Accounting Changes and Error Corrections

3 Months Ended

Mar. 31, 2023

Accounting Changes and Error Corrections [Abstract]

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

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 Reported		Adjustment	As Restated
ASSETS
Property and equipment, net	18,118		(13,395)	4,723
Other Assets	15,426		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 liabilities	36,242		(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 Reported	Adjustment	As Restated
ASSETS
Property and equipment, net	19,591	(14,298)	5,293
Deferred policy acquisition costs, net	60,979	(8,610)	52,369
Assets held for disposal	1,411,907	22,908	1,434,815
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses	75,374	(988)	74,386
Other liabilities	17,466	(11,617)	5,849
Liabilities held for disposal	1,642,212	12,605	1,654,817

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


	Three Months Ended March 31, 2023
REVENUE:	As Previously Reported		Adjustment		As Restated
Management fee income	9,668		(9,668)		—
Other revenue	4,075		(4,059)		16
Total revenue	104,047		(13,727)		90,320
EXPENSES:
Losses and loss adjustment expenses	19,073		(2,661)		16,412
Policy acquisition costs	26,927		45		26,972
Operating expenses	5,651		(3,483)		2,168
General and administrative expenses	9,837		(1,044)		8,793
Total expenses	61,488		(7,143)		54,345
Income before other income	39,840		(6,584)		33,256

Income before income taxes	40,428		(6,584)		33,844
Provision for income taxes	9,855		(6,378)		3,477
Income from continuing operations, net of tax	$	30,573	$	(206)	$	30,367
Income from discontinued operations, net of tax	230,305		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 operations	5.34		0.15		5.49
Total	$	6.05	$	0.14	$	6.19
Diluted
Continuing operations	$	0.70	$	—	$	0.70
Discontinued operations	5.29		0.15		5.44
Total	$	5.99	$	0.15	$	6.14


	Three Months Ended March 31, 2022
REVENUE:	As Previously Reported		Adjustment		As Restated
Management fee income	50,206		(50,206)		—
Other revenue	8,738		(8,723)		15
Total revenue	117,361		(58,929)		58,432
EXPENSES:
Losses and loss adjustment expenses	32,518		(6,203)		26,315
Policy acquisition costs	52,152		(31,844)		20,308
Operating expenses	10,603		(6,896)		3,707
General and administrative expenses	15,435		(7,371)		8,064
Total expenses	113,067		(52,314)		60,753
Income (loss) before other income	4,294		(6,615)		(2,321)

Income (loss) before income taxes	5,627		(6,615)		(988)
Provision (benefit) for income taxes	980		(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 Reported		Adjustment		As 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 Reported		Adjustment		As 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, 2023	83,488		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.