,350 796,546 
Premiums receivable, net (credit allowance of $53 and $51, respectively)
Reinsurance recoverable on paid and unpaid losses, net (credit allowance of $65 and $97, respectively)
Ceded unearned premiumsCeded unearned premiums65,702 90,496 
GoodwillGoodwill59,476 59,476 
Deferred policy acquisition costs, netDeferred policy acquisition costs, net59,897 52,369 
Intangible assets, netIntangible assets, net11,758 12,770 
Other assetsOther assets17,476 3,920 
Assets held for disposalAssets held for disposal13,395 1,434,815 
Total AssetsTotal Assets$1,447,436 $2,837,496 
LIABILITIES AND STOCKHOLDERS' EQUITYLIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:Liabilities:
Liabilities:
Liabilities:
Unpaid losses and loss adjustment expenses
Unpaid losses and loss adjustment expenses
Unpaid losses and loss adjustment expensesUnpaid losses and loss adjustment expenses$748,365 $842,958 
Unearned premiumsUnearned premiums301,625 258,978 
Reinsurance payable on premiumsReinsurance payable on premiums33,908 30,503 
Payments outstandingPayments outstanding2,326 2,000 
Accounts payable and accrued expensesAccounts payable and accrued expenses89,582 74,386 
Operating lease liabilityOperating lease liability1,412 1,689 
Other liabilitiesOther liabilities30,073 5,849 
Notes payable, netNotes payable, net148,438 148,355 
Liabilities held for disposalLiabilities held for disposal1,817 1,654,817 
Total LiabilitiesTotal Liabilities$1,357,546 $3,019,535 
Commitments and contingencies (Note 13)
Commitments and Contingencies (Note 12)Commitments and Contingencies (Note 12)
Stockholders' Equity:Stockholders' Equity:
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstandingPreferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding$— $— 
Common stock, $0.0001 par value; 100,000,000 shares authorized; 43,486,442 and 43,492,256 issued, respectively; 43,274,359 and 43,280,173 outstanding, respectively
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding
Common stock, $0.0001 par value; 100,000,000 shares authorized; 48,011,548 and 46,989,089 issued, respectively; 47,799,465 and 46,777,006 outstanding, respectively
Additional paid-in capitalAdditional paid-in capital395,966 395,631 
Treasury shares, at cost: 212,083 sharesTreasury shares, at cost: 212,083 shares(431)(431)
Accumulated other comprehensive lossAccumulated other comprehensive loss(25,629)(30,947)
Retained earnings (deficit)Retained earnings (deficit)(280,020)(546,296)
Total Stockholders' Equity (Deficit)$89,890 $(182,039)
Total Stockholders' Equity
Total Stockholders' Equity
Total Stockholders' Equity
Total Liabilities and Stockholders' EquityTotal Liabilities and Stockholders' Equity$1,447,436 $2,837,496 
See accompanying Notes to Restated Unaudited Condensed Consolidated Financial Statements.
4

UNITEDAMERICAN COASTAL INSURANCE HOLDINGS CORP.CORPORATION
Restated Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
Three Months Ended
March 31,
20232022
Three Months Ended
Three Months Ended
Three Months Ended
March 31,March 31,
202420242023
REVENUE:REVENUE:
Gross premiums written
Gross premiums written
Gross premiums writtenGross premiums written$187,123 $142,414 
Change in gross unearned premiumsChange in gross unearned premiums(42,647)(19,681)
Gross premiums earnedGross premiums earned144,476 122,733 
Ceded premiums earnedCeded premiums earned(57,152)(64,987)
Net premiums earnedNet premiums earned87,324 57,746 
Net investment incomeNet investment income2,589 1,404 
Net realized investment gains (losses)(83)37 
Net realized investment losses
Net unrealized gains (losses) on equity securitiesNet unrealized gains (losses) on equity securities474 (770)
Other revenueOther revenue16 15 
Other revenue
Other revenue
Total revenueTotal revenue90,320 58,432 
EXPENSES:EXPENSES:
Losses and loss adjustment expenses
Losses and loss adjustment expenses
Losses and loss adjustment expensesLosses and loss adjustment expenses16,412 26,315 
Policy acquisition costsPolicy acquisition costs26,972 20,308 
Operating expensesOperating expenses2,168 3,707 
General and administrative expensesGeneral and administrative expenses8,793 8,064 
Interest expenseInterest expense2,719 2,359 
Total expensesTotal expenses57,064 60,753 
Income before other incomeIncome before other income33,256 (2,321)
Other incomeOther income588 1,333 
Income before income taxesIncome before income taxes33,844 (988)
Provision for income taxesProvision for income taxes3,477 (715)
Income from continuing operations, net of taxIncome from continuing operations, net of tax$30,367 $(273)
Income (loss) from discontinued operations, net of tax236,913 (32,984)
Net income (loss)$267,280 $(33,257)
Less: Net loss attributable to NCI— (85)
Net income (loss) attributable to UIHC$267,280 $(33,172)
Income from discontinued operations, net of tax
Net income
OTHER COMPREHENSIVE INCOME (LOSS):OTHER COMPREHENSIVE INCOME (LOSS):
OTHER COMPREHENSIVE INCOME (LOSS):
OTHER COMPREHENSIVE INCOME (LOSS):
Change in net unrealized gains (losses) on investments
Change in net unrealized gains (losses) on investments
Change in net unrealized gains (losses) on investmentsChange in net unrealized gains (losses) on investments4,231 (27,689)
Reclassification adjustment for net realized investment lossesReclassification adjustment for net realized investment losses83 1,769 
Income tax benefit related to items of other comprehensive income (loss)Income tax benefit related to items of other comprehensive income (loss)— 6,236 
Total comprehensive income (loss)$271,594 $(52,941)
Less: Comprehensive loss attributable to NCI— (643)
Comprehensive income (loss) attributable to UIHC$271,594 $(52,298)
Income tax benefit related to items of other comprehensive income (loss)
Income tax benefit related to items of other comprehensive income (loss)
Total comprehensive income
Weighted average shares outstanding
Weighted average shares outstanding
Weighted average shares outstandingWeighted average shares outstanding
BasicBasic43,124,825 42,980,691 
Basic
Basic
DilutedDiluted43,574,840 42,980,691 
Earnings available to UIHC common stockholders per share
Earnings available to ACIC common stockholders per share
Earnings available to ACIC common stockholders per share
Earnings available to ACIC common stockholders per share
BasicBasic
Basic
Basic
Continuing operations
Continuing operations
Continuing operationsContinuing operations$0.70 $— 
Discontinued operationsDiscontinued operations5.49 (0.77)
TotalTotal$6.19 $(0.77)
DilutedDiluted
Continuing operationsContinuing operations$0.70 $— 
Continuing operations
Continuing operations
Discontinued operationsDiscontinued operations5.44 (0.77)
TotalTotal$6.14 $(0.77)
See accompanying Notes to Restated Unaudited Condensed Consolidated Financial Statements.
5

UNITEDAMERICAN COASTAL INSURANCE HOLDINGS CORP.CORPORATION

Restated Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended
(Unaudited)
Common StockAdditional Paid-in CapitalTreasury StockAccumulated Other Comprehensive LossRetained DeficitStockholders' Equity Attributable to UIHCNCITotal Stockholders’ Equity
Number of SharesDollars
December 31, 202143,370,442 $$394,268 $(431)$(6,531)$(74,904)$312,406 $19,551 $331,957 
Net loss— — — — — (33,172)(33,172)(85)(33,257)
Other comprehensive loss, net— — — — (19,126)— (19,126)(558)(19,684)
Stock Compensation(112,847)— 452 — — — 452 — 452 
Cash dividends on common stock ($0.06 per common share)— — — — — (2,589)(2,589)— (2,589)
March 31, 202243,257,595 $$394,720 $(431)$(25,657)$(110,665)$257,971 $18,908 $276,879 
Common StockAdditional Paid-in CapitalTreasury StockAccumulated Other Comprehensive LossRetained Earnings (Deficit)Total
Stockholders' Equity (Deficit)
Number of SharesDollars
December 31, 202243,280,173 $$395,631 $(431)$(30,947)$(546,296)$(182,039)
Net income— — — — — 267,280 267,280 
Other comprehensive income, net— — — — 4,314 — 4,314 
Impact of Deconsolidation of Discontinued Operations— — — — 1,004 (1,004)— 
Stock Compensation(5,814)— 335 — — — 335 
March 31, 202343,274,359 $$395,966 $(431)$(25,629)$(280,020)$89,890 

Common StockAdditional Paid-in CapitalTreasury StockAccumulated Other Comprehensive LossRetained Earnings (Deficit)Stockholders' Equity (Deficit)
Attributable to UIHC
NCITotal Stockholders’ Equity (Deficit)
Number of SharesDollars
December 31, 202243,280,173 $$395,631 $(431)$(30,947)$(546,296)$(182,039)$— $(182,039)
Net Income— — — — — 267,280 267,280 — 267,280 
Other comprehensive income, net— — — — 4,314 — 4,314 — 4,314 
Impact of Deconsolidation of Discontinued Operations— — — — 1,004 (1,004)— — — 
Stock Compensation(5,814)— 335 — — — 335 — 335 
March 31, 202343,274,359 $$395,966 $(431)$(25,629)$(280,020)$89,890 $— $89,890 

Common StockAdditional Paid-in CapitalTreasury StockAccumulated Other Comprehensive LossRetained Earnings (Deficit)Total
Stockholders' Equity
Number of SharesDollars
December 31, 202346,777,006 $$423,717 $(431)$(17,137)$(237,389)$168,765 
Net Income— — — — — 23,599 23,599 
Other comprehensive loss, net— — — — (198)— (198)
Stock Compensation22,459 — 428 — — — 428 
Issuance of common stock1,000,000 — 11,398 — — — 11,398 
March 31, 202447,799,465 $$435,543 $(431)$(17,335)$(213,790)$203,992 

See accompanying Notes to Restated Unaudited Condensed Consolidated Financial Statements.

6

UNITEDAMERICAN COASTAL INSURANCE HOLDINGS CORP.CORPORATION
Restated Condensed Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended March 31,
20232022
Three Months Ended March 31,Three Months Ended March 31,
202420242023
OPERATING ACTIVITIESOPERATING ACTIVITIES
Net income (loss)$267,280 $(33,257)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Net income
Net income
Net income
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
Depreciation and amortization
Depreciation and amortizationDepreciation and amortization2,155 2,606 
Bond amortization and accretionBond amortization and accretion160 1,634 
Net realized losses (gains) on investments(1,260)1,769 
Net realized gains on investments
Net unrealized losses (gains) on equity securitiesNet unrealized losses (gains) on equity securities(2,554)2,268 
Provision for uncollectable premiumsProvision for uncollectable premiums12 
Provision for uncollectable reinsurance recoverablesProvision for uncollectable reinsurance recoverables183 168 
Deferred income taxes, netDeferred income taxes, net15,767 (11,351)
Deferred income taxes, net
Deferred income taxes, net
Stock based compensationStock based compensation335 452 
Settlement of receivable owed by HCI in connection with purchase agreement— 3,800 
Gain on sale of property and equipmentGain on sale of property and equipment(422)(1,528)
Fixed asset disposalFixed asset disposal524 343 
Disposition of former subsidiary(238,440)— 
Gain on disposition of former subsidiary
Changes in operating assets and liabilities:Changes in operating assets and liabilities:
Accrued investment income
Accrued investment income
Accrued investment incomeAccrued investment income369 437 
Premiums receivablePremiums receivable15,178 2,265 
Reinsurance recoverable on paid and unpaid lossesReinsurance recoverable on paid and unpaid losses289,946 85,140 
Ceded unearned premiumsCeded unearned premiums72,064 146,667 
Deferred policy acquisition costs, netDeferred policy acquisition costs, net(875)(7,193)
Other assetsOther assets(31,630)(4,618)
Receivable from sale of building— 3,236 
Unpaid losses and loss adjustment expenses
Unpaid losses and loss adjustment expenses
Unpaid losses and loss adjustment expensesUnpaid losses and loss adjustment expenses(278,142)(117,236)
Unearned premiumsUnearned premiums(145,540)(39,731)
Reinsurance payable on premiumsReinsurance payable on premiums(13,376)(51,714)
Payments outstandingPayments outstanding(68,493)(10,246)
Accounts payable and accrued expensesAccounts payable and accrued expenses16,440 (2,924)
Operating lease liabilityOperating lease liability(277)(183)
Other liabilitiesOther liabilities(3,561)8,291 
Net cash provided by (used in) operating activitiesNet cash provided by (used in) operating activities$(104,164)$(20,893)
INVESTING ACTIVITIESINVESTING ACTIVITIES
Proceeds from sales, maturities and repayments of:Proceeds from sales, maturities and repayments of:
Proceeds from sales, maturities and repayments of:
Proceeds from sales, maturities and repayments of:
Fixed maturities
Fixed maturities
Fixed maturitiesFixed maturities178,211 85,978 
Equity securitiesEquity securities24,163 88 
Other investmentsOther investments227 1,063 
Purchases of:Purchases of:
Fixed maturitiesFixed maturities(7,439)(13,415)
Fixed maturities
Fixed maturities
Equity securitiesEquity securities(80)(3,121)
Other investments— (459)
Proceeds from sale of property and equipment
Proceeds from sale of property and equipment
Proceeds from sale of property and equipmentProceeds from sale of property and equipment464 730 
Cost of property, equipment and capitalized software acquiredCost of property, equipment and capitalized software acquired(154)(1,406)
Disposition of cash on divestiture of subsidiaryDisposition of cash on divestiture of subsidiary(232,582)— 
Net cash provided by (used in) investing activities$(37,190)$69,458 
Net cash used in investing activities
FINANCING ACTIVITIESFINANCING ACTIVITIES
Repayments of borrowings— (381)
Dividends— (2,589)
Net cash used in financing activities$— $(2,970)
Increase in cash, cash equivalents and restricted cash, including cash classified as assets held for disposal(141,354)45,595 
Cash, cash equivalents and restricted cash at beginning of period283,611 245,278 
Proceeds from issuance of common stock
Proceeds from issuance of common stock
Proceeds from issuance of common stock
Net cash provided by financing activities
Increase (decrease) in cash, cash equivalents and restricted cash, including cash classified as assets held for disposal
Cash, cash equivalents and restricted cash at beginning of period
Cash, cash equivalents and restricted at end of periodCash, cash equivalents and restricted at end of period$142,257 $290,873 
Supplemental Cash Flows InformationSupplemental Cash Flows Information
Interest paidInterest paid$— $35 
Income taxes paid$5,325 $77 
Interest paid
Interest paid
Income taxes paid (refunded)
See accompanying Notes to Restated Unaudited Condensed Consolidated Financial Statements.
7

UNITEDAMERICAN COASTAL INSURANCE HOLDINGS CORP.CORPORATION
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 20232024

1)    ORGANIZATION, CONSOLIDATION AND PRESENTATION

(a)Business

UnitedAmerican Coastal Insurance Holdings Corp.Corporation (referred to in this document as we, our, us, the Company or UIHC)ACIC) is a property and casualty insurance holding company that sources, writes and services residential commercial and personal property and casualty insurance policies using a network of agents and two wholly-owned insurance subsidiaries. On July 10, 2023, we changed our corporate name from United Insurance Holdings Corp. to American Coastal Insurance Corporation. Our two insurance subsidiaries are Interboro Insurance Company (IIC), acquired via mergeracquisition on April 29, 2016; and American Coastal Insurance Company (ACIC)(AmCoastal), acquired via merger on April 3, 2017.

Our other subsidiaries include United Insurance Management, L.C. (UIM), a managing general agent; Skyway Claims Services, LLC (SCS), which provides claims adjusting services to ACIC;our insurance companies; AmCo Holding Company, LLC (AmCo) which is a holding company subsidiary that consolidates its respective insurance company; BlueLine Cayman Holdings (BlueLine), which reinsures portfolios of excess and surplus policies; UPC Re, which provides a portion of the reinsurance protection purchased by our insurance subsidiaries when needed; Skyway Reinsurance Services, LLC, which provides reinsurance brokerage services for our insurance companies; Skyway Legal Services, LLC (SLS), which provides claims litigation services to our insurance companies; and Skyway Technologies,Underwriters, LLC, a managing general agent that provides technological and distribution services to our insurance companies.

Our primary products are commercial and homeowners' residential property insurance. We currently offer commercial residential insurance in Florida. During 2022, we also wrote commercial residential insurance in South CarolinaFlorida and Texas, however, effective May 1, 2022, we no longer write in these states. In addition, we write personal residential insurance in New York. During 2022, we wroteWe conduct our operations under two reportable segments, commercial residential property and casualty insurance policies (commercial lines) and personal residential business in six other states; however onproperty and casualty insurance policies (personal lines). Our chief operating decision maker is our President, who makes decisions to allocate resources and assesses performance at both segment levels, as well as at the corporate level.

On February 27, 2023, our former insurance subsidiary, United Property & Casualty Insurance Company (UPC) was placed into receivership with the Florida Department of Financial Services (DFS), which divested our ownership of UPC. The events leading to receivership and results of this subsidiary, now included within discontinued operations, are discussed in Note 43 below.

On August 25, 2022, we announced that our former subsidiary UPC had filed plans for withdrawal in the states of Florida, Louisiana, and Texas and intended to file a plan for withdrawal in the state of New York. All filed plans entail non-renewing personal lines policies in these states. Additionally, we announced that Demotech, Inc. (Demotech), an insurance rating agency, notified UPC of its intent to withdraw UPC's Financial Stability Rating. On December 5, 2022, the Florida Office of Insurance Regulation ("FLOIR") issued Consent Order No. 303643-22- CO that provided for the administrative supervision and approval of the plan of run-off for UPC (the "Consent Order"). The Consent Order provided formal approval of UPC's Plan of Run-Off (the "Plan") to facilitate a solvent wind down of its affairs in an orderly fashion. Additionally, in connection with the Plan, IIC agreed to not pay ordinary dividends without the prior approval of the New York Department of Financial Services until January 1, 2025. On February 10, 2023, we announced that a solvent run-off of UPC was unlikely and on February 27, 2023, UPC was placed into receivership with the Florida Department of Financial Services (the "DFS") which divested our ownership of UPC.

Effective June 1, 2022, we merged our majority-owned insurance subsidiary, Journey Insurance Company (JIC) into ACIC, with ACIC being the surviving entity. JIC was formed in strategic partnership with a subsidiary of Tokio Marine Kiln Group Limited (Kiln) on August 30, 2018 and operated independently from ACIC prior to the merging of the entities. The Kiln subsidiary held a noncontrolling interest in JIC, which was terminated prior to the merger.

Effective June 1, 2022, we entered into a quota share reinsurance agreement with TypTap Insurance Company (Typtap). Under the terms of this agreement, we ceded 100% of our former subsidiary UPC's in-force, new, and renewal policies in the states of Georgia, North Carolina and South Carolina. Effective June 1, 2022, we began the transition of South Carolina policies to Homeowners Choice Property and Casualty Insurance Company, Inc. (HCPCI) in connection with our renewal rights agreement. Effective October 1, 2022, we transitioned Georgia policies to HCPCI in connection with our renewal rights agreement. Effective December 1, 2022, we began the transition of North Carolina policies to HCPCI in connection with our renewal rights agreement. As a result, these policies will no longer be covered under this agreement upon their renewal. This agreement replaces the 85% quota share agreement with HCPCI effective December 31, 2021.

Effective May 31, 2022, we merged Family Security Insurance Company, Inc. (FSIC) into our former subsidiary UPC, with UPC being the surviving entity. FSIC was acquired via merger on February 3, 2015, and operated independently from
8

UNITED INSURANCE HOLDINGS CORP.
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 2023
UPC prior to the merging of the entities. In conjunction with the merger, we dissolved Family Security Holdings (FSH), a holding company subsidiary that consolidated its respective insurance company, FSIC.

Effective June 1, 2021, we entered into a quota share reinsurance agreement with HCPCI and TypTap. Under the terms of this agreement, we ceded 100% of our former subsidiary UPC's in-force, new, and renewal policies in the states of Connecticut, New Jersey, Massachusetts, and Rhode Island. The cession of these policies was 50% to HCPCI and 50% to TypTap. HCPCI is responsible for processing all claims as a part of this agreement. As of April 1, 2022, we completed the transition of all policies in these four states to HCPCI in connection with our renewal rights agreement (Northeast Renewal Agreement) to sell UPC's personal lines homeowners business in these states.

We conduct our operations under two reportable segments, personal residential property and casualty insurance policies (personal lines) and commercial residential property and casualty insurance policies (commercial lines). Our chief operating decision maker is our President, who makes decisions to allocate resources and assesses performance at both segment levels, as well as at the corporate level.

(b)Consolidation and Presentation

We prepare our unaudited condensed consolidated interim financial statements in conformity with U.S. generally accepted accounting principles (GAAP). We have condensed or omitted certain information and footnote disclosures normally included in the annual consolidated financial statements presented in accordance with GAAP. In management's opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, including normal recurring items, considered necessary for a fair presentation of interim periods. We include all of our subsidiaries in our consolidated financial statements, eliminating intercompany balances and transactions during consolidation. As described in Note 23, our former subsidiary, UPC, qualifiesand activities related directly to supporting the business conducted by UPC qualified as a discontinued operation.operations. Our unaudited condensed consolidated interim financial statements and footnotes should be read in conjunction with our consolidated financial statements and footnotes in our Annual Report on Form 10-K for the year ended December 31, 2022.2023.

While preparing our unaudited condensed consolidated financial statements, we make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, as well as reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Reported amounts that require us to make extensive use of estimates include our reserves for unpaid losses and loss adjustment expenses, investments and goodwill. Except for the captions on our Unaudited Condensed Consolidated Balance Sheets and Unaudited Condensed Consolidated Statements of Comprehensive Loss,Income, we generally use the term loss(es) to collectively refer to both loss and loss adjustment expenses.

Our results of operations and our cash flows as of the end of the interim periods reported herein do not necessarily indicate our results for the remainder of the year or for any other future period.

(c) Going Concern

Our unaudited condensed consolidated interim financial statements have been prepared in accordance with GAAP assuming the Company will continue as a going concern. As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, our subsidiary ACIC is a part of a combined reinsurance program with our former subsidiary, UPC.

To properly allocate the reinsurance recoverables under the shared catastrophe treaties, UPC and ACIC entered into a reinsurance allocation agreement that became effective on June 1, 2022 (the "Allocation Agreement"). The Allocation Agreement was filed with and approved by the FLOIR on December 5, 2022. On February 10, 2023, we announced that a solvent run-off of UPC was unlikely, driven by Hurrican Ian losses which exhausted UPC's reinsurance coverage. On February 27, 2023, UPC was placed into receivership with the DFS which divested our ownership of UPC. As of the date of filing our Annual Report, the DFS had not recognized the Allocation Agreement, leaving uncertainty regarding the timing of both recoveries currently held by UPC that are allocated to ACIC and future recoverables. Management also believed that the ability for ACIC to obtain adequate reinsurance to meet its needs for the June 1, 2023 to May 31, 2024 catastrophe cover could only be accomplished assuming that recoveries due to ACIC pursuant to the Allocation Agreement could be resolved in short order.

However, on April 19, 2023, ACIC entered into a Memorandum of Understanding with the DFS. Under the terms of the Memorandum, ACIC and the DFS as receiver of UPC have reached the following agreement:

98

UNITEDAMERICAN COASTAL INSURANCE HOLDINGS CORP.CORPORATION
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 20232024
1.The DFS adopts, ratifies and affirms the Allocation Agreement.
2.All future reinsurance recoverable under reinsurance agreements applicable to the Allocation Agreement for Hurricane Ian losses shall be paid, either directly from the reinsurers or directly from the reinsurance intermediary responsible therefor, to ACIC. If a true up adjustment demonstrates that any future reinsurance recoveries were over-collected by ACIC, ACIC will remit any over-payment to UPC.

While the execution of the MOU does alleviate the uncertainty regarding future recoverables, uncertainty does still exist regarding recoveries currently held by UPC. The Company intends to continue to work towards a fair and equitable solution regarding these held recoveries (See Note 19). In addition, the Company has not finalized its catastrophe cover for June 1, 2023 to May 31, 2024. While continued progress is being made, uncertainty does still exist regarding placement of this cover. As a result, the Company has concluded substantial doubt continues to exist regarding its ability to continue as a going concern.

2)    SIGNIFICANT ACCOUNTING POLICIES

(a) Changes to Significant Accounting Policies

During the three months ended March 31, 2023, our former subsidiary, UPC, was placed into receivership with the DFS. As described in Note 1, effective February 27, 2023, this receivership divested our ownership of UPC. This disposal was evaluated for qualification as a discontinued operation. The results of operations of business are reported as discontinued operations when the disposal represents a strategic shift that will have a major effect on the entity's operations and financial results. When a business is identified for discontinued operations reporting:

Results for prior periods are retroactively reclassified as discontinued operations;
Results of operations are reported in a single line, net of tax, in the Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss); and
Assets and liabilities are reported as held for disposal in the Unaudited Condensed Consolidated Balance Sheets
Premiums directly assumed from UPC by another entity of the consolidated group are now captured as assumed.

Additional details by major classification of operating results and financial position are included in Note 4.

There have been no other changes to our significant accounting policies as reported in our Annual Report on Form 10-K for the year ended December 31, 2022.

2023.

(b) Pending Accounting Pronouncements

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280) Improvements to Reportable Segments Disclosures. This update requires the disclosure of significant segment expenses that are part of an entity’s segment measure of profit or loss and regularly provided to the chief operating decision maker. In addition, it adds or makes clarifications to other segment-related disclosures, such as clarifying that the disclosure requirements in ASC 280 are required for entities with a single reportable segment and that an entity may disclose multiple measures of segment profit and loss. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods beginning after December 15, 2024, with early adoption permitted. We have evaluated pending accounting pronouncements and do not believe any would have anintend to elect to early adopt and are assessing the impact of adopting this new accounting standard on the operations orour consolidated financial reporting of our company.statements and related disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740) Improvements to Income Tax Disclosures. This update amends the Codification to enhance the transparency and decision usefulness of income tax disclosures. This ASU requires additional disaggregation of the reconciliation between the statutory and effective tax rate for an entity and of income taxes paid, both of which are disclosures required by current GAAP. The amendments improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted. We do not intend to elect to early adopt and are assessing the impact of adopting this new accounting standard on our consolidated financial statements and related disclosures.

3)    RESTATEMENT OF PREVIOUSLY REPORTED FINANCIAL STATEMENTS

Subsequent to the issuance of the Form 10-Q as of and for the three months ended March 31, 2023, the Company concluded it should restate its previously issued financial statements for both 2023 and 2022 to accurately present discontinued operations, including activities that directly support its former subsidiary, UPC, in accordance with ASC 205-20. The Company had previously excluded these supporting activities, assets, and liabilities, presenting only the results, assets and liabilities of UPC as discontinued operations.

In addition, the Company concluded it should restate its previously issued financial statements to accurately present its tax provision (benefit) related to both continuing and discontinued operations. Previously, the calculation of this provision (benefit) incorrectly included the benefit of the use of certain deferred tax assets held by UPC after the disposition of UPC occurred and incorrectly allocated this provision between continuing and discontinued operations.

In accordance with SEC Staff Accounting Bulletin No. 99, the Company evaluated the errors and has determined that the related impact was material to the previously filed financial statements that contained the error, reported in the Company’s Form 10-Q for the quarterly period ended March 31, 2023. Therefore, the Company concluded that the affected quarterly periods should be restated to present continuing and discontinued operations appropriately and recognize the additional
10

UNITED INSURANCE HOLDINGS CORP.
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 2023
provision for income taxes for the period and allocate appropriately to continuing and discontinued operations. As such, the Company is reporting these restated financial statements in this amended quarterly report. The previously filed Form 10-Q should no longer be relied upon.

The impact of the restatement on the financial statements for the affected quarterly periods are presented below.

Restated Condensed Consolidated Balance Sheets (Unaudited)

As of March 31, 2023
As Previously ReportedAdjustmentAs Restated
ASSETS
Property and equipment, net18,118 (13,395)4,723 
Other Assets15,426 2,050 17,476 
Assets held for disposal— 13,395 13,395 
Total Assets$1,445,386 2,050 $1,447,436 
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Other liabilities36,242 (6,169)30,073 
Liabilities held for disposal— 1,817 1,817 
Total Liabilities$1,361,898 (4,352)$1,357,546 
Stockholders' Equity:
Retained earnings (deficit)$(286,422)6,402 $(280,020)
Total Stockholders' Equity (Deficit)$83,488 6,402 $89,890 

As of December 31, 2022
As Previously ReportedAdjustmentAs Restated
ASSETS
Property and equipment, net19,591 (14,298)5,293 
Deferred policy acquisition costs, net60,979 (8,610)52,369 
Assets held for disposal1,411,907 22,908 1,434,815 
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses75,374 (988)74,386 
Other liabilities17,466 (11,617)5,849 
Liabilities held for disposal1,642,212 12,605 1,654,817 











11

UNITED INSURANCE HOLDINGS CORP.
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 2023







Restated Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

Three Months Ended March 31, 2023
REVENUE:As Previously ReportedAdjustmentAs Restated
Management fee income9,668 (9,668)— 
Other revenue4,075 (4,059)16 
Total revenue104,047 (13,727)90,320 
EXPENSES:
Losses and loss adjustment expenses19,073 (2,661)16,412 
Policy acquisition costs26,927 45 26,972 
Operating expenses5,651 (3,483)2,168 
General and administrative expenses9,837 (1,044)8,793 
Total expenses61,488 (7,143)54,345 
Income before other income39,840 (6,584)33,256 
Income before income taxes40,428 (6,584)33,844 
Provision for income taxes9,855 (6,378)3,477 
Income from continuing operations, net of tax$30,573 $(206)$30,367 
Income from discontinued operations, net of tax230,305 6,608 236,913 
Net income$260,878 $6,402 $267,280 
Earnings available to UIHC common stockholders per share
Basic
Continuing operations$0.71 $(0.01)$0.70 
Discontinued operations5.34 0.15 5.49 
Total$6.05 $0.14 $6.19 
Diluted
Continuing operations$0.70 $— $0.70 
Discontinued operations5.29 0.15 5.44 
Total$5.99 $0.15 $6.14 

12

UNITED INSURANCE HOLDINGS CORP.
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 2023
Three Months Ended March 31, 2022
REVENUE:As Previously ReportedAdjustmentAs Restated
Management fee income50,206 (50,206)— 
Other revenue8,738 (8,723)15 
Total revenue117,361 (58,929)58,432 
EXPENSES:
Losses and loss adjustment expenses32,518 (6,203)26,315 
Policy acquisition costs52,152 (31,844)20,308 
Operating expenses10,603 (6,896)3,707 
General and administrative expenses15,435 (7,371)8,064 
Total expenses113,067 (52,314)60,753 
Income (loss) before other income4,294 (6,615)(2,321)
Income (loss) before income taxes5,627 (6,615)(988)
Provision (benefit) for income taxes980 (1,695)(715)
Income (loss) from continuing operations, net of tax$4,647 $(4,920)$(273)
Loss from discontinued operations, net of tax(37,904)4,920 (32,984)
Net loss$(33,257)$— $(33,257)



Restated Condensed Consolidated Statements of Cash Flows (Unaudited)

Three Months Ended March 31, 2023
As Previously ReportedAdjustmentAs Restated
OPERATING ACTIVITIES
Net income (loss)$260,878 $6,402 $267,280 
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Disposition of former subsidiary(229,183)(9,257)(238,440)
Changes in operating assets and liabilities:
Other liabilities(6,416)2,855 (3,561)

Restated Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended
(Unaudited)

Three Months Ended March 31, 2023
As Previously ReportedAdjustmentAs Restated
Net Income for the three months ended March 31, 2023$260,878 $6,402 $267,280 
Retained Earnings (Deficit) as of March 31, 2023(286,422)6,402 (280,020)
Stockholders Equity (Deficit) attributable to UIHC at March 31, 202383,488 6,402 89,890 
Total Stockholders' Equity (Deficit)83,488 6,402 89,890 

In connection with these changes, our Notes to Unaudited Condensed Consolidated Financial Statements have also been restated where applicable.

4)    DISCONTINUED OPERATIONS

13

UNITED INSURANCE HOLDINGS CORP.
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 2023
On August 25, 2022, we announced that our former subsidiary UPC had filed plans for withdrawal in the states of Florida, Louisiana, and Texas and intended to file a plan for withdrawal in the state of New York. All filed plans entailed non-renewing personal lines policies in these states. Additionally, we announced that Demotech, an insurance rating agency, notified UPC of its intent to withdraw UPC's Financial Stability Rating. On December 5, 2022, the FLOIR issued Consent Order No. 303643-22- CO that provided for the administrative supervision and approval of the plan of run-off for UPC (the "Consent Order"). The Consent Order provided formal approval of UPC's Plan of Run-Off (the "Plan") to facilitate a solvent wind down of its affairs in an orderly fashion. On February 10, 2023, we announced that a solvent run-off of UPC was unlikely, driven by Hurricane Ian losses which exhausted UPC's reinsurance coverage. On February 27, 2023, UPC was placed into receivership with the DFS which divested our ownership of UPC.

In the first quarter of 2023, the assets and liabilities of UPC were divested. In addition, activities provided by our entities, SCS, SLS and UIM, related directly to supporting the business conducted by UPC have been included. The remaining assets and liabilities for the balance sheet as of December 31, 20222023 are reclassifiedpresented as held for disposal, retrospectively, and the results of UPC and activities related directly to supporting the business conducted by UPC are presented as discontinued operations for all periods presented.














9

AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2024
The results from discontinued operations for the three months ended March 31, 20232024 and 20222023 are presented below.

Results From Discontinued OperationsResults From Discontinued Operations
Three Months Ended March 31,
20232022
Results From Discontinued Operations
Results From Discontinued Operations
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
202420242023
REVENUE:REVENUE:
Gross premiums written
Gross premiums written
Gross premiums writtenGross premiums written$(120,608)$146,828 
Change in gross unearned premiumsChange in gross unearned premiums198,154 59,726 
Gross premiums earnedGross premiums earned77,546 206,554 
Ceded premiums earnedCeded premiums earned(48,203)(163,443)
Net premiums earnedNet premiums earned29,343 43,111 
Net investment incomeNet investment income2,182 1,075 
Net realized investment gains (losses)1,343 (1,806)
Net unrealized gains (losses) on equity securities2,080 (1,498)
Net realized investment gains
Net unrealized gains on equity securities
Other revenueOther revenue2,717 3,063 
Total revenueTotal revenue37,665 43,945 
EXPENSES:EXPENSES:
Losses and loss adjustment expenses
Losses and loss adjustment expenses
Losses and loss adjustment expensesLosses and loss adjustment expenses35,226 65,064 
Policy acquisition costsPolicy acquisition costs(1,352)5,708 
Operating expensesOperating expenses3,996 8,541 
General and administrative expensesGeneral and administrative expenses1,284 7,941 
Interest expenseInterest expense22 20 
Total expensesTotal expenses39,176 87,274 
Loss before other incomeLoss before other income(1,511)(43,329)
Other income (loss)— 
Other income
Loss before income taxesLoss before income taxes(1,511)(43,320)
Provision (benefit) for income taxesProvision (benefit) for income taxes16 (10,336)
Income (loss) from discontinued operations, net of tax$(1,527)$(32,984)
Loss from discontinued operations, net of tax


As of February 28, 2023, the Company completed the disposal of its former subsidiary, UPC. This divestiture resulted in a gain of $238,440,000 for the period.three months ended March 31, 2023. This gain was driven by the negative equity position of UPC.


14

UNITED INSURANCE HOLDINGS CORP.
NotesUPC prior to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 2023
the divestiture.



















10

AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2024

The major classes of assets and liabilities transferred as a result of the transaction as of the date of transfer and December 31, 2022 are presented below.

Major Classes of Assets and Liabilities Disposed
Closing (1)
December 31, 2022
ASSETS
Fixed maturities, available-for-sale1,380 171,781 
Equity securities272 23,363 
Other investments12,882 12,952 
Cash and cash equivalents224,824 158,990 
Restricted cash7,758 7,730 
Accrued investment income875 1,457 
Premiums receivable, net22,733 46,736 
Reinsurance recoverable on paid and unpaid losses, net548,929 834,863 
Ceded unearned premiums75,262 122,533 
Deferred policy acquisition costs, net(89)(2,046)
Other assets51,625 33,548 
Total assets$946,451 $1,411,907 
LIABILITIES
Unpaid losses and loss adjustment expenses920,431 1,103,980 
Unearned premiums98,655 286,842 
Reinsurance payable on premiums12,612 29,394 
Payments outstanding144,238 213,058 
Accounts payable and accrued expenses1,361 (872)
Other liabilities3,476 14,658 
Notes payable, net4,118 4,118 
Total Liabilities$1,184,891 $1,651,178 
Major Classes of Assets and Liabilities Disposed
Closing (1)
ASSETS
Fixed maturities, available-for-sale$1,380 
Equity securities272 
Other investments12,882 
Cash and cash equivalents224,824 
Restricted cash7,758 
Accrued investment income875 
Premiums receivable, net22,733 
Reinsurance recoverable on paid and unpaid losses, net548,929 
Ceded unearned premiums75,262 
Deferred policy acquisition costs, net(89)
Other assets51,625 
Total assets$946,451 
LIABILITIES
Unpaid losses and loss adjustment expenses$920,431 
Unearned premiums98,655 
Reinsurance payable on premiums12,612 
Payments outstanding144,238 
Accounts payable and accrued expenses1,361 
Other liabilities3,476 
Notes payable, net4,118 
Total Liabilities$1,184,891 
(1) The Company divested its ownership on February 27, 2023, the date the DFS was appointed as receiver of the entity.

During the first quarter of 2024, due to a change in circumstances, the Company evaluated its capitalized software, previously classified as held for disposal at December 31, 2023. As a result of this evaluation, it was determined that the use case of the software by the Company has shifted. The Company has reclassified this asset and the associated amortization expense in the current period presented within this footnote in accordance with GAAP guidance, resulting in amortization expense for the capitalized software being captured in continuing operations prospectively. Property & equipment of $8,095,000 at December 31, 2023 was also reclassed at March 31, 2024, before current quarter amortization.

As a result of the reclassification in the first quarter of 2024, described above, the Company held no assets or liabilities for disposal at March 31, 2024. At December 31, 2023, assets held for disposal consisted of property & equipment totaling $8,095,000. There were no liabilities held for disposal at December 31, 2023. In addition, other than the major classes of assets and liabilities remainingitem related to activities directly supportingcapitalized software noted above, there were no non-cash transactions during the business conducted by UPC are outlined inthree months ended March 31, 2024. During the table below as ofthree months ended March 31, 2023, and December 31, 2022.amortization attributed to discontinued operations totaled $252,000.


4)    SEGMENT REPORTING

Commercial Lines Business

1511

UNITEDAMERICAN COASTAL INSURANCE HOLDINGS CORP.CORPORATION
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 20232024
Major Classes of Assets and Liabilities Held for Disposal
March 31, 2023December 31, 2022
ASSETS
Property and equipment, net13,395 14,299 
Deferred policy acquisition costs— 8,609 
Total assets$13,395 $22,908 
LIABILITIES
Commissions Payable1,817 987 
Unearned Policy Fees— 2,652 
Total Liabilities$1,817 $3,639 
Our commercial lines business primarily provides commercial multi-peril property insurance for residential condominium associations and apartments in Florida, through our subsidiary AmCoastal. We include coverage to policyholders for loss or damage to buildings, inventory or equipment caused by covered causes of loss such as fire, wind, hail, water, theft and vandalism.

The discontinued operationsAll of our commercial lines business is administered by an outside managing general underwriter, AmRisc. This includes handling the Company incurred $252,000underwriting, claims processing and $438,000 of amortization expense during the three months ended March 31, 2023 and 2022, respectively. There were no other noncash transactions for either period.


5)    SEGMENT REPORTINGpremium collection related to our commercial business. In return, AmRisc is reimbursed through monthly management fees.

Personal Lines Business

Our personal lines business provides structure, content and liability coverage for standard single-family homeowners, renters and condominium unit owners, through our subsidiary IIC. Personal residential products are offered in New York. We include coverage to policyholders for loss or damage to dwellings, detached structures or equipment caused by covered causes of loss such as fire, wind, hail, water, theft and vandalism.

We have developed a unique and proprietary homeowners’ product. This product uses a granular approach to pricing for catastrophe perils. We have focused on using independent agencies as a channel of distribution for our personal lines business. All of our personal lines business is managed internally.


Commercial Lines Business

Our commercial lines business primarily provides commercial multi-peril property insurance for residential condominium associations and apartments in Florida, through our subsidiary ACIC. We include coverage to policyholders for loss or damage to buildings, inventory or equipment caused by covered causes of loss such as fire, wind, hail, water, theft and vandalism. We also wrote commercial residential coverage through our subsidiary JIC, in South Carolina and Texas. Effective June 1, 2022 JIC was merged into ACIC, with ACIC being the surviving entity. As a result, the commercial residential policies originally written by JIC were not renewed effective May 31, 2022.

All of our commercial lines business is administered by an outside managing general underwriter, AmRisc, LLC (AmRisc). This includes handling the underwriting, claims processing and premium collection related to our commercial business. In return, AmRisc is reimbursed through monthly management fees. International Catastrophe Insurance Managers (ICAT) handled the underwriting and premium collection for JIC’s commercial business written in South Carolina and Texas and was also reimbursed through monthly management fees. Effective May 31, 2022, the Company terminated its agreement with ICAT.

Please note the following similarities pertaining to the accounting and transactions of our operating segments for the three months ended March 31, 20232024 and 2022:2023:

Both operating segments follow the accounting policies as reported in our Annual Report on Form 10-K for the year ended December 31, 2022;2023;
Neither operating segment experienced significant noncashnon-cash transactions outside of depreciation and amortization for the three months ended March 31, 20232024 and 2022.2023.

16

UNITED INSURANCE HOLDINGS CORP.
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 2023
The tables below present the information for each of the reportable segment's profit or loss as well as segment assets for the three months ended March 31, 20232024 and 2022. We have restated our segments to reflect the divestiture of UPC during the first quarter of 2023, excluding the result of the entity for all periods presented.

2023.

1712

UNITEDAMERICAN COASTAL INSURANCE HOLDINGS CORP.CORPORATION
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 20232024
Three Months Ended March 31, 2023
Commercial
Personal (1)
AdjustmentsConsolidated
Three Months Ended March 31, 2024Three Months Ended March 31, 2024
CommercialCommercial
Personal (1)
AdjustmentsConsolidated
REVENUE:REVENUE:
Gross premiums written
Gross premiums written
Gross premiums writtenGross premiums written$176,641 $10,482 $— $187,123 
Change in gross unearned premiumsChange in gross unearned premiums(44,607)1,960 — (42,647)
Gross premiums earnedGross premiums earned132,034 12,442 — 144,476 
Ceded premiums earnedCeded premiums earned(53,374)(3,778)— (57,152)
Net premiums earnedNet premiums earned78,660 8,664 — 87,324 
Net investment incomeNet investment income1,786 782 21 2,589 
Net realized gains (losses)(83)— — (83)
Net realized investment losses
Net unrealized losses on equity securitiesNet unrealized losses on equity securities473 — 474 
Other revenue
Other revenue
Other revenueOther revenue— 16 — 16 
Total revenuesTotal revenues80,836 9,462 22 90,320 
EXPENSES:EXPENSES:
Losses and loss adjustment expensesLosses and loss adjustment expenses13,901 2,511 — 16,412 
Losses and loss adjustment expenses
Losses and loss adjustment expenses
Policy acquisition costsPolicy acquisition costs25,166 1,806 — 26,972 
Operating expensesOperating expenses96 1,948 124 2,168 
General and administrative expenses (2)
2,754 5,907 132 8,793 
General and administrative expenses
Interest expenseInterest expense— — 2,719 2,719 
Total expensesTotal expenses41,917 12,172 2,975 57,064 
Income (loss) before other incomeIncome (loss) before other income38,919 (2,710)(2,953)33,256 
Other income (loss)Other income (loss)— 803 (215)588 
Income (loss) before income taxesIncome (loss) before income taxes$38,919 $(1,907)(3,168)33,844 
Provision for income taxesProvision for income taxes3,477 3,477 
Net income (loss)Net income (loss)$(6,645)$30,367 
Less: Net loss attributable to noncontrolling interests— — 
Net income (loss) attributable to UIHC$(6,645)$30,367 
Loss ratio, net (3) (4)
17.7 %29.0 %18.9 %
Expense ratio (3) (5)
35.6 %111.5 %43.4 %
Combined ratio (3) (6)
53.3 %140.5 %62.3 %
Total segment assets$1,304,499 $118,700 $10,842 $1,434,041 
Loss ratio, net (2) (3)
Loss ratio, net (2) (3)
Loss ratio, net (2) (3)
18.4 %71.4 %23.1 %
Expense ratio (2) (4)
Expense ratio (2) (4)
34.6 %36.7 %35.2 %
Combined ratio (2) (5)
Combined ratio (2) (5)
53.0 %108.1 %58.3 %
(1) Our personal lines income statement also includes amounts related to subsidiaries outside of our insurance companies. We have included these items as these subsidiaries directly support our personal lines operations.
(2) Included in our General and Administrative expenses is $1,007,000 and $812,000 of depreciation and amortization expense related to our personal and commercial lines assets, respectively.
(3) As these are calculated ratios, the addition of the ratios will not result in the same value as the consolidated ratio. To calculate the consolidated ratio please see the corresponding footnote below.
(4)(3) Loss ratio, net is calculated as losses and LAE net of losses ceded to reinsurers, relative to net premiums earned. Management uses this operating metric to analyze our loss trends and believes it is useful for investors to evaluate this component separately from our other operating expenses.
(5)(4) Expense ratio is calculated as the sum of all operating expenses less interest expense relative to net premiums earned. Management uses this operating metric to analyze our expense trends and believes it is useful for investors to evaluate these components separately from our loss expenses.
(6)(5) Combined ratio is the sum of the loss ratio, net and expense ratio. Management uses this operating metric to analyze our total expense trends and believes it is a key indicator for investors when evaluating the overall profitability of our business.
1813

UNITEDAMERICAN COASTAL INSURANCE HOLDINGS CORP.CORPORATION
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 20232024
Three Months Ended March 31, 2022
Commercial
Personal (1)
AdjustmentsConsolidated
Three Months Ended March 31, 2023Three Months Ended March 31, 2023
CommercialCommercial
Personal (1)
AdjustmentsConsolidated
REVENUE:REVENUE:
Gross premiums written
Gross premiums written
Gross premiums writtenGross premiums written$127,964 $14,450 $— $142,414 
Change in gross unearned premiumsChange in gross unearned premiums(20,499)818 — (19,681)
Gross premiums earnedGross premiums earned107,465 15,268 — 122,733 
Ceded premiums earnedCeded premiums earned(62,022)(2,965)— (64,987)
Net premiums earnedNet premiums earned45,443 12,303 — 57,746 
Net investment incomeNet investment income1,127 268 1,404 
Net realized gains35 — 37 
Net realized investment losses
Net unrealized losses on equity securitiesNet unrealized losses on equity securities(769)— (1)(770)
Other revenue
Other revenue
Other revenueOther revenue— 15 — 15 
Total revenuesTotal revenues45,803 12,621 58,432 
EXPENSES:EXPENSES:
Losses and loss adjustment expensesLosses and loss adjustment expenses14,114 12,201 — 26,315 
Losses and loss adjustment expenses
Losses and loss adjustment expenses
Policy acquisition costsPolicy acquisition costs16,678 3,630 — 20,308 
Operating expensesOperating expenses1,109 2,507 91 3,707 
General and administrative expenses (2)
2,320 5,363 381 8,064 
General and administrative expenses
Interest expenseInterest expense— — 2,359 2,359 
Total expensesTotal expenses34,221 23,701 2,831 60,753 
Income (loss) before other incomeIncome (loss) before other income11,582 (11,080)(2,823)(2,321)
Other incomeOther income— (277)1,610 1,333 
Income (loss) before income taxesIncome (loss) before income taxes$11,582 $(11,357)(1,213)(988)
Provision for income taxesProvision for income taxes(715)(715)
Net income (loss)Net income (loss)$(498)$(273)
Less: Net income attributable to noncontrolling interests(85)(85)
Net income (loss) attributable to UIHC$(413)$(188)
Loss ratio, net (2) (3)
Loss ratio, net (2) (3)
Loss ratio, net (3) (4) (7)
31.1 %99.2 %45.6 %
Expense ratio (3) (5) (7)
44.2 %93.5 %55.6 %
Combined ratio (3) (6) (7)
75.3 %192.7 %101.1 %
Total segment assets$949,359 $156,443 $17,507 $1,123,309 
Loss ratio, net (2) (3)
17.7 %29.0 %18.9 %
Expense ratio (2) (4)
Expense ratio (2) (4)
35.6 %111.5 %43.4 %
Combined ratio (2) (5)
Combined ratio (2) (5)
53.3 %140.5 %62.3 %
(1) Our personal lines income statement also includes amounts related to subsidiaries outside of our insurance companies. We have included these items as these subsidiaries directly support our personal lines operations.
(2) Included in our General and Administrative expenses is $1,074,000 and $885,000 of depreciation and amortization expense related to our personal and commercial lines assets, respectively.
(3) As these are calculated ratios, the addition of the ratios will not result in the same value as the consolidated ratio. To calculate the consolidated ratio please see the corresponding footnote below.
(4)(3) Loss ratio, net is calculated as losses and LAE net of losses ceded to reinsurers, relative to net premiums earned. Management uses this operating metric to analyze our loss trends and believes it is useful for investors to evaluate this component separately from our other operating expenses.
(5)(4) Expense ratio is calculated as the sum of all operating expenses less interest expense relative to net premiums earned. Management uses this operating metric to analyze our expense trends and believes it is useful for investors to evaluate these components separately from our loss expenses.
(6)(5) Combined ratio is the sum of the loss ratio, net and expense ratio. Management uses this operating metric to analyze our total expense trends and believes it is a key indicator for investors when evaluating the overall profitability of our business.


Depreciation and amortization related to our commercial lines operating segment totaled $812,000 and $812,000 for the three months ended March 31, 2024 and 2023, respectively.



6)    INVESTMENTS

19

UNITED INSURANCE HOLDINGS CORP.
NotesDepreciation and amortization related to Restated Unaudited Condensed Consolidated Financial Statements
our personal lines operating segment totaled $1,273,000 and $1,007,000 for the three months ended March 31, 2023
The following table details fixed-maturity available-for-sale securities, by major investment category, at March 31,2024 and 2023, and December 31, 2022:
Cost or Adjusted/Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
March 31, 2023
U.S. government and agency securities$3,491 $— $82 $3,409 
Foreign government1,000 — 991 
States, municipalities and political subdivisions31,924 15 3,357 28,582 
Public utilities8,913 — 1,093 7,820 
Corporate securities99,324 58 13,659 85,723 
Mortgage-backed securities64,285 — 8,283 56,002 
Asset-backed securities30,536 36 2,366 28,206 
Total fixed maturities$239,473 $109 $28,849 $210,733 
December 31, 2022
U.S. government and agency securities$2,490 $— $105 $2,385 
Foreign government1,000 — 991 
States, municipalities and political subdivisions30,958 4,065 26,895 
Public utilities8,936 — 1,242 7,694 
Corporate securities99,062 20 15,739 83,343 
Mortgage-backed securities65,251 — 9,136 56,115 
Asset-backed securities30,038 2,788 27,259 
Total fixed maturities$237,735 $31 $33,084 $204,682 

Equity securities are summarized as follows:
March 31, 2023December 31, 2022
Estimated Fair ValuePercent of TotalEstimated Fair ValuePercent of Total
Mutual funds$16,181 100.0 %$15,657 100.0 %
respectively.







14

AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2024
The tables below present the segment assets as of March 31, 2024 and December 31, 2023.

Assets by Segment as of
CommercialPersonalAdjustmentsTotal
March 31, 2024$903,446 $103,947 $69,918 $1,077,311 
December 31, 2023896,159 85,099 71,030 1,052,288 







5)    INVESTMENTS

The following table details fixed-maturity available-for-sale securities, by major investment category, at March 31, 2024 and December 31, 2023:
Cost or Adjusted/Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
March 31, 2024
U.S. government and agency securities$27,494 $— $198 $27,296 
Foreign government— — — — 
States, municipalities and political subdivisions25,806 — 2,529 23,277 
Public utilities5,632 — 504 5,128 
Corporate securities70,027 8,562 61,473 
Mortgage-backed securities52,627 — 7,187 45,440 
Asset-backed securities17,164 1,465 15,702 
Total fixed maturities$198,750 $11 $20,445 $178,316 
December 31, 2023
U.S. government and agency securities$27,489 $11 $68 $27,432 
States, municipalities and political subdivisions26,336 2,480 23,865 
Public utilities5,645 — 511 5,134 
Corporate securities70,197 20 8,368 61,849 
Mortgage-backed securities53,619 — 7,309 46,310 
Asset-backed securities17,665 1,561 16,113 
Total fixed maturities$200,951 $49 $20,297 $180,703 


Equity securities are summarized as follows:
March 31, 2024December 31, 2023
Estimated Fair ValuePercent of TotalEstimated Fair ValuePercent of Total
Mutual funds$6,214 100.0 %$— — %





15

AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2024






When we sellthe Company sells investments, we calculatethe Company calculates the gain or loss realized on the sale by comparing the sales price (fair value) to the cost or adjusted/amortized cost of the security sold. We determine the cost or adjusted/amortized cost of the security sold using
20

UNITED INSURANCE HOLDINGS CORP.
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 2023
the specific-identification method. The following table details our realized gains (losses) by major investment category for the three months ended March 31, 20232024 and 2022,2023, respectively:
202420242023
Gains
(Losses)
Gains
(Losses)
Fair Value at Sale(1)
Gains
(Losses)
Fair Value at Sale(1)
20232022
Gains
(Losses)
Fair Value at SaleGains
(Losses)
Fair Value at Sale
Three Months Ended March 31,Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Fixed maturitiesFixed maturities$$5,292 $41 $12,192 
Equity securities— — — — 
Fixed maturities
Fixed maturities
Short-term investmentsShort-term investments— 126 — — 
Short-term investments
Short-term investments
Other investments
Total realized gainsTotal realized gains5,418 41 12,192 
Fixed maturitiesFixed maturities(87)(41)(4)251 
Equity securities— — — — 
Short-term investments— — — — 
Total realized losses
Total realized losses
Total realized lossesTotal realized losses(87)(41)(4)251 
Net realized investment gains (losses)Net realized investment gains (losses)$(83)$5,377 $37 $12,443 
(1)Fair value at sale includes maturities and paydowns executed at par value.

The table below summarizes our fixed maturities at March 31, 20232024 by contractual maturity periods. Actual results may differ as issuers may have the right to call or prepay obligations, with or without penalties, prior to the contractual maturities of those obligations.
March 31, 2023
Cost or Amortized CostPercent of TotalFair ValuePercent of Total
Due in one year or less$7,097 3.0 %$7,016 3.3 %
Due after one year through five years50,754 21.2 46,402 22.0 
Due after five years through ten years82,508 34.5 69,386 32.9 
Due after ten years4,293 1.8 3,721 1.8 
Asset and mortgage-backed securities94,821 39.5 84,208 40.0 
Total$239,473 100.0 %$210,733 100.0 %

March 31, 2024
Cost or Amortized CostPercent of TotalFair ValuePercent of Total
Due in one year or less$12,395 6.2 %$12,284 6.9 %
Due after one year through five years62,890 31.6 59,194 33.2 
Due after five years through ten years51,157 25.7 43,629 24.5 
Due after ten years2,517 1.3 2,067 1.2 
Asset and mortgage-backed securities69,791 35.2 61,142 34.2 
Total$198,750 100.0 %$178,316 100.0 %

The following table summarizes our net investment income by major investment category:

Three Months Ended March 31,
20232022
Fixed maturities$1,272 $1,431 
Equity securities81 66 
Cash and cash equivalents1,304 22 
Other investments55 
Other assets— — 
Investment income2,663 1,574 
Investment expenses(74)(170)
Net investment income$2,589 $1,404 





Three Months Ended March 31,
20242023
Fixed maturities$1,281 $1,272 
Equity securities13 81 
Cash and cash equivalents3,122 1,304 
Other investments155 
Investment income4,571 2,663 
Investment expenses(63)(74)
Net investment income$4,508 $2,589 

Portfolio monitoring

2116

UNITEDAMERICAN COASTAL INSURANCE HOLDINGS CORP.CORPORATION
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 20232024
We have a quarterly portfolio monitoring process to identify and evaluate each fixed-income security whose carrying value may be impaired as the result of a credit loss. For each fixed-income security in an unrealized loss position, if we determine that we intend to sell the security or that it is more likely than not that we will be required to sell the security before recovery of the cost or amortized cost basis for reasons such as liquidity needs, contractual or regulatory requirements, the security's entire decline in fair value is recorded in earnings.

If our management decides not to sell the fixed-income security and it is more likely than not that we will not be required to sell the fixed-income security before recovery of its amortized cost basis, we evaluate whether the decline in fair value has resulted from credit losses or other factors. This is typically indicated by a change in the rating of the security assigned by a rating agency, and any adverse conditions specifically related to the security or industry, among other factors. If the assessment indicates that a credit loss may exist, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses will be recorded in earnings. Credit loss is limited to the difference between a security's amortized cost basis and its fair value. Any additional impairment not recorded through an allowance for credit losses is recognized in other comprehensive loss.

During the three months ended March 31, 2023,2024, we determined that none of our fixed-income securities shown in the table below that are in an unrealized loss position have declines in fair value that are reflected as a result of credit losses. Therefore, no credit loss allowance was recorded at March 31, 2023.2024. The issuers of our debt security investments continue to make interest payments on a timely basis. We do not intend to sell, nor is it likely that we would be required to sell the debt securities before we recover our amortized cost basis. Equity securities are reported at fair value with changes in fair value recognized in the valuation of equity investments.

The following table presents an aging of our unrealized investment losses by investment class:

Less Than Twelve MonthsLess Than Twelve MonthsTwelve Months or More
Number of Securities(1)
Number of Securities(1)
Gross Unrealized LossesFair Value
Number of Securities(1)
Gross Unrealized LossesFair Value
March 31, 2024
U.S. government and agency securities
U.S. government and agency securities
U.S. government and agency securities
Less Than Twelve MonthsTwelve Months or More
Number of Securities(1)
Gross Unrealized LossesFair Value
Number of Securities(1)
Gross Unrealized LossesFair Value
March 31, 2023 
U.S. government and agency securities$$990 $73 $1,421 
Foreign governments991 — — — 
States, municipalities and political subdivisions
States, municipalities and political subdivisions
States, municipalities and political subdivisionsStates, municipalities and political subdivisions49 3,732 45 3,308 23,324 
Public utilitiesPublic utilities— — — 12 1,093 7,819 
Corporate securitiesCorporate securities35 547 10,964 115 13,112 71,582 
Mortgage-backed securitiesMortgage-backed securities12 248 3,749 116 8,035 52,254 
Asset-backed securitiesAsset-backed securities36 3,013 54 2,330 22,632 
Total fixed maturitiesTotal fixed maturities64 $898 $23,439 344 $27,951 $179,032 
Total fixed maturities
Total fixed maturities
December 31, 2022
December 31, 2023
December 31, 2023
December 31, 2023
U.S. government and agency securitiesU.S. government and agency securities$105 $2,385 — $— $— 
Foreign governments991 — — — 
U.S. government and agency securities
U.S. government and agency securities
States, municipalities and political subdivisions
States, municipalities and political subdivisions
States, municipalities and political subdivisionsStates, municipalities and political subdivisions21 540 7,306 31 3,525 18,853 
Public utilitiesPublic utilities193 2,286 1,049 5,408 
Corporate securitiesCorporate securities78 2,279 24,594 77 13,460 57,765 
Mortgage-backed securitiesMortgage-backed securities48 1,282 15,259 80 7,854 40,856 
Asset-backed securitiesAsset-backed securities16 795 6,397 46 1,993 19,028 
Total fixed maturitiesTotal fixed maturities175 $5,203 $59,218 238 $27,881 $141,910 
Total fixed maturities
Total fixed maturities
(1) This amount represents the actual number of discrete securities, not the number of shares or units of those securities. The numbers are not presented in thousands.



Fair value measurement

22

UNITED INSURANCE HOLDINGS CORP.
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 2023
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The hierarchy for inputs used in determining fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be
17

AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2024
used when available. Assets and liabilities recorded on our Unaudited Condensed Consolidated Balance Sheets at fair value are categorized in the fair value hierarchy based on the observability of inputs to the valuation techniques as follows:

Level 1: Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that we can access.

Level 2: Assets and liabilities whose values are based on the following:
    (a) Quoted prices for similar assets or liabilities in active markets;
    (b) Quoted prices for identical or similar assets or liabilities in markets that are not active; or
(c) Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Unobservable inputs reflect our estimates of the assumptions that market participants would use in valuing the assets and liabilities.

We estimate the fair value of our investments using the closing prices on the last business day of the reporting period, obtained from active markets such as the NYSE, Nasdaq and NYSE American. For securities for which quoted prices in active markets are unavailable, we use a third-party pricing service that utilizes quoted prices in active markets for similar instruments, benchmark interest rates, broker quotes and other relevant inputs to estimate the fair value of those securities for which quoted prices are unavailable. Our estimates of fair value reflect the interest rate environment that existed as of the close of business on March 31, 20232024 and December 31, 2022.2023. Changes in interest rates subsequent to March 31, 20232024 may affect the fair value of our investments.

The fair value of our fixed maturities is initially calculated by a third-party pricing service. Valuation service providers typically obtain data about market transactions and other key valuation model inputs from multiple sources and, through the use of proprietary models, produce valuation information in the form of a single fair value for individual fixed-income and other securities for which a fair value has been requested. The inputs used by the valuation service providers include, but are not limited to, market prices from recently completed transactions and transactions of comparable securities, interest rate yield curves, credit spreads, liquidity spreads, currency rates and other information, as applicable. Credit and liquidity spreads are typically implied from completed transactions and transactions of comparable securities. Valuation service providers also use proprietary discounted cash flow models that are widely accepted in the financial services industry and similar to those used by other market participants to value the same financial information. The valuation models take into account, among other things, market observable information as of the measurement date, as described above, as well as the specific attributes of the security being valued, including its term, interest rate, credit rating, industry sector and, where applicable, collateral quality and other issue or issuer specific information. Executing valuation models effectively requires seasoned professional judgment and experience.

Any change in the estimated fair value of our fixed-income securities would impact the amount of unrealized gain or loss we have recorded, which could change the amount we have recorded for our investments and other comprehensive loss on our Unaudited Condensed Consolidated Balance Sheet as of March 31, 2023.2024.
















18

AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2024






The following table presents the fair value of our financial instruments measured on a recurring basis by level at March 31, 20232024 and December 31, 2022:2023:

23

UNITED INSURANCE HOLDINGS CORP.
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 2023
TotalLevel 1Level 2Level 3
March 31, 2023
TotalTotalLevel 1Level 2Level 3
March 31, 2024
U.S. government and agency securities
U.S. government and agency securities
U.S. government and agency securitiesU.S. government and agency securities$3,409 $— $3,409 $— 
Foreign governmentForeign government991 — 991 — 
States, municipalities and political subdivisionsStates, municipalities and political subdivisions28,582 — 28,582 — 
Public utilitiesPublic utilities7,820 — 7,820 — 
Corporate securitiesCorporate securities85,723 — 85,723 — 
Mortgage-backed securitiesMortgage-backed securities56,002 — 56,002 — 
Asset-backed securitiesAsset-backed securities28,206 — 28,206 — 
Total fixed maturitiesTotal fixed maturities210,733 — 210,733 — 
Total fixed maturities
Total fixed maturities
Mutual fundsMutual funds16,181 16,181 — — 
Total equity securities
Total equity securities
Total equity securities
Other investments (1)
Total investmentsTotal investments$226,914 $16,181 $210,733 $— 
December 31, 2022
December 31, 2023
December 31, 2023
December 31, 2023
U.S. government and agency securitiesU.S. government and agency securities$2,385 $— $2,385 $— 
Foreign government991 — 991 — 
U.S. government and agency securities
U.S. government and agency securities
States, municipalities and political subdivisions
States, municipalities and political subdivisions
States, municipalities and political subdivisionsStates, municipalities and political subdivisions26,895 — 26,895 — 
Public utilitiesPublic utilities7,694 — 7,694 — 
Corporate securitiesCorporate securities83,343 — 83,343 — 
Mortgage-backed securitiesMortgage-backed securities56,115 — 56,115 — 
Asset-backed securitiesAsset-backed securities27,259 — 27,259 — 
Total fixed maturitiesTotal fixed maturities204,682 — 204,682 — 
Total fixed maturities
Total fixed maturities
Mutual FundsMutual Funds15,657 15,657 — — 
Total equity securitiesTotal equity securities15,657 15,657 — — 
Total equity securities
Total equity securities
Other investments (1)
Other investments (1)
125 — 125 — 
Total investmentsTotal investments$220,464 $15,657 $204,807 $— 
(1) Other investments included in the fair value hierarchy exclude these limited partnership interests that are measured at estimated fair value using the net asset value per share (or its equivalent) practical expedient.

Certain financial assets and financial liabilities are measured at fair value on a non-recurring basis; this is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). There were no financial instruments measured on a non-recurring basis at March 31, 20232024 and December 31, 2022.2023.

The carrying amounts for the following financial instrument categories approximate their fair values at March 31, 20232024 and December 31, 2022,2023, because of their short-term nature: cash and cash equivalents, accrued investment income, premiums receivable, reinsurance recoverable, reinsurance payable, other assets, and other liabilities. The carrying amount of our senior notes approximate fair value as the interest rates and terms are variable.

We are responsible for the determination of fair value and the supporting assumptions and methodologies. We have implemented a system of processes and controls designed to provide assurance that our assets and liabilities are appropriately valued. For fair values received from third parties, our processes are designed to provide assurance that the valuation
19

AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2024
methodologies and inputs are appropriate and consistently applied, the assumptions are reasonable and consistent with the objective of determining fair value, and the fair values are accurately recorded.

At the end of each quarter, we determine whether we need to transfer the fair values of any securities between levels of the fair value hierarchy and, if so, we report the transfer as of the end of the quarter. During the quarter ended March 31, 2023,2024, we transferred no investments between levels.

For our investments in U.S. government securities that do not have prices in active markets, agency securities, state and municipal governments, and corporate bonds, we obtain the fair values from our investment custodians, which use a third-party valuation service. The valuation service calculates prices for our investments in the aforementioned security types on a month-
24

UNITED INSURANCE HOLDINGS CORP.
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 2023
endmonth-end basis by using several matrix-pricing methodologies that incorporate inputs from various sources. The model the valuation service uses to price U.S. government securities and securities of states and municipalities incorporates inputs from active market makers and inter-dealer brokers. To price corporate bonds and agency securities, the valuation service calculates non-call yield spreads on all issuers, uses option-adjusted yield spreads to account for any early redemption features, and adds final spreads to the U.S. Treasury curve at 3 p.m. (ET) as of quarter end. Since the inputs the valuation service uses in its calculations are not quoted prices in active markets, but are observable inputs, they represent Level 2 inputs.

Other investments

We acquired investments in limited partnerships, recorded in the other investments line of our Unaudited Condensed Consolidated Balance Sheets, and these investments are currently being measured at estimated fair value utilizing a net asset value per share (or its equivalent) practical expedient.

The information presented in the table below is as of March 31, 2023:2024:

Book ValueUnrealized GainUnrealized LossFair Value
March 31, 2023
Book ValueBook ValueUnrealized GainUnrealized LossFair Value
March 31, 2024
Limited partnership investments (1)
Limited partnership investments (1)
Limited partnership investments (1)
Limited partnership investments (1)
$2,917 $633 $— $3,550 
Short-term investments
Short-term investments
Short-term investments
Total other investments
(1) Distributions will be generated from investment gains, from operating income, from underlying investments of funds, and from liquidation of the underlying assets of the funds. We estimate that the underlying assets of the funds will be liquidated over the next few months to five years.

Restricted Cash

We are required to maintain assets on deposit with various regulatory authorities to support our insurance operations. The cash on deposit with state regulators is available to settle insurance liabilities. We also use trust funds in certain reinsurance transactions.

The following table presents the components of restricted assets:
March 31, 2023December 31, 2022
March 31, 2024March 31, 2024December 31, 2023
Trust fundsTrust funds$49,046 $45,364 
Cash on deposit (regulatory deposits)Cash on deposit (regulatory deposits)625 624 
Total restricted cashTotal restricted cash$49,671 $45,988 


In addition to the cash held on deposit described above, we also have securities on deposit with regulators, which are presented within our Fixed Maturities or Other Investments lines on the Unaudited Condensed Balance Sheets, dependent upon if they are short-term or long-term in nature. The table below shows the carrying value of those securities held on deposit with regulators.
March 31, 2023December 31, 2022
Invested assets on deposit (regulatory deposits)$2,491 $2,616 
March 31, 2024December 31, 2023
Invested assets on deposit (regulatory deposits)$1,495 $1,495 


20

AMERICAN COASTAL INSURANCE CORPORATION

Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2024






7)6)    EARNINGS PER SHARE (EPS)

25

UNITED INSURANCE HOLDINGS CORP.
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 2023
Basic EPS is based on the weighted average number of common shares outstanding for the period, excluding any dilutive common share equivalents. Diluted EPS reflects the potential dilution resulting from the vesting of outstanding restricted stock awards, restricted stock units, performance stock units and stock options. The following table shows the computation of basic and diluted EPS for the three month periods ended March 31, 20232024 and 2022,2023, respectively:

Three Months Ended March 31,
20232022
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
202420242023
Numerator:Numerator:
Net income (loss) attributable to UIHC common stockholders$267,280 $(33,172)
Net income (loss) attributable to ACIC common stockholders
Net income (loss) attributable to ACIC common stockholders
Net income (loss) attributable to ACIC common stockholders
Denominator:Denominator:
Denominator:
Denominator:
Weighted-average shares outstanding
Weighted-average shares outstanding
Weighted-average shares outstandingWeighted-average shares outstanding43,124,825 42,980,691 
Effect of dilutive securitiesEffect of dilutive securities450,015 — 
Weighted-average diluted sharesWeighted-average diluted shares43,574,840 42,980,691 
Earnings available to UIHC common stockholders per share
Earnings available to ACIC common stockholders per share
Earnings available to ACIC common stockholders per share
Earnings available to ACIC common stockholders per share
Basic
Basic
BasicBasic$6.19 $(0.77)
DilutedDiluted$6.14 $(0.77)

See Note 1817 of these Notes to Unaudited Condensed Consolidated Financial Statements for additional information on the stock grants related to dilutive securities.

8)7)    PROPERTY AND EQUIPMENT, NET

Property and equipment, net consists of the following:
March 31,
2023
December 31,
2022
Computer hardware and software (software in progress of $76 and $82, respectively)
$8,134 $8,164 
Office furniture and equipment798 1,414 
Leasehold improvements316 753 
 Leased vehicles(1)
11 1,080 
Total, at cost9,259 11,411 
Less: accumulated depreciation and amortization(4,536)(6,118)
Property and equipment, net$4,723 $5,293 
March 31,
2024
December 31,
2023
Computer hardware and software$15,873 $7,925 
Office furniture and equipment705 748 
Leasehold improvements— 311 
Total, at cost16,578 8,984 
Less: accumulated depreciation and amortization(6,227)(5,326)
Property and equipment, net$10,351 $3,658 
(1) Includes vehicles under financing leases. See Note 13 of these Notes to Unaudited Condensed Consolidated Financial Statements for further information on leases.

Depreciation and amortization expense under property and equipment was $1,008,000 and $1,272,000$1,273,000 for the three months ended March 31, 2023 and 2022, respectively.2024. During the three months ended March 31, 2024, we moved capitalized software from discontinued operations to continuing operations to align with the Company's use of the system in the current year. Please see Note 3 for more detail. Depreciation and amortization expense under property and equipment was $1,008,000 for the three months ended March 31, 2023. During the three months ended March 31, 2024, we sold or disposed of leasehold improvements totaling $311,000. The accumulated depreciation on these improvements totaled $232,000 at the time of disposal. We disposed of computer hardware and software totaling $147,000. The accumulated depreciation on these systems totaled $98,000 at the time of disposal. In addition, we disposed of office furniture totaling $43,000. The accumulated depreciation on the office furniture totaled $41,000 at the time of disposal. During the year ended December 31, 2023, we sold or disposed of leased vehicles totaling $1,069,000.
21

AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2024
The accumulated depreciation on these vehicles totaled $1,037,000$1,038,000 at the time of disposal. We realized a net gain on this disposal of $422,000.$559,000. We disposed of computer hardware and software totaling $1,061,000. The accumulated depreciation on these systems totaled $379,000 at the time of disposal. In addition, we disposed of office furniture totaling $616,000$749,000 during the period. Accumulated depreciation at the time of this disposal totaled $603,000, respectively. During$702,000. Our depreciation and amortization expense under property and equipment can be attributed fully to our personal lines operating segment for these periods. These gains (losses) are reflected within "Other income" on the year ended December 31, 2022, we disposedUnaudited Condensed Consolidated Statements of computer hardware and software totaling $13,202,000, primarily related to the retirement of one of our policy systems for states in which we no longer write policies. The depreciation on these systems totaled $12,691,000 at the time of disposal. We also sold or disposed of leased vehicles totaling $1,222,000. The depreciation on these vehicles totaled $1,114,000 prior to disposal. The net gain on sale of these vehicles totaled $738,000. Finally, we sold three buildings and their related assets totaling $13,369,000. The depreciation on these buildings and related assets totaled $5,129,000 prior to disposal. The net realized gain on these sales totaled $12,164,000.Comprehensive Income.

9)8) GOODWILL AND INTANGIBLE ASSETS

26

UNITED INSURANCE HOLDINGS CORP.
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 2023
Goodwill

The carrying amount of goodwill at March 31, 20232024 and December 31, 20222023 was $59,476,000.

No impairment in the value of goodwill was recognized during the three month period ended March 31, 2023. As a result of the strategic decision to place our former subsidiary UPC into an orderly runoff, we recognized an impairment of our personal lines reporting unit's goodwill totaling $13,569,000 during the third quarter of 2022. The goodwill attributable to our commercial lines reporting unit was most recently tested for impairment during the fourth quarter of 2022. It was determined that there was no additional impairment in the value of the asset as of December 31, 2022.2024.

Goodwill allocated to our commercial lines reporting unit was $59,476,000 at March 31, 20232024 and December 31, 2022.2023. There was no goodwill allocated to our personal lines reporting unit at March 31, 20232024 and December 31, 2022.2023.

There was no goodwill acquired or disposed of during the three month periods ended March 31, 20232024 and 20222023. Accumulated impairment related to goodwill was $13,569,000$10,156,000 at March 31, 20232024 and December 31, 2022.2023. Accumulated impairment can be attributed to our personal lines segment.

Intangible Assets

The following is a summary of intangible assets excluding goodwill recorded as intangible assets on our Unaudited Condensed Consolidated Balance Sheets:
March 31, 2023December 31, 2022
March 31, 2024March 31, 2024December 31, 2023
Intangible assets subject to amortizationIntangible assets subject to amortization$10,560 $11,372 
Indefinite-lived intangible assets(1)
Indefinite-lived intangible assets(1)
1,198 1,398 
TotalTotal$11,758 $12,770 
(1) Indefinite-lived intangible assets are comprised of state insurance and agent licenses, as well as perpetual software licenses.


Intangible assets subject to amortization consisted of the following:
Weighted-average remaining amortization period (in years)Gross carrying amountAccumulated amortizationNet carrying amount
March 31, 2023
Weighted-average remaining amortization period (in years)Weighted-average remaining amortization period (in years)Gross carrying amountAccumulated amortizationNet carrying amount
March 31, 2024
Value of business acquired
Value of business acquired
Value of business acquiredValue of business acquired$42,788 $(42,788)$— 
Agency agreements acquiredAgency agreements acquired4.034,661 (24,910)9,751 
Trade names acquiredTrade names acquired1.06,381 (5,572)809 
TotalTotal$83,830 $(73,270)$10,560 
December 31, 2022
December 31, 2023
December 31, 2023
December 31, 2023
Value of business acquired
Value of business acquired
Value of business acquiredValue of business acquired$42,788 $(42,788)$— 
Agency agreements acquiredAgency agreements acquired4.334,661 (24,300)10,361 
Trade names acquiredTrade names acquired1.36,381 (5,370)1,011 
TotalTotal$83,830 $(72,458)$11,372 

22

AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2024
No impairment in the value of amortizing or non-amortizing intangible assets was recognized during the three months ended March 31, 20232024 and 2022.2023. However, during the three months ended March 31, 2023, and year ended December 31, 2022, we disposed of intangible assets totaling $200,000 and $2,359,000, respectively.$200,000.

Amortization expense of our intangible assets was $812,000 and $812,000 for both the three months ended March 31, 20232024 and 2022, respectively.2023.

27

UNITED INSURANCE HOLDINGS CORP.
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 2023

Estimated amortization expense of our intangible assets to be recognized by the Company during the remainder of 20232024 and over the next five years is as follows:
Year ending December 31,Year ending December 31,Estimated Amortization ExpenseYear ending December 31,Estimated Amortization Expense
Remaining in 2023$2,435 
20242,640 
Remaining in 2024
202520252,438 
202620262,438 
20272027609 
20282028— 
2029

10)9)    REINSURANCE

Our catastrophe reinsurance program isprograms are designed primarily by utilizing our risk management methodology,third-party catastrophe modeling software and consulting with third-party reinsurance experts to addressproject our exposure to catastrophes. catastrophe events. We evaluate modeled expected losses developed by the catastrophe modeling software using our risk portfolio data to estimate probable maximum losses (PML) across multiple return periods and the average annual loss. The Company monitors and manages its catastrophe risk using this model output along with other internal and external data sources, such as our historical loss experience and industry loss experience, to develop our view of catastrophe risk.

Our catastrophe reinsurance coverage consists of three separate placements:

1.AmCoastal’s core catastrophe reinsurance program in effect June 1 through May 31, annually, which includes excess of loss and quota share treaties providing coverage for catastrophe losses from named or numbered windstorms and earthquakes;

2.AmCoastal’s all other perils catastrophe excess of loss agreement in effect January 1 through December 31, annually, which provides protection from catastrophe loss events other than named or numbered windstorms and earthquakes; and

3.IIC’s core catastrophe reinsurance program in effect June 1 through May 31, annually, which provides protection from all catastrophe losses.

This reinsurance protection for catastrophes, including hurricanes and tropical storms. These reinsurance agreements areis an essential part of our catastrophe risk management strategy, whichstrategy. It is intended to provide our stockholders with an acceptable return on the risks assumed inby our property business,insurance entities, and to reduce the variability of earnings, while providing protection to our policyholders.surplus protection. Although reinsurance agreements contractually obligate our reinsurers to reimburse us for the agreed-upon portion of our gross paid losses, they do not discharge our primary liability. In the event one or more of our reinsurers fail to fulfill their obligation, the surplus of our statutory entities may decline, and we may not be able to fulfill our obligation to policyholders, or we may not be able to maintain compliance with various regulatory financial requirements. Additionally, we face the risk that actual losses incurred from one or more catastrophic events may be above the modeled expected loss, resulting in losses exceeding our reinsurance coverage, which may result in a decline in surplus, and as a result we may not be able to fulfill our obligations to policyholders, or we may not be able to maintain compliance with various regulatory financial requirements. The details of our programs and the likelihood of a catastrophic event exceeding these three coverages are outlined below.

Our program includes excess of loss and quota share treaties. OurAmCoastal’s core catastrophe reinsurance program in effect from June 1, 2022 through May 31, 2023, provides occurrence-based coverage for catastrophe losses from named or numbered windstorms and earthquakes up to an exhaustion point of approximately $2,500,000,000$1,100,000,000 for a first occurrence and $1,300,000,000 in the aggregate, including coverage related toaggregate. Under this program, our former insurance subsidiary, UPC. Under our core catastrophe excess of loss treaty, retention on a first and second event is $16,400,000 each. During$10,000,000 each, plus $2,250,000 retained separately by our captive. AmCoastal’s program
23

AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2024
provides sufficient coverage for a 1-in-150-year return period, indicating that the third quarter, oneprobability of a single occurrence exceeding protection purchased is roughly 0.7% estimated by equally blending the our reinsurers participating on the $25,000,000 excess of $20,000,000 layer of the coreAIR and RMS catastrophe models using long-term catalogs including demand surge. AmCoastal’s program exercisedalso provides sufficient coverage for a contractual right to terminate their participation due to Demotech's downgrade of UPC's Financial Stability Rating. We were unsuccessful in replacing this coverage1-in-100-year event followed by a 1-in-50-year event in the open marketsame treaty year, the probability of which is less than 0.1%. While we believe these catastrophe models are very good tools and their output provides reasonable proxies for the probability of exhausting our reinsurance protections, they are imperfect, so our captive reinsurer, UPC Re, stepped into the $25,000,000 excess of $20,000,000 layer which was subsequently impacted by Hurricane Ian resulting in an additional retained loss of $20,100,000. The exhaustion point of IIC's catastrophe reinsurance program is approximately $200,000,000 in the aggregate, with a retention of $3,000,000 per occurrence, covering all perils.actual results could vary dramatically from those expected.

During the third quarter of 2022, the Company's core catastrophe reinsurance program was impacted by Hurricane Ian. As a result, the Company has approximately $508 million of occurrence limit remaining for Ian all of which is attributable to ACIC only. After reinstatement premiums of approximately $15.4 million, the Company, with its former subsidiary UPC has approximately $993 million of aggregate limit remaining after Ian, based on our estimated ultimate net loss subject to the core catastrophe reinsurance program.

Effective January 1, 2023, we renewed ourAmCoastal’s all other perils catastrophe excess of loss agreement. The agreement provides protection from catastrophe loss events other than named windstorms and earthquakes up to $101,000,000.$172,000,000 in the aggregate. This agreement provides sufficient coverage for a 1-in-450-year return period, indicating that the probability of a single occurrence exceeding protection purchased is no more than 0.2%.

DuringIIC’s core catastrophe reinsurance program provides coverage up to an exhaustion point of approximately $82,000,000 in the third quarteraggregate, with a retention of 2022,$3,000,000 per occurrence. Based on IIC’s PML, the program provides sufficient coverage for a 1-in-130-year return period, indicating the probability of a single occurrence exceeding protection purchased is no more than 0.8%. IIC’s program also provides sufficient coverage for a 1-in-100-year event followed by a 1-in-50-year event in the same treaty year, the probability of which is less than 0.1%.

Effective December 15, 2023, we agreed to commute a private reinsurer’s share of core catastrophe reinsurance coverage and replace this gap in coverage with new coverage provided by one of our other private reinsurers who held a 100% share of the $15,000,000 in excess of $15,000,000 layer on our all other perils catastrophe excess of loss agreement notified us of their intent to terminate the agreement due to the contractual provision regarding the change in our former subsidiary UPC's statutory surplus being greater than 25%. We agreed to a termination and commutation date of September 30, 2022 for this contract.reinsurers. This changetransaction resulted in additional expense of approximately $1,300,000$6,300,000 for the year ended December 31, 2023, and a reduction in expense of ceded premium savings that would have otherwise been due inapproximately $9,400,000 during the fourth quarter of 2022 and the Company retaining all the risk for any non-hurricane catastrophe losses up to $30,000,000, excluding any quota share recoveries.three months ended March 31, 2024.

The table below outlines our quota share agreements in effect for the three months ended March 31, 20232024 and 2022.2023. The impacts of these quota share agreements on the financial statements of our former subsidiay, UPC's financial statementssubsidiary, UPC, are included in discontinued operations.
28

UNITED INSURANCE HOLDINGS CORP.
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 2023
Reinsurer
Companies in Scope (1)
Effective DatesCession RateStates in Scope
External third-partyAmCoastal06/01/2023 - 06/01/2024
40% (1)
Florida
External third-partyUPC, FSIC & ACICAmCoastal06/01/2022 - 06/01/2023
10% (2)(1)
Florida, Louisiana, Texas
TypTapUPC06/01/2022 - 06/01/2023
100% (3)(2)
Georgia, North Carolina, South Carolina
External third-partyUPC, FSIC & ACIC12/31/2021 - 12/31/2022
8% (2)
Florida, Louisiana, Texas
HCPCIUPC12/31/2021 - 06/01/202285%Georgia, North Carolina, South Carolina
External third-partyUPC & FSIC12/31/2021 - 12/31/2022
25% (4)
Florida, Louisiana, Texas
HCPCI / TypTap (5)
UPC06/01/2021 - 06/01/2022
100% (3)
Connecticut, New Jersey, Massachusetts, Rhode Island
External third-party
UPC, FSIC & ACIC (6)
06/01/2021 - 06/01/2022
15% (2)
Florida, Georgia, Louisiana, North Carolina, South Carolina, Texas
IICUPC12/31/2020 - 12/31/2022100%New York
(1) Effective May 31, 2022, FSIC was merged into UPC, with UPC being the surviving entity.
(2) This treaty provides coverage for all catastrophe perils and attritional losses incurred. For all catastrophe perils, the quota share agreement provides ground- up protection, effectively reducing our retention for catastrophe losses.
(3)(2) This treaty providesprovided coverage on our in-force, new and renewal policies until these states arewere transitioned to HCPCI or TypTap upon renewal.
(4) This treaty provides coverage on non-catastrophe losses on policies in-force on the effective date of the agreement.
(5) Cessions are split 50% to HCPCI and 50% to TypTap.
(6) This treaty was amended effective December 31, 2020 to include ACIC.

Reinsurance recoverable at the balance sheet dates consists of the following:
March 31,December 31,
20232022
March 31,March 31,December 31,
202420242023
Reinsurance recoverable on unpaid losses and loss adjustment expensesReinsurance recoverable on unpaid losses and loss adjustment expenses$646,011 $732,254 
Reinsurance recoverable on paid losses and loss adjustment expensesReinsurance recoverable on paid losses and loss adjustment expenses146,339 64,292 
Reinsurance recoverable (1)
Reinsurance recoverable (1)
$792,350 $796,546 
(1) Our reinsurance recoverable balance is net of our allowance for expected credit losses. More information related to this allowance can
be found in Note 1413.



11)





24

AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2024







10) LIABILITY FOR UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSE (LAE)
We determine the reserve for unpaid losses on an individual case basis for all incidents reported. The liability also includes amounts for incurred but not reported (IBNR) claims as of the balance sheet date.
The table below shows the analysis of our reserve for unpaid losses for the three months ended March 31, 20232024 and 20222023 on a GAAP basis:
29

UNITED INSURANCE HOLDINGS CORP.
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 2023
March 31,
March 31,March 31,
20232022 20242023
Balance at January 1Balance at January 1$842,958 $250,642 
Less: reinsurance recoverable on unpaid lossesLess: reinsurance recoverable on unpaid losses732,254 176,096 
Net balance at January 1Net balance at January 1$110,704 $74,546 
Incurred related to:Incurred related to:
Incurred related to:
Incurred related to:
Current year
Current year
Current yearCurrent year19,577 29,379 
Prior yearsPrior years(3,165)(3,064)
Total incurredTotal incurred$16,412 $26,315 
Paid related to:Paid related to:
Current yearCurrent year10,654 11,219 
Current year
Current year
Prior yearsPrior years14,108 18,358 
Total paidTotal paid$24,762 $29,577 
Net balance at March 31
Net balance at March 31
Net balance at March 31Net balance at March 31$102,354 $71,284 
Plus: reinsurance recoverable on unpaid lossesPlus: reinsurance recoverable on unpaid losses646,011 168,289 
Balance at March 31Balance at March 31$748,365 $239,573 
Composition of reserve for unpaid losses and LAE:
Composition of reserve for unpaid losses and LAE:
Composition of reserve for unpaid losses and LAE:
Composition of reserve for unpaid losses and LAE:
Case reserves
Case reserves
Case reserves Case reserves$284,679 $119,969 
IBNR reserves IBNR reserves463,686 119,604 
Balance at March 31Balance at March 31$748,365 $239,573 

Based upon our internal analysis and our review of the annual statement of actuarial opinion provided by our actuarial consultants at December 31, 2022,2023, we believe that the reserve for unpaid losses reasonably represents the amount necessary to pay all claims and related expenses which may arise from incidents that have occurred as of the balance sheet date.
As reflected in the table above, we had favorable development in both 20232024 and 20222023 related to prior year losses. This favorable development came as a result of re-estimating ultimate losses in 2024 and 2023 based on historical loss trends. The loss payments made by the Company during the three months ended March 31, 2023,2024, were lowerhigher than the loss payments made during the three months ended March 31, 2022,2023, due to the settling of claims related to non-tropical stormprior year catastrophe events.claims. Current year loss payments remained relatively flat. Case and IBNR reserves and reinsurance recoverable on unpaid losses increasedalso decreased when compared to the prior period as a result of Hurricane Ian, which made landfall during the third quartercontinued settlement of 2022.prior year claims with no similar losses in 2023 or the current year.

12)    LONG-TERM DEBT

Long-Term Debt

The table below presents all long-term debt outstanding as of March 31, 2023 and December 31, 2022:
Effective Interest RateCarrying Value at
MaturityMarch 31, 2023December 31, 2022
Senior NotesDecember 15, 20277.25%$150,000 $150,000 
Florida State Board of Administration Note (1)
July 1, 2026N/A— — 
Truist Term Note Payable (2)
May 26, 2031N/A— — 
Total long-term debt$150,000 $150,000 
(1) Our Florida State Board of Administration Note was held by our former subsidiary, UPC.
(2) Our Truist Term Note Payable was repaid in full on August 12, 2022.
3025

UNITEDAMERICAN COASTAL INSURANCE HOLDINGS CORP.CORPORATION
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 20232024




11)    LONG-TERM DEBT

Senior Notes Payable

On December 13, 2017, we issued $150,000,000 of 10-year senior notes (the Senior Notes) that will mature on December 15, 2027 and bear interest at a rate equal to 6.25% per annum payable semi-annually on each June 15 and December 15, commencing June 15, 2018. The Senior Notes are senior unsecured obligations of the Company. We may redeem the Senior Notes at our option, at any time and from time to time in whole or in part, prior to September 15, 2027, at a redemption price equal to the greater of (i) 100% of the principal amount of the notes to be redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon from the date of redemption to the date that is three months prior to maturity, plus accrued and unpaid interest thereon. On or after that date, we may redeem the Senior Notes at par, plus accrued and unpaid interest thereon. On December 8, 2022, the Kroll Bond Rating Agency, LLC announced a downgrade of our issuer and debt ratings from BBB- to BB+. As a result, pursuant to our agreement, the interest rate of our Senior Notes increased from 6.25% to 7.25% effective on the next interest payment date of June 15, 2023.

Florida State Board of Administration Note Payable

On September 22, 2006, we issued a $20,000,000, 20-year note payable to the Florida State Board of Administration (the SBA Note). For the first three years of the SBA Note we were required to pay interest only. On October 1, 2009, we began to repay the principal in addition to interest. The SBA Note bears an annual interest rate equivalent to the 10-year Constant Maturity Treasury rate (as defined in the SBA Note agreement), which resets quarterly. This note was held by our former insurance subsidiary, UPC. On February 27, 2023, UPC was placed into receivership with the Florida Department of Financial Services, divesting our ownership of UPC.

Truist Term Note Payable

On May 26, 2016, we issued a $5,200,000, 15-year term note payable to Truist (the Truist Note), with the intent to use the funds to purchase, renovate, furnish and equip our principal executive office. The Truist Note bears interest at 1.65% in excess of the one-month LIBOR, which resets monthly. LIBOR was phased out at the end of 2021, however, the Intercontinental Exchange will continue to publish one-month LIBOR settings through 2023. The outstanding Truist Note payable balance, including applicable interest, was repaid in full on August 12, 2022. Therefore, effective August 12, 2022, Truist no longer holds our principal executive office as collateral and may not take possession of or foreclose upon the office.

Financial Covenants

Senior Notes - Our Senior Notes provide that the Company and its subsidiaries shall not incur any indebtedness unless no default exists and the Company’s leverage ratio as of the last day of any annual or quarterly period (the balance sheet date) immediately preceding the date on which such additional indebtedness is incurred would have been no greater than 0.3:1, determined on a pro forma basis as if the additional indebtedness and all other indebtedness incurred since the immediately preceding balance sheet date had been incurred and the proceeds therefrom applied as of such day. The Company and its subsidiaries also may not create, assume, incur or permit to exist any indebtedness for borrowed money that is secured by a lien on the voting stock of any significant subsidiary without securing the Senior Notes equally. The Company may not issue, sell, assign, transfer or otherwise dispose of, directly or indirectly, any of the capital stock of the Company’s significant subsidiaries as of the issue date of the Senior Notes (except to the Company or to one or more of the Company’s other subsidiaries, or for the purpose of qualifying directors or as may be required by law or regulation), subject to certain exceptions. At December 31, 2022,2023, while our leverage ratio was greater than the allowed ratio above, we did not incur any additional debtindebtedness during the period and as a result, we were in compliance with the covenants in the Senior Notes.


SBA Note - Our SBA Note required that UPC maintained either a 2:1 ratio of net written premium to surplus, or net writing ratio, or a 6:1 ratio of gross written premium to surplus, or gross writing ratio, to avoid additional interest penalties. The SBA Note agreement defined surplus for the purpose of calculating the required ratios as the $20,000,000 of capital contributed to UPC under the agreement plus the outstanding balance of the note. Should UPC have failed to exceed either a net writing ratio of 1.5:1 or a gross writing ratio of 4.5:1, UPC's interest rate would have increased by 450 basis points above the 10-year Constant Maturity Treasury rate, which was 3.76% at the end of March 2023. Any other writing ratio deficiencies resulted in an interest rate penalty of 25 basis points above the stated rate of the note. Our SBA Note further provided that the Florida State Board of Administration may, among other things, declare its loan immediately due and payable upon any default existing
31

UNITED INSURANCE HOLDINGS CORP.
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 2023
under the SBA Note; however, any payment is subject to approval by the insurance regulatory authority. At March 31, 2023, we were no longer the holders of the SBA Note.

Debt Issuance Costs

The table below presents the rollforwardroll forward of our debt issuance costs paid, in conjunction with the debt instruments described above, during the three months ended March 31, 20232024 and 2022:2023:
202420242023
Balance at January 1,
20232022
Balance at January 1,$1,645 $1,998 
Additions— — 
Amortization
Amortization
AmortizationAmortization(83)(84)
Balance at March 31,Balance at March 31,$1,562 $1,914 

13)12)    COMMITMENTS AND CONTINGENCIES

Litigation

We are involved in claims-related legal actions arising in the ordinary course of business. We accrue amounts resulting from claims-related legal actions in unpaid losses and LAE during the period that we determine an unfavorable outcome becomes probable and we can estimate the amounts. Management makes revisions to our estimates based on its analysis of subsequent information that we receive regarding various factors, including: (i) per claim information; (ii) company and industry historical loss experience; (iii) judicial decisions and legal developments in the awarding of damages; and (iv) trends in general economic conditions, including the effects of inflation.
26

AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2024

AtOn October 20, 2023, we received notice that the DFS filed a notice of claim and demand for tender of insurance policy limits under our director and officer insurance to carriers participating in our director and officer’s insurance program (the “Claim”). The Claim alleges that former officers and directors of UPC were involved in wrongful acts that resulted in UPCs insolvency and demands immediate tender of our director and officer’s policy limit of $40,000,000 where we have a retention of $1,500,000. The former directors and officers of UPC deny the allegations. Although no litigation has arisen from the Claim, litigation is anticipated. The directors and officers plan to vigorously defend against the Claim; however, due to our indemnification obligation, during 2023, we accrued the policy retention amount of $1,500,000. This claim remains open as of March 31, 2023, the Company is involved in legal proceedings whereby on August 18, 2021, a former employee of Skyway Legal Services, LLC, filed a complaint against the Company in the United States District Court for the District of Delaware. The lawsuit alleges violations of and damages arising under Title VII of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act of 1967, and seeks damages in an unspecified amount. The Company, a named party to the lawsuit, denies that it employed the plaintiff and disputes the claims set forth in the lawsuit. On September 27, 2022, venue was transferred to the United States District Court for the Middle District of Florida, Tampa Division. The Company believes that an unfavorable outcome is neither probable nor estimable.2024.

Commitments to fund partnership investments

We have fully funded one limited partnership investments andinvestment. We have committed to fund our remaining limited partnership investment. The amount ofno unfunded commitments was $4,242,000 and $4,238,000 at March 31, 20232024 and December 31, 2022, respectively.2023.

Leases

We, as lessee, have entered into leases of commercial office space of various term lengths. In addition to office space, we lease office equipment and a parking lot under operating leases and vehicles under finance leases.












32

UNITED INSURANCE HOLDINGS CORP.
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 2023
The classification of operating and finance lease asset and liability balances within the Unaudited Condensed Consolidated Balance Sheets was as follows:
Financial Statement LineMarch 31, 2023December 31, 2022
Financial Statement LineFinancial Statement LineMarch 31, 2024December 31, 2023
AssetsAssets
Operating lease assetsOperating lease assetsOther assets$1,096 $1,278 
Financing lease assetsProperty and equipment, net51 
Operating lease assets
Operating lease assets
Total lease assets
Total lease assets
Total lease assetsTotal lease assets$1,098 $1,329 
LiabilitiesLiabilities
Liabilities
Liabilities
Operating lease liabilitiesOperating lease liabilitiesOperating lease liability$1,412 $1,689 
Financing lease liabilitiesOther liabilities— 
Operating lease liabilities
Operating lease liabilities
Total lease liabilitiesTotal lease liabilities$1,412 $1,691 
Total lease liabilities
Total lease liabilities

The components of lease expenses were as follows:
Three Months Ended March 31,
20232022
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
202420242023
Operating lease expenseOperating lease expense$222 $160 
Financing lease expense:Financing lease expense:
Amortization of leased assets
Amortization of leased assets
Amortization of leased assetsAmortization of leased assets129 
Net lease expenseNet lease expense$229 $289 
Net lease expense
Net lease expense

At March 31, 2023,2024, future minimum gross lease payments relating to these non-cancellable operating and finance lease agreements were as follows:
Operating LeasesFinance LeasesTotal
Remaining in 2023$682 $— $682 
2024593 — 593 
March 31, 2024
March 31, 2024
March 31, 2024
Remaining in 2024
20252025222 — 222 
2026202611 — 11 
20272027— — — 
Thereafter— — — 
Total undiscounted future minimum lease payments
Total undiscounted future minimum lease payments
Total undiscounted future minimum lease paymentsTotal undiscounted future minimum lease payments1,508 — 1,508 
Less: Imputed interestLess: Imputed interest(96)— (96)
Present value of lease liabilitiesPresent value of lease liabilities$1,412 $— $1,412 

27

AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2024
Weighted average remaining lease term and discount rate related to operating and finance leases were as follows:

March 31, 2023December 31, 2022
Weighted average remaining lease term (months)
Operating leases23 25 
Financing leases— 
Weighted average discount rate
Operating leases3.70 %3.79 %
Financing leases— %3.27 %
March 31, 2024December 31, 2023
Weighted average remaining lease term (months)20 17 
Weighted average discount rate3.47 %3.30 %


33

UNITED INSURANCE HOLDINGS CORP.
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 2023
There were no other cash or non-cash related activities during the three months ended March 31, 20232024 and 2022.2023.

Capital lease amortization expenses are included in depreciation expense in our Unaudited Condensed Consolidated Statements of Comprehensive Loss.Income. See Note 87 of these Notes to Unaudited Condensed Consolidated Financial Statements for more information regarding depreciation expense, Note 1211 for information regarding commitments related to long-term debt, and Note 1514 for information regarding commitments related to regulatory actions.

Subleases

We previously leased and occupied office space in which we no longer operate. Effective October 1, 2022, this office space is nowwas subleased to a third-party. ThisThe sublease iswas effective from October 1, 2022 through July 31, 2025, with no option to extend. However, on February 29, 2024, this sublease was cancelled as a part of an agreement to terminate the original lease associated with the office space. During the three months ended March 31, 2023,2024, we recognized $33,000 of income related to this sublease, exclusive of the lease expense associated with the original lease. During the year ended December 31, 2022, we recognized $297,000 of income related to this sublease, exclusive of the lease expense associated with the original lease.

Additionally, as a result of the sublease, we evaluated our right-of-use asset associated with the original lease for impairment, using the undiscounted cash flows from the sublease. During the year ended December 31, 2022, we recognized impairment of $175,000, which was recognized in the results of our personal lines operating segment.

Employee Retention Credit

A series of legislation was enacted in the United States during 2020 and 2021 in response to the COVID-19 pandemic that provided financial relief for businesses impacted by government-mandated shutdowns, work stoppages, or other losses suffered by employers. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provided an employee retention credit, which is a refundable tax credit against certain employment taxes of up to $5,000 per employee for eligible employers. The tax credit is equal to 50% of qualified wages paid to employees during a quarter, capped at $10,000 of qualified wages per employee. During the second quarter of 2022, we evaluated our eligibility and filed for a $10,161,000 refund in connection with our Employee Retention Tax Credit for the tax year ended December 31, 2021. As of March 31, 2022,2024, we have received $5,718,000 from the Internal Revenue ServiceIRS related to this refund. A gain contingency is an uncertain situation that will be resolved in the future, possibly resulting in a gain. We have not recorded the recognition ofrecognized this gain contingency of $10,161,000 within our financial statements except for whatthe $5,718,000 that has already been received and what was received after the balance sheet date prior to finalizing our results for the quarter, prior to settlement of the underlying event.received.

WhileQuota Share Commission Loss Contingency

AmCoastal participates in shared quota-share reinsurance agreements with our former subsidiary, UPC, which are subject
to a variable ceding commission based on loss experience. With the receivership of UPC in 2023, we believehave not received data
related to UPC losses that could unfavorably shift AmCoastal’s commission related to these contracts. In addition, we cannot
reasonably determine how this shift will be allocated between the likelihoodcontracted parties. Until we receive this loss data and provide
the updated calculations to both our reinsurance partners and the DFS, as receiver of UPC, we are unable to estimate the refund approval being reversed is low,impact,
however, we believe a loss contingency related to the extentthese commissions may exist as of the refunds received and recognized is present. March 31, 2024.

We will continue to monitor the matter for further developments that could affect the outcome of these contingencies and will make any appropriate adjustments each quarter.


14)13)    ALLOWANCE FOR EXPECTED CREDIT LOSSES
We are exposed to credit losses primarily through fourthree different pools of assets based on similar risk characteristics: premiums receivable for direct written business; reinsurance recoverables from ceded losses to our reinsurers; and our investment holdings; and our notes receivable.holdings. We estimate the expected credit losses based on historical trends, credit ratings assigned to reinsurers by rating agencies, average default rates, current economic conditions, and reasonable and supportable forecasts of future economic conditions that affect the collectability of the reported amounts over its expected life. Changes in the relevant information may significantly affect the estimates of expected credit losses.

28

AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2024
The allowance for credit losses is deducted from the amortized cost basis of the assets to present their net carrying value at the amount expected to be collected. Each period, the allowance for credit losses is adjusted through earnings to reflect expected credit losses over the remaining lives of the assets.



The following tables summarize our allowance for expected credit losses by pooled asset for the three months ended March 31, 2024 and 2023, and 2022:respectively:

34

UNITED INSURANCE HOLDINGS CORP.
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 2023
March 31, 2023December 31, 2022Provision for expected credit lossesWrite-offsMarch 31, 2023
Premiums Receivable$32 $(34)$29 $27 
Reinsurance Recoverables333 (183)— 150 
Total$365 $(217)$29 $177 
March 31, 2022December 31, 2021Provision for expected credit lossesWrite-offsMarch 31, 2022
Premiums Receivable$16 $(14)$10 $12 
Reinsurance Recoverables58 22 — 80 
Total$74 $$10 $92 

March 31, 2024December 31, 2023Provision for expected credit lossesWrite-offsMarch 31, 2024
Premiums Receivable$51 $(16)$18 $53 
Reinsurance Recoverables97 (32)— 65 
Total$148 $(48)$18 $118 
March 31, 2023December 31, 2022Provision for expected credit lossesWrite-offsMarch 31, 2023
Premiums Receivable$32 $(34)$29 $27 
Reinsurance Recoverables333 (183)— 150 
Total$365 $(217)$29 $177 

15)14)    STATUTORY ACCOUNTING AND REGULATION

The insurance industry is heavily regulated. State laws and regulations, as well as national regulatory agency requirements, govern the operations of all insurers such as our insurance subsidiaries. The various laws and regulations require that insurers maintain minimum amounts of statutory surplus and risk-based capital, restrict insurers' ability to pay dividends, specify allowable investment types and investment mixes, and subject insurers to assessments. Effective June 1, 2022, our insurance subsidiaries JIC and ACIC were merged, with ACIC being the surviving entity. Effective May 31, 2022, our former insurance subsidiaries UPC and FSIC were merged, with UPC being the surviving entity. Both UPC and ACIC areAmCoastal is domiciled in Florida, while IIC is domiciled in New York. At March 31, 2023,2024, and during the three months then ended, ACICAmCoastal and IIC met all regulatory requirements of the states in which they operate. As of December 31, 2022, UPC was determined to be insolvent and effective February 27, 2023 was placed into receivership by the DFS.

During 2023, we received an assessment notice from the Florida Insurance Guaranty Association (FIGA). This assessment will be 0.7% on direct written premium of all covered lines of business in Florida to cover the cost of an insurance company facing insolvency. This assessment is in addition to the 1.3% assessment, described below, and is recoupable from policyholders. During 2022, we received an assessment notice from FIGA. This assessment will bewas 1.3% on direct written premium of all covered lines of business in Florida to cover the cost of an insurance company facing insolvency.

The National Association of Insurance Commissioners (NAIC) has Risk-Based Capital (RBC) guidelines for insurance companies that are designed to assess capital adequacy and to raise the level of protection that statutory surplus provides for policyholders. Most states, including Florida and New York, have enacted statutory requirements adopting the NAIC RBC guidelines, and insurers having less statutory surplus than required will be subject to varying degrees of regulatory action, depending on the level of capital inadequacy. State insurance regulatory authorities could require an insurer to cease operations in the event the insurer fails to maintain the required statutory capital.

The state laws of Florida and New York permit an insurer to pay dividends or make distributions out of that part of statutory surplus derived from net operating profit and net realized capital gains. The state laws further provide calculations to determine the amount of dividends or distributions that can be made without the prior approval of the insurance regulatory authorities in those states and the amount of dividends or distributions that would require prior approval of the insurance regulatory authorities in those states. Statutory RBC requirements may further restrict our insurance subsidiaries' ability to pay dividends or make distributions if the amount of the intended dividend or distribution would cause statutory surplus to fall below minimum RBC requirements. Additionally, in connection with our former subsidiary UPC's plan for run off, IIC has agreed not to not pay ordinary dividends without prior approval of the New York Department of Financial Services until January 1, 2025.

Our insurance subsidiaries must each file with the various insurance regulatory authorities an “Annual Statement” which reports, among other items, statutory net income (loss) and surplus as regards policyholders, which is called stockholders'
29

AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2024
equity under GAAP. The table below details the statutory net income (loss) for each of our regulated entities for the three months ended March 31, 20232024 and 2022.2023.

35

UNITED INSURANCE HOLDINGS CORP.
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 2023
Three Months Ended March 31,
20232022
ACIC(1)
18,230 6,110 
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
202420242023
AmCoastal
IICIIC(2,203)(3,985)
TotalTotal$16,027 $2,125 
(1) ACIC results are inclusive of JIC as these entities were merged effective June 1, 2022.

Our insurance subsidiaries must maintain capital and surplus ratios or balances as determined by the regulatory authority of the states in which they are domiciled. At March 31, 2023,2024, we met these requirements. The table below details the amount of surplus as regards policyholders for each of our regulated entities at March 31, 20232024 and December 31, 2022.2023.

March 31, 2023December 31, 2022
ACIC(1)
101,811 77,511 
March 31, 2024March 31, 2024December 31, 2023
AmCoastal
IICIIC23,966 26,152 
TotalTotal$125,777 $103,663 
(1) ACIC results are inclusive of JIC as these entities were merged effective June 1, 2022.


16)15)    ACCUMULATED OTHER COMPREHENSIVE LOSS

We report changes in other comprehensive income (loss) items within comprehensive income (loss) on the Unaudited Condensed Consolidated Statements of Comprehensive Income, (Loss), and we include accumulated other comprehensive income (loss) as a component of stockholders' equity on our Unaudited Condensed Consolidated Balance Sheets.

The table below details the components of accumulated other comprehensive loss at period end:

  Pre-Tax AmountTax (Expense) BenefitNet-of-Tax Amount
December 31, 2022$(33,041)$2,094 $(30,947)
Changes in net unrealized losses on investments5,574 (315)5,259 
Reclassification adjustment for realized losses(1,260)315 (945)
Impact of deconsolidation of discontinued operations$(3)$1,007 $1,004 
March 31, 2023$(28,730)$3,101 $(25,629)

  Pre-Tax AmountTax (Expense) BenefitNet-of-Tax Amount
December 31, 2023$(20,238)$3,101 $(17,137)
Changes in net unrealized losses on investments(198)— (198)
Reclassification adjustment for realized losses— — — 
March 31, 2024$(20,436)$3,101 $(17,335)


17)16)    STOCKHOLDERS' EQUITY

Our Board of Directors declared no dividends on our outstanding shares of common stock to stockholders of record as follows for the periods presented (in thousands, except per share amounts):
Three Months Ended March 31,
20232022
Per Share AmountAggregate AmountPer Share AmountAggregate Amount
First Quarter$— $— $0.06 $2,589 
during 2023 or 2024.

In July 2019, our Board of Directors authorized a stock repurchase plan of up to $25,000,000 of our common stock. As of March 31, 2023,2024, we had not yet repurchased any shares under this stock repurchase plan. The timing and volume of repurchases are at the discretion of management, based on the capital needs of the business, the market price of UIHCACIC common stock, and general market conditions. The plan has no expiration date, and the plan may be suspended or discontinued at any time.

In September 2023, the Company entered into an equity distribution agreement (the “Agreement”) with Raymond James & Associates, Inc., as agent (the “Agent”), of up to 8,000,000 shares of the Company’s common stock, par value $0.0001 per share (the “Shares”). Sales of the Shares under the Agreement will be made in sales deemed to be “at the market offerings”. The Agent is not required to sell any specific amount of Shares but has agreed to act as the Company’s sales agent for a commission equal to 3.0% of the gross proceeds from the sales of the Shares. As of March 31, 2024, 4,373,000 shares have been sold under the Agreement resulting in commissions paid of approximately $1,181,000 and net proceeds of approximately $38,190,000.
36
30

UNITEDAMERICAN COASTAL INSURANCE HOLDINGS CORP.CORPORATION
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 20232024
The Agreement will terminate upon the issuance and sale of all Shares subject to the Agreement, or the Agreement may be suspended or discontinued at any time. The Company does not plan to sell additional shares under the at-the-market program to which this Agreement relates during the first half of 2024.

See Note 1817 in these Notes to Unaudited Condensed Consolidated Financial Statements for information regarding stock-based compensation activity.

18)17) STOCK-BASED COMPENSATION

We account for stock-based compensation under the fair value recognition provisions of ASC Topic 718 - Compensation - Stock Compensation. We recognize stock-based compensation cost over the award’s requisite service period on a straight-line basis for time-based restricted stock grants and performance-based restricted stock grants. We record forfeitures as they occur for all stock-based compensation.

The following table presents our total stock-based compensation expense:
Three Months Ended March 31,
20232022
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
202420242023
Employee stock-based compensation expenseEmployee stock-based compensation expense
Pre-tax
Pre-tax
Pre-tax Pre-tax$309 $390 
Post-tax (1)
Post-tax (1)
244 308 
Director stock-based compensation expenseDirector stock-based compensation expense
Pre-tax Pre-tax26 62 
Pre-tax
Pre-tax
Post-tax (1)
Post-tax (1)
21 49 
(1) The after tax amounts are determined using the 21% corporate federal tax rate.

We had approximately $1,709,000$1,886,000 of unrecognized stock compensation expense at March 31, 20232024 related to non-vested stock-based compensation granted, which we expect to recognize over a weighted-average period of approximately 1.81.7 years. We had approximately $10,000$41,000 of unrecognized director stock-based compensation expense at March 31, 20232024 related to non-vested director stock-based compensation granted, which we expect to recognize over a weighted-average period of approximately 0.10.2 years.

Restricted stock, restricted stock units and performance stock units

Stock-based compensation cost for restricted stock awards, restricted stock units and performance stock units is measured based on the closing fair market value of our common stock on the date of grant, which vest in equal installments over the requisite service period of typically three years. Restricted stock awards granted to non-employee directors vest over a one-year period. Each restricted stock unit and performance stock unit represents our obligation to deliver to the holder one share of common stock upon vesting.

Performance stock units vest based on the Company's return on average equity compared to a defined group of peer companies. On the grant date, we issue the target number of performance stock units. They are subject to forfeitures if performance goals are not met. The actual number of performance stock units earned can vary from zero to 150 percent of the target for the 2023, 2022 and 2021 awards.

We did not grant anygranted 30,000 shares of restricted common stock during the three month periodmonths ended March 31, 2023. We granted 114,866 shares of restricted common stock during the three month period ended March 31, 2022,2024, which had a weighted-average grant date fair value of $3.59 per share.$9.46. We did not grant shares of restricted common stock during the three months ended March 31, 2023.

The following table presents certain information related to the activity of our non-vested restricted common stock grants:
Number of Restricted SharesWeighted Average Grant Date Fair Value
Outstanding as of December 31, 2022714,239 $2.73 
Granted— — 
Less: Forfeited856 3.59 
Less: Vested44,457 4.40 
Outstanding as of March 31, 2023668,926 $2.62 


3731

UNITEDAMERICAN COASTAL INSURANCE HOLDINGS CORP.CORPORATION
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 2024
Number of Restricted SharesWeighted Average Grant Date Fair Value
Outstanding as of December 31, 2023(1)
445,646 $2.64 
Granted30,000 9.46 
Less: Forfeited856 3.59 
Less: Vested32,233 4.36 
Outstanding as of March 31, 2024442,557 $2.98 
(1) Contingent shares granted during 2023 have been excluded from the calculations above.

Stock options

Stock option fair value was estimated on the grant date using the Black-Scholes-Merton formula. Stock options vest in equal installments over the requisite service period of typically three years. The following weighted-average assumptions were used to value the stock options granted:
20232022
202420242023
Expected annual dividend yieldExpected annual dividend yield—  %—  %Expected annual dividend yield—  %—  %
Expected volatilityExpected volatility—  %49.66  %Expected volatility—  %80.84  %
Risk-free interest rateRisk-free interest rate—  %2.92  %Risk-free interest rate—  %3.44  %
Expected termExpected termN/A6 yearsExpected termN/A6 years

The expected annual dividend yield for our options granted during 20222024 and 2023 is based on no dividends being paid in future quarters. The expected volatility is a historical volatility calculated based on the daily closing prices over a period equal to the expected term. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the grant date. Expected term takes into account the three-year graded vesting term and the 10-year contractual term of the option.

We did not grant any stock options duringfor the three month periodsmonths ended March 31, 20232024 and 2022.2023.

The following table presents certain information related to the activity of our non-vested stock option grants:
Number of Stock OptionsWeighted Average Exercise PricesWeighted Average Remaining Contractual Term (years)Aggregate Intrinsic Value
Outstanding as of December 31, 20221,250,685 $3.71 7.66 $— 
Number of Stock OptionsNumber of Stock OptionsWeighted Average Exercise PricesWeighted Average Remaining Contractual Term (years)
Aggregate Intrinsic Value (3)
Outstanding as of December 31, 2023(1)
GrantedGranted— — — — 
Less: Forfeited Less: Forfeited— — — — 
Less: Expired Less: Expired161,925 3.05 — — 
Less: ExercisedLess: Exercised— — — — 
Outstanding as of March 31, 20231,088,760 $3.81 8.55 $451 
Outstanding as of March 31, 2024
Vested as of March 31, 2023(1)
532,797 $7.26 7.79 $112 
Exercisable as of March 31, 2023270,861 $6.57 7.89 $112 
Vested as of March 31, 2024(2)
Vested as of March 31, 2024(2)
Vested as of March 31, 2024(2)
Exercisable as of March 31, 2024
(1) Contingent options granted during 2023 have been excluded from the calculations above.
(2) The vested shares are calculated based on all vested shares at March 31, 2023,2024, inclusive of those that have since expired. The weighted average exercise prices, weighted-average remaining contractual term and aggregate intrinsic value is calculated based on only vested shares that are outstanding and exercisable at March 31, 2023.2024.
(3) Presented in ones.



19)




32

AMERICAN COASTAL INSURANCE CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2024
18)    SUBSEQUENT EVENTS

We evaluate all subsequent events and transactions for potential recognition or disclosure in our financial statements.

OnEffective April 5, 2023,17, 2024, the Company filed a Motion for Releasesecured $200 million dollars of Propertyexcess of ACIC in the Circuit Court of the Second Judicial
Circuit for Leon County, Florida, requesting that UPC immediately remit to ACICloss reinsurance recoveries currently held by UPC and reinsurance recoveries recovered by UPC in the future in accordance with the Company’s Allocation Agreement. Alternatively, ACIC requested future reinsurance recoveries remitted to UPC be placed into a segregated account for future reconciliation and remittance to ACIC. On April 13, 2023, the DFS filed a response to the Company’s motion, objecting to ACIC’s position. On April 14, 2023, the Court denied ACIC’s motion without prejudice.

On April 19, 2023, United Insurance Holding Corp.'s (the "Company") subsidiary, American Coastal Insurance Company ("ACIC") entered into a Memorandum of Understanding (the "Memorandum") with the Florida Department of Financial Services, Division of Rehabilitation and Liquidation (the "DFS") as receiver of the Company's former subsidiary, United Property & Casualty Insurance Company ("UPC")limit related to the Reinsurance Allocation Agreement (the "Allocation Agreement")its AmCoastal core catastrophe reinsurance program for 2024-2025. This limit attaches to AmCoastal's reinsurance coverage at $275 million and was obtained through 10.25% catastrophe bonds issued by and between ACIC and UPC.

38

UNITED INSURANCE HOLDINGS CORP.
Notes to Restated Unaudited Condensed Consolidated Financial Statements
March 31, 2023
The Allocation Agreement, effective on June 1, 2022, and approved by the Florida Office of Insurance Regulation (the "FLOIR") on December 5, 2022, describes the manner in which reinsurance recoveries under shared reinsurance agreements are allocated between ACIC and UPC. Under the terms of the Memorandum, ACIC and the DFS as receiver of UPC have reached the following agreement:

1.The DFS adopts, ratifies and affirms the Allocation Agreement.
2.All future reinsurance recoverable under reinsurance agreements applicable to the Allocation Agreement for Hurricane Ian losses shall be paid, either directly from the reinsurers, or directly from the reinsurance intermediary responsible therefor, to ACIC. IfArmor Re II Ltd., a true up adjustment demonstrates that any future reinsurance recoveries were over-collected by ACIC, ACIC will remit any over-payment to UPC.Bermuda-domiciled special purpose insurer.

On May 15, 2023,9, 2024, the Company togethersigned definitive agreements with it's subsidiary, ACIC,Forza Insurance Holdings, LLC ("Forza") in which the Company will sell and Forza will acquire 100% of the issued and outstanding stock of IIC. Closing is subject to the approval of the New York Department of Financial Services. Concurrently, IIC and SageSure entered into a Tax Memorandum of Understanding (the "Tax Memorandum") with the DFS as receiver of the Company's former subsidiary, UPC. On February 27, 2023, UPC entered into receivership with the DFS as receiver. As of March 31, 2023, in accordance with the various reinsurance allocation agreements including the AllocationProgram Administrator Agreement described above, the Company is due approximately $38,352,000 of net reinsurance recoveries received by UPCand Claims Services Agreement on behalf of the Company but not settled prior to receivership. In addition, in April ACIC paid reinsurance premiums on behalf of UPC totaling $12,929,000. The Company and the DFS believe that an opportunity exists to settle these balances via the realization of certain deferred tax assets of the Company's consolidated Federal and Florida tax returns to which ACIC and UPC belong. UPC holds certain deferred tax assets that are believed to be on no value to UPC on a stand-alone basis. However, ACIC and the Company have the opportunity, subject to certain conditions such as continuing and adequate profitability, to realize these assets.May 9, 2024. Under the terms of the Tax Memorandum, the Company, ACICthese service agreements, SageSure will provide policy administration, underwriting and the DFS as receiverclaims administration services on behalf of UPC have reached the following agreement:IIC.

1.The parties agree to cooperate with one another to achieve realization of the deferred tax assets;

2.The parties agree to deposit the funds that are or may be due to UPC pursuant to the Tax Allocation Agreement into a segregated account held by ACIC that will serve as collateral for any amount payable from or to UPC;

3.The parties agree that the Federal Income Tax Allocation Agreement entered into prior to UPC’s receivership is ratified and accepted by all parties;

4.The parties agree to an annual “true up” of the allocation of the disputed recoveries to the extent that such recoveries were not allocated correctly according to the Reinsurance Allocation Agreement;

5.In the event that ACIC, UIHC, or any of their affiliates make a claim or file a proof of claim in the UPC estate, the reviewed, approved, and/or adjudicated claim shall be reduced by the amount of (a) any tax benefit collectively received by ACIC, UIHC, or any of their affiliates as well as (b) any money withdrawn from the DTA Account for the benefit of any entity other than UPC; and

6.In the event that the benefit received by the Company is greater than the disputed recoveries, the difference shall be paid to DFS as receiver of UPC.

The Tax Memorandum allows the Company to secure amounts due from UPC to ACIC provided the Internal Revenue Service does not object to the Company utilizing UPC's net operating loss carry-forward against its future taxable income.
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UNITEDAMERICAN COASTAL INSURANCE HOLDINGS CORP.CORPORATION
Item 2. 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, 2022.2023. 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

    UnitedAmerican Coastal Insurance Holdings Corp.Corporation (referred to in this document as we, our, us, the Company or UIHC)ACIC) is a holding company primarily engaged in commercial and personal property and casualty insurance business with investments in the United States. On July 10, 2023, we changed our corporate name from United Insurance Holdings Corp. to American Coastal Insurance Corporation. We conduct our business principally through our two wholly-owned insurance subsidiaries: American Coastal Insurance Company (ACIC)(AmCoastal); and Interboro Insurance Company (IIC). Collectively, we refer to the holding company and all our subsidiaries, including non-insurance subsidiaries, as “United“American Coastal Insurance Holdings,Corporation,” which is the preferred brand identification for our Company.

Our Company’s primary source of revenue is generated from writing insurance in Florida and New York. 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 UIHCACIC to write profitable business in such areas. During 2022, we also wrote commercial residential insurance in South Carolina and Texas, however, effective May 1, 2022, we no longer write in these states. In addition, during 2022 we wrote personal residential business in six other states, however on

On February 27, 2023, our former insurance subsidiary, United Property & Casualty Insurance Company (UPC) was placed into receivership with the Florida Department of Financial Services (DFS), which divested our ownership of UPC. The events leading to receivership and results of this subsidiary, now included within discontinued operations, can be seen in Note 43 of the Notes to Unaudited Condensed Consolidated Financial Statements above.

On August 25, 2022, we announced that our former subsidiary UPC had filed plans for withdrawal in the states of Florida, Louisiana, and Texas and intended to file a plan for withdrawal in the state of New York. All filed plans entail non-renewing personal lines policies in these states. Additionally, we announced that Demotech, Inc. (Demotech), an insurance rating agency, notified UPC of its intent to withdraw UPC's Financial Stability Rating. On December 5, 2022, the Florida Office of Insurance Regulation ("FLOIR") issued Consent Order No. 303643-22- CO that provided for the administrative supervision and approval of the plan of run-off for UPC (the "Consent Order"). The Consent Order provided formal approval of UPC's Plan of Run-Off (the "Plan") to facilitate a solvent wind down of its affairs in an orderly fashion. Additionally, in connection with the Plan, IIC agreed to not pay ordinary dividends without the prior approval of the New York Department of Financial Services until January 1, 2025. On February 10, 2023, we announced that a solvent run-off of UPC was unlikely and on February 27, 2023, UPC was placed into receivership with the Florida Department of Financial Services (the "DFS") which divested our ownership of UPC.

Our Company, together with its former subsidiary, UPC and wholly-owned subsidiary 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 Insurance Company, 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. Effective June 1, 2022, we began transitioning South Carolina policies to HCPCI. The sale was consummated on December 30, 2021.

Effective June 1, 2022, we entered into a quota share reinsurance agreement with TypTap Insurance Company (Typtap) in connection with the Southeast Renewal Agreement. Under the terms of this agreement, we ceded 100% of our former subsidiary UPC's in-force, new, and renewal policies in the states of Georgia, North Carolina, and South Carolina. This agreement replaces the 85% quota share agreement with HCPCI effective December 31, 2021. Also effective June 1, our third-party quota share reinsurance agreements were renewed to exclude these states. We will no longer retain any risk associated with these states.

Our Company, together with its former subsidiary UPC and wholly-owned subsidiary 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
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UNITED INSURANCE HOLDINGS CORP.
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 all states was completed as of June 30, 2022.

Effective June 1, 2021, we entered into a quota share reinsurance agreement with HCPCI and TypTap in connection with the Northeast Renewal Agreement. Under the terms of this agreement, we ceded 100% of our former subsidiary UPC's 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.

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,AmCoastal, in April 2017 and IIC in April 2016, and Family Security Holdings, LLC (FSH), including its subsidiary Family Security Insurance Company, Inc. (FSIC), in February 2015, and our strategic partnership with a subsidiary of Tokio Marine Kiln Group Limited (Tokio Marine), which formed Journey Insurance Company (JIC) in August 2018. Effective June 1, 2022, we merged JIC into ACIC, with ACIC being the surviving entity. Effective May 31, 2022, we merged FSIC into UPC, with UPC being the surviving entity.2016.

As a result of the receivership of our former subsidiary UPC by the DFS effective February 27, 2022, ourOur policies in-force decreased by 51.3%3.2% from 48,152 policies in-force at March 31, 2022 to 23,473 policies in-force at March 31, 2023.2023 to 22,733 policies in-force at March 31, 2024. For more information regarding the concentration of our policies in force, please see the results of operations section below.

As of October 6, 2023, we were seeking a buyer for IIC to complete our exit from the personal lines business and expect the sale price to be the book value of the entity. The Company entered into a non-binding term sheet on October 6, 2023 for the sale of IIC whereby the buyer will acquire 100% of the issued and outstanding common stock of Interboro in exchange for a cash purchase price equal to the GAAP book value of IIC at the time of closing, subject to negotiating and entering into definitive documents containing customary terms and conditions and obtaining regulatory approval(s). The following discussion highlights significant factors influencing the consolidated financial position and results of operations of UnitedAmerican Coastal Insurance Holdings.Corporation. 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.

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UNITEDAMERICAN COASTAL INSURANCE HOLDINGS CORP.CORPORATION

20232024 Highlights
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
202420242023
Three Months Ended March 31,
20232022
Gross premiums written
Gross premiums written
Gross premiums writtenGross premiums written$187,123 $142,414 
Gross premiums earnedGross premiums earned144,476 122,733 
Net premiums earnedNet premiums earned87,324 57,746 
Total revenuesTotal revenues90,320 58,432 
Earnings from continuing operations, before income tax33,844 (988)
Income (loss) from discontinued operations, net of tax236,913 (32,984)
Consolidated net income (loss) attributable to UIHC267,280 (33,172)
Net income (loss) available to UIHC stockholders per diluted share
Income from continuing operations, net of tax
Income from discontinued operations, net of tax
Consolidated net income
Net income available to ACIC stockholders per diluted share
Continuing Operations
Continuing Operations
Continuing OperationsContinuing Operations$0.70 $— 
Discontinued OperationsDiscontinued Operations5.44 (0.77)
TotalTotal$6.14 $(0.77)
Reconciliation of net income (loss) to core income (loss):
Reconciliation of net income to core income:
Reconciliation of net income to core income:
Reconciliation of net income to core income:
Plus: Non-cash amortization of intangible assets$812 $812 
Less: Income (loss) from discontinued operations, net of tax236,913 (32,984)
Plus: Non-cash amortization of intangible assets and goodwill impairment
Plus: Non-cash amortization of intangible assets and goodwill impairment
Plus: Non-cash amortization of intangible assets and goodwill impairment
Less: Income from discontinued operations, net of tax
Less: Realized losses on investment portfolioLess: Realized losses on investment portfolio(83)37 
Less: Unrealized gains (losses) on equity securitiesLess: Unrealized gains (losses) on equity securities474 (770)
Less: Net tax impact (1)
Less: Net tax impact (1)
88 324 
Core income (loss) (2)
30,700 1,033 
Core income (loss) per diluted share(2)
$0.70 $0.02 
Core income (2)
Core income per diluted share(2)
Book value per shareBook value per share$2.08 $(4.21)
Book value per share
Book value per share
(1) In order to reconcile the net lossincome to the core lossincome measure, we included the tax impact of all adjustments using the 21% corporate federal tax rate.
(2) Core income, (loss), a measure that is not based on U.S. generally accepted accounting principles (GAAP), is reconciled above to net income, (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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UNITEDAMERICAN COASTAL INSURANCE HOLDINGS CORP.CORPORATION
Restated
Consolidated Net Income (Loss)
Three Months Ended March 31,
20232022
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
202420242023
REVENUE:REVENUE:
Gross premiums written
Gross premiums written
Gross premiums writtenGross premiums written$187,123 $142,414 
Change in gross unearned premiumsChange in gross unearned premiums(42,647)(19,681)Change in gross unearned premiums(28,636)(42,647)(42,647)
Gross premiums earnedGross premiums earned144,476 122,733 
Ceded premiums earnedCeded premiums earned(57,152)(64,987)
Net premiums earnedNet premiums earned87,324 57,746 
Net investment incomeNet investment income2,589 1,404 
Net realized investment gains (losses)(83)37 
Net realized investment losses
Net unrealized gains (losses) on equity securitiesNet unrealized gains (losses) on equity securities474 (770)
Management fee income— — 
Other revenue
Other revenue
Other revenueOther revenue16 15 
Total revenueTotal revenue90,320 58,432 
EXPENSES:EXPENSES:
Losses and loss adjustment expenses
Losses and loss adjustment expenses
Losses and loss adjustment expensesLosses and loss adjustment expenses16,412 26,315 
Policy acquisition costsPolicy acquisition costs26,972 20,308 
Operating expensesOperating expenses2,168 3,707 
General and administrative expensesGeneral and administrative expenses8,793 8,064 
Interest expenseInterest expense2,719 2,359 
Total expensesTotal expenses57,064 60,753 
Income before other incomeIncome before other income33,256 (2,321)
Other incomeOther income588 1,333 
Income before income taxesIncome before income taxes33,844 (988)
Provision for income taxesProvision for income taxes3,477 (715)
Net income from continuing operations, net of taxNet income from continuing operations, net of tax$30,367 $(273)
Income (loss) from discontinued operations, net of tax236,913 (32,984)
Net income (loss)$267,280 $(33,257)
Less: Net loss attributable to noncontrolling interests— (85)
Net income (loss) attributable to UIHC$267,280 $(33,172)
Earnings available to UIHC common stockholders per diluted share$6.14 $(0.77)
Income from discontinued operations, net of tax
Net income
Earnings available to ACIC common stockholders per diluted share
Book value per shareBook value per share$2.08 $(4.21)
Return on equity based on GAAP net income (loss)NM(41.7)%
Return on equity based on GAAP net incomeReturn on equity based on GAAP net income67.7 %NM
Loss ratio, net (1)
Loss ratio, net (1)
18.9 %45.6 %
Loss ratio, net (1)
23.1 %18.9 %
Expense ratio (2)
Expense ratio (2)
43.4 %55.6 %
Expense ratio (2)
35.2 %43.4 %
Combined ratio (3)
Combined ratio (3)
62.3 %101.1 %
Combined ratio (3)
58.3 %62.3 %
Effect of current year catastrophe losses on combined ratioEffect of current year catastrophe losses on combined ratio3.0 %9.6 %Effect of current year catastrophe losses on combined ratio1.1 %3.0 %
Effect of prior year development on combined ratioEffect of prior year development on combined ratio(3.6)%(5.3)%Effect of prior year development on combined ratio(0.6)%(3.6)%
Underlying combined ratio (4)
Underlying combined ratio (4)
63.0 %96.8 %
Underlying combined ratio (4)
Underlying combined ratio (4)
57.8 %63.0 %
(1) Loss ratio, net is calculated as losses and LAE net of losses ceded to reinsurers, relative to net premiums earned. Management uses this operating metric to analyze our loss trends and believes it is useful for investors to evaluate this component separately from our other operating expenses.
(2) Expense ratio is calculated as the sum of all operating expenses less interest expense relative to net premiums earned. Management uses this operating metric to analyze our expense trends and believes it is useful for investors to evaluate this component separately from our loss expenses.
(3) Combined ratio is the sum of the loss ratio, net and the expense ratio, net. Management uses this operating metric to analyze our total expense trends and believes it is a key indicator for investors when evaluating the overall profitability of our business.
(4) Underlying combined ratio, a measure that is not based on GAAP, is reconciled above to the combined ratio, 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.



43
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UNITEDAMERICAN COASTAL INSURANCE HOLDINGS CORP.CORPORATION
Definitions of Non-GAAP Measures

We believe that investors' understanding of UIHC'sACIC's performance is enhanced by our disclosure of the following non-GAAP measures. Our methods for calculating these measures may differ from those used by other companies and therefore comparability may be limited.

Combined ratio excluding the effects of current year catastrophe losses and prior year reserve development (underlying combined ratio) is a non-GAAP measure, that is computed by subtracting the effect of current year catastrophe losses and prior year development from the combined ratio. We believe that this ratio is useful to investors and it is used by management to highlight the trends in our business that may be obscured by current year catastrophe losses and prior year development. Current year catastrophe losses cause our loss trends to vary significantly between periods as a result of their frequency of occurrence and magnitude, and can have a significant impact on the combined ratio. Prior year development is caused by unexpected loss development on historical reserves. We believe it is useful for investors to evaluate these components separately and in the aggregate when reviewing our performance. The most directly comparable GAAP measure is the combined ratio. The underlying combined ratio should not be considered as a substitute for the combined ratio and does not reflect the overall profitability of our business.

Net loss and LAE excluding the effects of current year catastrophe losses and prior year reserve development (underlying loss and LAE) is a non-GAAP measure, that is computed by subtracting the effect of current year catastrophe losses and prior year reserve development from net loss and LAE. We use underlying loss and LAE figures to analyze our loss trends that may be impacted by current year catastrophe losses and prior year development on our reserves. As discussed previously, these two items can have a significant impact on our loss trends in a given period. We believe it is useful for investors to evaluate these components separately and in the aggregate when reviewing our performance. The most directly comparable GAAP measure is net loss and LAE. The underlying loss and LAE measure should not be considered a substitute for net loss and LAE and does not reflect the overall profitability of our business.

Net income (loss) excluding the effects of amortization of intangible assets, income (loss) from discontinued operations, realized gains (losses) and unrealized gains (losses) on equity securities, net of tax (core income (loss)) is a non-GAAP measure, which is computed by adding amortization, net of tax, to net income (loss) and subtracting income (loss) from discontinued operations, net of tax, realized gains (losses) on our investment portfolio, net of tax, and unrealized gains (losses) on our equity securities, net of tax, from net income (loss). Amortization expense is related to the amortization of intangible assets acquired, including goodwill, through mergers and therefore the expense does not arise through normal operations. Investment portfolio gains (losses) and unrealized equity security gains (losses) vary independent of our operations. We believe it is useful for investors to evaluate these components separately and in the aggregate when reviewing our performance. The most directly comparable GAAP measure is net income (loss). The core income (loss) measure should not be considered a substitute for net loss and does not reflect the overall profitability of our business.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

When we prepare our consolidated financial statements and accompanying notes in conformity with GAAP, we must make estimates and assumptions about future events that affect the amounts we report. Certain of these estimates result from judgments that can be subjective and complex. As a result of that subjectivity and complexity, and because we continuously evaluate these estimates and assumptions based on a variety of factors, actual results could materially differ from our estimates and assumptions if changes in one or more factors require us to make accounting adjustments. During the three months ended March 31, 2023,2024, we reassessed our critical accounting policies and estimates as disclosed in Note 2 to the Notes to Unaudited Condensed Consolidated Financial Statements and our Annual Report on Form 10-K for the year ended December 31, 2022.2023. We have made no material changes or additions with regard to those policies and estimates.

RECENT ACCOUNTING STANDARDS

Please refer to Note 2 in the Notes to Unaudited Condensed Consolidated Financial Statements for a discussion of recent accounting standards that may affect us.

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UNITEDAMERICAN COASTAL INSURANCE HOLDINGS CORP.CORPORATION
ANALYSIS OF FINANCIAL CONDITION - MARCH 31, 20232024 COMPARED TO DECEMBER 31, 20222023

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our accompanying unaudited condensed consolidated interim financial statements and related notes, and in conjunction with the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2022.2023.

Investments

The primary goals of our investment strategy are to preserve capital, maximize after-tax investment income, maintain liquidity and minimize risk. To accomplish our goals, we purchase debt securities in sectors that represent the most attractive relative value, and we maintain a moderate equity exposure. Limiting equity exposure manages risks and helps to preserve capital for two reasons: first, bond market returns are less volatile than stock market returns, and second, should the bond issuer enter bankruptcy liquidation, bondholders generally have a higher priority than equity holders in a bankruptcy proceeding. Our investment strategy is the same for both our personal lines and commercial lines operating segments.

We must comply with applicable state insurance regulations that prescribe the type, quality and concentrations of investments our insurance subsidiaries can make; therefore, our current investment policy limits investment in non-investment-grade fixed maturities and limits total investment amounts in preferred stock, common stock and mortgage notes receivable. We do not invest in derivative securities.

Two outside asset management companies, which have authority and discretion to buy and sell securities for us, manage our investments subject to (i) the guidelines established by our Board of Directors and (ii) the direction of management. The Investment Committee of our Board of Directors reviews and approves our investment policy on a regular basis.

Our cash, cash equivalents, restricted cash and investment portfolio totaled $372,721,000$504,456,000 at March 31, 2023,2024, compared to $340,905,000$369,022,000 at December 31, 2022.2023.

The following table summarizes our investments, by type:

March 31, 2024March 31, 2024December 31, 2023
Estimated Fair ValueEstimated Fair ValuePercent of TotalEstimated Fair ValuePercent of Total
U.S. government and agency securitiesU.S. government and agency securities$27,296 5.4%$27,432 7.4%
March 31, 2023December 31, 2022
Estimated Fair ValuePercent of TotalEstimated Fair ValuePercent of Total
U.S. government and agency securities$3,409 0.9%$2,385 0.7%
Foreign government991 0.3%991 0.3%
States, municipalities and political subdivisions
States, municipalities and political subdivisions
States, municipalities and political subdivisionsStates, municipalities and political subdivisions28,582 7.7%26,895 7.9%23,277 4.6%4.6%23,865 6.5%6.5%
Public utilitiesPublic utilities7,820 2.1%7,694 2.3%Public utilities5,128 1.0%1.0%5,134 1.4%1.4%
Corporate securitiesCorporate securities85,723 23.0%83,343 24.3%Corporate securities61,473 12.3%12.3%61,849 16.7%16.7%
Mortgage-backed securitiesMortgage-backed securities56,002 15.0%56,115 16.5%Mortgage-backed securities45,440 9.0%9.0%46,310 12.5%12.5%
Asset-backed securitiesAsset-backed securities28,206 7.6%27,259 8.0%Asset-backed securities15,702 3.1%3.1%16,113 4.4%4.4%
Total fixed maturitiesTotal fixed maturities210,733 56.6 %204,682 60.0 %
Total fixed maturities
Total fixed maturities178,316 35.4 %180,703 48.9 %
Mutual fundsMutual funds16,181 4.3%15,657 4.6%Mutual funds6,214 1.2%1.2%— —%—%
Total equity securities
Total equity securities
Total equity securitiesTotal equity securities16,181 4.3 %15,657 4.6 %6,214 1.2 1.2 %— — — %
Other investmentsOther investments3,550 1.0 %3,675 1.1 %Other investments14,217 2.8 2.8 %16,487 4.5 4.5 %
Total investmentsTotal investments230,464 61.9%224,014 65.7%Total investments198,747 39.4%39.4%197,190 53.4%53.4%
Cash and cash equivalentsCash and cash equivalents92,586 24.8 %70,903 20.8 %Cash and cash equivalents285,400 56.6 56.6 %153,762 41.7 41.7 %
Restricted cashRestricted cash49,671 13.3%45,988 13.5%Restricted cash20,309 4.0%4.0%18,070 4.9%4.9%
Total cash, cash equivalents, restricted cash and investmentsTotal cash, cash equivalents, restricted cash and investments$372,721 100.0 %$340,905 100.0 %Total cash, cash equivalents, restricted cash and investments$504,456 100.0 100.0 %$369,022 100.0 100.0 %






45

UNITED INSURANCE HOLDINGS CORP.
We classify all of our fixed-maturity investments as available-for-sale. Our investments at March 31, 20232024 and December 31, 20222023 consisted mainly of U.S. government and agency securities, states, municipalities and political subdivisions, mortgage-backed securities and securities of investment-grade corporate issuers. Our equity holdings consisted mainlyas of securities issued by companies in the financial, utilities and industrial sectors orMarch 31, 2024 consist of mutual funds. We held no equities as of December 31, 2023. At March 31, 2023,2024, approximately 79.6%83.1% of our fixed maturities were U.S. Treasuries or corporate bonds rated “A” or better, and 20.4%16.9% were corporate bonds rated “BBB” or "BB".

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AMERICAN COASTAL INSURANCE CORPORATION
Reinsurance

We follow the industry practice of reinsuring a portion of our risks. Reinsurance involves transferring, or "ceding", all or a portion of the risk exposure on policies we write to another insurer, known as a reinsurer. To the extent that our reinsurers are unable to meet the obligations they assume under our reinsurance agreements, we remain primarily liable for the entire insured loss under the policies we write.

Our catastrophe reinsurance program is designed, utilizing our risk management methodology, to address our exposure to catastrophe losses. According to the Insurance Service Office (ISO), a catastrophe loss is defined as a single unpredictable incident or seriescoverage consists of closely related incidents that result in $25,000,000 or more in U.S. industry-wide direct insured losses to property and that affect a significant number of policyholders and insurers (ISO catastrophes). In addition to ISO catastrophes, we also include as catastrophes those events (non-ISO catastrophes), which may include losses, that we believe are, or will be, material to our operations which we define as incidents that result in $1,000,000 or more in losses for multiple policyholders.three separate placements:

During the second quarter of 2022, we placed our1.AmCoastal’s core catastrophe reinsurance program in effect June 1 through May 31, annually, which includes excess of loss and quota share treaties providing coverage for the 2022 hurricane season. We purchasedcatastrophe losses from named or numbered windstorms and earthquakes;

2.AmCoastal’s all other perils catastrophe excess of loss agreement in effect January 1 through December 31, annually, which provides protection from catastrophe loss events other than named or numbered windstorms and earthquakes; and

3.IIC’s core catastrophe reinsurance program in effect June 1 through May 31, annually, which provides protection from all catastrophe losses.

This reinsurance protection is an essential part of our catastrophe risk management strategy. It is intended to provide our stockholders with an acceptable return on the risks assumed by our insurance entities, and to reduce the variability of earnings, while providing surplus protection. Although reinsurance agreements contractually obligate our reinsurers to reimburse us for the agreed-upon portion of our gross paid losses, they do not discharge our primary liability. In the event one or more of our reinsurers fail to fulfill their obligation, the surplus of our statutory entities may decline, and we may not be able to fulfill our obligation to policyholders, or we may not be able to maintain compliance with various regulatory financial requirements. Additionally, we face the risk that actual losses incurred from one or more catastrophic events may be above the modeled expected loss resulting in losses exceeding our reinsurance coverage, which may result in a decline in surplus, and as a result we may not be able to fulfill our obligations to policyholders, or we may not be able to maintain compliance with various regulatory financial requirements. The details of our programs and the likelihood of a catastrophic event exceeding these three coverages are outlined below.

AmCoastal’s core catastrophe reinsurance program provides occurrence-based coverage up to an exhaustion point of approximately $2,500,000,000$1,100,000,000 for a first occurrence and $1,300,000,000 in the aggregate, including coverage related toaggregate. Under this program, our former insurance subsidiary, UPC. The treaties reinsure for personal and commercial lines property excess catastrophe losses caused by multiple perils including hurricanes and tropical storms. The agreements became effective as of June 1, 2022, for a one-year term, and incorporate the mandatory coverage required by and placed with the Florida Hurricane Catastrophe Fund (FHCF) and coverage required under the Reinsurance to Assist Policyholders Program (RAP Program). The FHCF and RAP Program covers Florida risks only and we participate at 90%. Under our core catastrophe excess of loss treaty, retention on a first and second event is $16,400,000. During$10,000,000 each, plus $2,250,000 retained separately by our captive. AmCoastal’s program provides sufficient coverage for a 1-in-150-year return period, indicating that the third quarter, oneprobability of our reinsurers participating ona single occurrence exceeding protection purchased is roughly 0.7% estimated by equally blending the $25,000,000 excess of $20,000,000 layer of the coreAIR and RMS catastrophe models using long-term catalogs including demand surge. AmCoastal’s program exercisedalso provides sufficient coverage for a contractual right to terminate their participation due to Demotech's downgrade of UPC's Financial Stability Rating. We were unsuccessful in replacing this coverage1-in-100-year event followed by a 1-in-50-year event in the open marketsame treaty year, the probability of which is less than 0.1%. While we believe these catastrophe models are very good tools and their output provides reasonable proxies for the probability of exhausting our reinsurance protections, they are imperfect so our captive reinsurer, UPC Re, stepped into the $25,000,000 excess of $20,000,000 layer which was subsequently impacted by Hurricane Ian resulting in an additional retained loss of $20,100,000 million. The exhaustion point of IIC's catastrophe reinsurance program is approximately $200,000,000 in the aggregate, with a retention of $3,000,000 per occurrence, covering all perils.actual results could vary dramatically from those expected.

During the third quarter of 2022, the Company's core catastrophe reinsurance program was impacted by Hurricane Ian. As a result, the Company has approximately $508 million of occurrence limit remaining for Ian, all of which is attributable to ACIC only. After reinstatement premiums of approximately $15.4 million, the Company, with its former subsidiary UPC has approximately $993 million of aggregate limit remaining after Ian, based on our estimated ultimate net loss subject to the core catastrophe reinsurance program.

Effective January 1, 2023, we renewed ourAmCoastal’s all other perils (AOP) catastrophe excess of loss agreement. The agreement
provides protection from catastrophe loss events other than named windstorms and earthquakes up to $101,000,000.$172,000,000 in the aggregate. This agreement provides sufficient coverage for a 1-in-450-year return period, indicating that the probability of a single occurrence exceeding protection purchased is no more than 0.2%.

During the third quarterIIC’s core catastrophe reinsurance program provides coverage up to an exhaustion point of 2022, one of our private reinsurers who held a 100% share of the $15,000,000 in excess of $15,000,000 layer on our all other perils catastrophe excess of loss agreement notified us of their intent to terminate the agreement due to the contractual provision regarding the change in UPC's statutory surplus being greater than 25%. We agreed to a termination and commutation date of September 30, 2022 for this contract. This change will result in approximately $1,300,000 of ceded premium savings that would have otherwise been due$82,000,000 in the fourth quarteraggregate, with a retention of 2022 and$3,000,000 per occurrence. Based on IIC’s PML, the Company retaining allprogram provides sufficient coverage for a 1-in-130-year return period, indicating the riskprobability of a single occurrence exceeding protection purchased is no more than 0.8%. IIC’s program also provides sufficient coverage for any non-hurricane catastrophe losses up to $30,000,000, excluding any quota share recoveries.a 1-in-100-year event followed by a 1-in-50-year event in the same treaty year, the probability of which is less than 0.1%.








Effective December 15, 2023, we agreed to commute a private reinsurer’s share of core catastrophe reinsurance coverage and replace this gap in coverage with new coverage provided by one of our other private reinsurers. This transaction resulted in additional expense of approximately $6,300,000 for the year ended December 31, 2023, but will result in decreased expense totaling $14,300,000 during the first half of 2024, resulting in a net economic benefit of approximately $8,000,000 net of replacement coverage for the period December 15, 2023 through May 31, 2024.
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UNITEDAMERICAN COASTAL INSURANCE HOLDINGS CORP.CORPORATION

The table below outlines our quota share agreements in effect for the three months ended March 31, 20232024 and 2022.2023.

Reinsurer
Companies in Scope (1)
Effective DatesCession RateStates in Scope
External third-partyAmCoastal06/01/2023 - 06/01/2024
40% (1)
Florida
External third-partyUPC, FSIC & ACICAmCoastal06/01/2022 - 06/01/2023
10% (2)(1)
Florida, Louisiana, Texas
TypTapUPC06/01/2022 - 06/01/2023
100% (3)(2)
Georgia, North Carolina, South Carolina
External third-partyUPC, FSIC & ACIC12/31/2021 - 12/31/2022
8% (2)
Florida, Louisiana, Texas
HCPCIUPC12/31/2021 - 06/01/202285%Georgia, North Carolina, South Carolina
External third-partyUPC & FSIC12/31/2021 - 12/31/2022
25% (4)
Florida, Louisiana, Texas
HCPCI / TypTap (5)
UPC06/01/2021 - 06/01/2022
100% (3)
Connecticut, New Jersey, Massachusetts, Rhode Island
External third-party
UPC, FSIC & ACIC (6)
06/01/2021 - 06/01/2022
15% (2)
Florida, Georgia, Louisiana, North Carolina, South Carolina, Texas
IICUPC12/31/2020 - 12/31/2022100%New York
(1) Effective May 31, 2022, FSIC was merged into UPC, with UPC being the surviving entity.
(2) This treaty provides coverage for all catastrophe perils and attritional losses incurred. For all catastrophe perils, the quota share agreement provides ground- up protection effectively reducing our retention for catastrophe losses.
(3)(2) This treaty providesprovided coverage on our in-force, new and renewal policies until these states arewere transitioned to HCPCI or TypTap upon renewal.
(4) This treaty provides coverage on non-catastrophe losses on policies in-force on the effective date of the agreement.
(5) Cessions are split 50% to HCPCI and 50% to TypTap.

Reinsurance costs as a percentage of gross earned premium during the three month periods ended March 31, 20232024 and 20222023 were as follows:

20232022
202420242023
Three Months Ended March 31,Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Non-at-Risk
Non-at-Risk
Non-at-RiskNon-at-Risk(0.5)%(0.6)%(0.3)%(0.5)%
Quota ShareQuota Share(6.1)%(15.6)%Quota Share(29.8)%(6.1)%
All OtherAll Other(33.0)%(36.8)%All Other(29.2)%(33.0)%
Total Ceding RatioTotal Ceding Ratio(39.6)%(53.0)%Total Ceding Ratio(59.3)%(39.6)%

Reinsurance costs as a percent of gross earned premium for our personal residential property and casualty insurance policies (personal lines) and commercial residential property and casualty insurance policies (commercial lines) operating segments during the three month periods ended March 31, 20232024 and 20222023 were as follows:

PersonalCommercial
2023202220232022
PersonalPersonalCommercial
20242024202320242023
Three Months Ended March 31,Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Non-at-Risk
Non-at-Risk
Non-at-RiskNon-at-Risk(1.6)%(1.2)%(0.4)%(0.5)%(2.7)%(1.6)%(0.2)%(0.4)%
Quota ShareQuota Share— %— %(6.7)%(17.8)%Quota Share— %— %(31.5)%(6.7)%
All OtherAll Other(28.8)%(18.2)%(33.3)%(39.4)%All Other(26.1)%(28.8)%(29.2)%(33.3)%
Total Ceding RatioTotal Ceding Ratio(30.4)%(19.4)%(40.4)%(57.7)%Total Ceding Ratio(28.8)%(30.4)%(60.9)%(40.4)%

Please note that the sum of the percentages above will not reconcile to the consolidated percentages as they are calculated using each operating segments’ gross earned premium rather than our consolidated gross earned premium.

We amortize our ceded unearned premiums over the annual agreement period, and we record that amortization in ceded premiums earned on our Unaudited Condensed Consolidated Statements of Comprehensive Loss.Income. The table below summarizes
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UNITED INSURANCE HOLDINGS CORP.
the amounts of our ceded premiums written under the various types of agreements, as well as the amortization of ceded unearned premiums:
Three Months Ended March 31,
20232022
Quota Share$(12,243)$(23,128)
Excess-of-loss(19,295)(5,507)
Equipment, identity theft, and cyber security(820)(746)
Ceded premiums written$(32,358)$(29,381)
Change in ceded unearned premiums(24,794)(35,606)
Ceded premiums earned$(57,152)$(64,987)
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AMERICAN COASTAL INSURANCE CORPORATION
Three Months Ended March 31,
20242023
Quota Share$(58,094)$(12,243)
Excess-of-loss(19,829)(19,295)
Equipment, identity theft, and cyber security(783)(820)
Ceded premiums written$(78,706)$(32,358)
Change in ceded unearned premiums(21,386)(24,794)
Ceded premiums earned$(100,092)$(57,152)


The breakdown of our ceded premiums written under the various types of agreements, as well as the amortization of ceded unearned premiums for our personal lines and commercial lines operating segments can be seen in the tables below. These values can be reconciled to the table above.

Personal Lines Operating Segment
Three Months Ended March 31,
20232022
Excess-of-loss(995)353 
Equipment, identity theft, and cyber security(290)(168)
Ceded premiums written$(1,285)$185 
Change in ceded unearned premiums(2,493)(3,150)
Ceded premiums earned$(3,778)$(2,965)

Commercial Lines Operating Segment Impact
Three Months Ended March 31,
20232022
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
202420242023
Quota ShareQuota Share$(12,243)$(23,128)
Excess-of-lossExcess-of-loss(18,300)(5,860)
Equipment, identity theft, and cyber securityEquipment, identity theft, and cyber security(530)(578)
Ceded premiums writtenCeded premiums written$(31,073)$(29,566)
Ceded premiums written
Ceded premiums written
Change in ceded unearned premiumsChange in ceded unearned premiums(22,301)(32,456)
Ceded premiums earnedCeded premiums earned$(53,374)$(62,022)

Personal Lines Operating Segment
Three Months Ended March 31,
20242023
Excess-of-loss(507)(995)
Equipment, identity theft, and cyber security(302)(290)
Ceded premiums written$(809)$(1,285)
Change in ceded unearned premiums(1,644)(2,493)
Ceded premiums earned$(2,453)$(3,778)

Current year catastrophe losses disaggregated between namenamed and numbered storms and all other catastrophe loss events are shown in the following table.

20232022
Number of Events
Incurred Loss and LAE (1)
Combined Ratio ImpactNumber of Events
Incurred Loss and LAE (1)
Combined Ratio Impact
202420242023
Number of EventsNumber of Events
Incurred Loss and LAE (1)
Combined Ratio ImpactNumber of Events
Incurred Loss and LAE (1)
Combined Ratio Impact
Three Months Ended March 31,Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Current period catastrophe losses incurredCurrent period catastrophe losses incurred
Current period catastrophe losses incurred
Current period catastrophe losses incurred
Named and numbered storms
Named and numbered storms
Named and numbered stormsNamed and numbered storms— $— — %— $— — %— $$— — — %— $$— — — %
All other catastrophe loss eventsAll other catastrophe loss events2,615 3.0 %5,528 9.6 %All other catastrophe loss events754 754 1.1 1.1 %2,615 2,615 3.0 3.0 %
TotalTotal$2,615 3.0 %$5,528 9.6 %Total$$754 1.1 1.1 %$$2,615 3.0 3.0 %
(1) Incurred loss and LAE is equal to losses and LAE paid plus the change in case and incurred but not reported reserves. Shown net of losses ceded to reinsurers. Incurred loss and LAE and number of events includes the development on storms during the year in which it occurred.

48
41

UNITEDAMERICAN COASTAL INSURANCE HOLDINGS CORP.CORPORATION

The impact of the current year catastrophes to our personal lines and commercial lines operating segments can be seen in the tables below. Please note that the catastrophe events may have impacted both operating segments. As a result, the sum of the number of events in the tables below will not reconcile to the consolidated number of events above. In addition, the combined ratio impact is calculated using each segment's net premiums earned and sum of the ratios in the tables below will not reconcile to the ratios above.

PersonalCommercial Lines Operating Segment
20232022
Number of Events
Incurred Loss and LAE (1)
Combined Ratio ImpactNumber of Events
Incurred Loss and LAE (1)
Combined Ratio Impact
202420242023
Number of EventsNumber of Events
Incurred Loss and LAE (1)
Combined Ratio ImpactNumber of Events
Incurred Loss and LAE (1)
Combined Ratio Impact
Three Months Ended March 31,Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Current period catastrophe losses incurredCurrent period catastrophe losses incurred
Current period catastrophe losses incurred
Current period catastrophe losses incurred
Named and numbered storms
Named and numbered storms
Named and numbered stormsNamed and numbered storms— $— — %— $— — %— $$— — — %— $$— — — %
All other catastrophe loss eventsAll other catastrophe loss events518 6.0 %2,423 19.7 %All other catastrophe loss events211 211 0.3 0.3 %2,097 2,097 2.7 2.7 %
TotalTotal$518 6.0 %$2,423 19.7 %Total$$211 0.3 0.3 %$$2,097 2.7 2.7 %
(1) Incurred loss and LAE is equal to losses and LAE paid plus the change in case and incurred but not reported reserves. Shown net of losses ceded to reinsurers. Incurred loss and LAE and number of events includes the development on storms during the year in which it occurred.


CommercialPersonal Lines Operating Segment
20232022
Number of Events
Incurred Loss and LAE (1)
Combined Ratio ImpactNumber of Events
Incurred Loss and LAE (1)
Combined Ratio Impact
202420242023
Number of EventsNumber of Events
Incurred Loss and LAE (1)
Combined Ratio ImpactNumber of Events
Incurred Loss and LAE (1)
Combined Ratio Impact
Three Months Ended March 31,Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Current period catastrophe losses incurredCurrent period catastrophe losses incurred
Current period catastrophe losses incurred
Current period catastrophe losses incurred
Named and numbered storms
Named and numbered storms
Named and numbered stormsNamed and numbered storms— $— — %— $— — %— $$— — — %— $$— — — %
All other catastrophe loss eventsAll other catastrophe loss events2,097 2.7 %3,105 6.8 %All other catastrophe loss events543 543 8.9 8.9 %518 518 6.0 6.0 %
TotalTotal$2,097 2.7 %$3,105 6.8 %Total$$543 8.9 8.9 %$$518 6.0 6.0 %
(1) Incurred loss and LAE is equal to losses and LAE paid plus the change in case and incurred but not reported reserves. Shown net of losses ceded to reinsurers. Incurred loss and LAE and number of events includes the development on storms during the year in which it occurred.

See Note 109 in our Notes to Unaudited Condensed Consolidated Financial Statements for additional information regarding our reinsurance program.


Unpaid Losses and Loss Adjustments

We generally use the term “loss(es)” to collectively refer to both loss and LAE. We establish reserves for both reported and unreported unpaid losses that have occurred at or before the balance sheet date for amounts we estimate we will be required to pay in the future, including provisions for claims that have been reported but are unpaid at the balance sheet date and for obligations on claims that have been incurred but not reported at the balance sheet date. Our policy is to establish these loss reserves after considering all information known to us at each reporting period. At any given point in time, our loss reserve represents our best estimate of the ultimate settlement and administration costs of our insured claims incurred and unpaid.

Unpaid losses and LAE totaled $748,365,000$279,556,000 and $842,958,000$370,221,000 as of March 31, 20232024 and December 31, 2022,2023, respectively. Of this total, $727,320,000$258,379,000 and $816,489,000,$347,738,000, respectively, is related to our commercial lines operating segment. The remaining $21,045,000$21,177,000 and $26,469,000,$22,483,000, respectively, is related to our personal lines operating segment. On a consolidated basis, this balance has decreased from year end as we continue to settle claims related to Hurricane Ian which made landfall in the third quarter of 2022.

Since the process of estimating loss reserves requires significant judgment due to a number of variables, such as fluctuations in inflation, judicial decisions, legislative changes and changes in claims handling procedures, our ultimate liability
49

UNITED INSURANCE HOLDINGS CORP.
will likely differ from these estimates. We revise our reserve for unpaid losses as additional information becomes available, and reflect adjustments, if any, in our earnings in the periods in which we determine the adjustments as necessary.

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AMERICAN COASTAL INSURANCE CORPORATION
See Note 1110 in our Notes to Unaudited Condensed Consolidated Financial Statements for additional information regarding our losses and loss adjustments.

InflationDiscontinued Operations

DuringOn February 10, 2023, we announced that a solvent run-off for UPC was unlikely and on February 27, 2023, UPC was placed into receivership with the fourth quarterDFS, which divested our ownership of 2021, the United States began experiencing an increase in the rate of inflation. During the first half of 2022, inflation hit 8.6%, its highest level since 1981, impacting all industries. Premium rates charged to policyholders are typically developed several months prior to implementation, using market information available at the time of the filing. While we attempt to charge adequate premium rates to combat increased costs, during periods of high inflation, we may not have included the negative impact to loss and loss adjustment expenses into our projections, resulting in premium rates that may not be sufficient. In addition, we may be limited in our ability to raise premium rates due to regulatory restrictions.UPC. As a result, ofUPC, as well as the inflation during 2023, higher loss and loss adjustment expenses have hadactivities related directly to supporting the business conducted by UPC, qualifies as a negative impact on ourdiscontinued operation. For more information regarding the results of our discontinued operations, during the three months ended March 31, 2023.see Note 3 in our Notes to Consolidated Financial Statements.

In response to inflation, the Federal Reserve has also increased interest rates which may negatively affect the market value of our investment portfolio and our rate of return on investments. Management monitors and responds to the inflationary pressure and changing interest rate environment for potential long-term material impacts to our investment portfolio and results of operations.
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UNITED INSURANCE HOLDINGS CORP.
RESULTS OF OPERATIONS - COMPARISON OF THE THREE MONTH PERIODS ENDED MARCH 31, 20232024 AND 20222023

Net income attributable to UIHCACIC for the three months ended March 31, 2023 increased $300,452,000,2024 decreased $243,681,000, or 905.7%91.2%, to net income of$23,599,000 from $267,280,000 for the first quarter of 2023 from a net loss of $33,172,000 for the same period in 2022.2023. Of this income, $23,599,000 is attributable to continuing operations for the three months ended March 31, 2024, a decrease of $6,768,000 from $30,367,000 for the same period in 2023. Drivers of net income from continuing operations during the three months ended March 31, 20232024 include increased gross premiums earned and decreased loss and LAEexpenses driven by decreased non-catastrophe losses, and decreases acrossin policy acquisition costs operating and underwriting expenseslosses and general and administrative expenses,LAE incurred, partially offset by lower revenues as the detailsresult of which are described below. In additionhigher ceded premiums earned. During the first quarter of 2024, none of our net income was attributable to continuing operations, we recognized income from discontinued operations, compared to $236,913,000 of $236,913,000, driven by the deconsolidation of UPC.net income attributable to discontinued operations in 2023.

Revenue

Our gross written premiums increased $44,709,000,$10,335,000, or 31.4%5.5%, to $187,123,000$197,458,000 for the first quarterthree months ended March 31, 20232024 from $142,414,000$187,123,000 for the same period in 2022.2023. This increase was driven primarily by an increase in our commercial premiums written in Florida, as we continue to focus on transitioning towards a specialtyour commercial book of business. In addition, we saw an increase in written premiums across our personal lines underwriter.business, due primarily to rate increases. The breakdown of the quarter-over-quarter changes in both direct written and assumed premiums by state and gross written premium by line of business are shown in the table below.

($ in thousands)($ in thousands)Three Months Ended March 31,($ in thousands)Three Months Ended March 31,
20232022Change
202420242023Change
Direct Written and Assumed Premium by State (1)
Direct Written and Assumed Premium by State (1)
FloridaFlorida$176,611 $125,764 $50,847 
Florida
Florida
New York
TexasTexas(9)1,986 (1,995)
New York10,482 4,683 5,799 
South Carolina— 93 (93)
Total direct written premium by state187,084 132,526 54,558 
Total direct written premium by region
Assumed premium (2)
Assumed premium (2)
39 9,888 (9,849)
Total gross written premium by state$187,123 $142,414 $44,709 
Total gross written premium by region
Gross Written Premium by Line of BusinessGross Written Premium by Line of Business
Gross Written Premium by Line of Business
Gross Written Premium by Line of Business
Commercial property
Commercial property
Commercial property
Personal propertyPersonal property$10,482 $14,450 $(3,968)
Commercial property176,641 127,964 48,677 
Total gross written premium by line of businessTotal gross written premium by line of business$187,123 $142,414 $44,709 
(1) We are no longer writing in Texas or South Carolina as of May 31, 2022.
(2) Assumed premium written for 2023 and 2024 primarily included commercial property business assumed from unaffiliated insurers. Assumed premium written for 2022 includes New York property business assumed from our former subsidiary, UPC totaling $9,767,000.


Three Months Ended March 31,Three Months Ended March 31,
New and Renewal Policies (1) By State
New and Renewal Policies (1) By State
20242023Change
Florida
New York
Three Months Ended March 31,
New and Renewal Policies(1) by State (2)
20232022Change
Florida1,157 1,472 (315)
Texas— 18 (18)
New York6,137 9,952 (3,815)
South Carolina— (1)
TotalTotal7,294 11,443 (4,149)
Total
Total
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AMERICAN COASTAL INSURANCE CORPORATION
(1) Only includes new and renewal homeowner, commercial and dwelling fire policies written during the quarter.
(2) We are no longer writing in Texas or South Carolina as of May 31, 2022.






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UNITED INSURANCE HOLDINGS CORP.

Expenses

Expenses for the three months ended March 31, 20232024 decreased $3,689,000,$14,264,000, or 6.1%25.0%, to $57,064,000$42,800,000 from $60,753,000$57,064,000 for the same period in 2022.2023. The decrease in expenses was primarily due to a decrease in loss and LAE of $9,903,000. Operating and underwriting expenses also decreased $1,539,000 in the first quarter of 2023 compared to the first quarter of 2022.policy acquisition costs quarter-over-quarter. This was partially offset by increased operating and administrative costs quarter-over-quarter. The details of these changes can be seen below.
Three Months Ended March 31,
20242023Change
Net loss and LAE$15,906 $16,412 $(506)
% of Gross earned premiums9.4 %11.5 %(2.1) pts
% of Net earned premiums23.1 %18.9 %4.2 pts
Less:
Current year catastrophe losses$754 $2,615 $(1,861)
Prior year reserve (favorable) development(432)(3,165)2,733 
Underlying loss and LAE (1)
$15,584 $16,962 $(1,378)
% of Gross earned premiums9.2 %11.7 %(2.5) pts
% of Net earned premiums22.7 %19.4 %3.3 pts
(1) Underlying loss and LAE is a non-GAAP measure and is reconciled above to net loss and LAE, the most directly comparable GAAP measure. Additional information regarding non-GAAP financial measures presented in this document is in the "Definitions of Non-GAAP Measures" section of this Form 10-Q.

The calculations of our expense ratios are shown below.
Three Months Ended March 31,
20242023Change
Policy acquisition costs$11,793 $26,972 $(15,179)
Operating and underwriting2,809 2,168 641 
General and administrative9,573 8,793 780 
Total operating expenses$24,175 $37,933 $(13,758)
% of Gross earned premiums14.3 %26.3 %(12.0) pts
% of Net earned premiums35.2 %43.4 %(8.2) pts

Loss and LAE decreased $506,000, or 3.1%, to $15,906,000 for the three months ended March 31, 2024 from $16,412,000 for the same period in 2023. Loss and LAE expense as a percentage of net earned premiums increased 4.2 points to 23.1% for the three months ended March 31, 2024, compared to 18.9% for the same period in 2023. Excluding catastrophe losses and reserve development, our gross underlying loss and LAE ratio for the three months ended March 31, 2024 was 9.2%, a decrease of 2.5 points from 11.7% during the three months ended March 31, 2023.

Policy acquisition costs decreased $15,179,000, or 56.3%, to $11,793,000 for the three months ended March 31, 2024 from $26,972,000 for the same period in 2023. The primary driver of the decrease was an increase in ceding commission income of $17,321,000, driven by our commercial lines quota share coverage effective June 1, 2023. This was partially offset by an increase in external management fees incurred of $1,599,000 and premium taxes of $556,000 related primarily to our increased commercial lines gross written premium during 2024.

Operating expenses increased $641,000, or 29.6%, to $2,809,000 for the three months ended March 31, 2024 from $2,168,000 for the same period in 2023, primarily due to increased underwriting costs quarter-over-quarter totaling $1,120,000. This was partially offset by decreased overhead costs such as rent, printing, postage and utilities totaling $328,000 as a result of cost saving initiatives implemented.

General and administrative expenses increased $780,000, or 8.9%, to $9,573,000 for the three months ended March 31, 2024 from $8,793,000 for the same period in 2023 driven increased external legal and audit fees in 2024 totaling $707,000.


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AMERICAN COASTAL INSURANCE CORPORATION
Commercial Lines Operating Segment Results

Pretax earnings attributable to our commercial lines operating segment for the three months ended March 31, 2024 decreased $6,124,000, or 15.7%, to pre-tax income of $32,795,000 from pre-tax income of $38,919,000 for the same period in 2023. The change in earnings was primarily driven by increased ceded premiums, driven by changes in our quota share contracts effective June 1, 2023, increased general and administrative expenses and increased operating expenses, the details of which are described below. This was partially offset by increased gross premiums earned quarter-over-quarter as we continue to focus on our specialty commercial lines underwriting.

Revenue

Our gross written premiums attributable to our commercial lines operating segment increased $7,960,000, or 4.5%, to $184,601,000 for the three months ended March 31, 2024 from $176,641,000 for the same period in 2023. This increase was driven by our continued focus on our specialty commercial lines underwriting. The breakdown of the commercial lines operating segment year-over-year changes in both direct written and assumed premiums by state are shown in the table below.

($ in thousands)Three Months Ended March 31,
20242023Change
Direct Written and Assumed Premium by State (1)
Florida$184,601 $176,611 $7,990 
Texas— (9)
Total direct written premium by region184,601 176,602 7,999 
Assumed premium (2)
— 39 (39)
Total gross written premium by region$184,601 $176,641 $7,960 
(1) We are no longer writing in Texas as of May 31, 2022.
(2) Assumed premium written for 2024 and 2023 is primarily commercial property business assumed from unaffiliated insurers.

Three Months Ended March 31,
New and Renewal Policies(1) by State
20242023Change
Florida1,062 1,157 (95)
Total1,062 1,157 (95)
(1) Only includes new and renewal commercial policies written during the year.

45

AMERICAN COASTAL INSURANCE CORPORATION
Expenses

Expenses attributable to our commercial lines operating segment for the three months ended March 31, 2024 decreased $8,663,000, or 20.7%, to $33,254,000 from $41,917,000 for the same period in 2023. The decrease in expenses was primarily due to a decrease in policy acquisition costs of $6,664,000 and generalloss and LAE incurred. This was partially offset by increased operating and administrative costscosts. The details of $729,000.these changes quarter-over-quarter can be seen below.

The calculations of our commercial lines operating segment loss ratios and underlying loss ratios are shown below.
Three Months Ended March 31,
20232022Change
Three Months Ended March 31,Three Months Ended March 31,
20242023Change
Net loss and LAENet loss and LAE$16,412 $26,315 $(9,903)
% of Gross earned premiums% of Gross earned premiums11.5 %21.4 %(9.9) pts% of Gross earned premiums7.2 %10.5 %(3.3) pts
% of Net earned premiums% of Net earned premiums18.9 %45.6 %(26.7) pts% of Net earned premiums18.4 %17.7 %0.7 pts
Less:Less:
Current year catastrophe lossesCurrent year catastrophe losses$2,615 $5,528 $(2,913)
Prior year reserve unfavorable development(3,165)(3,064)(101)
Current year catastrophe losses
Current year catastrophe losses
Prior year reserve (favorable) development
Underlying loss and LAE (1)
Underlying loss and LAE (1)
$16,962 $23,851 $(6,889)
% of Gross earned premiums% of Gross earned premiums11.7 %19.4 %(7.7) pts% of Gross earned premiums7.1 %11.0 %(3.9) pts
% of Net earned premiums% of Net earned premiums19.4 %41.3 %(21.9) pts% of Net earned premiums18.2 %18.5 %(0.3) pts
(1) Underlying loss and LAE is a non-GAAP measure and is reconciled above to Net loss and LAE, the most directly comparable GAAP measure. Additional information regarding non-GAAP financial measures presented in this document is in the "Definitions of Non-GAAP Measures" section of this Form 10-Q.

The calculations of our commercial lines operating segment expense ratios are shown below.

Three Months Ended March 31,
20232022Change
Policy acquisition costs$26,972 $20,308 $6,664 
Operating and underwriting2,168 3,707 (1,539)
General and administrative8,793 8,064 729 
Total Operating Expenses$37,933 $32,079 $5,854 
% of Gross earned premiums26.3 %26.1 %0.2 pts
% of Net earned premiums43.4 %55.6 %(12.2) pts
Three Months Ended March 31,
20242023Change
Policy acquisition costs$12,181 $25,166 $(12,985)
Operating and underwriting2,187 96 2,091 
General and administrative7,333 2,754 4,579 
Total Operating Expenses$21,701 $28,016 $(6,315)
% of Gross earned premiums13.5 %21.2 %(7.7) pts
% of Net earned premiums34.6 %35.6 %(1.0) pts

Loss and LAE attributable to our commercial lines operating segment decreased by $9,903,000,$2,348,000, or 37.6%16.9%, to $16,412,000$11,553,000 for the first quarter of 2023three months ended March 31, 2024 from $26,315,000$13,901,000 for the first quarter of 2022.same period in 2023. Loss and LAE expense as a percentage of net earned premiums decreased 26.7increased 0.7 points to 18.9%18.4% for the first quarter of 2023,three months ended March 31, 2024 compared to 45.6%17.7% for the first quarter of 2022.same period in 2023. Excluding catastrophe losses and reserve development, our gross underlying loss and LAE ratio for the first quarter of 2023three months ended March 31, 2024 would have been 11.7%7.1%, a decrease of 7.73.9 points from 19.4%11.0% during the first quarter of 2022.same period in 2023.

Policy acquisition costs increasedattributable to our commercial lines operating segment decreased by $6,664,000,$12,985,000, or 32.8%51.6%, to $26,972,000$12,181,000 for the first quarter of 2023three months ended March 31, 2024 from $20,308,000$25,166,000 for the first quarter of 2022, primarily duesame period in 2023, driven by a $17,311,000 increase in ceding commission income related to a $7,537,000our quota share agreements effective June 1, 2023. This was partially offset by an $3,823,000 increase in external management fees incurred related to our commercial linesand commissions and a $509,000 increase in premium tax expense, all as a result of increased gross written premium during the first quarter of 2023, driven by increased written premiumpremiums quarter-over-quarter.

Operating and underwriting expenses decreasedattributable to our commercial lines operating segment increased by $1,539,000,$2,091,000, or 41.5%2,178.1%, to $2,168,000$2,187,000 for the first quarter of 2023three months ended March 31, 2024 from $3,707,000$96,000 for the first quarter of 2022,same period in 2023, driven by a decrease in investments in technology of $506,000 and a decrease$1,050,000 increase in underwriting expenses and a $1,041,000 increase in allocation of $698,000 year-over-year. Both of these decreases are driven by the change to our personal lines operating segmentoverhead expenses in 2023.2024.

General and administrative expenses attributable to our commercial lines operating segment increased by $729,000,$4,579,000, or 9.0%166.3%, to $8,793,000$7,333,000 for the first quarter of 2023three months ended 2024 from $8,064,000$2,754,000 for the first quarter of 2022,same period in 2023, driven by the ana $2,728,000 increase in salary related expenses of $861,000 year-over-year.


allocated salaries and a $1,777,000 increase in allocated external fees such as legal, audit, actuarial and tax services provided during the year.
5246

UNITEDAMERICAN COASTAL INSURANCE HOLDINGS CORP.CORPORATION


Personal Lines Operating Segment Results

Pretax earnings attributable to our personal lines operating segment for the three months ended March 31, 20232024 increased $9,450,000,$3,013,000, or 83.2%158.0%, to pre-tax income of $1,106,000 from a pre-tax loss of $1,907,000 for the first quarter of 2023 from a pre-tax loss of $11,357,000 for the same period in 2022.2023. The change in pretax earnings was primarily driven by a decrease in gross written premiums quarter-over-quarter asexpenses, the details of which are described below. Expenses decreased quarter-over-quarter, driven by decreased loss & LAE, policy acquisition costs, and operating expenses. These decreases were partially offset by an increasea decrease in generalnet premiums earned quarter-over-quarter and administrative expensesincreased losses and LAE, driven by increased non-catastrophe losses quarter-over-quarter. The details of the change in these expenses are described below.

Revenue

Our gross written premiums attributable to our personal lines operating segment decreased $3,968,000,increased $2,375,000 or 27.5%22.7%, to $10,482,000$12,857,000 for the first quarterthree months ended March 31, 20232024 from $14,450,000$10,482,000 for the same period in 2022.2023. This decreaseincrease was driven primarily by a decreae in assumed premiums, driven by the terminationrate increases on our personal lines book of our quota share agreement between our former subsidiary, UPC and IIC effective December 31, 2022.business. The change in personal lines direct written and assumed premiums and new and renewal premiumspolicies of the personal lines operating segment quarter-over-quarter can be seen below.

($ in thousands, policies in ones)Three Months Ended March 31,
($ in thousands)($ in thousands)Three Months Ended March 31,
202420242023Change
20232022Change
Direct Written PremiumDirect Written Premium$10,482 $4,684 $5,798 
Assumed Premiums— 9,766 (9,766)
Direct Written Premium
Direct Written Premium
Total gross written premium
Total gross written premium
Total gross written premiumTotal gross written premium$10,482 $14,450 $(3,968)
New and Renewal Policies (1)
New and Renewal Policies (1)
6,137 9,952 (3,815)
New and Renewal Policies (1)
New and Renewal Policies (1)
(1) Only includes new and renewal homeowner and dwelling fire policies written during the quarter.year.





































5347

UNITEDAMERICAN COASTAL INSURANCE HOLDINGS CORP.CORPORATION

Expenses

Expenses attributable to our personal lines operating segment for the three months ended March 31, 20232024 decreased $11,529,000,$5,581,000, or 48.6%45.9%, to $12,172,000$6,591,000 from $23,701,000$12,172,000 for the same period in 2022.2023. The decrease in expenses is attributable to decreased loss and LAE driven by decreased non-catastrophe losses, as well as a decrease in policy acquisition costs, operating and operating expenses. Theadministrative costs, the details of these changeswhich are described below. These decreases were partially offset by increased loss and LAE incurred, driven by increased non-catastrophe losses.

The calculations of our personal lines operating segment loss ratios and underlying loss ratios are shown below.
Three Months Ended March 31,
20232022Change
Three Months Ended March 31,Three Months Ended March 31,
20242023Change
Net loss and LAENet loss and LAE$2,511 $12,201 $(9,690)
% of Gross earned premiums% of Gross earned premiums20.2 %79.9 %(59.7) pts% of Gross earned premiums50.9 %20.2 %30.7 pts
% of Net earned premiums% of Net earned premiums29.0 %99.2 %(70.2) pts% of Net earned premiums71.4 %29.0 %42.4 pts
Less:Less:
Current year catastrophe lossesCurrent year catastrophe losses$518 $2,423 $(1,905)
Current year catastrophe losses
Current year catastrophe losses
Prior year reserve (favorable) developmentPrior year reserve (favorable) development(395)(1,261)866 
Underlying loss and LAE (1)
Underlying loss and LAE (1)
$2,388 $11,039 $(8,651)
% of Gross earned premiums% of Gross earned premiums19.2 %72.3 %(53.1) pts% of Gross earned premiums49.0 %19.2 %29.8 pts
% of Net earned premiums% of Net earned premiums27.5 %89.7 %(62.2) pts% of Net earned premiums68.7 %27.5 %41.2 pts
(1) Underlying loss and LAE is a non-GAAP measure and is reconciled above to Net loss and LAE, the most directly comparable GAAP measure. Additional information regarding non-GAAP financial measures presented in this document is in the "Definitions of Non-GAAP Measures" section of this Form 10-Q.

The calculations of our personal lines operating segment expense ratios are shown below.
Three Months Ended March 31,
20232022Change
Three Months Ended March 31,Three Months Ended March 31,
20242023Change
Policy acquisition costsPolicy acquisition costs$1,806 $3,630 $(1,824)
Operating and underwritingOperating and underwriting1,948 2,507 (559)
General and administrativeGeneral and administrative5,907 5,363 544 
Total Operating ExpensesTotal Operating Expenses$9,661 $11,500 $(1,839)
% of Gross earned premiums% of Gross earned premiums77.6 %75.3 %2.3 pts% of Gross earned premiums26.2 %77.6 %(51.4) pts
% of Net earned premiums% of Net earned premiums111.5 %93.5 %18.0 pts% of Net earned premiums36.7 %111.5 %(74.8) pts

Loss and LAE attributable to our personal lines operating segment decreasedincreased by $9,690,000,$1,842,000, or 79.4%73.4%, to $4,353,000 for the three months ended March 31, 2024 from $2,511,000 for the first quarter of 2023 from $12,201,000 for the first quarter of 2022.same period in 2023. Loss and LAE expense as a percentage of net earned premiums decreased 70.2increased 42.4 points to 71.4% for the three months ended March 31, 2024, compared to 29.0% for the first quarter of 2023, compared to 99.2% for the first quarter of 2022.same period in 2023. Excluding catastrophe losses and reserve development, our gross underlying loss and LAE ratio for the first quarter of 2023three months ended March 31, 2024 would have been 19.2%49.0%, a decreasean increase of 53.129.8 points from 72.3% during19.2% for the first quarter of 2022.same period in 2023.

Policy acquisition costs attributable to our personal lines operating segment decreased by $1,824,000,$2,194,000, or 50.2%121.5%, to $(388,000) for the three months ended March 31, 2024 from $1,806,000 for the first quarter ofsame period in 2023, from $3,630,000 for the first quarter of 2022, primarily due to a $2,214,000 decrease in reinsurance commissions decreased $2,530,000,agent commission expense in 2024, driven by the terminationcollection of the quota share agreement between our former subsidiary UPC and IIC.previously unearned agent commissions.

Operating and underwriting expenses attributable to our personal lines operating segment decreased by $559,000,$1,412,000, or 22.3%72.5%, to $536,000 for the three months ended March 31, 2024 from $1,948,000 for the first quarter ofsame period in 2023, from $2,507,000 for the first quarter of 2022, due to decreased allocation of investments in technology of $251,000 in 2023$1,070,000. We also experienced decreased operating costs such as utilities, printing and decreased underwriting expensespostage of $105,000 as the result of the decrease in premiums written described above.$375,000 quarter-over-quarter.

General and administrative expenses attributable to our personal lines operating segment increased by $544,000,decreased $3,817,000, or 10.1%64.6%, to $5,907,000 for the first quarter of 2023 from $5,363,000 for the first quarter of 2022, driven by a $889,000 increase in salary related expenses as a result of lower headcount quarter-over-quarter. This was partially offset by lower costs associated with professional services provided by external vendors such as tax and legal services.

54

UNITED INSURANCE HOLDINGS CORP.
Commercial Lines Operating Segment Results

Pretax earnings attributable to our commercial lines operating segment$2,090,000 for the three months ended March 31, 2023 increased $27,337,000, or 236.0%, to pre-tax income of $38,919,000 for the first quarter of 20232024 from pre-tax income of $11,582,000$5,907,000 for the same period in 2022. The change in earnings was primarily driven by increased gross written premiums quarter-over-quarter, and decreased operating and underwriting expenses. This was partially offset by increased policy acquisition costs quarter-over-quarter. The details of these changes are described below.

Revenue

Our gross written premiums attributable to our commercial lines operating segment increased $48,677,000, or 38.0%, to $176,641,000 for the first quarter ended March 31, 2023, from $127,964,000 for the same period in 2022. This increase was driven primarily by an increase in written premiums in the state of Florida, as we focus on increasing commercial written premiums and transitioning towards a specialty commercial lines underwriter. The breakdown of the commercial lines operating segment quarter-over-quarter changes in both direct written and assumed premiums by state are shown in the table below.

($ in thousands)Three Months Ended March 31,
20232022Change
Direct Written and Assumed Premium by State (1)
Florida$176,611 $125,764 $50,847 
Texas(9)1,986 (1,995)
South Carolina— 93 (93)
Total direct written premium by state176,602 127,843 48,759 
Assumed premium (2)
39 121 (82)
Total gross written premium by state$176,641 $127,964 $48,677 
(1) We are no longer writing in Texas or South Carolina as of May 31, 2022.
(2) Assumed premium written for 2022 and 2021 is primarily commercial property business assumed from unaffiliated insurers.

Three Months Ended March 31,
New and Renewal Policies(1) by State (2)
20232022Change
Florida1,157 1,472 (315)
Texas— 18 (18)
South Carolina— (1)
Total1,157 1,491 (334)
(1) Only includes new and renewal commercial policies written during the year.
(2) We are no longer writing in Texas or South Carolina as of May 31, 2022.
55

UNITED INSURANCE HOLDINGS CORP.
Expenses

Expenses attributable to our commercial lines operating segment for the three months ended March 31, 2023 increased $7,696,000, or 22.5%, to $41,917,000 from $34,221,000 for the same period in 2022. The increase in expenses was primarily due to an increase in policy acquisition costs of $8,488,000 in the first quarter of 2023 compared to the first quarter of 2022. This was partially offset by a $1,012,000 decrease in policy acquisition costs. The details of these changes can be seen below.

The calculations of our commercial lines operating segment loss ratios and underlying loss ratios are shown below.
Three Months Ended March 31,
20232022Change
Net loss and LAE$13,901 $14,114 $(213)
% of Gross earned premiums10.5 %13.1 %(2.6) pts
% of Net earned premiums17.7 %31.1 %(13.4) pts
Less:
Current year catastrophe losses$2,097 $3,105 $(1,008)
Prior year reserve (favorable) development(2,770)(1,803)(967)
Underlying loss and LAE (1)
$14,574 $12,812 $1,762 
% of Gross earned premiums11.0 %11.9 %(0.9) pts
% of Net earned premiums18.5 %28.2 %(9.7) pts
(1) Underlying loss and LAE is a non-GAAP measure and is reconciled above to Net loss and LAE, the most directly comparable GAAP measure. Additional information regarding non-GAAP financial measures presented in this document is in the "Definitions of Non-GAAP Measures" section of this Form 10-Q.

The calculations of our commercial lines operating segment expense ratios are shown below.
Three Months Ended March 31,
20232022Change
Policy acquisition costs$25,166 $16,678 $8,488 
Operating and underwriting96 1,109 (1,013)
General and administrative2,754 2,320 434 
Total Operating Expenses$28,016 $20,107 $7,909 
% of Gross earned premiums21.2 %18.7 %2.5 pts
% of Net earned premiums35.6 %44.2 %(8.6) pts

Loss and LAE attributable to our commercial lines operating segment decreased by $213,000, or 1.5%, to $13,901,000 for the first quarter of 2023 from $14,114,000 for the first quarter of 2022. Loss and LAE expense as a percentage of net earned premiums decreased 13.4 points to 17.7% for the first quarter of 2022, compared to 31.1% for the first quarter of 2021. Excluding catastrophe losses and reserve development, our gross underlying loss and LAE ratio for the first quarter of 2022 would have been 11.0%, a decrease of 0.9 points from 11.9% during the first quarter of 2022.

Policy acquisition costs attributable to our commercial lines operating segment increased by $8,488,000, or 50.9%, to $25,166,000 for the first quarter of 2023 from $16,678,000 for the first quarter of 2022, driven by increases in external management fees of $7,537,000, as a result of increased gross written premiums quarter-over-quarter. In addition ceding commission income related to our quota share reinsurance agreements decreasing $3,506,000, driven by the non-renewal of agreements at the end of 2022. These increases were partially offset by decreased agent commission expenses of $2,363,000.

Operating and underwriting expenses attributable to our commercial lines operating segment decreased by $1,013,000, or 91.3%, to $96,000 for the first quarter of 2023 from $1,109,000 for the first quarter of 2022, driven by a $591,000$3,363,000 decrease in underwriting expenses quarter-over-quarter, decreased allocations of expenses for investments in technology of $196,000,allocated salaries and a $586,000 decrease in expense related to our credit allowance reserve of $208,000.

General and administrative expenses attributable to our commercial lines operating segment increased by $434,000, or 18.7%, to $2,754,000 for the first quarter of 2023 from $2,320,000 for the first quarter of 2022, driven by a $433,000 increase in allocated external professionalfees such as legal, audit, actuarial and tax services costs forprovided during the first quarter of 2023 compared to the same period in 2022.year.


5648

UNITEDAMERICAN COASTAL INSURANCE HOLDINGS CORP.CORPORATION
LIQUIDITY AND CAPITAL RESOURCES

We generate cash through premium collections, reinsurance recoveries, investment income, the sale or maturity of invested assets, the incurrence of debt and the issuance of additional shares of our stock. We use our cash to pay reinsurance premiums, claims and related costs, policy acquisition costs, salaries and employee benefits, other expenses and stockholder dividends, acquire subsidiaries and pay associated costs, as well as to repay debts, repurchase stock and purchase investments.

As a holding company, we do not conduct any business operations of our own and, as a result, we rely on cash dividends or intercompany loans from our management subsidiaries to pay our general and administrative expenses. Insurance regulatory authorities heavily regulate our insurance subsidiaries, including restricting any dividends paid by our insurance subsidiaries and requiring approval of any management fees our insurance subsidiaries pay to our management subsidiaries for services rendered; however, nothing restricts our non-insurance company subsidiaries from paying us dividends other than state corporate laws regarding solvency. Our management subsidiaries pay us dividends primarily using cash from the collection of management fees from our insurance subsidiaries, pursuant to the management agreements in effect between those entities. In accordance with state laws, our insurance subsidiaries may pay dividends or make distributions out of that part of their statutory surplus derived from their net operating profit and their net realized capital gains. The Risk-Based Capital (RBC) guidelines published by the National Association of Insurance Commissioners may further restrict our insurance subsidiaries’ ability to pay dividends or make distributions if the amount of the intended dividend or distribution would cause their respective surplus as it regards policyholders to fall below minimum RBC guidelines. See Note 1514 in our Notes to Unaudited Condensed Consolidated Financial Statements for additional information.

During the three months ended March 31, 2023,2024, the Company made noa capital contributionscontribution of $1,265,000 to its subsidiaries. During the three months ended March 31, 2022, the Company made capital contributions of $8,000,000 each to our former insurance subsidiaries,reinsurance subsidiary, UPC and FSIC.Re. We may make future contributions of capital to our insurance subsidiaries as circumstances require. The Company made no capital contributions to its subsidiaries during the three months ended March 31, 2023.

As described in Note 1 in theNotes to Unaudited Condensed Consolidated Financial Statements above, substantial doubt exists about the Company’s ability to continue as a going concern within the twelve-month period subsequent to the date that these unaudited condensed consolidated interim financial statements are issued. No adjustments have been made that might be necessary ifIn September 2023, the Company is unableentered into an equity distribution agreement (the “Agreement”) with Raymond James & Associates, Inc., as agent (the “Agent”), of up to continue as a going concern. Accordingly, the unaudited condensed consolidated interim financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.

Management’s strategic plans include the following:

Working with the DFS to achieve a fair and equitable solution regarding reinsurance recoverables held by UPC that management believes are due to ACIC;
Providing additional information to our rating agencies for the affirmation8,000,000 shares of the Company’s current financial ratings;
Successfully renewing our catastrophe reinsurance programs for ACIC and IIC effective June 1, 2023; and
Exploring raising additional capital for UIHC and ACIC, including incommon stock, par value $0.0001 per share (the “Shares”). Sales of the form of surplus note contributions, to strengthen its statutory risk-based capital if necessary.

IfShares under the Company is unable to implement these actions, there is no assurance that the CompanyAgreement will be ablemade in sales deemed to obtainbe “at the necessary amountsmarket offerings”. The Agent is not required to sell any specific amount of additional capitalShares but has agreed to continueact as the Company’s sales agent for a going concern.commission equal to 3.0% of the gross proceeds from the sales of the Shares. As of March 31, 2024, 4,373,000 shares had been sold under the dateAgreement resulting in commissions paid of this report we do not have any commitments from any sourceapproximately $1,181,000 and net proceeds of approximately $38,190,000. The Agreement will terminate upon the issuance and sale of all Shares subject to provide such additional capital. Even if we are able to secure debtthe Agreement, or equity financing, itthe Agreement may be unavailable insuspended or discontinued at any time. The Company does not plan to sell additional shares under the amounts or time when we require. Furthermore, such financing would likely takeat-the-market program to which this Agreement relates during the formfirst half of bank loans, surplus notes, private placement or public offering of debt or equity securities or some combination of these. The issuance of additional equity securities would dilute the stock ownership of current investors while incurring loans, surplus notes or other debt would increase our capital requirements and a possible loss of valuable assets if such obligations were not repaid in accordance with their terms.2024.








57

UNITED INSURANCE HOLDINGS CORP.
Cash Flows for the three months ended March 31, 20232024 and 20222023 (in millions)
656667656667

49

AMERICAN COASTAL INSURANCE CORPORATION
Operating Activities

The principal cash inflows from our operating activities come from premium collections, reinsurance recoveries and investment income. The principal cash outflows from our operating activities are the result of claims and related costs, reinsurance premiums, policy acquisition costs and salaries and employee benefits. A primary liquidity concern with respect to these cash flows is the risk of large magnitude catastrophe events.

During the three months ended March 31, 2023,2024, we experienced cash outflowsinflows of $104,164,000$124,484,000 compared to cash outflows of $20,893,000$104,164,000 during the three months ended March 31, 2022. Net income for the period increased $62,012,000, exclusive of the impact of the disposition of UPC, driving these inflows.2023. This ischange was driven by normal business operations, such as premium collections. Claims payments were offset by reinsurance recovery collections, with the deconsolidation of UPC innet outflow from these activities totaling approximately $6,685,000. In addition, during the first quarter of 2023. This resulted2023, we disposed of UPC, resulting in changesa gain on disposal adjustment of $238,440,000. There was no similar transaction in our unpaid loss and loss adjustment expenses, net of reinsurance recoverables on paid and unpaid losses, in 2022, as we no longer hold the UPC portion of this liability.2024.

Investing Activities

The principal cash inflows from our investing activities come from repayments of principal, proceeds from maturities and sales of investments. We closely monitor and manage these risks through our comprehensive investment risk management process. The principal cash outflows relate to sales of investments. The primary liquidity concerns with respect to these cash flows are the risk of default by debtors and market disruption. During the three months ended March 31, 2023,2024, net purchases of investments totaled $195,082,000$2,005,000 compared to net sales of investments of $70,134,000$195,082,000 during the three months ended March 31, 2022. This was partially2023. These net sales in 2023 were offset by the disposition of $232,582,000 in cash related to the receivership of cash held by UPC at the time of receivership.UPC.

Financing Activities

The principal cash outflows from our financing activities come from repayments of debt and payments of dividends. The primary liquidity concern with respect to these cash flows is market disruption in the cost and availability of credit. We believe our current capital resources, together with cash provided from our operations, are sufficient to meet currently anticipated working capital requirements. During the three months ended March 31, 2023,2024, cash provided by financing activities totaled $11,398,000, compared to no cash was used in financing activities compared to $2,970,000 for the three months ended March 31, 2022.2023. The decreaseincrease in outflowinflow in 20232024 can be attributed to no dividend payment being made in the first quarterproceeds received from the issuance of 2023. In addition, no repayments of borrowings were made in 2023 as we no longer holdour common stock under our at the debt associated with our former subsidiary, UPC.market program described above.





58

UNITED INSURANCE HOLDINGS CORP.
OFF-BALANCE SHEET ARRANGEMENTS

At March 31, 2023,2024, we did not have any off-balance sheet arrangements or material changes to our contractual obligations during the quarter.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risks, including interest rate risk related to changes in interest rates in our fixed-maturity securities, credit risk related to changes in the financial condition of the issuers of our fixed-maturities and equity price risk related to changes in equity security prices. These risks are disclosed in Part II, Item 7A. "Quantitative and Qualitative Disclosures about Market Risk" of our Annual Report on Form 10-K for the year ended December 31, 2022.2023.

We held no equity securities as of December 31, 2023. During the first quarter of 2024, we began investing in equity securities. As of March 31, 2024, our equity portfolio consists of mutual funds totaling $6,214,000. We had no other material changes in our market risk during the three months ended March 31, 2023.2024.

Item 4. Controls and Procedures

We maintain a set of disclosure controls and procedures designed to ensure that the information required to be disclosed in reports we file or submit under the Securities Exchange Act of 1934, as amended (Exchange Act), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. We designed our disclosure controls with the objective of ensuring we accumulate and communicate this information to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

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AMERICAN COASTAL INSURANCE CORPORATION
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report. Based on our evaluation, our principal executive officer and principal financial officer concluded that at the time the original report was filed with the SEC, our disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period covered by this report.

Subsequent to that evaluation, our management, including our principal executive officer and principal financial officer, concluded that, as of March 31, 2023, our disclosure controls and procedures were not effective due to thea material weakness in our internal control over financial reporting described below.

Existence of Material Weakness as of March 31, 2023

TheDuring the second quarter of 2023, the Company identified a material weakness in its internal control over financial reporting related to the reporting of the discontinued operations.operations as of March 31, 2023. Specifically, the Company’s controls over the review of significant unusual transactions, including the effects of the transactions on the preparation of the Company's tax provision were not designed effectively. The Company did not have sufficient, experienced accounting resources to effectively review the accounting for and reporting of significant, unusual transactions. As a result of the material weakness, management’s review control did not detect an error in the accounting related to the recording of the discontinued operations and as a result, net income was understated by $6.4 million. TheIn 2023, the Company restated its consolidated interim financial statements as of and for the three months ended March 31, 2023 to reflect the correction of this error in this Amended Report.error.

Remediation Plan

Since identifying the material weakness related to management’s review controls related to significant, unusual and complex transactions in the preparation of the Company's financial statements, management has begun remediation of the process and controls in place to measure and record transactions and their related effects to income tax accounting to enhance the effectiveness of the design and operation of those controls. The Company will focus on the accounting and disclosure for unusual and complex transactions such as discontinued operations and will continue to augment existing staff with additional skilled accounting resources and strengthen the review process to improve the design and operation of financial reporting and corresponding internal controls.

These remediation measures require validation and testing of the design and operating effectiveness of internal control over
a sustained period of financial reporting to reachingreach a determination that the material weakness has been remediated. As we continue to validate and test our internal control over financial reporting, we may determine that additional measures or modifications to the remediation plan are necessary or appropriate.

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UNITED INSURANCE HOLDINGS CORP.
Changes in Internal Control over Financial Reporting

During the quarterthree months ended March 31, 2023,2024, there was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation of our internal control performed during the fiscal year ended December 31, 2022,2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, except as noted above with respect to the identification of the material weakness.reporting.


PART II. OTHER INFORMATION
Item 1. Legal Proceedings

We are involved in routine claims-related legal actions arising in the ordinary course of business. We accrue amounts resulting from claims-related legal actions in unpaid losses and loss adjustment expenses during the period that we determine an unfavorable outcome becomes probable and we can estimate the amounts. Management makes revisions to our estimates based on its analysis of subsequent information that we receive regarding various factors, including: (i) per claim information; (ii) company and industry historical loss experience; (iii) judicial decisions and legal developments in the awarding of damages; and (iv) trends in general economic conditions, including the effects of inflation.

AtOn October 20, 2023, we received notice that the DFS filed a notice of claim and demand for tender of insurance policy limits under our director and officer insurance to carriers participating in our director and officer’s insurance program (the “Claim”). The Claim alleges that former officers and directors of UPC were involved in wrongful acts that resulted in UPCs insolvency and demands immediate tender of our director and officer’s policy limit of $40,000,000 where we have a retention of $1,500,000. The former directors and officers of UPC deny the allegations. Although no litigation has arisen from the Claim, litigation is anticipated. The directors and officers plan to vigorously defend against the Claim; however, due to our indemnification obligation, during 2023 we accrued the policy retention amount of $1,500,000. This claim remains open as of March 31, 2023, the Company is involved in legal proceedings whereby on August 18, 2021, Jacqueline A. Miraglia v. United Insurance Holdings Corp., and United Property & Casualty Insurance Company was filed in the United States District Court for the District of Delaware alleging violations and damages arising under Title VII of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act of 1967, and seeks damages in an unspecified amount. On September 27, 2022, venue was transferred to the United States District Court for the Middle District of Florida, Tampa Division. In November, 2022, the plaintiff filed an Amended Complaint styled Jacqueline A. Miraglia vs. United Insurance Holdings Corp., United Property & Casualty Insurance Company, and Skyway Claims Services, LLC, alleging violations arising under Title VII of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act of 1967. The Company denies wrongdoing and believes that an unfavorable outcome is neither probable nor estimable.2024.


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Item 1A. Risk Factors

There have been no material changes to the risk factors previously disclosed in Part I. Item 1A "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2022,2023, except as set forth below.

We have identified a material weakness inThe insurance industry is heavily regulated and further restrictive regulation may reduce our internal control over financial reporting,profitability and limit our management has concluded that our internal control over financial reporting and disclosure controls and procedures were not effective as of the end of the period covered by this report. While we are working to remediate the identified material weakness, we cannot assure you that additional material weaknesses or significant deficiencies will not occur in the future. If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, our stockholders could lose confidence in our financial reporting, which could harm our business and the trading price of our common stock.growth.

The Sarbanes-Oxley Actinsurance industry is extensively regulated and supervised. Insurance regulatory authorities generally design insurance rules and regulations to protect the interests of 2002,policyholders, and not necessarily the interests of insurers, their stockholders, and other investors. This regulation relates to authorization for lines of business, capital and surplus requirements, investment limitations, underwriting limitations, transactions with affiliates, dividend limitations, changes in control, premium rates and a variety of other financial and non-financial components of an insurance company's business. We are subject to comprehensive regulation and supervision by state insurance departments in New York and Florida, the states in which our insurance subsidiaries are domiciled, as well as all states in which they are licensed. The regulations of each state are unique and complex and subject to change, and certain states may have regulations that conflict with the regulations of other states in which we operate. As a result, we are subject to the risk that compliance with the regulations in one state may not result in compliance with the regulations in another state.

We strive to maintain all required licenses and approvals. However, we may not fully comply with the wide variety of applicable laws and regulations. The relevant authority's interpretation of the laws and regulations also may change from time to time. Regulatory authorities have relatively broad discretion to impose fines, and grant, renew or the Sarbanes-Oxley Act, requires, among other things, that we maintain effective disclosure controlsrevoke licenses and procedures and internal control over financial reporting. As disclosed in this Amended Report, in the course of preparing our interim financial statements for the fiscal quarter ended June 30, 2023, we identified a material weakness in our internal control over financial reporting, which existed as of March 31, 2023. The material weakness was caused by inadequate controls over our tax processes, described in more detail under the heading Part I — Item 4. Controls and Procedures in this Amended Report. We have commenced efforts to remediate the material weakness as described in more detail under the heading Part I — Item 4. Controls and Procedures in this Amended Report. The material weakness in our internal control over financial reporting will not be considered remediated until the controls operate for a sufficient period of time and management has concluded, through testing, that these controls operate effectively.approvals. If we do not successfully remediatehave the required licenses and approvals or do not comply with applicable regulatory requirements, these authorities could preclude or temporarily suspend us from carrying on some or all of our activities or impose substantial fines. In addition, we may face individual and class action lawsuits by insured and other parties for alleged violations of certain of these laws or regulations.

State statutes and administrative rules generally require each insurance company to register with the department of insurance in its state of domicile and to furnish information concerning the operations of the companies within the holding company system. Failure to comply with such requirements may materially affect the operations, management or financial condition of the insurers.As part of its registration, each insurance company must identify material weakness,agreements, relationships and transactions with affiliates, including loans, investments, asset transfers, transactions outside of the ordinary course of business, certain management, service, and cost sharing agreements, reinsurance transactions, dividends, and other financial and non-financial components of an insurer’s business. Some states impose restrictions or if other material weaknessesrequire prior regulatory approval of specific corporate actions, which may adversely affect our ability to operate, innovate, obtain necessary rate adjustments in a timely manner or other deficiencies arisegrow our business profitably. For example, the Florida Office of Insurance Regulation (the “Office”) notified our subsidiary, American Coastal Insurance Company and its officers and directors, that it was required to show why those officers and directors were not a substantial contributing cause of the insolvency of our former subsidiary, United Property & Casualty Insurance Company, pursuant to section 624.4073 Fla. Stat., which prohibits officers and directors of insolvent insurers from serving as officers or directors of another insurer unless that officer or director demonstrates that their actions or omissions were not a significant contributing cause of the insolvency.We have been in discussions with the Office and continue working with the Office on this issue. Our ability to comply with these laws and regulations, and to obtain necessary regulatory action in a timely manner is, and will continue to be, critical to our success.

Currently, the federal government’s role in regulating or dictating the policies of insurance companies is limited. However, from time to time Congress has considered and may in the future we may be unable to accurately report our financial results, which could cause our financial results to be materially misstated and require restatement. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filingconsider proposals that would increase the role of periodic reportsthe federal government in insurance regulation, either in addition to applicable stock exchange listing requirements, investors may lose confidenceor in lieu of state regulation. For example, the Dodd-Frank Act established a Federal Insurance Office (FIO) within the U.S. Department of Treasury Department to collect data on the insurance industry, recommend changes to the state system of insurance regulation and preempt certain state insurance laws. The potential impact on our business as a result of the Dodd-Frank Act and the FIO’s current and future recommendations remains unclear; however, the implementation of any federal insurance regulations that constrain our business opportunities or reduce investment flexibility could negatively impact our business.

In recent years, the state insurance regulatory framework has come under increased federal scrutiny. Changes in federal legislation, regulation and/or administrative policies in several areas, including changes in financial services regulation and federal taxation, could negatively affect the insurance industry and us. In addition, Congress and some federal agencies from time to time investigate the current condition of insurance regulation in the United States to determine whether to impose federal or national regulation or to allow an optional federal charter, similar to the option available to most banks. Further, the
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reportingNAIC and state insurance regulators continually reexamine existing laws and regulations, specifically focusing on modifications to holding company regulations, interpretations of existing laws and the development of new laws and regulations. We cannot predict what effect, if any, proposed or future legislation or NAIC initiatives may have on the manner in which we conduct our business.

As part of potential, or future, industry-wide investigations, we may from time to time receive requests for information from government agencies and authorities at the state or federal level. If we are subpoenaed for information by government agencies and authorities, potential outcomes could include law enforcement proceedings or settlements resulting in fines, penalties and/or changes in business practices that could cause a material adverse effect on our results of operations. In addition, these investigations may result in changes to laws and regulations affecting the industry.

Changes to insurance laws or regulations, or new insurance laws and regulations, may be more restrictive than current laws or regulations and could significantly increase our compliance costs, which could have a material adverse effect on our results of operations and our stock priceprospects for future growth. Additionally, our failure to comply with certain provisions of applicable insurance laws and regulations could result in significant fines or penalties being levied against us and may decline as a result. We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to remediate the control deficiencies that led tocause a material weakness inadverse effect on our internal control overresults of operations or financial reporting or that they will prevent or avoid potential future material weaknesses.condition.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three months ended March 31, 2023,2024, we did not sell any unregistered equity securities or repurchase any of our equity securities.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

The following exhibits are filed or furnished herewith or are incorporated herein by reference:
Exhibit  Description
Renewal RightsEmployment Agreement, dated as of February 1, 2023, byJanuary 17, 2024, between American Coastal Insurance Corporation and among United Property and Casualty Insurance Company and Slide Insurance Company.Svetlana Castle (included as Exhibit 10.1 to the Form 8-K filed on February 6, 2023,January 18, 2024 and incorporated herein by reference.)reference).
Asset Purchase and Services Agreement, dated as of February 1, 2023, by and among United Insurance Management, L.C. and Slide Insurance Company. (included as Exhibit 10.2 to the Form 8-K filed on February 6, 2023, and incorporated herein by reference.)
Consent Order Appointing the Florida Department of Financial Services as Receiver of United Property & Casualty Insurance Company for Purposes of Liquidation, Injunction and Notice of Automatic Stay, dated as of February 27, 2023. (included as Exhibit 10.1 to the Form 8-K filed on February 28, 2023, and incorporated herein by reference.)
  Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act.
  Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act.
  Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act.
  Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act.
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCHInline XBRL Taxonomy Extension Schema
101.CALInline XBRL Taxonomy Extension Calculation Linkbase
101.DEFInline XBRL Taxonomy Extension Definition Linkbase
101.LABInline XBRL Taxonomy Extension Label Linkbase
101.PREInline XBRL Taxonomy Extension Presentation Linkbase
104Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101).
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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
UNITEDAMERICAN COASTAL INSURANCE HOLDINGS CORP.CORPORATION
  
August 21, 2023May 10, 2024By:/s/ R. Daniel Peed
 R. Daniel Peed, Chief Executive Officer
 (principal executive officer and duly authorized officer)
 
August 21, 2023May 10, 2024By:/s/ B. Bradford MartzSvetlana Castle
 B. Bradford Martz,Svetlana Castle, Chief Financial Officer and President
(principal financial officer and principal accounting officer)



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