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Universal Reports First Quarter 2024 Results
"It was a strong quarter, including a 29.4% annualized adjusted return on common equity and 35.4% adjusted diluted EPS growth year-over-year," said Stephen J. Donaghy, Chief Executive Officer. "Results were solid across the board, including profitable underwriting that was complemented by our non-underwriting operations, which is a testament to our differentiated business model. Direct premiums written growth accelerated sequentially, as policies-in-force are stabilizing following our previous underwriting initiatives.
"I'm pleased to announce the completion of our 2024-2025 reinsurance renewal for our insurance entities, as our program is now fully supported and secured. We've also secured additional multi-year coverage, taking us through the 2025-2026 hurricane season and have added new, financially strong reinsurers to our existing panel of long-term partners. This achievement reflects the diligence and planning of our reinsurance team throughout the year. Program cost and coverage were consistent with our expectations and we'll provide specific details at the end of May, as we typically do."
*Reconciliations of GAAP to non-GAAP financial measures are provided in the attached tables.
Quarterly Financial Results
Summary Financial Results
($thousands, except per share data) Three Months Ended March 31,
-------------------------------------------------------------------------------------------------------------------------------------------------------------
2024 2023 Change
-------------------- --------- -------------------- -------------------- --------- -------------------- -------------------
GAAP comparison
----------------------------------------------------
Total revenues $ 367,959 $ 316,508 16.3 %
Operating income $ 49,106 $ 34,427 42.6 %
Operating income margin 13.3 % 10.9 % 2.4 pts
Net income available to common stockholders $ 33,654 $ 24,170 39.2 %
Diluted earnings per common share $ 1.14 $ 0.79 44.3 %
Annualized ROCE 38.1 % 31.7 % 6.4 pts
Book value per share, end of period $ 12.68 $ 10.57 20.0 %
Non-GAAP comparison(1)
----------------------------------------------------
Core revenue $ 364,930 $ 316,339 15.4 %
Adjusted operating income $ 46,077 $ 34,258 34.5 %
Adjusted operating income margin 12.6 % 10.8 % 1.8 pts
Adjusted net income available to common stockholders $ 31,370 $ 24,043 30.5 %
Adjusted diluted earnings per common share $ 1.07 $ 0.79 35.4 %
Annualized adjusted ROCE 29.4 % 23.9 % 5.5 pts
Adjusted book value per share, end of period $ 15.34 $ 13.52 13.5 %
Underwriting Summary
----------------------------------------------------
Premiums:
Premiums in force $ 1,963,765 $ 1,862,716 5.4 %
Policies in force 820,078 827,981 (1.0 )%
Direct premiums written $ 446,179 $ 410,102 8.8 %
Direct premiums earned $ 482,072 $ 455,368 5.9 %
Ceded premiums earned $ (148,047 ) $ (173,144 ) (14.5 )%
Ceded premium ratio 30.7 % 38.0 % (7.3) pts
Net premiums earned $ 334,025 $ 282,224 18.4 %
Net ratios:
Loss ratio 71.9 % 73.1 % (1.2) pts
Expense ratio 23.6 % 26.9 % (3.3) pts
Combined ratio 95.5 % 100.0 % (4.5) pts
Net Income and Adjusted Net Income
Net income available to common stockholders was $33.7 million, up from $24.2 million in the prior year quarter, and adjusted net income available to common stockholders was $31.4 million, up from $24.0 million in the prior year quarter. The increase in adjusted net income available to common stockholders mostly stems from higher underwriting and net investment income, partly offset by lower commission revenue.
Revenues
Revenue was $368.0 million, up 16.3% from the prior year quarter and core revenue was $364.9 million, up 15.4% from the prior year quarter. The increase in core revenue primarily stems from higher net premiums earned and net investment income, partly offset by lower commission revenue.
Direct premiums written were $446.2 million, up 8.8% from the prior year quarter. The increase stems from 5.2% growth in Florida and 25.6% growth in other states. Overall growth mostly reflects higher rates, inflation adjustments and stabilizing policies in force.
Direct premiums earned were $482.1 million, up 5.9% from the prior year quarter. The increase stems from rate-driven direct premiums written growth over the past twelve months.
The ceded premium ratio was 30.7%, down from 38.0% in the prior year quarter. The decrease primarily reflects efficiencies associated with the 2023-2024 reinsurance program, including the benefits of multi-year reinsurance and the Reinsurance to Assist Policyholders (RAP) layer, partly offset by higher private market reinsurance pricing.
Net premiums earned were $334.0 million, up 18.4% from the prior year quarter. The increase is primarily attributable to higher direct premiums earned and a lower ceded premium ratio, as described above.
Net investment income was $13.5 million, up from $10.7 million in the prior year quarter. The increase primarily stems from higher fixed income reinvestment yields and higher yields on cash.
Commissions, policy fees and other revenue were $17.4 million, down 25.8% from the prior year quarter. The decrease primarily reflects commissions earned on Hurricane Ian related reinstatement premiums in the prior year quarter.
Margins
The operating income margin was 13.3%, up from an operating income margin of 10.9% in the prior year quarter. The adjusted operating income margin was 12.6%, up from an adjusted operating income margin of 10.8% in the prior year quarter. The higher adjusted operating income margin primarily reflects a lower net combined ratio and higher net investment income, partly offset by lower commission revenue.
The net loss ratio was 71.9%, down 1.2 points compared to the prior year quarter. The decrease primarily reflects higher net premiums earned associated with lower reinsurance costs in the current year quarter.
The net expense ratio was 23.6%, down 3.3 points from 26.9% in the prior year quarter. The reduction primarily reflects higher net premiums earned associated with lower reinsurance costs in the current year quarter and economies of scale.
The net combined ratio was 95.5%, down 4.5 points compared to the prior year quarter. The decrease reflects lower net loss and expense ratios, as described above.
Capital Deployment
During the first quarter, the Company repurchased approximately 208 thousand shares at an aggregate cost of $4.1 million. The Company's current share repurchase authorization program has approximately $20.0 million remaining.
On April 10, 2024, the Board of Directors declared a quarterly cash dividend of 16 cents per share of common stock, payable on May 17, 2024, to shareholders of record as of the close of business on May 10, 2024.
Conference Call and Webcast
Friday, April 26, 2024 at 10:00 a.m. ET Investors and other interested parties may listen to the call by accessing the online, real-time webcast at universalinsuranceholdings.com/investors or by registering in advance via teleconference at register.vevent.com/register/BIe25a714f6df74ad6a67ecf9d12bad614. Once registration is completed, participants will be provided with a dial-in number containing a personalized conference code to access the call. An online replay of the call will be available at universalinsuranceholdings.com/investors soon after the investor call concludes.
About Universal
Universal Insurance Holdings, Inc. (NYSE: UVE) is a holding company providing property and casualty insurance and value-added insurance services. We develop, market, and write insurance products for consumers predominantly in the personal residential homeowners lines of business and perform substantially all other insurance-related services for our primary insurance entities, including risk management, claims management and distribution. We provide insurance products in the United States through both our appointed independent agents and our direct online distribution channels, primarily in Florida. Learn more at universalinsuranceholdings.com or get an insurance quote at clovered.com.
Non-GAAP Financial Measures and Key Performance Indicators
This press release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the U.S. Securities and Exchange Commission ("SEC"), including core revenue, adjusted net income attributable to common stockholders and diluted adjusted earnings (loss) per common share, which exclude the impact of net realized gains (losses) on investments and net change in unrealized gains (losses) on investments. Adjusted operating income and adjusted operating income margin exclude the impact of net realized gains (losses) on investments and net change in unrealized gains (losses) on investments and interest and amortization of debt issuance costs. Adjusted common stockholders' equity and adjusted book value per share exclude accumulated other comprehensive income (AOCI), net of taxes. Adjusted return on common equity excludes after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) on investments from the numerator and AOCI, net of taxes, and current period after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) on investments from the denominator. A "non-GAAP financial measure" is generally defined as a numerical measure of a company's historical or future performance that excludes or includes amounts, or is subject to adjustments, so as to be different from the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles ("GAAP"). UVE management believes that these non-GAAP financial measures are meaningful, as they allow investors to evaluate underlying revenue and profitability trends and enhance comparability across periods. When considered together with the GAAP financial measures, management believes these metrics provide information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionately positive or negative impact on results in any particular period. UVE management also believes that these non-GAAP financial measures enhance the ability of investors to analyze UVE's business trends and to understand UVE's operational performance. UVE's management utilizes these non-GAAP financial measures as guides in long-term planning. Non-GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, financial measures presented in accordance with GAAP. For more information regarding our key performance indicators, please refer to the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations - Key Performance Indicators" in our forthcoming Quarterly Report on Form 10-Q for the quarter ended March 31, 2024.
Forward-Looking Statements
This press release may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "anticipate," "will," "plan," and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Such statements may include commentary on plans, products and lines of business, marketing arrangements, reinsurance programs and other business developments and assumptions relating to the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, including those risks and uncertainties described under the heading "Risk Factors" and "Liquidity and Capital Resources" in our 2023 Annual Report on Form 10-K, and supplemented in our subsequent Quarterly Reports on Form 10-Q. Future results could differ materially from those described, and the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. For further information regarding risk factors that could affect the Company's operations and future results, refer to the Company's reports filed with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K and the most recent quarterly reports on Form 10-Q.
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except per share data)
March 31, December 31,
2024 2023
---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ----------------------
ASSETS:
Invested Assets
$ 1,107,058 $ 1,064,330
Fixed maturities, at fair value
81,659 80,495
Equity securities, at fair value
10,434 10,434
Other investments, at fair value
5,479 5,525
Investment real estate, net
---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ----------------------
1,204,630 1,160,784
Total invested assets
Cash and cash equivalents 396,323 397,306
Restricted cash and cash equivalents 2,635 2,635
Prepaid reinsurance premiums 88,499 236,254
Reinsurance recoverable 124,646 219,102
Premiums receivable, net 73,974 77,064
Property and equipment, net 49,416 47,628
Deferred policy acquisition costs 106,632 109,985
Goodwill 2,319 2,319
Other assets 71,070 63,484
---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ----------------------
TOTAL ASSETS $ 2,120,144 $ 2,316,561
====================== ====================== ====================== ====================== ====================== ======================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Unpaid losses and loss adjustment expenses $ 429,629 $ 510,117
Unearned premiums 954,666 990,559
Advance premium 74,370 48,660
Reinsurance payable, net 97,871 191,850
Long-term debt, net 101,815 102,006
Other liabilities 97,129 132,072
---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ----------------------
1,755,480 1,975,264
Total liabilities
---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ----------------------
STOCKHOLDERS' EQUITY:
Cumulative convertible preferred stock ($0.01 par value)(2) -- --
Common stock ($0.01 par value)(3) 472 472
Treasury shares, at cost - 18,511 and 18,303 (264,918 ) (260,779 )
Additional paid-in capital 116,239 115,086
Accumulated other comprehensive income (loss), net of taxes (76,714 ) (74,172 )
Retained earnings 589,585 560,690
---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ----------------------
364,664 341,297
Total stockholders' equity
---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ----------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,120,144 $ 2,316,561
====================== ====================== ====================== ====================== ====================== ======================
Notes:
(2)Cumulative convertible preferred stock ($0.01 par value): Authorized - 1,000 shares; Issued - 10 and 10 shares; Outstanding - 10 and 10 shares; Minimum liquidation preference - $9.99 and $9.99 per share.
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands)
Three Months Ended
March 31,
------------------------------------------------------------------------------------------------------------------
2024 2023
-------------------- ------- -------------------- -------------------- ------- --------------------
REVENUES
Net premiums earned $ 334,025 $ 282,224
Net investment income 13,523 10,698
Net realized gains (losses) on investments (77 ) (788 )
Net change in unrealized gains (losses) on investments 3,106 957
Commission revenue 11,033 17,282
Policy fees 4,405 4,167
Other revenue 1,944 1,968
-------------------- ------- -------------------- -------------------- ------- --------------------
367,959 316,508
Total revenues
EXPENSES
Losses and loss adjustment expenses 240,187 206,154
Policy acquisition costs 54,821 51,691
Other operating expenses 23,845 24,236
-------------------- ------- -------------------- -------------------- ------- --------------------
318,853 282,081
Total operating costs and expenses
Interest and amortization of debt issuance costs 1,622 1,636
-------------------- ------- -------------------- -------------------- ------- --------------------
Income before income tax expense 47,484 32,791
13,827 8,618
Income tax expense
-------------------- ------- -------------------- -------------------- ------- --------------------
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
SHARE AND PER SHARE INFORMATION
(in thousands, except per share data)
Three Months Ended
March 31,
----------------------------------------------------------------------------------------------------------------
2024 2023
-------------------- ------ -------------------- -------------------- ------ --------------------
Weighted average common shares outstanding - basic 28,869 30,382
Weighted average common shares outstanding - diluted 29,404 30,626
Shares outstanding, end of period 28,758 30,440
Basic earnings per common share $ 1.17 $ 0.80
Diluted earnings per common share $ 1.14 $ 0.79
Cash dividend declared per common share $ 0.16 $ 0.16
Book value per share, end of period $ 12.68 $ 10.57
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
SUPPLEMENTARY INFORMATION
(in thousands, except for Policies In Force data)
Three Months Ended
March 31,
------------------------------------------------------------------------------------------------------------------
2024 2023
-------------------- ------- -------------------- -------------------- ------- --------------------
Premiums
$ 354,825 $ 337,365
Direct premiums written - Florida
91,354 72,737
Direct premiums written - Other States
-------------------- ------- -------------------- -------------------- ------- --------------------
Direct premiums written - Total $ 446,179 $ 410,102
Direct premiums earned $ 482,072 $ 455,368
Net premiums earned $ 334,025 $ 282,224
Underwriting Ratios - Net
Loss and loss adjustment expense ratio 71.9 % 73.1 %
General and administrative expense ratio 23.6 % 26.9 %
16.4 % 18.3 %
Policy acquisition cost ratio
7.2 % 8.6 %
Other operating expense ratio
Combined ratio 95.5 % 100.0 %
As of
March 31,
--------------------------------------------------------------------------------------------------------------------------
2024 2023
-------------------- ----------- -------------------- -------------------- ----------- --------------------
Policies in force
Florida 570,395 595,327
Other States 249,683 232,654
-------------------- ----------- -------------------- -------------------- ----------- --------------------
Total 820,078 827,981
Premiums in force
Florida $ 1,587,950 $ 1,543,967
Other States 375,815 318,749
-------------------- ----------- -------------------- -------------------- ----------- --------------------
Total $ 1,963,765 $ 1,862,716
Total Insured Value
Florida $ 188,222,514 $ 197,085,882
Other States 140,982,423 123,651,801
-------------------- ----------- -------------------- -------------------- ----------- --------------------
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, except for per share data)
GAAP revenue to core revenue
Three Months Ended
March 31,
------------------------------------------------------------------------------------------------------------------
2024 2023
-------------------- ------- -------------------- -------------------- ------- --------------------
GAAP revenue $ 367,959 $ 316,508
(77 ) (788 )
less: Net realized gains (losses) on investments
3,106 957
less: Net change in unrealized gains (losses) on investments
-------------------- ------- -------------------- -------------------- ------- --------------------
GAAP operating income to adjusted operating income
Three Months Ended
March 31,
----------------------------------------------------------------------------------------------------------------
2024 2023
-------------------- ------ -------------------- -------------------- ------ --------------------
GAAP income before income tax expense $ 47,484 $ 32,791
1,622 1,636
add: Interest and amortization of debt issuance costs
GAAP operating income 49,106 34,427
(77 ) (788 )
less: Net realized gains (losses) on investments
3,106 957
less: Net change in unrealized gains (losses) on investments
-------------------- ------ -------------------- -------------------- ------ --------------------
GAAP operating income margin to adjusted operating income margin
Three Months Ended
March 31,
--------------------------------------------------------------------------------------------------------------------
2024 2023
-------------------- -------- -------------------- -------------------- -------- --------------------
GAAP operating income (a) $ 49,106 $ 34,427
GAAP revenue (b) 367,959 316,508
GAAP operating income margin (a/b) 13.3 % 10.9 %
Adjusted operating income (c) 46,077 34,258
Core revenue (d) 364,930 316,339
-------------------- -------- -------------------- -------------------- -------- --------------------
GAAP net income (NI) to adjusted NI available to common stockholders
Three Months Ended
March 31,
--------------------------------------------------------------------------------------------------------------------
2024 2023
-------------------- -------- -------------------- -------------------- -------- --------------------
GAAP NI $ 33,657 $ 24,173
3 3
less: Preferred dividends
GAAP NI available to common stockholders (e) 33,654 24,170
(77 ) (788 )
less: Net realized gains (losses) on investments
3,106 957
less: Net change in unrealized gains (losses) on investments
745 42
add: Income tax effect on above adjustments
-------------------- -------- -------------------- -------------------- -------- --------------------
Adjusted NI available to common stockholders (f) $ 31,370 $ 24,043
==================== ======== ==================== ==================== ======== ====================
Weighted average diluted common shares outstanding (g) 29,404 30,626
Diluted earnings per common share (e/g) $ 1.14 $ 0.79
GAAP stockholders' equity to adjusted common stockholders' equity
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
As of
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
March 31, March 31, December 31,
2024 2023 2023
-------------------- --------- -------------------- -------------------- --------- -------------------- -------------------- --------- --------------------
GAAP stockholders' equity $ 364,664 $ 321,806 $ 341,297
100 100 100
less: Preferred equity
Common stockholders' equity (h) 364,564 321,706 341,197
(76,714 ) (89,991 ) (74,172 )
less: Accumulated other comprehensive (loss), net of taxes
-------------------- --------- -------------------- -------------------- --------- -------------------- -------------------- --------- --------------------
Adjusted common stockholders' equity (i) $ 441,278 $ 411,697 $ 415,369
==================== ========= ==================== ==================== ========= ==================== ==================== ========= ====================
Common shares outstanding (j) 28,758 30,440 28,966
Book value per common share (h/j) $ 12.68 $ 10.57 $ 11.78
GAAP return on common equity (ROCE) to adjusted ROCE
Three Months Ended Year Ended
March 31, December 31,
------------------------------------------------------------------------------------------------------------------ -----------------------------------------------
2024 2023 2023
-------------------- ------- -------------------- -------------------- ------- -------------------- -------------------- ------- --------------------
Actual or Annualized NI available to common stockholders (k) $ 134,616 $ 96,680 $ 66,813
Average common stockholders' equity (l) 352,881 304,751 314,497
ROCE (k/l) 38.1 % 31.7 % 21.2 %
Annualized adjusted NI available to common stockholders (m) $ 125,480 $ 96,172 $ 58,657
Adjusted average common stockholders' equity(4)(n) 427,182 401,574 399,396
-------------------- ------- -------------------- -------------------- ------- -------------------- -------------------- ------- --------------------
Adjusted ROCE (m/n) 29.4 % 23.9 % 14.7 %
==================== ======= ==================== ==================== ======= ==================== ==================== ======= ====================
View source version on businesswire.com: https://www.businesswire.com/news/home/20240425320138/en/
SOURCE: Universal Insurance Holdings
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Investors: Arash Soleimani, CFA, CPA, CPCU, ARe Chief Strategy Officer 954-804-8874 asoleimani@universalproperty.com
COMTEX_451420852/1006/2024-04-25T16:10:07