Hello, and welcome to the United Insurance Holdings Second Quarter 2022 Financial Results Conference Call and Webcast. At this time, all participants are in listen-only mode. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Karin Daly, Vice President with the Equity Group. Please go ahead, Karin.

Thank you, Kevin, and good afternoon, everyone. UPC Insurance has also made this broadcast available on its website at www.upcinsurance.com. A replay will be available for approximately 30 days following the call. Additionally, you can find copies of UPC's earnings release and presentation in the Investors section of the company's website. Speaking today will be Chairman of the Board and Chief Executive Officer, R. Daniel Peed; and President and Chief Financial Officer, Bennett Bradford Martz. On behalf of the company, I'd like to note that statements made during this call that are not historical facts are forward-looking statements. The company believes these statements are based on reasonable estimates, assumptions and plans. However, if the estimates, assumptions or plans underlying the forward-looking statements prove inaccurate or if other risks or uncertainties arise, actual results could differ materially from those expressed in or implied by the forward-looking statements. Factors that could cause actual results to vary materially may be found in our filings with the U.S. Securities and Exchange Commission in the Risk Factors section of our most recent annual report on Form 10-K or subsequent quarterly reports on Form 10-Q. Forward-looking statements speak only as of the date on which they are made, and except as required by applicable law, we undertake no obligation to update or revise any forward-looking statements. With that, it's my pleasure to turn the call over to Mr. Daniel Peed. Dan?

Thanks, Karin. Hello, and thanks for joining us on our second quarter earnings call. I'm Dan Peed, Chairman and CEO of UPC Insurance. I'm planning to offer an overview of some of our activities in the second quarter, and then Brad Martz will provide more specific numbers. The second quarter was busy. During the quarter, we closed on restructuring both our personal lines and commercial lines businesses. In personal lines, we closed the merger of Family Security Insurance Company and UPC effective May 31, with UPC as the surviving entity. In our commercial lines business, we merged Journey Insurance Company and American Coastal Insurance Company effective June 1, with American Coastal as the surviving entity. Both of these were done to separate out our personal lines and commercial lines businesses, simplifying the structure from five writing companies to three, reallocate capital and reduce expenses. Turning to results. The main theme in our personal lines business is continued derisking necessary to right-size the portfolio and reduce the amount of catastrophe reinsurance that was needed at the 6/1 renewal. We continued to shrink the personal lines portfolio with the TIV of the core portfolio down 16% year-over-year and the hurricane PML down approximately 24% when considering the Southeast renewal rights transaction. This enabled the successful 6/1 catastrophe reinsurance renewal. However, shrinking the personal lines portfolio creates a temporary headwind on as the gross earned premium shrinks significantly faster than the ceded earned premium. Gross earned premiums were down by 14% due mostly to the sale of the Southeast renewal rights, while net earned premiums were down by 23%. This is reflected in our personal lines ceded earned premium ratios at 68.9%, up from 59.7%. Losses in both catastrophe and non-catastrophe claims continue to be impacted by increasing inflation and excessive litigation, driving…

Thank you, Dan, and hello. This is Brad Martz, President and CFO of UPC Insurance. I'm pleased to review UPC's financial results but encourage everyone to also review our press release, investor presentation and Form 10-Q for more information regarding the company's performance. Highlights for the quarter ended June 30, 2022 included a GAAP net loss of $69 million or $1.60 per share compared to a net loss of $23.5 million or $0.55 a share last year and a core loss of $64.3 million or $1.49 per share compared to a core loss of $24.6 million or $0.57 a share a year ago. On Page 4 of our investor presentation highlights that our core loss included $20.6 million of net retained catastrophe losses or approximately $0.38 a share after tax, $7.8 million of prior year reserve development, approximately $0.14 per share after tax and the $43.7 million noncash valuation allowance charge, which was slightly over $1 per share. In total, these items reduced our GAAP EPS and our non-GAAP core earnings per share by approximately $1.53 per share. Catastrophe losses included 16 new PCS events in the quarter, and the prior year reserve development was driven by reserve strengthening across several smaller PCS events within our retention. The real noise in the quarter came from our decision to record a valuation allowance against 100% of UIHC's deferred tax asset. This accrual was deemed necessary due to uncertainty about our ability to utilize the roughly $190 million net operating loss carryforward, given the cumulative results over the past several periods. Gross premium written for the quarter of $360.1 million declined $66.3 million or approximately 16%, and gross premiums earned of $305.8 million decreased about 14%, consistent with our expectations of less exposure, offset by higher rates on our personal lines portfolio.…

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today. End of Q&A: