Universal Reports Second Quarter 2024 Results

Diluted GAAP earnings per common share (EPS) of $1.21; diluted adjusted* EPS of $1.18
Annualized return on average common equity (“ROCE”) of 37.4%, annualized adjusted* return on average common equity of 30.5%
Direct premiums written of $578.3 million, up 5.7% from the prior year quarter
Book value per share of $13.79, up 24.0% year-over-year; adjusted book value per share of $16.44, up 14.9% year-over-year
Total capital returned to shareholders of $10.1 million, including $5.3 million of share repurchases and a $0.16 per share regular dividend

Universal Insurance Holdings (NYSE: UVE) (“Universal” or the “Company”) reported second quarter 2024 results.

*Reconciliations of GAAP to non-GAAP financial measures are provided in the attached tables.

“In the quarter, we delivered a solid 30.5% annualized adjusted return on common equity and 35.6% adjusted diluted EPS growth year-over-year,” said Stephen J. Donaghy, Chief Executive Officer. “Results were driven by strong underwriting performance and we continue to see encouraging claims and litigation trends. Florida policies in force increased sequentially for the second quarter in a row and overall policies-in-force increased year-over-year for the first time since 2021. As we mentioned previously, we completed the placement of our 2024-2025 reinsurance renewal for our insurance entities. We’re very pleased with the outcome of the program and the support we received from our longstanding reinsurance partners and from new partners as well. Importantly, despite having substantially more demand for private market reinsurance following the expirations of the Reinsurance to Assist Policyholders (RAP) layer and our catastrophe bond, the overall cost of our program was only up modestly.”

Quarterly Financial Results

Summary Financial Results

($ thousands, except per share data)

Three Months Ended June 30,

Six Months Ended June 30,

2024

2023

Change

2024

2023

Change

GAAP comparison

Total revenues

380,214

339,570

12.0

748,173

656,078

14.0

Operating income

49,528

39,168

26.5

98,634

73,595

34.0

Operating income margin

13.0

11.5

1.5 pts

13.2

11.2

2.0 pts

Net income available to common stockholders

35,414

28,564

24.0

69,068

52,734

31.0

Diluted earnings per common share

1.21

0.93

30.1

2.35

1.72

36.6

Annualized ROCE

37.4

34.8

2.6 pts

37.6

33.9

3.7 pts

Book value per share, end of period

13.79

11.12

24.0

13.79

11.12

24.0

Non-GAAP comparison1

Core revenue

379,170

336,957

12.5

744,100

653,296

13.9

Adjusted operating income

48,484

36,555

32.6

94,561

70,813

33.5

Adjusted operating income margin

12.8

10.8

2.0 pts

12.7

10.8

1.9 pts

Adjusted net income available to common stockholders

34,627

26,594

30.2

65,997

50,636

30.3

Adjusted diluted earnings per common share

1.18

0.87

35.6

2.25

1.65

36.4

Annualized adjusted ROCE

30.5

25.3

5.2 pts

30.0

24.7

5.3 pts

Adjusted book value per share, end of period

16.44

14.31

14.9

16.44

14.31

14.9

Underwriting Summary

Premiums:

Premiums in force

1,999,705

1,879,053

6.4

1,999,705

1,879,053

6.4

Policies in force

833,433

809,685

2.9

833,433

809,685

2.9

Direct premiums written

578,267

547,126

5.7

1,024,446

957,228

7.0

Direct premiums earned

490,649

463,324

5.9

972,721

918,692

5.9

Ceded premiums earned

(145,691

)

(160,050

)

(9.0

(293,738

)

(333,194

)

(11.8

Ceded premium ratio

29.7

34.5

(4.8) pts

30.2

36.3

(6.1) pts

Net premiums earned

344,958

303,274

13.7

678,983

585,498

16.0

Net ratios:

Loss ratio

70.6

73.8

(3.2) pts

71.2

73.4

(2.2) pts

Expense ratio

25.3

— pts

24.5

26.1

(1.6) pts

Combined ratio

95.9

99.1

(3.2) pts

95.7

99.5

(3.8) pts

1 Reconciliation of GAAP to non-GAAP financial measures are provided in the attached tables. Adjusted net income available to common stockholders, adjusted diluted earnings per common share and core revenue exclude net realized gains (losses) on investments and net change in unrealized gains (losses) on investments. Adjusted operating income excludes the items above and interest and amortization of debt issuance costs. Adjusted book value per share excludes accumulated other comprehensive income, net of taxes. Adjusted ROCE is calculated by dividing annualized adjusted net income available to common stockholders by average adjusted book value per share, with the denominator further excluding current period after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) on investments.

Net Income and Adjusted Net Income

Net income available to common stockholders was $35.4 million, up from $28.6 million in the prior year quarter, and adjusted net income available to common stockholders was $34.6 million, up from $26.6 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.

Revenues

Revenue was $380.2 million, up 12.0% from the prior year quarter and core revenue was $379.2 million, up 12.5% 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 $578.3 million, up 5.7% from the prior year quarter. The increase stems from 0.9% growth in Florida and 30.1% growth in other states. Overall growth mostly reflects higher rates, inflation adjustments and higher policies in force.

Direct premiums earned were $490.6 million, up 5.9% from the prior year quarter. The increase stems from direct premiums written growth over the past twelve months.

The ceded premium ratio was 29.7%, down from 34.5% in the prior year quarter. The decrease primarily reflects efficiencies associated with the 2023-2024 reinsurance program, which was in place through May 31, 2024, including the benefits of the Reinsurance to Assist Policyholders (RAP) layer and multi-year reinsurance, partly offset by a modestly higher ceded premium ratio associated with the 2024-2025 reinsurance program, which incepted on June 1, 2024.

Net premiums earned were $345.0 million, up 13.7% 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 $14.7 million, up from $11.3 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 $19.6 million, down 12.7% 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 13.0%, up from an operating income margin of 11.5% in the prior year quarter. The adjusted operating income margin was 12.8%, 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 70.6%, down 3.2 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 and a lack of reserve development in the current year quarter.

The net expense ratio was 25.3%, unchanged from the prior year quarter.

The net combined ratio was 95.9%, down 3.2 points compared to the prior year quarter. The decrease reflects a lower net loss ratio, as described above.

Capital Deployment

During the second quarter, the Company repurchased approximately 274 thousand shares at an aggregate cost of $5.3 million. The Company’s current share repurchase authorization program has approximately $14.7 million remaining.

On July 11, 2024, the Board of Directors declared a quarterly cash dividend of 16 cents per share of common stock, payable on August 9, 2024, to shareholders of record as of the close of business on August 2, 2024.

Conference Call and Webcast

Friday, July 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 https://register.vevent.com/register/BI717d7ee869b64db08f781e3de2dccf31. 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 June 30, 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)

June 30,

December 31,

2024

2023

ASSETS:

Invested Assets

Fixed maturities, at fair value

1,215,630

1,064,330

Equity securities, at fair value

75,834

80,495

Other investments, at fair value

10,434

Investment real estate, net

5,523

5,525

Total invested assets

1,307,421

1,160,784

Cash and cash equivalents

283,264

397,306

Restricted cash and cash equivalents

68,635

2,635

Prepaid reinsurance premiums

575,620

236,254

Reinsurance recoverable

130,900

219,102

Premiums receivable, net

87,169

77,064

Property and equipment, net

49,306

47,628

Deferred policy acquisition costs

117,144

109,985

Goodwill

2,319

Other assets

56,757

63,484

TOTAL ASSETS

2,678,535

2,316,561

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:

Unpaid losses and loss adjustment expenses

344,648

510,117

Unearned premiums

1,042,283

990,559

Advance premium

73,402

48,660

Reinsurance payable, net

648,961

191,850

Long-term debt, net

101,625

102,006

Other liabilities

74,379

132,072

Total liabilities

2,285,298

1,975,264

STOCKHOLDERS' EQUITY:

Cumulative convertible preferred stock ($0.01 par value)2

—

Common stock ($0.01 par value)3

472

Treasury shares, at cost - 18,785 and 18,303

(270,542

)

(260,779

)

Additional paid-in capital

118,795

115,086

Accumulated other comprehensive income (loss), net of taxes

(75,718

)

(74,172

)

Retained earnings

620,230

560,690

Total stockholders' equity

393,237

341,297

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

2,678,535

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.

3 Common stock ($0.01 par value): Authorized - 55,000 shares; Issued - 47,298 and 47,269 shares; Outstanding 28,513 and 28,966 shares.

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(in thousands)

Three Months Ended

Six Months Ended

June 30,

2024

2023

2024

2023

REVENUES

Net premiums earned

344,958

303,274

678,983

585,498

Net investment income

14,660

11,282

28,183

21,980

Net realized gains (losses) on investments

(311

)

882

(388

)

Net change in unrealized gains (losses) on investments

1,355

1,731

4,461

2,688

Commission revenue

11,679

14,986

22,712

32,268

Policy fees

5,576

5,384

9,981

9,551

Other revenue

2,297

2,031

4,241

3,999

Total revenues

380,214

339,570

748,173

656,078

EXPENSES

Losses and loss adjustment expenses

243,572

223,727

483,759

429,881

Policy acquisition costs

56,615

52,006

111,435

103,697

Other operating expenses

30,499

24,669

54,345

48,905

Total operating costs and expenses

330,686

300,402

649,539

582,483

Interest and amortization of debt issuance costs

1,623

1,629

3,245

3,265

Income before income tax expense

47,905

37,539

95,389

70,330

Income tax expense

12,489

8,973

26,316

17,591

NET INCOME

35,416

28,566

69,073

52,739

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

SHARE AND PER SHARE INFORMATION

(in thousands, except per share data)

Three Months Ended

Six Months Ended

June 30,

2024

2023

2024

2023

Weighted average common shares outstanding - basic

28,600

30,265

28,734

30,323

Weighted average common shares outstanding - diluted

29,308

30,659

29,369

30,633

Shares outstanding, end of period

28,513

30,080

28,513

30,080

Basic earnings per common share

1.24

0.94

2.40

1.74

Diluted earnings per common share

1.21

0.93

2.35

1.72

Cash dividend declared per common share

0.16

0.32

Book value per share, end of period

13.79

11.12

13.79

11.12

Annualized return on average common equity (ROCE)

37.4

34.8

37.6

33.9

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

SUPPLEMENTARY INFORMATION

(in thousands, except for Policies In Force data)

Three Months Ended

Six Months Ended

June 30,

2024

2023

2024

2023

Premiums

Direct premiums written - Florida

461,018

456,984

815,843

794,349

Direct premiums written - Other States

117,249

90,142

208,603

162,879

Direct premiums written - Total

578,267

547,126

1,024,446

957,228

Direct premiums earned

490,649

463,324

972,721

918,692

Net premiums earned

344,958

303,274

678,983

585,498

Underwriting Ratios - Net

Loss and loss adjustment expense ratio

70.6

73.8

71.2

73.4

General and administrative expense ratio

25.3

24.5

26.1

Policy acquisition cost ratio

16.4

17.2

16.4

17.7

Other operating expense ratio

8.9

8.1

8.4

Combined ratio

95.9

99.1

95.7

99.5

As of

June 30,

2024

2023

Policies in force

Florida

572,860

576,407

Other States

260,573

233,278

Total

833,433

809,685

Premiums in force

Florida

1,597,080

1,549,410

Other States

402,625

329,643

Total

1,999,705

1,879,053

Total Insured Value

Florida

188,408,742

192,324,456

Other States

149,623,623

126,539,944

Total

338,032,365

318,864,400

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

Six Months Ended

June 30,

2024

2023

2024

2023

GAAP revenue

380,214

339,570

748,173

656,078

less: Net realized gains (losses) on investments

(311

)

882

(388

)

less: Net change in unrealized gains (losses) on investments

1,355

1,731

4,461

2,688

Core revenue

379,170

336,957

744,100

653,296

GAAP operating income to adjusted operating income

Three Months Ended

Six Months Ended

June 30,

2024

2023

2024

2023

GAAP income before income tax expense

47,905

37,539

95,389

70,330

add: Interest and amortization of debt issuance costs

1,623

1,629

3,245

3,265

GAAP operating income

49,528

39,168

98,634

73,595

less: Net realized gains (losses) on investments

(311

)

882

(388

)

less: Net change in unrealized gains (losses) on investments

1,355

1,731

4,461

2,688

Adjusted operating income

48,484

36,555

94,561

70,813

GAAP operating income margin to adjusted operating income margin

Three Months Ended

Six Months Ended

June 30,

2024

2023

2024

2023

GAAP operating income (a)

49,528

39,168

98,634

73,595

GAAP revenue (b)

380,214

339,570

748,173

656,078

GAAP operating income margin (a÷b)

13.0

11.5

13.2

11.2

Adjusted operating income (c)

48,484

36,555

94,561

70,813

Core revenue (d)

379,170

336,957

744,100

653,296

Adjusted operating income margin (c÷d)

12.8

10.8

12.7

10.8

GAAP net income (NI) to adjusted NI available to common stockholders

Three Months Ended

Six Months Ended

June 30,

2024

2023

2024

2023

GAAP NI

35,416

28,566

69,073

52,739

less: Preferred dividends

GAAP NI available to common stockholders (e)

35,414

28,564

69,068

52,734

less: Net realized gains (losses) on investments

(311

)

882

(388

)

less: Net change in unrealized gains (losses) on investments

1,355

1,731

4,461

2,688

add: Income tax effect on above adjustments

257

643

1,002

684

Adjusted NI available to common stockholders (f)

34,627

26,594

65,997

50,636

Weighted average diluted common shares outstanding (g)

29,308

30,659

29,369

30,633

Diluted earnings per common share (e÷g)

1.21

0.93

2.35

1.72

Diluted adjusted earnings per common share (f÷g)

1.18

0.87

2.25

1.65

GAAP stockholders’ equity to adjusted common stockholders’ equity

As of

June 30,

December 31,

2024

2023

GAAP stockholders’ equity

393,237

334,672

341,297

less: Preferred equity

100

Common stockholders’ equity (h)

393,137

334,572

341,197

less: Accumulated other comprehensive (loss), net of taxes

(75,718

)

(95,857

)

(74,172

)

Adjusted common stockholders’ equity (i)

468,855

430,429

415,369

Common shares outstanding (j)

28,513

30,080

28,966

Book value per common share (h÷j)

13.79

11.12

11.78

Adjusted book value per common share (i÷j)

16.44

14.31

14.34

GAAP return on common equity (ROCE) to adjusted ROCE

Three Months Ended

Six Months Ended

Year Ended

June 30,

December 31,

2024

2023

2024

2023

Actual or Annualized NI available to common stockholders (k)

141,656

114,256

138,136

105,468

66,813

Average common stockholders’ equity (l)

378,851

328,139

367,167

311,184

314,497

ROCE (k÷l)

37.4

34.8

37.6

33.9

21.2

Annualized adjusted NI available to common stockholders (m)

138,508

106,376

131,994

101,272

58,657

Adjusted average common stockholders’ equity4 (n)

454,673

420,078

440,577

409,955

399,396

Adjusted ROCE (m÷n)

30.5

25.3

30.0

24.7

14.7

4 Adjusted average common stockholders’ equity excludes current period after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) on investments.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240725830739/en/

Investors/Media: Arash Soleimani, CFA, CPA, CPCU, ARe Chief Strategy Officer 954-804-8874 asoleimani@universalproperty.com

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