EX-99.1 2 q420uveex-991pressrelease.htm EX-99.1 Document
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Exhibit 99.1
Universal Insurance Holdings Reports Fourth Quarter 2020 Results

•4Q20 total revenue up 14.1% to $273.1 million; FY20 up 14.2% to $1.1 billion
•More than $1.5 billion of premium now in force
•4Q20 diluted GAAP earnings per share (EPS) of $(0.57), non-GAAP adjusted EPS1 of $(0.84)
•FY20 diluted GAAP EPS of $0.60, non-GAAP adjusted EPS1 of $(0.90)
•Full year EPS impact predominantly driven by heightened 2020 weather events
•Full year Florida primary rate increases approved of close to 20% for UPCIC (Includes 7.0% in 4Q20)
•Initiating FY21 guidance: GAAP and non-GAAP adjusted EPS1 of $2.75 - $3.00 (assuming no extraordinary weather events in 2021); ROAE 17% - 19%.
1 Excludes net realized and unrealized gains and losses on investments as well as extraordinary reinstatement premiums and associated commissions (“non-GAAP adjusted EPS”). Reconciliations of GAAP to non-GAAP financial measures are provided in the attached tables.

Fort Lauderdale, Fla., February 25, 2021 – Universal Insurance Holdings (NYSE: UVE) (the “Company”) reported 2020 fourth quarter diluted EPS of $(0.57) on a GAAP basis and $(0.84) non-GAAP adjusted EPS1. Quarterly direct premiums written were up 21.9% from the year-ago quarter to $368.8 million.

“We ended the year with a record of $1.5 billion of premium now in force. Unfortunately, we also saw a record-setting frequency of weather events during the 2020 wind season, which impacted our fourth quarter and full year results,” said Stephen J. Donaghy, Chief Executive Officer. “In 2020 we continued our focus on underwriting, increasing our primary rates in Florida close to 20% for the full year, including 7% in the fourth quarter for reinsurance costs, as well as primary rate increases in some of our other states. We have continued to maintain a resilient balance sheet that has self-funded our risk bearing entities capital requirements, in addition to enhancing our reserves. We continue to be backed by our great reinsurance program and partners with close to 75% of our first event reinsurance capacity for June 1st, 2021 secured already. We continued our geographic expansion efforts in 2020, and implemented our catastrophe rapid response teams during the COVID-19 pandemic, which accelerated our use of digital technology for adjusting claims. We also continue to develop adaptive adjusting approaches to address claims loss cost trends. We look forward to 2021 as we continue to focus on resiliency and taking the necessary steps to provide reliability to consumers and reduce uncertainty for shareholders.”


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Summary Financial Results
($thousands, except per share data)Three Months Ended December 31,Twelve Months Ended December 31,
20202019Change20202019Change
(GAAP comparison)
Total revenue$273,126 $239,402 14.1 %$1,072,770 $939,351 14.2 %
Income (loss) before income taxes(26,999)(69,053)61.0 %24,231 63,517 (61.9)%
Income (loss) before income taxes margin(9.9)%(28.8)%18.9 pts2.3 %6.8 %(4.5) pts
Diluted EPS(0.57)(1.55)63.2 %0.60 1.36 (55.9)%
Annualized return on average equity (ROE)(15.4)%(38.4)%23.0 pts4.1 %9.2 %(5.1) pts
Book value per share, end of period14.43 15.13 (4.6)%14.43 15.13 (4.6)%
(Non-GAAP comparison)2
Adjusted operating income(38,227)(69,687)45.1 %(39,044)55,833 NM
Adjusted EPS(0.84)(1.57)46.5 %(0.90)1.18 NM
2 Reconciliation of GAAP to non-GAAP financial measures are provided in the attached tables. Adjusted operating income excludes net realized and unrealized gains and losses on investments, interest expense, and extraordinary reinstatement premiums and associated commissions. Non-GAAP adjusted EPS excludes net realized and unrealized gains and losses on investments, as well as extraordinary reinstatement premiums and associated commissions.
NM = Not Meaningful

Total revenue grew double digits for both the quarter and the year, driven primarily by growth in net premiums earned (organic new business growth and primary rate increases), partially offset by increased reinsurance costs. Revenue growth was also attributable to realized gains on investments, and increases in service revenue, partially offset by decreases in net investment income. GAAP diluted EPS and non-GAAP adjusted EPS results for the quarter and the year benefited from the aforementioned items, but were impacted predominantly by weather events and related social dynamics and increased reinsurance costs.

Underwriting
($thousands, except policies in force)
Three Months Ended December 31,Twelve Months Ended December 31,
20202019Change20202019Change
Policies in force (as of end of period)984,830 888,361 10.9%984,830 888,361 10.9%
Premiums in force (as of end of period)$1,519,949 $1,296,416 17.2%$1,519,949 $1,296,416 17.2%
Direct premiums written368,823 302,655 21.9%1,517,479 1,292,721 17.4%
Direct premiums earned374,825 321,571 16.6%1,395,623 1,233,121 13.2%
Net premiums earned242,173 215,819 12.2%923,563 842,502 9.6%
Expense ratio3
27.3 %29.6 %(2.3) pts31.4 %32.3 %(90) bps
Loss & LAE ratio96.7 %113.3 %(16.6) pts82.2 %71.6 %10.6 pts
Combined ratio124.0 %142.9 %(18.9) pts113.6 %103.9 %9.7 pts
3 Expense ratio excludes interest expense.

Direct premiums written were up more than 20% for the quarter, led by the continued impact of rate increases in Florida and other states, as well as strong direct premium growth of 18.9% in Other States (non-Florida). For the year, direct premiums written were up double digits, led by rate increases and volume, with strong direct premium growth of 17.7% in Other States (non-Florida), and a slightly improved policy retention. In 2020 we implemented
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new guidelines on new business to address emerging loss trends that have since slowed the rate of growth in Florida.

On the expense side, the combined ratio decreased 18.9 points for the quarter, but increased 9.7 points for the year. The increases for the year were driven primarily by increased weather events in 2020, an increase in our core loss pick when compared to the full prior year, and the effect on the ratio from increased reinsurance costs. The increases were partially offset by lower prior year development, a benefit from our claims adjusting business, and an improvement in the expense ratio as set forth below.

•The expense ratio improved 2.3 points for the quarter driven by a 3.1 point improvement in the other operating expense ratio, partially offset by a 80 basis point increase in policy acquisition costs. For the year, the expense ratio improved 90 basis points driven by a 1.4 point improvement in other operating expenses, partially offset by a 50 basis point increase in policy acquisition costs. Increases in the policy acquisition cost ratio were primarily driven by the effect of reinsurance costs.

•The net loss and loss adjustment expense ratio increased 16.6 points for the quarter and 10.6 points for the year. Quarterly and full year drivers for 2020 include:

◦Core losses of $134.5 million or 55.6 points for the quarter and $538.5 million or 58.3 points for the year were primarily related to accruing incremental reserves as the industry continues to see increased severity in represented claims, which were offset by a benefit from our claims adjusting business. Reinsurance costs also drove increases in the core net loss ratio.

◦Weather events in excess of plan of $76.0 million or 31.4 points ($16.7 million in 4Q19) for the quarter were related to a number of weather events in the states where we do business. For the full year, weather events in excess of plan were $162.0 million or 17.6 points ($38.7 million in FY19), which includes one significant hurricane, Hurricane Sally, and a significant number of other smaller hurricanes and other PCS events.

◦Prior years’ reserve development of $23.4 million or 9.7 points for the quarter and $58.3 million or 6.3 points for the year were primarily related to the continued adjusting and settlement of Hurricane Irma and companion claims.

Services
($thousands)Three Months Ended December 31,Twelve Months Ended December 31,
20202019Change 20202019Change
Commission revenue$9,393 $7,168 31.0 %$33,163 $26,101 27.1 %
Policy fees5,520 4,973 11.0 %23,773 21,560 10.3 %
Other revenue1,972 2,603 (24.2)%8,501 7,972 6.6 %
Total16,885 14,744 14.5 %65,437 55,633 17.6 %

Total services revenue increased 14.5% for the quarter and 17.6% for the full year. The increase was driven by commission revenue earned on ceded premiums and an increase in policy fees due to an increase in volume, partially offset by other revenue.

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Investments
($thousands)Three Months Ended December 31,Twelve Months Ended December 31,
20202019Change 20202019Change
Net investment income$2,823 $7,578 (62.7)%$20,393 $30,743 (33.7)%
Realized gains (losses)9,058 437 1,972.8 %63,352 (12,715)NM
Unrealized gains (losses)2,187 824 165.4 %25 23,188 (99.9)%
NM = Not Meaningful

Net investment income decreased 62.7% for the quarter and 33.7% for the year, primarily due to lower yields on cash and fixed-income investments during 2020 when compared to 2019. Realized gains for the quarter and for the full year resulted primarily from taking advantage of increased market prices on our available-for-sale debt investment portfolio, and to a lesser extent aided by the sale of equity securities. Unrealized gains were driven by market fluctuations in equity securities resulting in a favorable outcome for the quarter and the full year.

Capital Deployment

During the fourth quarter, the Company repurchased approximately 193 thousand shares at an aggregate cost of $2.4 million. For the full year, the Company repurchased approximately 1.6 million shares at an aggregate cost of $28.9 million. The Company’s current share repurchase authorization program has $19.4 million remaining as of December 31, 2020 and runs through November 3, 2022.

Guidance

Universal initiated the following guidance for fiscal 2021:

•GAAP and Non-GAAP Adjusted EPS in a range of $2.75 - $3.00 (assuming no extraordinary weather events in 2021)
•Annualized return on average equity in a range of 17% - 19%


Conference Call and Webcast

•Friday, February 26, 2021 at 9:00 a.m. ET
•U.S Dial-in Number: (855) 752-6647
•International: (503) 343-6667
•Participant code: 9074399
•Listen to live webcast: UniversalInsuranceHoldings.com
•Replay of the call will be available on the UVE website and by phone at (855) 859-2056 or internationally at (404) 537-3406 using the participant code: 9074399 through March 13, 2021

About Universal Insurance Holdings, Inc.

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Universal Insurance Holdings (UVE) is a holding company offering 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 sell insurance products through both our appointed independent agents and through our direct online distribution channels in the United States across 19 states (primarily Florida). Learn more at UniversalInsuranceHoldings.com.

Non-GAAP Financial Measures

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 adjusted earnings per diluted share, which excludes the impact of the net realized and unrealized gains and losses on investments as well as extraordinary reinstatement premiums and associated commissions. Extraordinary reinstatement premiums are not covered by reinstatement premium protection and attach just below the Florida Hurricane Catastrophe Fund (“FHCF”) reinsurance layer. Adjusted operating income excludes the impact of the net realized and unrealized gains and losses on investments, as well as interest expense and extraordinary reinstatement premiums and associated commissions. 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, when considered together with the GAAP financial measures, 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 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 Annual Report on Form 10-K for the year ended December 31, 2020.

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 2020 Annual
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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.


Investor Relations Contact:
Rob Luther, 954-595-7272
VP, Corporate Development, Strategy & IR
rluther@universalproperty.com


Media Relations Contact:
Andy Brimmer / Mahmoud Siddig, 212-355-4449
Joele Frank, Wilkinson Brimmer Katcher

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UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except per share data)
December 31,December 31,
20202019
ASSETS
Invested Assets
  Fixed maturities, at fair value$819,861 $855,284 
  Equity securities, at fair value84,887 43,717 
  Investment real estate, net15,176 15,585 
  Total invested assets919,924 914,586 
Cash and cash equivalents167,156 182,109 
Restricted cash and cash equivalents12,715 2,635 
Prepaid reinsurance premiums215,723 175,208 
Reinsurance recoverable160,417 193,236 
Premiums receivable, net66,883 63,883 
Property and equipment, net53,572 41,351 
Deferred policy acquisition costs110,614 91,882 
Goodwill2,319 2,319 
Other assets49,418 52,643 
TOTAL ASSETS$1,758,741 $1,719,852 
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Unpaid losses and loss adjustment expenses$322,465 $267,760 
Unearned premiums783,135 661,279 
Advance premium49,562 30,975 
Reinsurance payable, net10,312 122,581 
Long-term debt8,456 9,926 
Other liabilities135,549 133,430 
     Total liabilities1,309,479 1,225,951 
STOCKHOLDERS' EQUITY:
Cumulative convertible preferred stock ($0.01 par value)4
— — 
Common stock ($0.01 par value)5
468 467 
Treasury shares, at cost - 15,680 and 14,069(225,506)(196,585)
Additional paid-in capital103,445 96,036 
Accumulated other comprehensive income (loss), net of taxes3,343 20,364 
Retained earnings567,512 573,619 
     Total stockholders' equity449,262 493,901 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$1,758,741 $1,719,852 
Notes:
4 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.
5 Common stock ($0.01 par value): Authorized - 55,000 shares; Issued - 46,817 and 46,707 shares; Outstanding 31,137 and 32,638 shares.

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UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)
(in thousands)
Three Months EndedTwelve Months Ended
December 31,December 31,
2020201920202019
REVENUES
Net premiums earned$242,173 $215,819 $923,563 $842,502 
Net investment income2,823 7,578 20,393 30,743 
Net realized gains (losses) on sale on investments9,058 437 63,352 (12,715)
Net change in unrealized gains (losses) of equity securities2,187 824 25 23,188 
Commission revenue9,393 7,168 33,163 26,101 
Policy fees5,520 4,973 23,773 21,560 
Other revenue1,972 2,603 8,501 7,972 
  Total revenues273,126 239,402 1,072,770 939,351 
EXPENSES
Losses and loss adjustment expenses233,940 244,445 758,810 603,406 
Policy acquisition costs52,120 44,667 199,102 177,530 
Other operating expenses14,048 19,298 90,525 94,650 
Interest expense17 45 102 248 
     Total expenses300,125 308,455 1,048,539 875,834 
Income (loss) before income tax expense(26,999)(69,053)24,231 63,517 
     Income tax expense (benefit)(9,324)(17,980)5,126 17,003 
NET INCOME (LOSS)$(17,675)$(51,073)$19,105 $46,514 

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
SHARE AND PER SHARE INFORMATION
(in thousands, except per share data)
Three Months EndedTwelve Months Ended
December 31,December 31,
2020201920202019
Weighted average common shares outstanding - basic31,193 32,889 31,884 33,893 
Weighted average common shares outstanding - diluted31,295 32,889 31,972 34,233 
Shares outstanding, end of period31,137 32,638 31,137 32,638 
Basic earnings (loss) per common share$(0.57)$(1.55)$0.60 $1.37 
Diluted earnings (loss) per common share$(0.57)$(1.55)$0.60 $1.36 
Cash dividend declared per common share$0.29 $0.29 $0.77 $0.77 
Book value per share, end of period$14.43 $15.13 $14.43 $15.13 
Annualized return on average equity (ROE)(15.4)%(38.4)%4.1 %9.2 %
NM = Not Meaningful

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UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
SUPPLEMENTARY INFORMATION
(in thousands, except for Policies In-Force data)
Three Months EndedTwelve Months Ended
December 31,December 31,
2020201920202019
Premiums
     Direct premiums written - Florida$302,552 $246,927 $1,250,748 $1,066,112 
     Direct premiums written - Other States66,271 55,728 266,731 226,609 
Direct premiums written - Total$368,823 $302,655 $1,517,479 $1,292,721 
Direct premiums earned$374,825 $321,571 $1,395,623 $1,233,121 
Net premiums earned$242,173 $215,819 $923,563 $842,502 
Underwriting Ratios - Net
Loss and loss adjustment expense ratio96.7 %113.3 %82.2 %71.6 %
General and administrative expense ratio6
27.3 %29.6 %31.4 %32.3 %
  Policy acquisition cost ratio21.5 %20.7 %21.6 %21.1 %
  Other operating expense ratio6
5.8 %8.9 %9.8 %11.2 %
Combined ratio124.0 %142.9 %113.6 %103.9 %
Other Items
   (Favorable)/Unfavorable prior year reserve
development		$23,433 $84,365 $58,337 $88,068 
   Points on the loss and loss adjustment
expense ratio		9.7  pts39.1  pts6.3  pts10.4  pts
6 Expense ratio excludes interest expense.
As of
December 31,
20202019
Policies in force
Florida728,211 662,343 
Other States256,619 226,018 
Total984,830 888,361 
Premiums in force
Florida$1,252,916 $1,070,034 
Other States267,033 226,382 
Total1,519,949 1,296,416 
Total Insured Value
Florida$192,504,430 $164,654,848 
Other States109,976,625 91,401,560 
Total302,481,055 256,056,408 




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 Three Months Ended December 31, 2020
 DirectLoss RatioCededLoss RatioNetLoss Ratio
Premiums earned$374,825  $132,652  $242,173  
Loss and loss adjustment expenses:      
Core losses$134,734 35.9 %$190 0.1 %$134,544 55.6 %
Weather events7
168,917 45.1 %92,954 70.1 %75,963 31.4 %
Prior years’ reserve development93,511 24.9 %70,078 52.8 %23,433 9.7 %
Total losses and loss adjustment expenses$397,162 105.9 %$163,222 123.0 %$233,940 96.7 %
7 Includes only current year weather events beyond those expected.


Twelve Months Ended December 31, 2020
DirectLoss RatioCededLoss RatioNetLoss Ratio
Premiums earned$1,395,623 $472,060 $923,563 
Loss and loss adjustment expenses:
Core losses$538,826 38.6 %$316 0.1 %$538,510 58.3 %
Weather events7
256,917 18.4 %94,954 20.1 %161,963 17.6 %
Prior years’ reserve development284,315 20.4 %225,978 47.9 %58,337 6.3 %
Total losses and loss adjustment expenses$1,080,058 77.4 %$321,248 68.1 %$758,810 82.2 %
7 Includes only current year weather events beyond those expected.
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UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, except for per share data)
Three Months EndedTwelve Months EndedGuidance
December 31,December 31,Full Year 2021E
2020201920202019
Income (Loss) Before Income Taxes$(26,999)$(69,053)$24,231 $63,517 
Adjustments:
Reinstatement premium, net of commissions8
— 582 — 2,541 
    Net unrealized (gains)/losses on equity securities(2,187)(824)(25)(23,188)
    Net realized (gains)/losses on investments(9,058)(437)(63,352)12,715 
    Interest Expense17 45 102 248 
    Total Adjustments(11,228)(634)(63,275)(7,684)
Non-GAAP Adjusted Operating Income$(38,227)$(69,687)$(39,044)$55,833 
GAAP Diluted EPS$(0.57)$(1.55)$0.60 $1.36 $2.75 - $3.00
Adjustments:
Reinstatement premium, net of commissions8
— 0.02 — 0.07 
    Net unrealized (gains)/losses on equity securities(0.07)(0.03)— (0.68)
    Net realized (gains)/losses on investments(0.29)(0.01)(1.98)0.37 
    Total Pre-Tax Adjustments(0.36)(0.02)(1.98)(0.24)
    Income Tax on Above Adjustments0.09 — 0.48 0.06 
    Total Adjustments(0.27)(0.02)(1.50)(0.18)
Non-GAAP Adjusted EPS$(0.84)$(1.57)$(0.90)$1.18 $2.75 - $3.00
8 Includes reinstatement premiums not covered by reinstatement premium protection and related commissions.

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