UVE - Universal Reports Second Quarter 2024 Results

July, 25 2024 04:10 PM UNIVERSAL INSURANCE HOLDINGS INC

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 comparison ¹












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
%


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



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



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



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,


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
)


94

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,


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


$
0.16



$
0.32


$
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,


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
%


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
%



8.1
%


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,


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
)


94

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,


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
)


94

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,


June 30,

2024

2023


2024

2023
GAAP NI
$
35,416


$
28,566



$
69,073


$
52,739

less: Preferred dividends

2



2




5



5

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
)


94

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,

June 30,


December 31,

2024

2023


2023
GAAP stockholders’ equity
$
393,237


$
334,672



$
341,297

less: Preferred equity

100



100




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,


June 30,


December 31,

2024

2023


2024

2023


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’ equity ⁴ (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

Company Name:	UNIVERSAL INSURANCE HOLDINGS INC
Stock Symbol:	UVE
Market:	NYSE
Website:	universalinsuranceholdings.com

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