UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. - - PDF document

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: March 19, 2018 (Date of earliest event reported) FEDERATED NATIONAL HOLDING COMPANY (Exact name of registrant as specified in its charter) Florida 000-25001 65-0248866 (State or other jurisdiction of incorporation) (Commission File Number) (I.R.S. Employer Identification No.) 14050 N.W. 14th Street, Suite 180 Sunrise, FL 33323 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (800) 293-2532 NOT APPLICABLE (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

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Item 7.01. Regulation FD Disclosure. Officers of Federated National Holding Company (the “Company”) will present to members of the investment community as part of a non-deal road show beginning on March 19, 2018. A copy of the investor presentation to be used during these presentations is attached as Exhibit 99.1 to this Current Report on Form 8- K and is also available in the "Investor" section of the Company’s website at www.fednat.com. The Company disclaims any obligation to correct or update these materials in the future. In accordance with General Instruction B.2 to Form 8-K, the information set forth in this Item 7.01 and the investor presentation attached to this report as Exhibit 99.1 is "furnished" and shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or

• therwise subject to the liabilities of that Section, nor shall such information be deemed incorporated by

reference in any filing under the Exchange Act or the Securities Act of 1933, as amended (the “Securities Act”). The investor presentation attached hereto as Exhibit 99.1 contains statements that may be deemed forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These statements are therefore entitled to the protection of the safe harbor provisions of these

• laws. These statements may be identified by the use of forward-looking terminology such as “anticipate,”

“believe,” “budget,” “contemplate,” “continue,” “could,” “envision,” “estimate,” “expect,” “forecast,” “guidance,” “indicate,” “intend,” “may,” “might,” “outlook,” “plan,” “possibly,” “potential,” “predict,” “probably,” “pro-forma,” “project,” “seek,” “should,” “target,” “will,” “would,” “will be,” “will continue” or the negative thereof or other variations thereon or comparable terminology. The Company has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While the Company believes these expectations, assumptions, estimates and projections are reasonable, such forward- looking statements are only predictions and involve a number of risks and uncertainties, many of which are beyond the Company’s control. These and other important factors may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Management cautions that any such forward-looking statements are not guarantees of future performance, and readers cannot assume that such statements will be realized or the forward-looking events and circumstances will occur. Factors that might cause such a difference include, without limitation, the risks and uncertainties discussed under “Risk Factors” in the Company’s Annual Report

• n Form 10-K, and discussed from time to time in the Company’s reports filed with the Securities and

Exchange Commission. Item 9.01 Financial Statements and Exhibits. (d) Exhibits. 99.1 Federated National Holding Company Investor Presentation Representing Fourth Quarter 2017.

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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. FEDERATED NATIONAL HOLDING COMPANY Date: March 19, 2018 By: /s/ Ronald A. Jordan Name: Ronald A. Jordan Title: Chief Financial Officer (Principal Executive Officer)

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EXHIBIT INDEX Exhibit No. 99.1 Exhibit Title Federated National Holding Company Investor Presentation Representing Fourth Quarter 2017.

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FEDERATED NATIONAL

(NASDAQ: FNHC) 22ND ANNUAL CFANY INSURANCE INDUSTRY CONFERENCE

March 19, 2018

Exhibit 99.1

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SAFE HARBOR STATEMENT

Safe harbor statement under the Private Securities Litigation Reform Act of 1995: Statements that are not historical fact are forward-looking statements that are subject to certain risks and uncertainties that could cause actual events and results to differ materially from those discussed herein. The risks and uncertainties include, without limitation, risks and uncertainties related to estimates, assumptions and projections generally; the nature of the Company’s business; the adequacy of its reserves for losses and loss adjustment expense; claims experience; weather conditions (including the severity and frequency of storms, hurricanes, tornadoes and hail) and other catastrophic losses; reinsurance costs and the ability of reinsurers to indemnify the Company; raising additional capital and our potential failure to meet minimum capital and surplus requirements; potential assessments that support property and casualty insurance pools and associations; the effectiveness of internal financial controls; the effectiveness of our underwriting, pricing and related loss limitation methods; changes in loss trends, including as a result of insureds’ assignment of benefits; court decisions and trends in litigation; our potential failure to pay claims accurately; ability to obtain regulatory approval applications for requested rate increases, or to underwrite in additional jurisdictions, and the timing thereof; inflation and other changes in economic conditions (including changes in interest rates and financial markets); pricing competition and other initiatives by competitors; legislative and regulatory developments; the outcome of litigation pending against the Company, and any settlement thereof; dependence on investment income and the composition of the Company’s investment portfolio; insurance agents; ratings by industry services; the reliability and security of our information technology systems; reliance on key personnel; acts of war and terrorist activities; and other matters described from time to time by the Company in releases and publications, and in periodic reports and other documents filed with the United States Securities and Exchange Commission In addition, investors should be aware that generally accepted accounting principles prescribe when a company may reserve for particular risks, including claims and litigation exposures. Accordingly, results for a given reporting period could be significantly affected if and when a reserve is established for a

• contingency. Reported results may therefore appear to be volatile in certain accounting periods.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We do not undertake any obligation to update publicly or revise any forward-looking statements to reflect circumstances or events that occur after the date the forward- looking statements are made.

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FNHC CORPORATE PROFILE

Overview:

• Leader in coastal Florida homeowners market
• High quality book of business with proven underwriting excellence
• Strong, large partner agent network and brand recognition
• Experienced leadership team

Key Metrics:

• Cash and Investments: $530.2M
• Book Value Per Common Share: $16.29, excluding non-controlling interest
• Agency Partnerships: 2,500+
• Gross Written Premiums for Q417: $133.9M
• Florida OIR Market Share*: 5.1%
• Demotech Financial Stability Rating: A

3

Federated National Insurance Company (FNIC) is predominantly a homeowners’ insurer in Florida with controlled expansion in AL, LA, SC and TX.

* Market data as of September 30, 2017 (Source: Florida OIR)

SLIDE 8

LONG-TERM TRACK RECORD OF BOOK VALUE GROWTH

$10.70 $11.70 $13.22 $14.13 $14.88 $15.54 $16.22 $16.86 $17.56 $17.92 $17.72 $16.25 $16.54 $16.97 $15.98 $16.29 $0.00 $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 $16.00 $18.00 $20.00 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16* Q1-17 Q2-17 Q3-17** Q4-17

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* Impacted by Hurricane Matthew ** Impacted by Hurricane Irma Source: Company Filings and SNL Financial Note: Based on GAAP financial information

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• Top five position in attractive Florida market
• Favorable track record of GWP
• Significant opportunity to expand market share and diversify book
• Recent refocus on homeowners market
• Industry experience and market savvy executive team

INVESTMENT CONSIDERATIONS

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SLIDE 10

GROWING FLORIDA MARKET SHARE

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OIR = Office of Insurance Regulation % Market share per OIR for Q1 and Q2-17 unavailable as of 8/17/2017.

$336.00 $357.00 $379.80 $410.60 $426.70 $439.76 $455.30 $463.97 $466.14 $468.94 $470.00 $473.89 $471.92 183 197 213 232 243 253 266 271 272 273 271 269 264 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 50 100 150 200 250 300 350 400 450 500 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17

Premiums/Policies In -Force at Quarter End

FNIC Hom eowners Florida Market Share

Premiums in Force and % Market Share

Premiums In-Force ($in Mill) Policies In-Force (# in Thousands) % of Market Share per OIR

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Source: Florida OIR

FLORIDA HOMEOWNERS MARKET OVERVIEW

• Nation’s third largest state
• Population growing by 1,000 every day
• $9.2 billion HO insurance market
• Highly fragmented market with national players comprising less

than 20%, none with higher market share than Federated National

• Federated National’s focus is on high quality, well-mitigated

homes (build after 1994) – we have ~20% of homes in this class statewide

• With Citizens down to ~450k policies, from 1.5mm in 2011, the

days of depopulation growth are over with most companies now looking to grow through geographic expansion and new products Large, fragm ented m arket dom inated by “specialists”, with lim ited presence of national P&C carriers

7 Rank Insurer 2017 Q3 FL HO DWP ($ mm) FL HO Mkt Share (%) 1 Universal Insurance

907 9.9

2 Citizens Property Ins

772 8.5

3

Federated National 465 5.1

4 Heritage Insurance

439 4.8

5 Security First Insurance

375 4.1

6 Homeowner’s Choice Insurance

340 3.7

7 First Protective Insurance

296 3.2

8 United Property & Casualty

296 3.2

9 American Integrity

283 3.1

10

• St. John’s Insurance

256 2.8

11 People’s Trust Insurance

245 2.7

12 Florida Peninsula

244 2.7

13 United Services Auto

243 2.7

14 Tower Hill Prime

226 2.7

15 Federal Insurance

161 2.5

16 AIG Property

154 1.8

17 ASI Preferred

147 1.7

18 Safepoint Insurance

140 1.6

19 Olympus Insurance

134 1.5

20 Tower Hill Signature

127 1.5

21 USAA Casualty

116 1.4

22 Tower Hill Preferred

104 1.3

23 Gulfstream P&C Insurance

102 1.1

24 Auto Club Insurance

90 1.1

25 Progressive Property

98 1.1

Others

2,354 25.8

Total

$9,122(1) 100.0

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DISTRIBUTION NETWORK & STRATEGY

• All policies are generated on a voluntary basis
• Partnership with 2,500+ partner agents

– One of a few selected Florida homeowners’ insurance companies appointed to write voluntary business through Allstate & GEICO Florida partner agents

• Focus on higher value, better mitigated properties

– Emphasize properties which typically have more advanced wind / hurricane mitigation features and lower All Other Peril (non-catastrophe) losses, all of which mitigate expected losses – Underwrite every risk to maintain our quality book of business

• Trust-based model

– FNIC has achieved its growth by winning the business at the point of sale, not on price, but because our partner insurance agents trust us with their clients based on past experience

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Federated National is a partner of choice in the upper segm ent of the Florida hom eowners m arket.

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DISCIPLINED UNDERWRITING APPROACH

• Focus on higher value properties with an emphasis on more advanced wind / hurricane mitigation

features and lower All Other Peril (non-catastrophe) losses

• Utilize a front-end Generalized Linear Model (“GLM”) to calculate each risk’s associated expenses,

CAT and non-CAT exposure, cost of capital and risk concentration in order to determine a pass/fail position on all new business quoting

– Manual reviews of every bound risk to ensure accuracy of information – Regulatory approved use of our GLM-based analytics to provide a layer of pre-binding portfolio optimization management

• Rates on every policy a function of FNIC’s historical loss experience, concentration of risk, expenses

and current market conditions

– All risks are subject to an annual review to ensure low performing risks are not offered a renewal

• Business written by MNIC utilizes a similar disciplined approach as its policies are also underwritten

by FedNat Underwriters (“FNU”), the Company’s wholly owned MGA

Federated National’s m eticulous underwriting approach allows the Com pany to m anage its current exposures while profitably underwriting new risks. Underwriting Process Overview

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QUALITY FLORIDA HOMEOWNERS’ PORTFOLIO

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1-in-10 0 Year Probable Maxim um Loss / In-Force Prem ium (“PML Prem ium ”)

Note: Probable Maximum Loss modeled using average of RMS and AIR combined and assuming LT, NoSS and NoLA

FNIC Total Insured Value and Policies In-Force

77 82 88 96 99 102 105 105 103 102 100 98 96 183 197 213 232 243 253 266 271 272 273 271 269 264 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 10 20 30 40 50 60 70 80 90 100 110 120 130 140

Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17

PIF (Thousands) TIV ($ Billions)

Total Insured Value Policies In Force

264% 266% 266% 264% 260% 255% 248% 237% 223% 200% 210% 220% 230% 240% 250% 260% 270% 280% 290% 300%

Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17

Gross written prem ium s flat due to rate increases

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The Assignm ent of Benefits (“AOB”) Challenge

• Florida HO specialist results have come under pressure

from increased storm activity and the AOB crisis

• Incurred loss ratios for FL homeowners increased by more

than 5 points in 2016, primarily driven by the adverse AOB trends*

• AOB unlikely to see legislative solution near-term but

significant rate increases are being approved by the OIR

• Combined with the 2 storms in 2016 and attritional loss

pressure, the FL HO industry reported an aggregate combined ratio of 107% in 2016 vs. 90% in 2015

• 2016 upward trend has leveled off with higher frequency

and lower severity Federated National’s AOB Strategy

• Pricing

– Achieved aggregate 16+% compounded homeowners rate increase

• ver 2016-17 to combat AOB impact; expect additional future increases
• Proactive management, training and engagement

– Implemented processes, employee training and rate increases to manage AOB claims

• Contact policyholders to educate them on claims reporting to

FNHC upon occurrence

• Analyze expected costs and works directly with AOB

contractors and preferred FNHC vendors to arrive at a fair payment or else invokes the policy’s appraisal clause

• Reducing litigation and mitigation expense risk

– Company aggressively pushes Alternative Dispute Resolution practices to avoid or reduce AOB related litigation expenses – FNHC instituted FL OIR approved policy language changes that restrict emergency mitigation expenses

SUCCESSFULLY MITIGATING AOB HEADWIND

AOB has been a significant drag on FL HO providers, but Federated National’s m ulti-pronged strategy has positioned the com pany for im proved underwriting profitability.

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* Source: Dowling & Partners

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2017-2018 REINSURANCE STRUCTURE

Program Highlights

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Federated National has full indem nity reinsurance with highly rated reinsurers, and has m aintained a business relationship with m any of them for num erous years ~$2.2 billion

• f aggregate coverage with

maximum single event coverage

• f approximately

$1.5 billion

Per occurrence pretax retention of

$18 million 80+

reinsurance partners, all of which are rated “A-” or higher by A.M. Best

• r fully collateralized

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ROBUST CLAIMS CAPABILITIES AND TENURED STAFF

• 40+ field adjusters covering the state
• f Florida as well as Louisiana
• 80+ onsite (desk) adjusters
• Claims management team of over 40

Directors, Managers, Supervisors and Team Leads

• In-house Litigation Management Team,

which includes 3 in-house attorneys, supported by 15-person staff

• Claims personnel average 10+ years

experience and are fully licensed

• Many on our team have tenure dating

to storms of 2004 and 2005

• Training and knowledge is promoted

and enhanced through on- and off-site education

• 24/7 new claims reporting capacity

with immediate emergency response available when warranted

• Long-standing relationships with water

remediation companies, emergency services providers and loss causation analysts that provide rapid mitigation

• f damages and exceptional customer

service

• Owns 1/3 of Southeast Catastrophe

Consulting Company, an independent catastrophe claims adjuster

• Dedicated catastrophe adjusters

available to FNIC & MNIC

• All data and systems functionality are

integrated and backed-up through a remote cloud-based computing system

In-House Claim s Adjusters Strategic Alliance with Catastrophe Adjuster Efficient Claim s Response

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SLIDE 18

• Re-focusing on FNHC’s core strengths
• Maintain market share in high end Florida market
• Expand into larger, second tier pricing market through newly acquired full control of

Monarch ($4.6B market opportunity)

• Selectively expand in adjacent coastal markets
• Continued investment in our people and processes to improve underwriting and claims

performance through technology

2018 & BEYOND: BUILDING FOUNDATION FOR LONG-TERM VALUE CREATION

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SLIDE 19

KEY RECENT EVENTS CHART OUR FUTURE PATH

• Harvey & Irma update

– $24.7 million pre-tax loss retained, net of reinsurance and other recoveries – Company retention offset by claims adjusting fees and other related income resulting in $10 million net after-tax impact

• Q4 HO revenue grew 21% and earnings of $7.4 million, marking our strongest performance in 8

quarters

• FL rate increases taking effect, offsetting AOB and driving expected improvement in underwriting

performance beginning in 2018

• Exiting unprofitable non-core businesses

– Auto – Minimal headwind beginning 2018 – Commercial GL – Small business proved a distraction to our HO focus – Combined reduction in GWP of ~$75M annualized

• Completed purchase of Monarch venture from partners, paving path to FL book diversification strategy

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Near-term focus on driving im proved underwriting perform ance, while setting the stage longer-term profitable growth in HO

SLIDE 20

DIVERSIFYING FLORIDA BOOK – REGIONAL PENETRATION

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Federated National Insurance Com pany – Florida Market for Hom eowners

Panhandle

11.6%

North FL

5.6%

Tampa/

• St. Pete

13.5%

Central FL

14.6%

Treasure Coast

8.1%

SW FL

21.9%

Tri-County

24.7%

T

• tal Florida

Policies in Force for Homeowners/Fire as of December 31, 2017

263,695

• Statewide offering of HO3,

HO6, HO4 and DP-3 Forms

• Risk Management through

utilization of both analytics and geographic exposure management

• Distribute through independent

retail partner agents and national carrier affinities

• Managed catastrophe exposure

by ceding risk through reinsurance treaties

SLIDE 21

Monarch National Insurance Overview

• Established in 2015 as joint venture with

Crosswinds and TransRe

• Strategy: Leverage Federated National’s partner

agent network to gain access to risk-adjusted class

• f FL HO market
• Closed acquisition in February for $16.7 million in

cash and retired $5 million note

• Improved capital-efficiency with Monarch National

stacked under Federated National Ownership Benefits

• Full control in executing on the Monarch opportunity
• Provides second prong to FL diversification strategy,

expanding access to 50% of the FL HO market of which we are underweight

• Strengthens our partner agent relationships by

expanding our appetite to risk-adjusted market

• Continuing to enhance our underwriting process by

deploying sophisticated scoring and leveraging our strong reinsurance partnerships to manage risk

DIVERSIFYING FLORIDA BOOK – MONARCH

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Full Ownership of Monarch creates strategic flexibility and a path to diversification and growth

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MIDDLE MARKET OPPORTUNITY

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High-end Segm ent High Quality Well Mitigated Risk Middle Market Segm ent Risk Adjusted Houses Low-end Segm ent Poorly/Un-Mitigated Risk HO Insurance Market Segments Federated National Current Share

• f Market Segment

Our Focus Underweight Not our Focus

Vast middle-market growth opportunity

~50% of total HO Insurance Market

SLIDE 23

COASTAL STATE DIVERSIFICATION

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Federated National Insurance Com pany In-Force Policy Counts – Regionally

• Limited to Gulf and Atlantic

coastal states offering Property & Casualty policies

• Focus on hurricane zones

1 and 2 where consumer need is the greatest

• Leveraging best practices

developed over our 2 plus decades of experience in Florida

• Distributed through general

partner agents and national carrier affinities Florida

89.6%

Texas

1.8%

Louisiana

5.6%

Alabama

1.0%

South Carolina

2.0%

Based on homeowners/fire lines of business

SLIDE 24

WHY WE ARE WELL POSITIONED TO SUCCEED

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• Strong mindshare, partner agent network in Florida supports diversified regional penetration
• Ownership of Monarch gives us control in tailoring product for new Florida insurance

classes

• Continued expansion as we take our model to neighboring states
• Multiple opportunities to leverage technology to improve performance
• Deep domain expertise across the FNHC organization

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EXPERIENCED MANAGEMENT TEAM

An experienced m anagem ent team that has extensive tenure in the hom eowners’ insurance m arket in Florida

Michael Braun

Chief Executive Officer & President

Appointed Chief Executive Officer in July 2008 Elected to Board in 2005

Ronald Jordan

Chief Financial Officer

Worked for multiple Fortune 200 insurance and Big 4 25+ years of Accounting, Finance, Risk & Governance

21

Tracy Wiggan

Vice President of Human Resources

20 + years experience in human resources

Anthony Prete

Vice President of Strategy

15+ years of industry experience

Stephen Young

Vice President of Operations

20+ years of industry experience

• C. Brian Turnau

Vice President of Claims

18+ years of industry experience

Neil Novellas

Vice President of Internal Audit

20+ years of auditing experience

Christopher Clouse

Vice President of Personal Lines Underwriting

25+ years of industry experience

Larry Hufschmid

Vice President of Information Technology

28+ years of industry experience and 38 years of IT experience

Gordon Jennings

Vice President of Risk Management

23+ years of industry experience

Erick Fernandez

Chief Accounting Officer

15+ years of Accounting and Finance

Scott Fest

Vice President of Reinsurance

20+ years of Reinsurance experience

SLIDE 26

FINANCIAL OVERVIEW

22

SLIDE 27

$44,786 $49,227 $62,285 $53,723 $54,997 $60,045 $69,405 $75,425 $78,493 $83,159 $77,914 $84,774 $50,107 $54,028 $62,421 $67,825 $70,596 $74,958 $72,266 $80,435 $1,594 $2,752 $3,754 $5,921 $8,036 $5,619 $5,648 $4,339 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17

Net Prem ium s Earned (in thousands)

Net Premiums Earned Total HO Auto

PREMIUMS

23

$106,702 $132,019 $129,840 $125,210 $136,024 $171,218 $161,137 $137,105 $146,051 $168,692 $148,585 $128,915 $114,667 $145,648 $133,532 $118,890 $121,221 $151,626 $141,409 $122,499 $15,689 $18,996 $21,523 $13,271 $19,291 $10,622 $7,176 $6,416 $- $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17

Gross Written Prem ium s (in thousands)

Gross Premiums Written Total HO Auto Note: Breakouts for Homeowners and Automobile are provided from 1Q16 forward Note: Excludes CGL

SLIDE 28

REVENUE AND EXPENSES

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$54,936 $58,790 $72,599 $63,567 $65,010 $70,786 $81,758 $89,971 $93,054 $98,159 $98,697 $101,752 $16,503 $17,002 $26,562 $20,278 $20,510 $22,107 $32,941 $32,354 $32,271 $36,087 $33,509 $33,311

$10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100,000 $110,000 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16* Q4-16 Q1-17 Q2-17 Q3-17 Q4-17

Total Revenues and Expenses (excluding Losses, LAE and Taxes) (in thousands)

Total Revenues Total Expenses (excl Losses/LAE and Taxes)

*Unwinding of Florida homeowners’ 30% quota share reinsurance treaty.

SLIDE 29

4Q17 RESULTS BY LINE OF BUSINESS

25

HO Other Consolidated

Total Revenue $87,606 $14,146 $101,752 Costs and expenses: Losses and loss adjustment expenses 47,345 11,529 58,874 All other expenses 29,254 4,057 33,311 Total costs and expenses 76,599 15,586 92,185 Income before income taxes 11,007 (1,440) 9,567 Income taxes 4,246 (303) 3,943 Net income 6,761 (1,137) 5,624 Net loss attributable to noncontrolling interest (672) – (672) Net income attributable to FNHC shareholders $ 7,433 $ (1,137) $ 6,296

Note: Homeowners is presented on an underwriting results basis. Non-strategic lines, investing activities and corporate/support expenses are presented in Other.

SLIDE 30

$87,503 $5,624 $1,763 $3,556 $2,677 $4,490 $1,763 $58,874 $27,984 $5,327 $3,943

NET INCOME BRIDGE

26

• Q4-17 net income per

average diluted share was 48¢ and annualized ROE was 12.1%, excluding realized investment gains.

• Q4-17 losses and LAE

included $1.5, pre-tax, from severe weather events.

SLIDE 31

LOSSES AND LAE

27

32.6% 22.6% 33.3% 39.3% 41.9% 54.5% 48.9% 79.6% 50.0% 48.5% 254.4% 77.4% 53.5% 47.0% 45.6% 53.7% 56.8% 81.6% 66.2% 93.1% 69.7% 67.5% 93.3% 67.3%

0.0% 50.0% 100.0% 150.0% 200.0% 250.0% 300.0% Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16* Q1-17 Q2-17 Q3-17** Q4-17

Gross and Net Loss Ratios (1)

Gross Loss Ratio Net Loss Ratio

(1) (1)

Beginning Q4-15, we have experienced increased loss and LAE costs associated with claims in our Florida homeowners book of business due to Assignment

• f Benefits (“AOB”)

AOB has resulted in a rate increase effective August 2016, with an additional 10% Florida statewide-average increase taking effect August 2017

* Impacted by Hurricane Matthew ** Impacted by Hurricane Irma (1) Includes the impact of severe weather events (Hurricane Matthew, Tornados, Tropical Storm Colin, Hurricane Hermine, and Hurricane Irma)

SLIDE 32

BALANCE SHEET STRENGTH

28

“Our com m itm ent to protecting our policyholders and our shareholders”

$39.1 $51.8 $76.9 $125.3 $145.1 $141.5 $140.8 $140.7 $124.2 $162.2 $58.1 $65.9 $108.5 $192.6 $228.0 $215.7 $218.8 $217.5 $208.6 $211.6

$0.0 $50.0 $100.0 $150.0 $200.0 $250.0

2011 2012 2013 2014 2015 2016 Q1-17 Q2-17 Q3-17 Q4-17  FNHC Statutory Surplus(1)  FNHC Shareholders’ Equity(2)

(1) 2016 Statutory surplus includes $25M surplus infusion (2) FNHC Shareholders’ Equity excludes non-controlling interest

Conservative Capital Structure Reinsurance Strategy Low risk investment portfolio

SLIDE 33

Federated National Investm ent Portfolio Com position*

as of December 31, 2017 (in millions) US Gov. & Agency Sec. $94.2 Cash and Cash Equivalents $72.1 Corporate & Collateralized Mortgage Obligations $244.2

• State. Muni, and

Political Subs $65.1 Common Stock & Mutual Funds $14.3

INVESTMENT PORTFOLIO HOLDINGS

29

• Designed to preserve capital, maximize

after-tax investment income, maintain liquidity and minimize risk

• Utilize outside investment managers for the

fixed income and equity portfolios

• As of 12/31/2017, 100% of the

Company’s fixed income portfolio was rated investment grade

– Average duration: 3.962 years – Composite rating: A- (S&P) – YTM: 2.58% – Book yield: 2.53%

• Historical total returns on cash and investments

as of 12/31/2017

– 1 Year: 4.00% – 2 Years: 2.97%

*excludes Monarch National

SLIDE 34

INVESTMENT OPPORTUNITY

30

Underwriting Perform ance Strategy And Philosophy Investm ent Returns Shareholders’ Returns

• Maintain competitive

advantage on higher value properties

• Expand in middle market

growth opportunity

• Prioritize value of book
• Focus on sustainable

profitability

• Employ sophisticated pricing

and actuarial tools

• Re-focus on our core: quality

property book

• Maintain regional growth

strategy that includes expanding in Non-FL states

• Continue efficient and

effective use of reinsurance programs

• Focus on long-term profitable

growth

• Preserve capital
• Maximize after-tax

investment income

• Utilize investment managers

for fixed income and equity portfolio

• Maintain liquidity
• Executed on authorized

program for common stock repurchases

• Committed to maintaining

Dividends

• Effective use of controls and

management oversight of expenditures

• Achieve book value growth

SLIDE 35

THANK YOU!

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