Greetings. Welcome to the United Insurance Holdings Corporation. second quarter 2021 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If you'd like to ask a question, please press star one on your telephone keypad. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Adam Prior of The Equity Group. Thank you. You may begin. Thank you, Allison. Good afternoon, everyone. Thank you for joining us. You can find copies of UPC's earnings release today at www.upcinsurance.com in the investor relations section. In addition, the company has made an accompanying presentation available on its website. You're also welcome to contact our office at 212-836-9606, and I'd be happy to send you a copy. In addition, UPC Insurance has made this broadcast available on its website as well. Before we get started, I'd like to read the following statement on behalf of the company. Except with respect to historical information, statements made in this conference call constitute forward-looking statements within the meaning of the federal securities laws, including statements relating to trends in the company's operations and financial results and the business and the products of the company and its subsidiaries. Actual results from UPC may differ materially from those results anticipated in these forward-looking statements. As a result of risks and uncertainties, including those described from time to time in UPC's filings with the U.S. Securities and Exchange Commission, UPC specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments, or otherwise. With that, I'd now like to turn the call over to Mr. Dan Peed, UPC's Chief Executive Officer. Please go ahead, Dan. Thanks, Adam. Hello, thanks for joining us on our second quarter earnings call. I'm Dan Peed, Chairman and CEO of UPC. I'm planning to offer an overview and discussion of some of our activities and then turn it over to Brad Martz, and he'll go over specific numbers. The second quarter results reflect continued execution of our 2021 transition plan. The plan is to rotate to a dramatically reduced named and non-named CAT retention level and increased quota share protection, both of these to de-stress capital and reduce volatility. These actions drive a significantly increased reinsurance spend, which reduces our margin during the transition but are subsequently priced into the portfolio, meaning that we capture the increased price of our reinsurance and our policy premiums. We continue to stay focused on the steps necessary to achieve a strong underwriting profit beginning in 2022 and continuing to grow in 2023, along with reduced volatility at the same time from both our commercial and personal lines businesses. These steps include compounding rate increases, adequate reserving, exposure management, and enhanced risk selection. Many of the underwriting actions that we began to take in the second half of 2020 are beginning to flow through as written and subsequently earned premium. In the second quarter, our personal lines average rate was again up by 10.4%, and commercial lines average rate was up by nearly 18%. Our personal lines renewal business premium increased over the last 12 months on like-for-like accounts by $89.9 million, with a record $27 million increase in the second quarter. Our current filings across all states will yield an average renewal business rate increase in the third quarter of nearly 20% and near 15% in the fourth quarter. Note that these rate increases are compounding on top of at least one, if not two, prior rate increases. Despite these rate increases, we have renewal retention rates, excluding non-renewals, of 90.6% in personal lines and near 94% in commercial lines. On top of these rate increases, we are reassessing the replacement cost estimate of both our personal lines and commercial lines portfolios, given the rapid increase in construction and materials costs. We expect this to add an additional $30 million-$50 million of written premium to the personal lines portfolio over the next 12-18 months. We are shrinking our exposure in personal lines with a TIV reduction of 5.8% in only the second quarter and on track for a portfolio annual PML reduction of nearly 13% by September 30th of this year. This had a major impact on reducing the pressure on our June 1 CAT reinsurance placement. That June 1 XL CAT reinsurance placement was very successful and included most of our long-term reinsurance partners. The reinsurance tower continues on a strong aggregate cascading basis, offering stronger first event protection than a traditional placement. We also were able to significantly reduce our hurricane retentions. Our first and second event retentions are $15 million per occurrence, plus we buy an aggregate protection for losses in the pooled companies at $31 million for the year. This retention is a significant reduction from the approximately $200 million retention in the 2020 hurricane season. Effective July 1st, 2021, Florida adopted Senate Bill 76, which was an insurance reform package that, among other reforms designed to protect consumers, addressed litigation trends experienced by Florida carriers. We feel like there are several material changes which will reduce litigation over time. However, it is still too early to estimate the impact to loss costs given the July 1 effective date. Looking forward, we plan to continue to rebalance our portfolio towards a 50/50 mix of personal lines and commercial lines over the next several years. For example, in the second quarter, our commercial lines direct written and assumed premium is up 18.4%, while our personal lines direct written premium is down 12.2%. See our investor supplement for results broken down by personal lines and commercial lines. We continue on track for a third quarter launch of Skyway Technologies, our managing general agent direct-to-consumer platform, beginning with an HO6 product. The technology developed by Skyway will create a new distribution channel for UPC, reduce acquisition expenses, reach the new generation of insurance buyers, and transform how UPC deploys its data and technology resources. We plan to expand the suite of products offered through Skyway Technologies, and we are currently developing a strategy to launch HO3 products in Florida through Skyway Tech in 2022. The current insurance market continues to be as firm as it has been in years, and the Florida market is expected to remain hard for an extended period of time, especially for personal lines business. 2021 continues to be a transition year for UPC as we rotate to reduce CAT retentions, reduce personal line exposure, that incurs an additional reinsurance cost and a reduced margin during the transition. As we get through the transition, we expect to return to a strong underwriting profit and targeted margins beginning in 2022 and continuing to grow into 2023. With that, I'll turn it over to Brad Martz. Thank you, Dan. Hello, this is Brad Martz, President and CFO of UPC Insurance. I'm pleased to review UPC's financial results. I encourage everyone to review our press release, investor presentation, and Form 10-Q for more information regarding the company's performance. While we're disappointed in our results so far this transition year in some respects, page four of our investor presentation summarizes good progress we've made delivering on several important strategic initiatives to reduce volatility and improve results. Our response to these challenges in our business is creating a foundation for profitable growth in future periods. Evidence of this progress includes, but is not limited to, improvements in our reinsurance program that has significantly reduced our group's net exposure to hurricane risk, underwriting actions to ensure rate adequacy and proper insurance to value that are expected to fuel significant increases in net premiums, reorganization of insurance operations to better connect information technology, underwriting, actuarial and analytics, and our CAT modeling teams under the common leadership of our CIO, Chris Griffith, to ensure data and technology are at the heart of our risk selection and exposure management processes going forward. Finally, we're proud of formalizing our ESG strategy and making certain commitments that we expect to improve decision-making, associate engagement, and our results over time. For more information on our ESG strategy, you can refer to page 15 of our investor presentation and view our full report is available on our website. For the quarter ending June 30th, 2021, the company reported a GAAP net loss of $23.5 million or $0.55 a share. On page five of our investor presentation reconciles our core loss of $24.6 million or $0.57 a share to our underlying core earnings that exclude CAT and prior year development, which declined roughly $6 million or $0.14 a share year-over-year. The decline in core earnings was primarily driven by two things. First, a $40 million decrease in net premium earned, which is partially offset by an $11 million decrease in policy acquisition costs, resulting from reinsurance strategies designed to reduce operating leverage and retention of risk in our personal lines business. The 100% session of our business in Connecticut, Massachusetts, New Jersey, and Rhode Island, along with the inclusion of American Coastal Insurance Company in our 23% quota share, are the biggest differences in ceded premium earned year-over-year. Second, a $16.4 million increase in net loss and loss adjustment expense driven by CAT losses of just over $40 million compared to just under $30 million in the same period a year ago due to higher gross losses and the absence of our now-expired catastrophe aggregate program that ceded approximately $30 million of CAT losses in the second quarter of 2020. Direct premiums written for the quarter were almost flat year-over-year, despite a significant decline in total insured values in personal lines, which was offset by strong growth in commercial lines. Page six of our investor presentation shows our evolving mix by line of business. Growth in commercial appears muted by the change in assumed premiums written that peaked over $104 million in 2018, but decreased to approximately $45 million in 2020 and will be zero this year due to those quota share reinsurance relationships being placed into runoff. Assumed premiums in the current quarter decreased by $12 million year-over-year. That was offset by an increase of approximately $36 million in American Coastal's commercial residential business that continued to perform very well. Commercial lines produced core income of roughly $4 million in the second quarter and $12 million year to date. Our results by line of business are shown on page eight of our investor supplement. Ceded earned premiums were $211 million, an increase of $52.3 million or 33% year-over-year, due mainly to more business being ceded via quota share reinsurance, which is partially offset by ceded losses and ceding commissions earned. Other items included in total revenues during the second quarter included $4 million of fee income that declined slightly due to reduced personal lines policy count, investment income of $3.7 million, which declined $2.2 million due to lower yields and dividends from a smaller common stock portfolio, and unrealized gains from equities of $2.4 million compared to over $20 million a year ago. UPC's second quarter net loss and LAE was $118.1 million, an increase of $16.4 million or 16% year-over-year. Catastrophe losses added nearly 28 points to our net loss and combined ratios. Reserve development was favorable and did not have a significant impact this quarter. Page 10 of our investor presentation shows just how challenging the non-hurricane all other peril CAT has been during the first half of the year. While gross losses have increased, our reinsurance programs have responded to help contain our net losses. The real long-term solution to mitigating CAT risk continues to be exposure management. Excluding these two items, our underlying loss in LAE was $78.2 million, up $5.5 million or 8% year-over-year. This produced an underlying net loss ratio of 53.7%, which was up 14. 5 points from 39.2% in the second quarter last year, due primarily to the normalization of frequency and severity of non-CAT losses that were suppressed by the COVID lockdown last year. Page 11 of our investor presentation also illustrates some of the inflationary pressures we've seen on loss costs in the current accident year. UPC's operating expenses were $67.9 million, a decrease of $14.8 million year-over-year or 18%. This decline was driven mainly by higher ceding commission income in the current quarter, which is reflected in lower acquisition costs. However, our net expense ratio increased roughly 2 points to 46.7% due to the increase in ceded premium earned. On the balance sheet, UPC's assets total $3.1 billion, including cash and investments of approximately $1.2 billion. The modified duration of our fixed income holdings decreased to 4.3 years, with our overall composite rating of A+ being unchanged. GAAP equity attributable to UIHC stockholders declined approximately 14% from year-end to $339 million, with a book value per share of $7.85. Unrestricted liquidity at the holding company was approximately $28 million at quarter end, net of $17 million of additional capital committed to our pooled group during the second quarter. Our statutory surplus of our combined group was $294 million at June 30th. That concludes our prepared remarks, and we're now happy to take any questions. Thank you. At this time, we will be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from Greg Peters with Raymond James. Please proceed with your question. Good afternoon. I guess to start things off with, on your exposure management strategy, I think you said, Dan, in your comments that you're targeting by the end of September to have it down 13% or 14%. I'm wondering if there's other levers you can pull to drive it lower further quicker, if that makes sense to you? Thanks, Greg. September 30th is when the Florida Hurricane Catastrophe Fund and other things set. That's how we kind of measure the exposure for this year, and that's why it's been our target. We did target 13%. I don't have the numbers right at hand, but I believe we're ahead of pace on that target. That, of course, is our exposure management of our main personal lines and commercial lines of ML. We have done other things such as the sale to HCI of the four Northeast states. That obviously will reduce our exposure in an expedited manner. The other side of that equation, as we've discussed, is the increase or kind of dramatic increase in our reinsurance and moving our retentions down, like we said, from what was last year, about, I think, $208 million, to this year having an aggregate for pooled companies of $31 million. You might remember our target on the first quarter call was $25 million first and second event and $70 million aggregate. We actually improved upon that on that number. Those things all are mitigating our exposure. Right. Then, when I look at your press release, I think on page three, you disclose the premium by state. With what is such a challenging environment in Florida, it's the only state where you're showing positive change, yet Pretty sure you're dropping your TIV, so that's got to be the variance is just all rate. Is that the right read on that? That's right. The key thing happening there, if I remember what you're looking at, is that the commercial and personal are together, and what we're growing most dramatically from a rate perspective is our American Coastal book, which is 100% in Florida. Yeah That moves those totals that you're seeing then. Yeah. I guess just two more questions. First, I think I know what the answer is, but I'm just going to have you talk to it. This is the next page of your press release, page four, and this is the table where you go through the underlying loss and LAE ratios. With all the rate that you've thrown at the book, I was surprised to see such a dramatic deterioration in that ratio on a year-over-year basis. I'm talking about the going from 39.2% last year, and obviously, that was probably COVID had a favorable influence on that number, but going to 53.7%, it seemed like it was running a little bit higher than what I would've ordinarily expected. I can comment on that. We'll say that it's higher than we expected. Obviously, we watch that underlying ratio as an important indicator as to how the book is doing, excluding CATs and prior year development. In this quarter specifically, and in this half to some degree, both the non-CAT as well as the CAT claims seem to be bouncing back. The second quarter of 2020 was impacted by COVID by reducing the frequency, and for that matter, severity, whereas the second quarter of 2021 seems to have gotten the other end of that slingshot. We have the social inflation we've discussed with the litigation. We also have physical inflation. We added a slide, I think, on our investor supplement showing the price of lumber, which I believe are short-term supply demand imbalances. We're incurring those costs as we adjust our claims as we go through the first half of this year. I think that, I won't say that that is just an interim thing, but I do think it's being impacted by the rebound from COVID. Got it. The final question I have is, the whole group's under tremendous pressure and strain due to the results that everyone's had to deal with. Capital becomes an important metric here when we think about both gross and earned. I was wondering if you could give us an updated perspective on, given what was a horrible first half, but it should be a better second half considering your new reinsurance program. Can you give us a perspective on how you're positioned capital-wise through the end of the year? Yeah, sure. Brad mentioned that our unrestricted liquidity is about $28 million, and that's net of $17 million that was contributed to the STAT companies in the second quarter. Capital raising is something we watch all the time. We watch with the board of directors, and that is under evaluation. One of our alternatives, along with potentially an increased quota share, obviously the Project Patriot in selling the four states de-stresses capital. The exposure management that we've talked about being both the trimming of our outwards portfolio by 10%-15%, but also a material increase in our ceded reinsurance premium, which of course decreases our net written premium. We've also announced last quarter that we were exploring the potential divestiture of Interboro. These things are all really designed to reduce capital, or as you mentioned, raise capital. I think that that's under evaluation and it stays under continuous evaluation by the board. Got it. Thank you for your answers. Thanks, Greg. Thank you. As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. Our next question comes from Elyse Greenspan with Wells Fargo. Please proceed with your question. Hi, good evening. My first question is just as we think about just inflationary trends and higher loss costs that you guys discussed, how do you think about just as we think about the underlying loss ratio kind of trending throughout the rest of the year? Yeah, thanks, Elyse. I guess I'll take that one, and that's kind of what Greg asked just now. We do expect that to trend much more favorably through the second half of this year. Noticing that our non-named CAT really is all incurred in the first and second quarters, or not all, but say 90%, and then that's dramatically reduced in the third and fourth quarters, and our exposure in the third and fourth quarters is the hurricanes, which we feel that we've kind of corralled, given the retentions that we've put on our hurricane protection. Along with the rate increases I mentioned, that we feel like we'll average 20% or even slightly over 20% in the third quarter on our personal lines. When we combine those, we certainly would hope to see that underlying combined ratio go down. As we think about, I guess, rate needing to earn in, I guess, can you just help us in future directory to expect to see some of the improvement this year and then incrementally more improvement once we get into 2022? Absolutely. We've been with about a 10%, 10.4%, I think, average rate increase on personal lines book for probably at least four quarters or five quarters. It's still kind of escalating from that. Like I mentioned, 20% in Q3. That reverts. There's some overlapping rate increases in Q3. That reverts to about 15% in Q4, and Q1, and Q2. Those will earn through the portfolio. We are already one to two years into this process. It just seems to take a long time, but we actually started quite a while ago. Elyse, this is Brad. I would just add page 14 of our investor supplement lays out a pretty nice roadmap of exactly what Dan's talking about, how it's trending, and what the current run rate is. Okay, that's helpful. Then as we think about, I guess, just kind of top-line growth, right, as you get a good amount of rate and then kind of as you're rejiggering the business mix, how should we think about policy and premium growth kind of trending from here? Yeah. I think that we should definitely think about two things. One is personal lines business and the other is commercial. For personal lines, we would expect probably about a 10%-20% reduction due to the exposure management with about a 15% average rate increase through the year. You're getting about a flat premium on the shrinking exposure base of our personal lines business. And that excludes, of course, the four states that we have sold in the Northeast. On the commercial lines business, we would expect about a 15%-20% rate increase. We hit 18% this last quarter, and with a consistent exposure base. That gives us a top-line growth there in the 15%-20% on the commercial lines. That's helpful. I know last quarter, I think you guys have seen some additional movement in your Irma losses. Have those kind of held steady at this point? Yes. No increase to Irma in the second quarter. We feel good with our ultimate and still have approximately $239 million worth of IBNR reserves on top of $120 million of case reserves. No concerns about Irma at the moment. Okay. I'm assuming quarter to date, it seems like there haven't been that much on the CAT loss front, obviously recognizing, right, like we approach the peak of hurricane season at the end of this month. Has there been anything just from a third quarter perspective that you guys are kind of monitoring on the CAT loss side? We've had one event. Elsa did impact Florida and a few other states. We've got little less than 300 claims and don't expect it to be a significant event for us. Okay, that's helpful. Thanks for the color. You're welcome. Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. One moment please, when we poll for question. Ladies and gentlemen, we have reached the end of the question and answer session, and I will now turn the call over to Dan Peed for closing remarks. Thank you. With that, we'll wrap up our call for today. I want to thank our entire team for their tireless efforts, and also thanks to all of you for joining our call today. Thanks again. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation, and have a wonderful evening.