® UNITED INSURANCE HOLDINGS CORP. 2020 ANNUAL REPORT ® UNITED INSURANCE HOLDINGS CORP. 2020 ANNUAL REPORT SUPERIOR CUSTOMER FIVE FOUNDATIONS EXPERIENCE PUTTING PRINCIPLES +06124#%6+%' 6KOGN[HCKTTGUQNWVKQPQHENCKOU 9GRTQEGUUENCKOUWUKPIRTQHGUUKQPCNKPJQWUG 72%CUUQEKCVGUYJQUJCTGQWTEQOOKVOGPVVQ GZEGNNGPEG0QOCVVGTVJGUKVWCVKQPYGUVTKXG VQRTQXKFGCNNRQNKE[JQNFGTUCVKOGN[TGURQPUG FINANCIAL STABILITY CPFHCKTTGUQNWVKQPQHVJGKTENCKOU6JGTGUWNVU CTGRTQORVTGUVQTCVKQPQTTGRNCEGOGPVQHVJG 1WTƂPCPEKCNUVTGPIVJCUUWTGUQWT RTQRGTV[CPFJKIJEWUVQOGTUCVKUHCEVKQP CDKNKV[VQRC[ENCKOU (KPCPEKCNUVCDKNKV[KUVJGƂTUVCPFOQUV '#5'1(&1+0)$75+0'55 KORQTVCPVQHQWT(KXG(QWPFCVKQPU9GJCXG LWUVWPFGTOKNNKQPQHGSWKV[ECRKVCNKP 9GoTGGCU[VQYQTMYKVJ QWTEQORCP[CPFRWTEJCUGQXGTDKNNKQPQH TGKPUWTCPEGtOCMKPIWUQPGQHVJGNCTIGUV RWTEJCUGTUQH75RTQRGTV[ECVCUVTQRJG 9GMPQY[QWoTGDWU[UQHQTDQVJCIGPVU TGKPUWTCPEGKPVJGYQTNF&GURKVGTGVCKPKPI CPFRQNKE[JQNFGTUYGYCPV[QWTGZRGTKGPEG TQWIJN[OKNNKQPQHECVCUVTQRJGNQUUGU QHFQKPIDWUKPGUUYKVJ72%VQDGGCU[CPF KPVJGNCUV[GCTUQWTECRKVCNRQUKVKQPJCU GHƂEKGPV6JCVOGCPUVJGCDKNKV[VQTGRQTVENCKOU TGOCKPGFUVCDNGCPFQWTTGKPUWTCPEG CPFCEEGUURQNKE[KPHQTOCVKQPQPNKPGGCU[ RTQITCOTGURQPFGFCUGZRGEVGFYKVJRNGPV[ CEEGUUVQC72%TGRTGUGPVCVKXGD[RJQPGVQ QHRTQVGEVKQPVQURCTG6JCVoUƂPCPEKCN CPUYGT[QWTSWGUVKQPUCPFOWEJOQTG UVTGPIVJ%QWPVQPKVHTQO72% 241&7%656*#6914- FAIR PRICING (NGZKDNGRTQFWEVQRVKQPUOGGV 1WTUGPUKDNGRTKEKPIUWRRQTVU WPKSWGPGGFU GXGT[QPGoUDGUVKPVGTGUVU 9GQHHGTCUGNGEVKQPQHEWUVQOK\CDNGRTQFWEVU 9GRNGFIGCNYC[UVQRTQXKFGCRTKEGVJCV FGUKIPGFVQRTQXKFGCHHQTFCDNGQRVKQPUYKVJ CEEWTCVGN[TGƃGEVUVJGTKUMYGCTGCUUWOKPIKP UWRGTKQTRTQVGEVKQP(QTDQVJTGUKFGPVKCNCPF YTKVKPICRQNKE[6JCVKUHCKTRTKEKPICPFKPVJG EQOOGTEKCNNKPGUYGNKUVGPVQQWTCIGPVUVQ NQPITWPKVYQTMUVQVJGDGPGƂVQHCIGPVUCPF WPFGTUVCPFVJGPGGFUQHRQNKE[JQNFGTUCPF RQNKE[JQNFGTU9GYCPVVQDGEQORGVKVKXGYKVJ FGXGNQRRTQFWEVUVJCVOGGVVJQUGPGGFU QVJGTECTTKGTUDWVYGYQPoVEWVRTKEGUVQYKP DWUKPGUUKHKVLGQRCTFK\GUQWTƂPCPEKCNUVCDKNKV[ CPFCDKNKV[VQRC[ENCKOUKPCNNEKTEWOUVCPEGU A LETTER TO SHAREHOLDERS CHIEF EXECUTIVE OFFICER & CHAIRMAN OF THE BOARD R. DANIEL PEED UPC Insurance experienced a challenging operating environment in 2020 as our people and capital ÜiÀi«ÕÌÌ ÀÕ} ÌÜÕ«ÀiVi`iÌi`ÌiÃÌð / iwÀÃÌÜ>ÃÌ iVÀ>ÛÀÕë>`iV° / à ÀÀwV and hopefully once-in-a-lifetime event disrupted the lives of so many people and how they work. We were fully prepared to work remotely, and quickly implemented those plans to ensure the safety and well-being of our associates. I’m very proud of how our amazing team of insurance professionals responded by continuing to work collaboratively and productively throughout the year during tremendous uncertainty. The second was an extremely active Atlantic hurricane season with a record-breaking 30 named windstorms and 12 landfalling storms in the continental United States. As a specialty underwriter of catastrophe-exposed property insurance, that’s a harsh headline, but it is also why we exist. UPC incurred gross losses from six hurricanes and six tropical storms making landfall within our geographic footprint estimated at $439.8 million, with $208.2 million retained by the Company, net of reinsurance. We plan and prepare for named windstorm activity annually, but the frequency of U.S. landfalls shattered the previous record of 9 set over one-hundred years ago in 1916 and was the primary driver of -$95.5 million net loss. Our claims team did a tremendous job of rising to the challenge and keeping the promise for our policyholders by continuing to improve their customer service experience despite the pandemic. The good news coming out of this challenging year is that Ì iV>ÃÌ>Ü`ÃÌÀ>ÀiÌvÀLÌ «iÀÃ>>`ViÀV>iÃVÌÕiÃÌwÀÀ>«`Þ° Effective July 1st, 2020 I accepted the role of Chairman and CEO, and we made several other V >}iÃÌÕÀ ÝiVÕÌÛii>`iÀà «/i>°/ iÃiV >}ià >Ûi>Ài>`Þ >`>Ã}wV>Ì«>VÌ our strategy, culture, and results. I am very proud of how the team has come together during this challenging year, and feel we have a great leadership team moving forward. The ELT is fully aligned around a new and improved strategy for creating shareholder value focused on three themes: 1. Focused Underwriting 2. De-risk and Simplify 3. Leverage Technology 7iÕ`iÀÃÌ>`Ì >Ì1* ½ÃÓäÓäw>V>ÀiÃÕÌÃ>ÀiÌÃÕÃÌ>>Li]ÃÕÀ } iÃÌ«ÀÀÌÞÃÌi>À >Õ`iÀÜÀÌ}«ÀwÌVÕÃÛiv>iÌÀiÌ>i`V>Ì>ÃÌÀ« iÃÃið />VV«Ã Ì >ÌÓäÓ£>` beyond, all 3 themes must contribute to reshaping how we conduct our business, but none more than focused underwriting. We believe that over time, underwriting and risk selection are the ultimate `iÌiÀ>ÌivVÀi>Ì}>«ÀwÌÀÃÃÌ iÃÕÀ>ViLÕÃiÃð vÌ iÀiÃ>ÃÛiÀ}ÌVÀi>Ãi` catastrophe loss activity, it is the favorable hard market conditions mentioned above that typically vÜ`ÃV>Ì° / Ãi>ÃÜiÜ >Ûi>ÌiÀÀwV««ÀÌÕÌÞÌwiÌÕiÕÀÀ>ÌiÃ]Ì} Ìi underwriting rules and/or modify coverages across all products in ways that are expected to make a Ã}wV>Ì«ÀÛiiÌÌÕÀ«ÀwÌ>LÌÞÜ i>Ã>}ÕÀ«ÀÌvÀiV>«Ì>ivwViÌ°/ i combination will return us to a sustainable return on capital and renewed growth. LETTER TO SHAREHOLDERS – 1 De-risk and simplify is our way of saying we intend to reduce operating leverage as measured by the ratio of net premiums to capital, reduce retention of risk from catastrophe events and eliminate unnecessary complexity in our operations. The frequency and severity of catastrophe losses is iÀiÌÞÕ«Ài`VÌ>Li]ÃÜiÌi`ÌÀi`ÕViÌ Ã«ÌiÌ>Û>ÌÌÞÌi>À}ÃLÞÃ}wV>ÌÞ reducing our occurrence and aggregate hurricane retentions for the upcoming hurricane season. Our reinsurance partners also seek a reasonable return on their capital, so our ceded premiums are expected to increase but not as fast as our gross premiums. UPC began to improve rate adequacy in 2019, and the continued rate on rate will earn through our portfolio through 2021 and going forward. When you combine that with our exposure management initiatives designed to avoid risks that do not wÌÕÀ«ÀwÌ>LÌÞvÀ>iÜÀ>`Ì ii>ÌvÕÌ«i«À`ÕVÌÃ>`ÃÌ>ÌiÃÌ >Ì>ÀiÌVÀiÌ our long-term strategy, the Company is well positioned to make these necessary changes to our risk transfer programs. As of mid-March we have nearly 90% of our needed limit already agreed and we expect an orderly renewal of our June 1st cat treaty. Leveraging technology means we intend to open new direct distribution channels online through Skyway Technologies, continue migration away from legacy systems to consolidate all policies on our new Agent Connect platform, improve our analytical tools and modeling capabilities focused on Õ`iÀÜÀÌ}>`ÃëÀiÛiÌ]>``i«ÞÀiÀLÌVÃÌVÀi>ÃiÛiÀ>«iÀ>Ì}ivwViVÞ >`«ÀÛiVÕÃÌiÀiÝ«iÀiViiÛið 1* >Ã>Ài>`Þ>`iÃ}wV>ÌV>«Ì>ÛiÃÌiÌà systems and software that should allow us to make long strides toward these objectives in 2021. Another important component of our strategy going forward is to create more balance between personal lines and commercial lines over time. Our specialty commercial business written in American Coastal continues to have the leading market share of Florida condominium associations, and has been ÛiÀÞ«ÀwÌ>LiÃViÌÃVi«ÌÓääÇ°7iÌi`Ì>V>ÌiÀiV>«Ì>>`ÀiÃÕÀViÃÌÜ>À` growing commercial lines, which is expected to be partially offset by exposure reductions in personal lines. Recent announcements of shedding $130 million of personal lines premium in the Northeast and the formation of a new excess & surplus lines carrier to target commercial property are good examples of this rebalancing effort. As we optimize the risk portfolio, I believe both lines of business are capable v«À`ÕV}i>}vÕVÌÀLÕÌÃÌÕÀÕLiÀi«ÀÀÌÞvi>À}>Õ`iÀÜÀÌ}«ÀwÌ° A lot has happened in 2020, including the pandemic, an unprecedented number of tropical storms hitting the US, and a change in our leadership team. In 2021, we are positioned to continue growing ÕÀÕ`iÀÞ}«ÀwÌ>LÌÞ]Ü iÀi`ÕV}ÕÀ>}}Ài}>ÌiV>Ì>ÃÌÀ« iÀiÌiÌÃÌ«ÀÌiVÌV>«Ì>°/ i «>ÃÌÃiÛiÀ>Þi>ÀÃviiÛ>Ìi`V>Ì>ÃÌÀ« i>VÌÛÌÞÃwÀ}Ì i>ÀiÌ`À>>ÌV>Þ]Ü V ÃiÝ«iVÌi` to continue for several years, especially in southeast personal lines. I believe, UPC, as a leading underwriter of US coastal exposures, is well positioned to take a leadership role in our specialty lines of business, enabling a return to a sustainable and attractive return on capital, while at the same time serving our insureds and partnering with our reinsurers. R. Daniel Peed iv ÝiVÕÌÛi"vwViÀ>` >À>vÌ i >À` United Insurance Holdings Corp. LETTER TO SHAREHOLDERS – 2 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K Í ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 OR ‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period to Commission File Number 001-35761 United Insurance Holdings Corp. (Exact Name of Registrant as Specified in Its Charter) Delaware 75-3241967 (State or Other Jurisdiction of Incorporation or Organization) (IRS Employer Identification Number) 800 2nd Avenue S. 33701 St. Petersburg, Florida (Zip Code) (Address of Principal Executive Offices) 727-895-7737 (Telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered Common Stock, $0.0001 par value per share UIHC Nasdaq Stock Market LLC Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ‘ No Í Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ‘ No Í 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