INVESTOR PRESENTATION. Third Quarter 2018 December

Transcription

1 INVESTOR PRESENTATION Third Quarter 2018 December

2 Forward Looking Statements This presentation contains certain forward-looking statements that are intended to be covered by the safe harbors created by The Private Securities Litigation Reform Act of All statements other than statements of historical fact included in this presentation are forward-looking statements, including statements accompanied by words such as believe, expect, anticipate, intend, estimate, plan, project and continue or future or conditional verbs such as will, would, should, could or may. These statements include the plans and objectives of management for future operations, including those relating to future growth of the Company s business activities and availability of funds, and are based on current expectations that involve assumptions that are difficult or impossible to predict accurately many of which are beyond the control of the Company. There can be no assurance that actual developments will be consistent with our assumptions. Actual results may differ materially from those expressed or implied in these statements as a result of significant risks and uncertainties. The projections and statements in this presentation speak only as of the date of this presentation and the Company undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. 1.

3 Table of Contents National General Holdings Corp. (NGHC)... 3 National General Management Team National General Overview The National General Advantage Property & Casualty P&C: Overview P&C: Automobile P&C: Home and Package P&C: Lender Placed.. 12 Accident & Health Appendix Supplementary Information Fee Income Conservative Investment Portfolio Capital Position Liquidity & Ownership.. 33 Catastrophe Reinsurance Quota Share Reinsurance.. 35 A&H: Overview A&H: Expansion The National General Advantage Specialty Niche Player Growth and Profitability Technology Growth Through Strategic Acquisitions Appendix Financial Information Summary Income Statement. 37 Balance Sheet Highlights Segment Performance: Quarterly. 39 Non-GAAP Reconciliation Additional Disclosures Strengthened Corporate Profile Short-Tail Focus Conservative Financial Profile Companies and Partners

4 National General Holdings Corp. (NGHC) Ticker Symbol* NGHC Current Price $26.30 (as of close of trading on November 26, 2018) Shares Outstanding 113 million / 67 million public float (as of November 26, 2018) Market Capitalization Dividend & Yield $2.9 billion $0.04 per share quarterly / $0.16 per share annually (1.0% annual dividend yield) Average Daily Volume 255,764 shares (3 month average daily volume as of November 26, 2018) Fully Diluted Book Value Per Share Capital Raises Analyst Coverage Company Contacts $14.66 (September 30, 2018) June 2013: private placement of mm shares at $10.50 for $213 mm net proceeds Feb. 2014: follow-on private placement of mm shares at $14.00 for $178.5 mm net proceeds May 2014: private issuance of $250 mm of 6.75% senior notes due May 15, 2024 June 2014: issuance of $55 mm in 7.50% non-cumulative series A preferred stock March/April 2015: issuance of $165 mm in 7.50% non-cumulative series B preferred stock August 2015: issuance of $100 mm in 7.625% subordinated notes due 2055 August 2015: follow-on offering of 11.5 mm shares at $19.00 for $211 mm net proceeds October 2015: private issuance of $100 mm of 6.75% senior notes due May 15, 2024 July 2016: issuance of $200 mm in 7.50% non-cumulative series C preferred stock November 2018: follow-on offering of 5.75 mm shares at $24.00 for $132.5 mm net proceeds Randy Binner B. Riley FBR Capital Markets & Co. Matthew Carletti JMP Securities Adam Klauber, CFA William Blair & Company, L.L.C. Kai Pan Morgan Stanley Meyer Shields, FCAS Keefe, Bruyette & Woods. Inc. Mike Weiner, CFA Chief Financial Officer, (212) , Mike.Weiner@NGIC.com Christine Worley Director of Investor Relations, (212) , Christine.Worley@NGIC.com 3. * NOTE: Shares trade on the NASDAQ Global Market following 144A Follow-On Offering priced at $14.00 per share on 2/19/2014.

5 Management Team Barry Karfunkel Co-Chairman Chief Executive Officer Robert Karfunkel Co-Chairman President Michael Weiner Executive Vice President Chief Financial Officer Jeffrey Weissmann Executive Vice President General Counsel & Secretary Peter Rendall Executive Vice President Chief Operating Officer and CRO Doug Hanes Executive Vice President P&C Product Management Andy McGuire Executive Vice President National General Preferred Mike Bentz Senior Vice President National General Benefits Solution Art Castner President National General Lender Services Jim McCoy Senior Vice President Chief Actuary Aaron Kuluk Executive Vice President Retail Distribution Tom Newgarden Executive Vice President Business Development 9+ years experience in the financial services industry Joined National General at inception in 2010, where he has served on the Board of Directors and as Executive Vice President, President, and now Chief Executive Officer Previous experience: Maiden Capital Solutions, AmTrust Capital Partners Joined National General at inception in 2010, where he has served on the Board of Directors and as Executive Vice President Strategy and Development, Chief Marketing Officer, and now President. Serves as a director of many National General subsidiaries and prior experience includes Maiden Reinsurance 20+ years of experience in the financial services and insurance industry Joined National General in March 2010 Previous experience: Cerberus, Citigroup, KPMG LLP and Bankers Trust Co. 15+ years of experience in financial services and insurance industry legal affairs Joined National General as General Counsel & Secretary in 2011 Previous Experience: Cadwalader, Wickersham & Taft, LLP in securities, mergers & acquisitions and corporate governance 16+ years of experience in the insurance industry Joined National General (via GMAC Insurance) in August 2002 Previous experience: various roles at GMAC/National General, Integrated Services, Inc. (software) 10+ years of experience in the insurance industry Joined National General (via GMAC Insurance) in February 2006 Previous experience: FirmLogic LLC (Litigation Consulting Firm), National Institutes of Health 20+ years of experience in the insurance industry Joined National General (via Tower transaction) in September 2014 Previous experience: Tower Group, Fireman s Fund, Zurich North America, Allstate and Safeco 10+ years of experience in the Insurance Industry Joined National General in October 2015 Previous experience: Assurant Health, Mickinsey & Company 20+ years of experience in the insurance industry Joined National General in October 2015 (via QBE Lender-Placed Insurance acquisition) Previous experience: QBE North America, Ocwen Financial Corporation 20 years of actuarial experience in pricing and reserving capacities for both commercial and personal lines Joined National General in 2018 Pervious experience: Chief Actuary at AIG s international business. Fellow of the Casualty of Actuaries (FCAS). 14+ years of experience in the insurance industry Joined National General in November 2013 Previous experience: various management roles at National General and subsidiaries, Sequoia Insurance 25+ years of experience in the insurance industry Joined National General in August 2010 Previous experience: Safeco and AIG 4.

6 National General Overview We are a specialty personal lines insurance holding company that provides personal and commercial automobile, homeowners, recreational vehicle, accident and health, and various other niche insurance products in the U.S. and internationally. Founded with the acquisition of GMAC Insurance in 2010; Core business dates back over 75 years National General operates in attractive, specialty short-tail niches where we can leverage our core competencies of data and analytics, technology and strong underwriting We operate in two distinct business segments: Property & Casualty and Accident & Health $4.4 billion of 2017 GWP / ~$4.8 billion managed premium $1.9 billion of shareholders equity and $2.6 billion total capital at December 31, 2017 A- rating from A.M. Best ~7,570 employees at December 31, 2017 ~32,100 independent P&C agents & brokers / ~ 28,000 independent A&H agents & brokers SBA 9% RV/ Pkgd. 12% A&H 2% $5.0 $4.5 $4.0 $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 $0.9 $1.2 GWP Growth Over Time ($ in billions) Infrastructure Building Mode $1.4 $1.3 $2.1 $2.3 $3.3 $4.4 $3.3 + Period from March 1, 2010 (Inception) to December 31, 2010 Evolution into a diversified, specialty insurer $ mo'179Mo' Personal Auto 76% Other 1% Lender- Placed 8% RV/Pkgd. 4% Other 1% A&H 13% SBA 7% Home 13% Personal Auto 54% GWP: $1,339mm GWP: $4,375mm We target a companywide combined ratio of 92-94% resulting in a low-to-mid- teens ROE 5.

7 The National General Advantage The NatGen Approach Is To Disrupt The Insurance Industry By Leveraging Our Core Capabilities Across All Facets Of The Business. We Focus on Niche Distribution and Markets. IT/ Systems Scale/ Operating Leverage Acquisitions Analytics User Experience Analytics Pricing/ Underwriting Claims Marketing Sales Distribution Over 32,100 independent P&C agents & brokers / ~ 28,000 independent A&H agents & brokers Leading individual A&H agency platform Direct General & Personal Express Entrepreneurial Spirit Deep and experienced senior management team that s never pleased with the status quo Allows quick execution 6.

8 PROPERTY & CASUALTY

9 Property & Casualty Overview A Leader in Attractive Niches History: GMAC formed Motors Insurance Corporation in 1939, GMAC Insurance acquired by National General in 2010 Premium Volume: $3.8 billion of GWP in 2017 with total written and managed premium (including Reciprocal Exchanges) of ~$4.2 billion Geography: We are licensed to operate in 50 states and the District of Columbia. Distribution: Through more than 32,100 independent agents and brokers, our own MGAs (Clearside General, RAC Insurance Partners, and Assigned Risk Solutions), and direct through numerous long-term affinity relationships and Direct General s omni channel direct platform including approximately 400 stores. Business Detail: We underwrite various P&C products including: non-standard, standard, and preferred auto; homeowners, umbrella, and package; recreational vehicle; motorcycle; lender placed; and small business auto. Additionally, we also offer federal flood policies, which are not written on National General paper. Gross Written Premium Over Time ($ billions) $4.0 $3.8 $3.5 $3.3 $3.0 $2.8 $2.9 $2.5 $2.0 $1.9 $2.1 $1.5 $1.3 $1.0 $0.5 $ Mo'17 9Mo'18 Combined Ratio* Expense Ratio Loss Ratio 95.2% 97.5% 95.2% 91.6% 91.3% 94.6% 97.2% 26.9% 29.7% 20.0% 23.3% 24.0% 24.9% 23.1% 68.3% 67.8% 75.2% 68.3% 67.3% 69.7% 74.1% * NOTES: Expense Ratio and Combined Ratio exclude the impact of non-cash amortization of intangible assets and impairment of goodwill. 8.

10 P&C Overview: Automobile $2.8 billion Auto 2017 GWP Product Overview Private Passenger Auto We write coverage for liability and physical damage for standard, preferred, and non-standard risks throughout the U.S. North Carolina Auto We are a top writer of personal auto in North Carolina, which has a unique take all comers market supported by the North Carolina Reinsurance Facility (NCRF), to which we cede roughly 40% of NC GWP. Affinity Auto We offer a customized product to affinity groups on a white label basis, including insurance for the National Rural Letter Carriers Association, a 109 year-old labor union representing over 100,000 American rural letter carriers and several other affinities. RV/Package We are one of the top writers of RV coverage in the U.S. via Good Sam, an RV club with over 1 million members which also operates Camping World. Our exclusive contract runs until Jan 21, Unlike many competitors, our policies carry RV-specific endorsements, including automatic personal effects coverage, optional replacement cost coverage, RV storage coverage and full-time liability coverage, as well as the ability to bundle coverage for RVs and passenger cars in a single policy billed on a combined statement. Small Business Auto We provide liability and physical damage coverage for light-to-medium duty commercial vehicles, focused on artisan vehicles, with an average of two vehicles per policy. Motorcycle We provide coverage for most types of motorcycles, as well as golf carts and all-terrain vehicles. Louisiana 4% Michigan 5% Virginia 5% Florida 11% Small Business Auto 13% RV/ Package 9% Alabama Washington 3% 3% New York 11% North Carolina PP Auto 26% Texas 3% Arizona 1% Pennsylvania 1% Other States 9% California 17% Private Passenger Auto 53% North Carolina 26% 9.

11 P&C: Non-Standard Auto Niche Roughly $50 billion market size National General s market share is in the low-to-mid single digits Higher-risk sector of the overall market including new drivers, drivers with moving violations/credit problems, unusual drivers license status, purchase minimum limits The insight our technology gives us allows NGHC to better segment the market Makes purchasing decisions based on availability of funds and affordability NGHC s data driven analytics allows greater pricing consistency than most peers Shorter policy duration with lower limits than standard policies Short-tail policies with lower limits leads to more consistent underwriting results for NGHC High lapse-rate and frequent interactions with insured Our flexible technology keeps expenses low in a high-touch environment More susceptible to fraud Our claims department has a long tenure in handling non-standard risks Homeowners& Farmowners 16% Commercial 50% P&C 2016 Industry Premiums ~$600 bln Private Auto 34% Non- Standard Auto 35% Standard Auto 65% 10. * NOTE: Non-Standard Auto market share estimate based on Insurance Journal s estimated 30-40% of total auto insurance

12 P&C Overview: Home and Package $560 million Home 2017 GWP Homeowners/Umbrella/Package Our homeowners policies are generally multipleperil, providing property and liability coverages for one- and two-family, owneroccupied residences. We also provide additional coverage to the homeowner for personal umbrella. Target standard/preferred customer base Package offering with auto/umbrella improves customer retention We offer one policy, one invoice We believe we have one of the best policy processing systems in the market Nevada 2% Illinois 3% Maine 5% Mass. 6% Louisiana 7% Texas 8% New Hampshire Arizona 1% 2% New Jersey 8% Other States 5% California 31% New York 13% High Net Worth Opportunity NatGen Premier offers homeowners and package policies for the HNW market, with a target market of home values between $750 thousand and $5 million. Our focus is on home values in the $1-3 million range, or what we define as the mass affluent market. The NatGen Premier product suite is generally aligned to the HNW market: offering guaranteed replacement cost on building and contents, no time limit on loss of use with cash out options available, offering additional coverage for collections and umbrella (with limits up to $10 million), and all properties are inspected by vendors that specialize in HNW homes We continue to expand our NatGen Premier product Connecticut 9% 11.

13 P&C Overview: Lender Placed We acquired the Lender Placed platform in 2015, which facilitated our entry into the homeowners and auto lender-placed insurance line with an industry leading platform and management team. National General Lender Placed, the second largest lender-placed insurance platform in the U.S., produced $345 million of gross written premium in The company has an industry leading technology platform supported by comprehensive enterprise risk management capabilities, offering a full suite of lender-placed insurance products to customers through three distinct operating units: o LPI Home The second largest LPI home platform in the U.S., offering fire, home, and flood products, as well as tracking and other ancillary services to financial institution clients. o LPI Auto We offer collateral protection insurance (CPI), guaranteed asset protection (GAP) and insurance recovery services for automobiles o Seattle Specialty Insurance Services (SSIS) An agency and tracking business focused on the smaller niche loan servicer that offers a full range of coverage options underwritten by third-party insurance carriers. 12.

14 ACCIDENT & HEALTH

15 Accident & Health Overview Nimble Provider in an Evolving Niche History: Entered in 2012 following the passage of the Affordable Care Act with a significant presence established in 2015 after the acquisition of Assurant Health s Business Premium Volume: $581 million of GWP in 2017, $981 million of managed premium in 2017 Geography: Operates in the U.S. and Europe Business Details: o o Products are short-tail and leverage National General s data, analytics and technology core competencies. o Accident/AD&D, Limited Medical/Hospital Indemnity, Short Term Medical, Cancer/Critical Illness, Small Group Self- Funded (Stop Loss), Term Life, Dental and Vision. Multiple owned distribution platforms providing us greater control. o Call Center Agency (VelaPoint), Independent Agency (AHCP), Worksite Marketing (TABS), North Star Marketing (NSM), Managing General Agency (HST), Large 3 rd Party General Agencies $700 $600 $500 $400 $300 $200 $100 $0 N/A $34 Gross Written Premiums ($ in millions)* $140 $ YTD YTD Combined Ratio* Expense Ratio 102.1% 104.8% 23.5% 33.5% 16.7% 78.7% 71.3% $464 Loss Ratio 97.8% 81.1% $581 $ % 19.4% 72.7% $ % 30.4% 59.7% * NOTES: Expense Ratio and Combined Ratio exclude the impact of non-cash amortization of intangible assets and impairment of goodwill. 14.

16 A&H: Product Overview Individual Health Short Term Medical These plans offer major medical-like coverage to individuals for a prescribed short duration. Carriers may still underwrite and install basic cost protection devices like pre-existing condition limitations. Supplemental Plans These plans are packaged with core medical coverage to help bridge the gap until the deductible in the event of a critical illness or accident or provide ancillary coverages such as dental and vision. Limited Medical/Hospital Indemnity These plans are excellent supplements to high deductible plans helping mitigate high catastrophic individual out of pocket expenses. They can also be sold as stand alone programs, offering basic insurance for those that cannot afford or do not wish to pay for more expensive major medical plans. A&H 2017 managed & GWP: $981 million Self-Funded $160 16% NHIC $238 24% EuroAccident $117 12% Managed 3rd Party Premium $466 48% Group Benefits Small Group Self-Funded /Stop Loss We offer a wide array of selffunded/stop loss programs for small and large employers, as permitted by state law. We also package our non-major medical coverages with stop loss programs. EuroAccident We provide health insurance (predominantly personal medical insurance or PMI, which is an enhanced medical policy that supplements a national health care plan) to large groups and individuals in Sweden. Small Group Self Funded 18% Individual Major Medical 34% EuroAccident 13% Medicare 20% Short-Term Medical 7% Accident/ AD&D 5% Cancer/ Critical Illness 4% Dental/Vision 4% Other 0.2% 15. * NOTE: Individual Major Medical business is not written on National General paper.

17 A&H: Structure Overview National General s A&H Segment boasts a leading carrier in its niche slice of the individual A&H and small group markets, leading product distribution and technology Quotit/ AgentCubed/ LeadCloud Technology Velapoint/ HealthCompare Leads NHIC Product Access to other carriers Owned Call Center Agency Under 65 Medicare Health Solutions Team Captive General Agency Technology AHCP Non-Exclusive General Agency Independent Agents Leads NHIC Product Access to other carriers NHIC Product Access to other carriers NHIC Product Short Term Medical Limited Medical Small Group Stop Loss Critical Illness AD&D Accidental Medical Expense Cancer/ Heart/ Stroke Dental/ Vision 16.

18 Accident & Health Expansion History The A&H segment presents a significant opportunity with the continuing evolution of the Patient Protection and Affordable Care Act (PPACA), there is substantial demand for alternative and supplemental products. The key acquisitions we have completed to build out the segment are as follows: VelaPoint America s HealthCare Plan (AHCP) The Association Benefits Solutions (TABS) National Health Insurance Company (NHIC) Healthcare Solutions Team (HST) Assurant Health HealthCompare, Quotit AgentCubed Acquired in February General agency call center that sells a full range of supplemental & individual major medical policies via state/federal exchanges and third-party carriers. Acquired in February MGA/program manager that works with > 4,300 independent agents/general agents across the U.S. to provide an array of insurance products, including those from third-party insurers. Acquired in September Administers specialty self-insurance arrangements, offering ERISA qualified self-insured plans to employers in affinity associations or trade groups and selling medical stop loss coverage to employers. Acquired in November Texas domiciled life/health insurer established in 1979 and licensed in 48 states & DC. NHIC serves as the underwriting company for our A&H segment. Acquired in January MGA that partners with ~500 independent agents across U.S. to provide a wide range of A&H products. Transaction closed October The transaction includes certain business lines and assets from Assurant Health, including the small group self-funded and supplemental product lines, as well as North Star Marketing, a proprietary small group sales channel. Acquired in January HealthCompare is a consumer facing website and call center that sells health insurance products primarily to seniors. Quotit is a comparative rater that connects carriers, brokers, and consumers with insurance rates and benefits online. Acquired in June Lead distribution and CRM software solution specific to the insurance industry. 17.

19 The National General Advantage 1 Leading player in specialty, niche classes of the P&C and A&H markets 2 Proven track record of underwriting discipline while generating strong growth and consistent profitability 3 Differentiated technology platform that permeates across the value chain 4 Core competency in M&A 5 Strengthened independence and governance 6 Focus on short-tail liabilities that exhibit lower volatility 7 Conservative financial profile 18.

20 1 Leading Player in Specialty, Niche Classes of the P&C and A&H Markets B High Net Worth Homeowners A Non-Standard Auto Segmentation and analytics creates differentiated underwriting approach #2 NSA player in the U.S. Entered during period of market dislocation Focus on the underserved portions of mass-affluent market C InsurTech Platform Saas platform Leverage technology to generate 3 rd party fees Quotit, MyClaimsPics and NPS D RV / Specialty Vehicles Utilize affinity relationships 35+ year track record One of the leading national carriers E Short-term Medical Unique product offering given changing healthcare dynamics Nimble approach to refine products as legislation evolves Large player in growing market F Small Group Stop-Loss Core focus on the employers with 5-25 employees Sophisticated analytics to monitor trends quickly We only operate in targeted niches where we are a leader and have competitive advantages 19.

21 2 Proven Track Record of Underwriting Discipline While Generating Strong Growth and Consistent Profitability Opportunistic organic growth Acquisitions have been a key part of growth story Low volatility lines of business $5.0 $4.5 $4.0 $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 Substantial and Persistent Topline Growth ($ in billions) Infrastructure Building Mode $4.4 $3.8 $3.3 $3.3 $2.3 $2.1 $1.2 $1.4 $1.3 $ YTD YTD 1 Average combined ratio of 93.7% since 2013 Target a companywide 92-94% combined ratio With Track Record of Underwriting Profits Combined Ratio % 93.1% 94.2% 96.1% 92.0% 91.4% (1) Period from March 1, 2010 (Inception) to December 31, 2010 (2) Expense ratio and combined ratio exclude the impact of non-cash amortization of intangible assets and impairment of goodwill YTD 20.

22 3 Differentiated Technology Platform that Permeates Across Value Chain We employ a differentiated approach to technology relative to the rest of the industry Technology is a true differentiator for National General We have one policy system, which handles policy processing, billing and a user application database Policy admin (NPS) and claims (EPIC) systems are internally built and fully integrated with one another NPS and EPIC allow for more efficient data capture, facilitating the use of our proprietary tools to implement new pricing elements Systems are highly scalable, allowing us to grow without significant cost Industry Norm Rent Variable Cost Multiple Admin / Claims Systems Utilize External Consultants Acquired Businesses on Separate Systems Rigid and Slow to Implement Change National General Own Fixed Cost One Admin System One Claims System Developers In-House Rapidly Integrate, Driving Expense Efficiencies Flexible and Agile Rapid Product Dev. Capability 21.

23 4 Core Competency in M&A We have expertise in acquiring, integrating and improving businesses M&A Philosophy Identify companies that are good underwriters but have operational challenges = 3 Track Record of Success 20+ acquisitions since our founding Integration Expertise We integrate all companies onto our systems in rapid fashion Valuation Discipline Avoid broad auctions Maintain price discipline Don t pay up for assets Sourcing Hang around the hoop Maintain relationships with potential targets Track record makes us a good home for management teams (Renewal Rights) Examples 22.

24 4 Core Competency in M&A Strategic Transactions Since taking over the company in 2010, we have completed multiple acquisitions which have built National General into the well diversified personal lines insurer it is today. We target acquisitions of carriers with good underwriting and high expenses; and will look at renewal rights transactions, book rolls, new products, distribution, underwriting teams, etc. 1939: Motors Insurance Corporation (MIC) is formed by GMAC 1980: MIC starts offering automobile liability insurance to GM employees 1991: GMAC purchases National General Insurance Companies and now provides insurance through affinity groups and a broader product offering to GM and GMAC employees 1997: GMAC purchases Integon, a publicly traded NC-based insurance group with independent agency distribution in 20 states 1999: MIC, National General Insurance and Integon start operating under the GMAC Insurance name 2006: GMAC Insurance acquires MEEMIC and GM sells 51% controlling interest in GMAC to a consortium of investors led by Cerberus Capital Management 2008: GMAC launches strategic review of insurance operations PRIOR OWNERSHIP CURRENT OWNERSHIP March 2010: NGHC purchases GMAC Insurance September 2011: Acquisition of Agent Alliance February 2012: Acquisition of VelaPoint / America s Health Care Plan (AHCP) November 2012: Acquisition of National Health Insurance Company (NHIC) April 2013: Acquisition of Euro Accident June 2014: Acquisition of Imperial September 2014: Tower Group Personal Lines Transaction closes April 2015: Acquisition of Assigned Risk Solutions October 2015: Acquisition of QBE Lender- Placed Insurance October 2016: Acquisition of Standard Property and Casualty Insurance Company (f/k/a Standard Mutual) December 2016: Renewal Rights of Nationwide Non-Standard Auto July 2018: Acquisition of LeadCloud July 2011: Renewal Rights of American Modern December 2011: Acquisition of ClearSide General September 2012: Acquisition of TABS companies 2013: Form European life and non-life insurers April 2014: Acquisition of Personal Express July 2014: Acquisition of Agent Alliance Insurance Company January 2015: Acquisition of Healthcare Solutions Team October 2015: Acquisition of Certain Businesses from Assurant Health June 2016: Acquisition of Century National Insurance Company November 2016: Acquisition of Direct General Corporation January 2017: Acquisition of Quotit and HealthCompare 23.

25 4 National Farmers Union Insurance Transaction Overview: Announced agreement to acquire National Farmers Union Insurance on November 13, 2018 from QBE for 100% cash consideration Purchase price of $43mm, with additional capital of ~$35mm expected to support the business 2017 Gross Written Premiums Other 9% Expected closing in the first half of 2019 Company Overview: Wisconsin domiciled P&C carrier with operations dating back to 1945 Primarily writes personal and farm auto, farm owners and homeowners policies 2017 GWP of $175mm 10-year average loss ratio (ex-ulae) of 65% Farm Owner 35% Home Owner 23% Personal Auto 33% Farm Auto 25% Concentration in the Midwest ~ 60 employees Gross Underwriting Result ($mm) Exclusive distribution arrangement with the National Farmers Union which runs through 2050 Strategic Rationale: Expands geographic footprint into the Midwest Niche distribution network Straight-forward integration Immediately accretive to EPS $17 $23 $5 $13 $9 $ UW Result UW Result ex-cat 24.

26 5 Strengthened Corporate Profile We have taken meaningful strides in 2017 and 2018 to enhance our independence, strengthen our governance and streamline our business Jun-2017 No longer a controlled company Jul-2017 Sept-2017 Nov-2017 Entered into meaningful quota shares with high quality reinsurers Acquired our policy administration system (NPS) Added Jay Nichols (retired Axis Re CEO) to board YE 2017 Engaged E&Y as auditor; clean opinion on financial statements and controls May-2018 Appointed Blackrock to manage investment portfolio 25.

27 6 Focus on Short-Tail Liabilities that Exhibit Low Volatility Products Personal Auto / NSA Short-Duration? Loss ratios have remained stable in spite of recent catastrophe events Short-tail product offering presents limited risk around future reserve development Stable Loss Ratio Trend 1... High Net-Worth Homeowners 75.7% 69.3% 69.0% 70.1% 71.9% 69.3% RV / Specialty Short-term Medical / Supplemental Plans YTD...with Limited Reserve Development 1,2 Small Group Stop-Loss 0.2 % 0.4 % 1.1 % 0.9 % 0.5 % 0.2 % (1.4)% YTD (1) Excludes reciprocal exchanges (2) Measures impact on reported calendar year loss ratios from prior period loss reserve development 26.

28 7 A Conservative Financial Profile Equities Short-term 1% 5% Other Structured Products 9% Govt Bonds 10% Investment Portfolio Other 8% Corporate Bonds 29% MBS 38% Premier asset manager (Blackrock) now managing portfolio as of May 2018 Average yield of 3.1% through YTD % of fixed income rated A- or better; 99% of fixed income investment grade B C $6 Minimal Reserve Volatility 1 Reserve Development ($ in millions) $18 $18 $14 $6 0.4% average impact on loss ratio $(38) YTD Partner with High Quality Reinsurers Ceded Premium ($ in millions) $367 Limited reserve volatility Short-tail business provides confidence over reserving levels Historical development has been very small relative to aggregate reserves We have partnerships with some of the largest global reinsurers Large auto quota share with Hannover Re $99 $57 $41 Hannover Re Swiss Re Everest Re Fairfax (1) Excludes reciprocal exchanges Meaningful property quota share with consortium of high quality reinsurers Maximum loss on one individual property event is $41mm pre-tax 27.

29 Companies and Partners 28.

30 APPENDIX: SUPPLEMENTARY INFORMATION

31 Fee Income We generate fee income, which increases our capital flexibility, within both our P&C and A&H segments. Our core agency auto states have historically been the primary contributor to fee income, but we expect continued fee growth to come from the expansion of our A&H segment, the addition of fee income from acquisitions, and the addition of management fees from the Attorneys-in-Fact (AIF) that manage the reciprocal exchanges. Our main sources of our fee income include: Policy Service Fees We charge policy service fees (including fees for installment plans, policy renewal, nonsufficient funds, late payments, cancellations and various financial responsibility filing fees) which are generally designed to offset expenses incurred in the administration of our insurance business (both P&C and A&H segments). Distribution Fees We collect service fees as commissions and general agent fees for selling policies issued by third-party insurance companies, on which we do not bear underwriting risk (both P&C and A&H segments). AIF Management Fees We charge a fee for managing the reciprocal exchanges through the Attorneys-in-Fact, which were included in the Tower Personal Lines transaction that closed on September 15, 2014 (P&C segment). We note that these fees are eliminated in consolidated GAAP results. $600.0 $500.0 $400.0 $300.0 $200.0 $100.0 $0.0 Service and Fee Revenue ($ in millions) A&H $16.4 $44.8 $53.5 $66.1 $77.4 $82.8 P&C $58.5 $98.8 $119.9 $201.3 $138.9 $271.8 $154.6 $ * Service and Fee Revenue by Category ($ millions) Distribution Fees $ % AIF MGT Fees $ % Policy Service Fees $ % 30. * NOTE: Period from March 1, 2010 (Inception) to December 31, 2010.

32 Conservative Investment Portfolio Composition by Asset Class ($ in millions) at September 30, 2018 Fixed Income Composition by Ratings at September 30, 2018 Fair Value at September 30, 2018 Consolidated % of Total Portfolio Preferred Stock $ % Common Stock % Total Equities, available-for-sale % Corporate Bonds 1, % Residential MBS % Commercial MBS % Structured Securities % Municipal Bonds % Foreign Government % U.S. Treasuries & Federal Agency % Assset-Backed Securities % Total Fixed Maturities, available-for-sale 3, % Subtotal Equities & Fixed Maturities, available-forsale 3, % Other Investments Cash & Cash Equivalents % Equity in Unconsolidated Subsidiaries % Other Investments % Short Term Investments % Restricted Cash and Cash Equivalents % Total Investment Portfolio $ 4, % AA+, AA, AA- 48.0% AAA 6.0% Fixed Income Portfolio Key Statistics at September 30, 2018 Average Yield: 3.1% Average Duration: 4.2 years A+, A, A- 39.2% BBB+, BBB, BBB- 2.7% US Treasury 1.0% * NOTE: Fixed Income Composition by Ratings is for NGHC portfolio only. Equity Investments in Unconsolidated Subsidiaries is predominantly Life Settlement Contract and Real Estate investments. 31.

33 Capital Position Recent capital actions include: On March 27, 2015, we closed on $150.0 million of 7.50% Series B Non-Cumulative Preferred Stock redeemable on or after April 15, On April 6, 2015, the underwriters over-allotment option was exercised for an additional $15.0 million. On August 18, 2015 we closed a Follow-On Offering of 11.5 million common shares at $19.00 per share (including the underwriters over-allotment option), generating approximately $210.9 million of net proceeds. On August 18, 2015 we closed an offering of $100 million in aggregate principal amount of 7.625% Subordinated Notes due 2055, resulting in net proceeds of $96.85 million. On October 8, 2015 we closed on a private issuance of $100 million in aggregate principal amount of 6.75% Senior Unsecured Notes due 2024, resulting in net proceeds of approximately $98.85 million. On January 25, 2016, we entered into a $225 million revolving credit facility with a letter of credit sub-limit of $25 million and an expansion feature up to $50 million. The facility has a maturity date of January 25, 2020, and replaces our previous $135 million credit agreement. On July 7, 2016, we closed on $200.0 million of 7.50% Series C Non-Cumulative Preferred Stock redeemable on or after July 15, NGHC Capital Position ($ in millions) September 30, 2018 Shareholders Equity $2,043.0 Debt $675.3 Total Capital $2,718.2 Undrawn Amount of $245m LOC $85.0 Total Available Capital $2,803.2 Debt to Equity Ratio 33.1% Debt to Total Capital Ratio 24.8% NGHC Shareholders Equity ($ in millions) On November 19, 2018 we closed a Follow-On Offering $310.0 $361.6 $413.0 of 5.75 million common shares at $24.00 per share (including the underwriters over-allotment option), generating approximately $132.5 million of net proceeds We expect to be able to write business with operating leverage of up to approximately 1.8x total capital. $642.9 $1,885.7 $1,928.6 $1,514.0 $1,

34 2/20/14 4/20/14 6/20/14 8/20/14 10/20/14 12/20/14 2/20/15 4/20/15 6/20/15 8/20/15 10/20/15 12/20/15 2/20/16 4/20/16 6/20/16 8/20/16 10/20/16 12/20/16 2/20/17 4/20/17 6/20/17 8/20/17 10/20/17 12/20/17 2/20/18 4/20/18 6/20/18 8/20/18 10/20/18 Liquidity & Ownership Average Daily Volume: 255,764 shares (3 month average daily volume as of November 26, 2018) Currently approximately 40% of our shares are owned by Affiliated Shareholders, with approximately 60% publicly floating. 3 Month Average Daily Volume Affiliated Shareholders/Available Floating Shares 500, , , , , , , , ,000 50,000 0 Holder Shares (millions) % of Shares Karfunkel Family Trusts % June 2013 Equity Issuance % February 2014 Follow-On Equity Issuance % August 2015 Follow-On Equity Issuance % October 2016 Standard Mutual Subscription Rights % November 2018 Follow-On Equity Issuance % Exercised Options/RSUs % Total % 33.

35 Catastrophe Reinsurance May 1, 2018 April 30, 2019 $575m We have a sizable reinsurance program that we believe conservatively protects our capital position in the case of a catastrophic event Cover provides protection to the 156 year All Perils (RMS/AIR Blend) return time and to above the 250 year Northeast only Hurricane return time (AIR) Tower has a reinstatement for second event coverage Within the $70 mln retention are the 42% homeowners quota share and 15% auto quota share, which inures to the benefit of the company Panel of financially strong reinsurers The property catastrophe program for the Reciprocal Exchanges, which was effective July 1, 2017, provides $355 million of coverage in excess of a $20 million per event retention (exposure is reduced further by a 50.5% quota share arrangement), with one reinstatement. Our casualty catastrophe program provides $45 million of coverage in excess of a $5 million retention. For umbrella policies, we have $9 million of coverage in excess of $1 million retention. $325m $170m $70m QS (42% HO; 15% Auto) $250m xs $325m $155m xs $170m $100m xs $70m Retention 34.

36 Quota Share Reinsurance Effective July 1, 2017, we entered into two separate third party quota share arrangements, each with a duration of two years The quota share arrangements support the growth we are experiencing in our auto and homeowners lines of business, and have provided sideways protection to large loss events Auto 15% of net liability under auto policies in force at 7/1/2017 and new and renewal policies issued during the term of the arrangement 31.2% ceding commission, subject to a sliding scale adjustment to a max of 32.8% if the loss ratio is <63.4% or a minimum of 29.6% if the loss ratio is >66.6% Reinsurance agreement is with Hannover Re Home 29.6% of net liability under home policies in force at 7/1/2017 and new and renewal policies issued during the term of the arrangement, which was increased to 42% effective May 1, % ceding commission on 29.6% of the cede and 38% ceding commission on 12.4% of the cede (effective May 1, 2018) Reinsurance agreement is led by Everest Re and Munich Re 35.

37 APPENDIX: FINANCIAL INFORMATION

38 Summary Income Statement ($ in thousands) Twelve Months Ended December 31, 2016 Twelve Months Ended December 31, 2017 Three Months Ended September 30, 2018 Reciprocal Reciprocal Reciprocal NGHC Exchanges Consolidated NGHC Exchanges Consolidated NGHC Exchanges Consolidated Revenues: Gross written premium $3,261,670 $241,540 $3,500,898 (A) $4,375,414 $383,773 $4,755,985 (G) $1,234,320 $121,351 $1,355,671 Net written premium 2,952, ,548 3,072,696 3,401, ,649 3,577, ,210 14, ,024 Net earned premium 2,884, ,395 2,995,171 3,484, ,871 3,654, ,376 43, ,527 Ceding commission income 2,078 43,522 45,600 56,276 60, ,456 44,513 14,587 59,100 Service, fees, and other income 410,771 3, ,817 (B) 552,580 5, ,927 (I) 160,425 1, ,690 (O) Net investment income 112,977 8, ,187 (C) 102,229 9, ,950 (J) 30,984 2,344 30,696 (P) Net realized gain/(loss) on investments 29, ,006 40,665 6,123 46,788 (3,003) (167) (3,170) Other than temporary impairment losses (22,102) 0 (22,102) (25) 0 (25) Bargain purchase gain and other revenue 24, ,308 (198) 0 (198) Total revenues 3,442, ,010 3,568,987 (D) 4,235, ,293 4,422,074 (K) 1,129,295 61,490 1,168,843 (Q) Expenses: Loss and loss adjustment expense 2,023,064 69,216 2,092,280 2,506, ,840 2,626, ,098 40, ,310 Acquisition and other underwriting costs 481,865 15, ,007 (E) 622,269 50, , ,180 11, ,470 General and administrative 677,582 65, ,148 (F) 887,472 80, ,996 (L) 234,626 20, ,733 (R) Interest expense 40,180 6,506 40,180 (G) 47,086 9,604 47,086 (M) 12,583 2,632 12,583 (S) Total expenses 3,222, ,246 3,338,615 (H) 4,063, ,575 4,258,593 (N) (H) 1,044,487 74,551 1,097,096 (T) Pre-Tax Income 219,608 10, , ,763 (9,282) 163,481 84,808 (13,061) 71,747 Provision for income taxes 43,789 (9,791) 33,998 66,918 (5,645) 61,273 16,426 (908) 15,518 Net income 175,819 20, , ,845 (3,637) 102,208 68,382 (12,153) 56,229 Less: Net income attributable to Non Controlling Interest ,555 20,668 0 (3,637) (3,637) 0 (12,153) (12,153) Net income attributable to NGHC 175, , , ,845 68, ,382 Less: dividends on preferred shares 24, ,333 31, ,500 7, ,875 Net income available to common stockholders $151,373 $0 $151,373 $74,345 $0 $74,345 $60,507 $0 $60,507 NOTE: Consolidated column includes eliminations as follow s: (A) $(2,312), (B) $(33,816), (C) $(6,506, (D) $(40,322), (E) $(6), (F) $(33,810), (G) $(6,506), (H) $(40,322), (I) $(3,202), (J) $(55,447), (K) $(9,604), (L) $(65,051), (M) $(9,604), (N) $(65,051), (O) $(19,310), (P) $(2,632), (Q) $(21,942), (R) $(19,310), (S) $(2,632), (T) $(21,942) 37.

39 Balance Sheet Highlights ($ in thousands) December 31, 2016 December 31, 2017 September 30, 2018 Reciprocal Reciprocal Reciprocal NGHC Exchanges Consolidated NGHC Exchanges Consolidated NGHC Exchanges Consolidated Assets Total investments $3,413,727 $306,345 $3,631,064 (A) $3,411,730 $327,213 $3,649,788 (K) $3,644,476 $320,337 $3,863,534 (T) Cash and cash equivalents 212,894 7,405 $220, ,840 5,442 $292, , ,930 Premiums and other receivables 1,045,377 47,198 $1,091,774 (B) 1,268,330 56,792 $1,324,321 (L) 1,398,843 64,090 1,461,332 (U) Reinsurance recoverable on unpaid losses 892,264 55,972 $948,236 1,199,961 94,204 $1,294,165 1,951, ,773 2,207,794 Intangible assets, net 456,695 11,025 $467, ,385 3,685 $404, ,652 3, ,202 Goodwill 158,364 0 $158, ,153 0 $174, , ,984 Other assets 652,932 89,764 $720,571 (C) 1,186, ,763 $1,300,964 (M) 704,870 32, ,312 (V) Total Assets $6,832,253 $517,709 $7,238,028 (D) $7,927,455 $618,099 $8,439,743 (N) $8,697,513 $677,363 $9,249,088 (W) Liabilities Unpaid loss and loss adjustment expense reserves $2,136,791 $137,075 $2,273,866 $2,520,204 $143,353 $2,663,557 $2,679,190 $175,945 $2,855,135 Unearned premiums & other service revenue 1,502, ,724 $1,701,286 1,807, ,395 $2,032,605 2,067, ,418 2,331,855 Reinsurance payable 78,949 20,662 $98,810 (E) 329,772 69,076 $398,047 (O) 594,460 62, ,692 (X) Accounts payable and accrued expenses 331,129 13,179 $337,910 (F) 423,054 24,682 $431,881 (P) 460,498 27, ,889 (Y) Debt 752,001 89,008 $752,001 (G) 713,710 89,155 $713,710 (Q) 675, , ,263 (Z) Other Liabilities 145,138 27,386 $156,797 (H) 204,936 41,582 $246, ,731 59, ,275 Total Liabilities $4,946,570 $486,034 $5,320,670 (I) $5,998,886 $593,243 $6,486,318 (R) $6,640,579 $691,318 $7,206,109 (AA) Stockholders' Equity $1,885,683 $31,675 $1,917,358 $1,928,569 $24,865 $1,953,434 $2,056,934 ($13,955) $2,042,979 Total Liabilities and Stockholders' Equity $6,832,253 $517,709 $7,238,028 (J) $7,927,455 $618,108 $8,439,752 (S) $8,697,513 $677,363 $9,249,088 (AB) * NOTE: Consolidated column includes eliminations as follows: (A) $(89,008), (B) $(801), (C) $(22,125), (D) $(111,934), (E) $(801), (F) $(6,398), (G) $(89,008), (H) $(15,727), (I) $(89,155), (J) $(105,811), (K) $(89,155), (L) $(801), (M) $(15,855), (N) $(105,811), (O) $(801), (P) $(15,855), (Q) $(89,155), (R) $(105,811), (S) $(105,811), (T) $(101,279), (U) $(1,601), (V) $(22,908), (W) $(125,788), (X) $(1,601), (Y) $(22,908), (Z) $(101,279), (AA) $(125,788), (AB) $(125,788) 38.

40 Segment Performance: Quarterly ($ in thousands) Three Months Ended September 30, Reciprocal Reciprocal P&C A&H NGHC Exchanges P&C A&H NGHC Exchanges Gross written premium $1,090,372 $143,948 $1,234,320 $121,351 $979,440 $121,266 $1,100,706 $104,406 Net written premium 784, , ,210 14, , , ,021 43,533 Net earned premium 741, , ,376 43, , , ,323 41,978 Ceding commission income (primarily related parties) 44, ,513 14,587 30, ,901 19,201 Service, fees, and other income 113,967 46, ,425 1, ,565 32, ,057 4,084 Total underwriting revenue $899,241 $202,073 $1,101,314 $59,313 $817,836 $168,445 $986,281 $65,263 Loss and loss adjustment expense $544,446 $72,652 $617,098 $40,212 $528,875 $83,414 $612,289 $26,856 Acquisition costs and other 135,406 44, ,180 11, ,643 33, ,469 17,116 General and administrative 184,101 50, ,626 20, ,460 38, ,923 18,819 Total underwriting expenses $863,953 $167,951 $1,031,904 $71,919 $812,978 $155,703 $968,681 $62,791 Underwriting income (loss) $35,288 $34,122 $69,410 ($12,606) $4,858 $12,742 $17,600 $2,472 Non-cash amortization of intangible assets and goodwill 6,546 1,714 8,260 (14) 7,994 1,280 9,274 (69) Underwriting income (loss) before amortization and impairment $41,834 $35,836 $77,670 ($12,620) $12,852 $14,022 $26,874 $2,403 Underwriting ratios Loss and loss adjustment expense ratio (2) 73.5% 46.8% 68.8% 93.2% 77.0% 61.5% 74.5% 64.0% Operating expense ratio (Non-GAAP) (3,4) 21.8% 31.3% 23.4% 36.0% 22.3% 29.2% 23.4% 30.1% Combined Ratio (Non-GAAP) (3,5) 95.2% 78.1% 92.2% 129.2% 99.3% 90.7% 97.9% 94.1% Underwriting ratios (before amortization and impairment) Loss and loss adjustment expense ratio (2) 73.5% 46.8% 68.8% 93.2% 77.0% 61.5% 74.5% 64.0% Operating expense ratio (Non-GAAP) (3,6) 20.9% 30.2% 22.5% 36.1% 21.1% 28.2% 22.3% 30.3% Combined Ratio (Non-GAAP) (5,7) 94.4% 77.0% 91.3% 129.3% 98.1% 89.7% 96.8% 94.3% 39.

41 Non-GAAP Reconciliation - Quarterly ($ in thousands) Three Months Ended September 30, Reciprocal Reciprocal P&C A&H NGHC Exchanges P&C A&H NGHC Exchanges Operating expense ratio (Non-GAAP) Total underwriting expenses $863,953 $167,951 $1,031,904 $71,919 $812,978 $155,703 $968,681 $62,791 Less: Loss and loss adjustment expense 544,446 72, ,098 40, ,875 83, ,289 26,856 Less: Ceding commission income 44, ,513 14,587 30, ,901 19,201 Less: Service, fees and other income 113,967 46, ,425 1, ,565 32, ,057 4,084 Operating expense 161,296 48, ,868 15, ,863 39, ,434 12,650 Net earned premium $741,030 $155,346 $896,376 $43,151 $686,596 $135,727 $822,323 $41,978 Operating expense ratio (Non-GAAP) 21.8% 31.3% 23.4% 36.0% 22.3% 29.2% 23.4% 30.1% Operating expense ratio before amortization and impairment (Non-GAAP) Total underwriting expenses $863,953 $167,951 $1,031,904 $71,919 $812,978 $155,703 $968,681 $62,791 Less: Loss and loss adjustment expense 544,446 72, ,098 40, ,875 83, ,289 26,856 Less: Ceding commission income 44, ,513 14,587 30, ,901 19,201 Less: Service, fees and other income 113,967 46, ,425 1, ,565 32, ,057 4,084 Less: Non cash amortization of intangible assets 6,546 1,714 8,260 (14) 7,994 1,280 9,274 (69) Operating expense before amortization and impairment 154,750 46, ,608 15, ,869 38, ,160 12,719 Net earned premium $741,030 $155,346 $896,376 $43,151 $686,596 $135,727 $822,323 $41,978 Operating expense ratio (Non-GAAP) 20.9% 30.2% 22.5% 36.1% 21.1% 28.2% 22.3% 30.3% 40.

42 Non-GAAP Reconciliation - Annual ($ in thousands) Twelve Months Ended December 31, Reciprocal Reciprocal P&C A&H NGHC Exchanges P&C A&H NGHC Exchanges Operating expense ratio (Non-GAAP) Total underwriting expenses $3,371,144 $644,839 $4,015,983 $250,971 $2,650,238 $532,273 $3,182,511 $149,740 Less: Loss and loss adjustment expense 2,187, ,463 $2,506, ,840 1,721, ,210 $2,023,064 69,216 Less: Ceding commission income 55,263 1,013 $56,276 60, ,331 $2,078 43,522 Less: Service, fees and other income 397, , ,580 5, , , ,771 3,862 Operating expense 730, , ,885 65, ,802 90, ,598 33,140 Net earned premium $2,951,022 $533,283 $3,484,305 $169,871 $2,470,349 $414,427 $2,884,776 $110,395 Operating expense ratio (Non-GAAP) 24.7% 32.0% 25.9% 38.4% 26.5% 21.9% 25.9% 30.0% Operating expense ratio before amortization and impairment (Non-GAAP) Total underwriting expenses $3,371,144 $644,839 $4,015,983 $250,971 $2,650,238 $532,273 $3,182,511 $149,740 Less: Loss and loss adjustment expense 2,187, ,463 $2,506, ,840 1,721, ,210 $2,023,064 69,216 Less: Ceding commission income 55,263 1,013 $56,276 60, ,331 $2,078 43,522 Less: Service, fees and other income 397, ,614 $552,580 5, , ,936 $410,771 3,862 Less: Non cash amortization of intangible assets 47,742 8,871 56,613 6,882 41,089 10,593 51,682 20,795 Operating expense before amortization and impairment 682, , ,272 58, ,713 80, ,916 12,345 Net earned premium $2,951,022 $533,283 $3,484,305 $169,871 $2,470,349 $414,427 $2,884,776 $110,395 Operating expense ratio (Non-GAAP) 23.1% 30.4% 24.2% 34.3% 24.9% 19.4% 24.1% 11.2% 41.