INVESTOR PRESENTATION June 2015

Transcription

1 1 INVESTOR PRESENTATION June 2015

2 SAFE HARBOR This document contains forward-looking statements and management may make additional forward looking statements in response to your questions. Forward-looking statements include statements regarding the intent, belief or current expectations of the Company and its management about the Company s business, financial condition and results of operations, among other factors. In some cases you can identify these statements by forward-looking words such as may, might, will, will likely result, should, anticipates, expects, intends, plans, seeks, estimates, potential, continue, believes and similar expressions, although some forward-looking statements are expressed differently. These forward-looking statements are based on the Company s current expectations and assumptions that are subject to risks and uncertainties that may cause its actual results, performance, or achievements to differ materially from any expected future results, performance, or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. These risks and uncertainties include, but are not limited to the level of demand for the Company s coverage and the incidence of catastrophic events related to its coverage; the Company s ability to grow and remain profitable in the competitive insurance industry; its ability to access additional capital; its ability to attract and retain qualified personnel; changes in general economic, business and industry conditions; and legal, regulatory, and tax developments. 2

3 Ticker (NASDAQ: PIH) Stock Price $7.57 (as of 5/28/2015) AT A GLANCE Shares Outstanding 6.36 million Market Cap $48.1 million (as of 5/28/2015) Sector / Industry Insurance 3 A homeowners insurance company in states where we believe there is a significant potential for generating high returns on equity with controlled risk

4 MANAGEMENT BACKGROUND OVER 100 YEARS OF COMBINED HOMEOWNERS INSURANCE EXPERIENCE IN COASTAL STATES Gordon G. Pratt Chairman Douglas Raucy President and CEO Over 20 years of executive insurance industry experience Current or past director, investor, executive, or advisor to over two dozen insurance enterprises Chase Manhattan Bank, Conning & Company, Hales Group, Willis Group, Fund Management Group President and CEO of Maison Insurance Co. Founder of three homeowners insurance companies Former head of Allstate s national catastrophe team, over 20 years experience as an Allstate employee in various positions John Hill, CPA Chief Financial Officer CFO of Maison Insurance Co., previously CFO of three P/C insurance companies Over 15 years experience in the Florida homeowners market 10 years of experience at a Big Four accounting firm Dean Stroud VP of Underwriting VP of underwriting for Maison Insurance Co. Former President of Audubon Insurance Co. (AIG subsidiary) Over 40 years of homeowner underwriting experience Bob Gantley VP and COO Over 35 years of experience in the industry, particularly in claims and underwriting President of ClaimCor, a claim and underwriting technical solutions company 4

5 TARGETING THE CORRECT MARKETS Creating a homeowners insurance company in states where we believe there is a significant potential for generating high returns on equity with controlled risk Market Criteria Includes: Target states with high property premiums in U.S. Seek favorable legislative environment Areas where industry giants (State Farm, Allstate, Farmers) are looking to decrease coastal risk exposure Locations where management has experience in writing and managing wind-risk and independent and captive agent contacts Ability to grow to scale quickly in part due to an existing state-run depopulation program State-run insurer provides property insurance to marketplace and looks to shrink over time by allowing private insurers to take out policies and assume that risk 5

6 COMPELLING INVESTMENT OPPORTUNITY Integrated Insurance Company Targeting High Potential Markets Management Team with Experience Establishing and Managing Coastal Business Favorable Reinsurance Market Plan for Expansion into Coastal States 6

7 STOCK REPURCHASE PROGRAM Announced December 1, 2014 While investing in the expansion of our business operations remains our first priority, the Board s consent to initiate the program is a sign of the importance we place in the Company s ability to create long-term profitable growth. -CEO Doug Raucy 500,000 shares of common stock over 12 month period Repurchases will be made from time to time in open market transactions, privatelynegotiated transactions, block purchases, or otherwise in accordance with Federal securities laws at the discretion of the Company s management. 7

8 8 BUSINESS OVERVIEW

9 WHAT IS 1347 PIH PIH is a holding company that owns an admitted property and casualty insurance company based in Louisiana, doing business as Maison Insurance Company, a managing general agency (MGA) doing business in Louisiana, Maison Managers Inc., and a claims handling company ClaimCor, LLC Corporate structure: 1347 Property Insurance Holdings, Inc Maison Insurance Company provides full coverage to personal residential dwellings on a multi-peril form to single family structures including manufactured housing units. Additionally it provides reduced coverage and wind/hail only coverage Maison Insurance Company Maison Managers, Inc ClaimCor, LLC (Dec 2014) Company is currently writing in Louisiana, seeking entry into other coastal markets POLICY COUNT TOTAL ASSETS ClaimCor, LLC is a claims and underwriting technical solutions company, acquired in December Based in St. Petersburg, Florida, the Company provides turnkey, customized, client centric claim and underwriting technical solutions to its business partners 22,300 at 3/31/15 $75.9 million 9

10 COMPANY HISTORY October 2012 Company is formed and Douglas Raucy named CEO September 2013 Company reports profitable operations in Q3, begins to achieve necessary scale March 2013 IPO: $17.4M Company listed on NASDAQ: PIH February 2015 Company terminates management services agreement with 1347 Advisors, LLC. * June 2015 Company finalizes partnership with Brotherhood Mutual and expands into Texas December 2012 Company participates in wind/hail-only depopulation from Louisiana Citizens yielding 3,000 policies December 2013 Company assumes another 3,500 policies from Louisiana Citizens June 2013 Company completes secondary offering of $23.0M December 2014 Company announces stock repurchase program Company signs definitive agreement to acquire ClaimCor, LLC March 2015 Company reports 2014 results; highlighted by profit of $3.6M, and $32.7M in direct premiums written 11,500 policies-in-force 21,400 policies-in-force * Note: 1347 Advisors LLC is a wholly owned subsidiary of Kingsway America Inc. 10

11 LOUISIANA MARKET Population 4.6 million Total Number of Households Approximately 1.7 million Homeowners Direct Premiums Written 3-year CAGR for Direct Premiums Written ( ) Top Three in Market Share $2.6 Billion* 3.45% State Farm / Allstate LA Citizens Among the highest overall property insurance rates in the country Low loss costs and attritional (non-catastrophe) loss ratios Wind/hail-only policies are limited to providing coverage for these types of weather Favorable regulatory environment Significant opportunity to rapidly expand independent agent distribution network through Chief Underwriting Officer s 40 years of experience in Louisiana homeowner market * Source: U.S. Census, SNL Financial (Louisiana Homeowners Lines of Business) December 31, 2013 Personal Property Homeowner Multi-peril, fire, allied lines 11

12 LOUISIANA CITIZENS HOW IT WORKS Louisiana Citizens Property Insurance Company (Citizens) Citizens currently writes homeowners insurance for approximately 7% of Louisiana properties as an insurer of last resort The state of Louisiana implemented an insurance take-out program to reduce the number of properties insured by Citizens Under this take-out program, state-approved insurance companies, such as Maison, have the opportunity to assume insurance policies written by Citizens Occurs annually, on December 1 Take-out company assumes risk / collects unearned premium immediately 12

13 DIVERSE BOOK OF POLICIES Homeowners : owner occupied dwellings, obtained through network of independent agents Wind / Hail Only: protects insured from perils resulting only from wind and / or hail events, obtained through Louisiana Citizens depopulations Manufactured Home: began writing policies through a partnership with American Modern Insurance Group Dwelling Fire: non-owner occupied dwellings Policy Breakdown as of December 31, 2014 Homeowners 45% Type of Policy Policy Count % of Total Policies in Force Homeowners 9, % Wind/Hail only 7, % Manufactured Home 4, % Dwelling Fire 2% Dwelling Fire % Total 21, % Manufactured Home 19% Wind/Hail only 34% 13

14 EFFECTIVE DISTRIBUTION INCREASING THE POLICY BASE Since its founding, the Company has established a network of agents throughout Louisiana Focus on service and quality claims handling Company has seen steady organic policy growth since entering independent agency market Policies written through independent agents are all-peril, including the wind/hail Independent Agency Locations New Orleans, LA Baton Rouge, LA Other Policy Acquisition Opportunities Renewal rights transactions to gain access to niche markets Establish partnerships as entry to geographies and property segments Lafayette, LA Lake Charles, LA 14

15 DISCIPLINED UNDERWRITING PRACTICES Develop products tailored for the market Utilize technology to adequately assess insurance to value Physically inspect every insured risk written organically through independent agents Net Loss Ratio Manage catastrophe risks through reinsurance, periodic modeling of inforce exposures and individual policy characteristics, e.g., roof engineering 50% 40% Address classes of risks and rate adequacy with annual rate filings 30% 20% 10% 0% 9.3% 2014 Q1 24.8% 21.3% 21.4% 2014 Q Q Q4 10.5% 2015 Q1 Responsive, highly efficient, and experienced claims operation As a result of the acquisition of ClaimCor, PIH will begin to realize efficiencies and a direct cost savings from internalizing claims services during Underwriting discipline to select quality risks for wind / hail-only and full coverage policies 15

16 FAVORABLE REINSURANCE MARKET The largest cost in homeowners insurance is reinsurance Reinsurance brokers predict increased reinsurance capacity and lower prices At July 1, we saw continued significant decreases in U.S. property catastrophe program pricing. David Flandor, Global Head of Business Intelligence at Guy Carpenter Capital available for reinsurance coverage hit a record $575 billion at the end of the third quarter, placing pressure on prices, according to broker Aon Benfield. Bloomberg News Factors Influencing Global Supply of Reinsurance + Record levels of reinsurer capital + Increased investor interest in catastrophe bonds and similar collateralized facilities - Continued low market valuations of reinsurers shares = High reinsurance market supply 16

17 REINSURANCE STRUCTURE Company has created a reinsurance program focused on preserving capital Expects to utilize traditional reinsurance and the insurance-linked securities market to minimize reinsurance costs with 1-in-100 year event coverage and reinstatements $92,000, Property Catastrophe Reinsurance Structure 6/1/2014 5/31/ st Event 2 nd Event 3 rd and Subsequent Events Top & Aggregate* $20,000,000 xs $72,000,000 Top & Aggregate $19,000,000 xs $72,000,000 $72,000,000 $55,000,000 Catastrophe Occurrence $17,000,000 xs $55,000,000 RPP Cover Catastrophe Occurrence $17,000,000 xs $55,000,000 Catastrophe Occurrence $25,000,000 xs $30,000,000 RPP Cover Catastrophe Occurrence $25,000,000 xs $30,000,000 $30,000,000 Catastrophe Occurrence $27,000,000 xs $3,000,000 RPP Cover Catastrophe Occurrence $27,000,000 xs $3,000,000 $3,000,000 Company Retention $1,000,000 xs $2,000,000 Company Retention Top & Aggregate $19,000,000 xs $0 17

18 CURRENT PREMIUM GROWTH 2014 highlighted by $32.7 million in direct premiums written (104% year-over-year increase) Direct Premiums Written Net Premiums Earned $35M $30M $32.7 $20M $18M $16M $18.5 $25M $14M $20M $12M $16.0 $10M $15M $10M $5M $5.7 $8.0 $8M $6M $4M $2M $5.0 $4.1 $6.0 $0M YE 2013 YE 2014 Q Q $0M YE 2013 YE 2014 Q Q

19 19 GROWTH STRATEGY

20 EXPANSION INTO NEW MARKETS PIH intends, either organically or through acquisition, to expand into other coastal states that fit their selection criteria and when timing is appropriate Texas Hawaii Florida Possible first-ever depopulation from Texas Windstorm Insurance Association (TWIA) in 2015 Large market opportunity Potential partnership opportunities Company would seek homeowners and wind-only policies and other underserved markets Company would seek homeowners and wind-only policies and other underserved markets Last hurricane to hit Hawaii was Iniki in 1992, hit only one island, Kauai Potential partnership opportunities Favorable legislative environment Large market opportunity Florida Citizens monthly depopulations Company would seek homeowners and wind-only policies and other underserved markets 20

21 MARKET OPPORTUNITIES The following represents the approximate aggregate industry premiums for targeted markets in the states that PIH anticipates writing (in millions): State Aggregate Premium in Targeted Markets % of Targeted Market Florida (personal property) $12, % Texas (commercial multi-peril) $9, % Louisiana (personal property) $2, % Hawaii (personal property) $ % Total $25, % PIH s goal is to capture between 2% and 3% of the Louisiana market in its first three years of operation (approximately $61.5 M) 21 Source: SNL Financial

22 QUARTERLY P & L DATA ( in thousands ) 1 st Quarter 2014 Year 4 th Quarter 3 rd Quarter 2 nd Quarter 1 st Quarter 2013 Year Total Revenues $ 6,400 $ 18,965 $ 5,427 $ 4,536 $ 4,829 $ 4,173 $ 5,091 Total Expenses *9,381 13,236 4,111 3,484 3,775 1,866 6,235 Income (loss) before income tax (2,981 ) 5,729 1,316 1,052 1,054 2,307 (1,144 ) Income tax expense (benefit) (2,024 ) 2, (396 ) Net Income (Loss) $ (2,024) $ 3,646 $ 695 $ 632 $ 616 $ 1,703 $ (748 ) *Includes one time loss on termination of Management Services Agreement (MSA) of $5,421 22

23 PEER COMPARISON (figures in millions, except per share data) Company Ticker 5 / 28 / 2015 Market Cap Price/ Book Value (LTM) P/E (LTM) Universal Insurance Holdings Inc. UVE $25.68 $ x x HCI Group, Inc. HCI $43.40 $ United Insurance Holdings Corp. UIHC $14.50 $ Federated National Holding Company FNHC $25.61 $ Heritage Insurance Holdings, Inc. HRTG $20.91 $ MEAN 2.19 x 9.13 x 1347 Property Insurance Holdings, Inc. PIH $7.57 $ Source: Bloomberg and Wall Street Research Note: LTM = Latest Twelve Months UVE HCI Price / Book 2.0 HRTG 1.5 FNHC 1.0 PIH UIHC M 200M 400M 600M 800M 1,000M Market Cap

24 INVESTMENTS CONSIDERATIONS A homeowners insurance company focused on market geographies with addressable needs Dedicated management team with experience launching and rapidly expanding coastal insurance companies Continued focus on the markets we know Clean balance sheet with no legacy issues IPO and follow-on capital raises placed company in strong financial position to safely expand Opportunities for growth through partnerships with agency organizations and expansion into other states 24

25 APPENDIX: FINANCIAL STATEMENTS

26 BALANCE SHEET (in thousands) March 31, 2015 December 31, 2014 Assets ( unaudited ) Investments: Fixed income securities, at fair value (amortized cost of $13,052 and $10,515, respectively) $ 13,164 $ 10,514 Short-term investments, at cost which approximates fair value 101 2,198 Other Investments, at cost Total investments 13,424 12,712 Cash and cash equivalents 53,734 53,639 Deferred policy acquisition costs 2,928 3,091 Premiums receivable, net allowance for doubtful accounts of $4 and $3, respectively 1,651 2,086 Ceded unearned premiums 1,718 1,561 Reinsurance recoverable on reserves Current income taxes recoverable Net deferred income taxes Property and equipment, net Goodwill Intangible assets, net of accumulated amortization of $3 and $0, respectively 49 - Other assets Total Assets $ 75,864 $ 74,234 Liabilities and Shareholders Equity Liabilities: Loss and loss adjustment expense reserves $ 1,074 $ 1,211 Unearned premium reserves 17,125 17,703 Ceded reinsurance premiums payable 2,692 2,559 Agent commissions payable Premiums collected in advance 1, Due to related party Current income taxes payable Accrued expenses and other liabilities 1,884 1,557 Series B Preferred shares, $25.00 par value, 120,000 and zero shares issued and outstanding at March 31, 2015 and December 31, 2, , respectively - Total Liabilities 26,883 24,320 Shareholders Equity: Common stock, $0.001 par value; authorized 10,000,000 shares; 6,358,125 issued and outstanding at March 31, 2015 and December 31, 2014, respectively $ 6 $ 6 Additional paid-in capital 48,647 47,631 Retained earnings 254 2,278 Accumulated other comprehensive loss 74 (1) Total Shareholders Equity 48,981 49,914 Total Liabilities and Shareholders Equity $ 75,864 $ 74,234 26

27 CONSOLIDATED STATEMENT OF INCOME ( unaudited ) ( in thousands ) Three months ended March 31, Revenues: Net premiums earned $ 6,018 $ 4,114 Net investment income 78 4 Other income Total revenues 6,400 4,173 Expenses: Net losses and loss adjustment expenses Amortization of deferred policy acquisition costs 1, General and administrative expenses 1, Loss on termination of Management Services Agreement (MSA) 5,421 - Total expenses 9,381 1,866 Income (loss) before income tax expense (benefit) (2,981 ) 2,307 Income tax expense (benefit) (957 ) 604 Net income (loss) $ (2,024) $ 1,703 Less: Beneficial conversion feature on convertible preferred shares Net income (loss) attributable to common shareholders $ (2,024) $ 1,203 Earnings (loss) per share net income (loss) attributable to common shareholders: Basic: $ (0.32) $ 1.17 Diluted: $ (0.32) $ 1.17 Weighted average shares outstanding (in 000s): Basic: 6,358,125 1,027,590 Diluted: 6,358,125 1,027,590 Consolidated Statements of Comprehensive Income (Loss) Net income (loss) $ (2,024) $ 1,703 Unrealized losses on investment available for sale, net of income taxes 75 (3 ) Comprehensive income (loss) $ (1,949) $ 1,700 27

28 CONTACT US For Additional Information At The Company Doug Raucy Chief Executive Officer Investor Relations The Equity Group Terry Downs Associate 28