EX-99.1 2 q421uveex-991pressrelease.htm EX-99.1 Document
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Exhibit 99.1
Universal Insurance Holdings Reports Fourth Quarter 2021 Results

•4Q21 direct premiums earned up 11.5%; FY21 up 14.4% driven by primary rate increases
•4Q21 diluted GAAP earnings per share (EPS) of $(1.54), non-GAAP adjusted EPS1 of $(1.53) predominantly driven by inflationary trends
•FY21 diluted GAAP EPS of $0.65, non-GAAP adjusted EPS1 of $0.61
•Clovered.com, our digital agency subsidiary surpassed $40 million in placed premiums in 2021
•4Q21 completed private placement of $100 million senior unsecured notes
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 24, 2022 – Universal Insurance Holdings (NYSE: UVE) (the “Company”) reported fourth quarter and full year 2021 results.

“We ended the year with a record of approximately $1.7 billion of premiums in force and a return on average equity of 4.6%, despite the accelerated inflationary trends we announced on February 10th, which resulted in the Company increasing reserves,” said Stephen J. Donaghy, Chief Executive Officer. “Additionally, Clovered.com, our digital agency subsidiary surpassed $40 million in placed premiums during 2021. The lion’s share of our approved rate filings for UPCIC in Florida over the past several quarters for new and renewal business are now effective. We continue to sharpen our pencils on our 2022 Florida primary rate filing in the coming months and are hitting the ground running on our reinsurance renewal, with over 77% of capacity on our first event All States tower already secured. We look forward to continuing to focus on resiliency through this cycle and are monitoring closely the actions in the Florida legislature in regards to several bills, including SB1728, SB1402 and SB186, amongst others.”


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Summary Financial Results
($thousands, except per share data)Three Months Ended December 31,Twelve Months Ended December 31,
20212020Change20212020Change
(GAAP comparison)
Total revenue$292,659 $273,126 7.2 %$1,121,851 $1,072,770 4.6 %
Income (loss) before income taxes(64,461)(26,999)(138.8)%28,413 24,231 17.3 %
Income (loss) before income taxes margin(22.0)%(9.9)%(12.1) pts2.5 %2.3 %20 bps
Diluted EPS(1.54)(0.57)(170.2)%0.65 0.60 8.3 %
Annualized return on average equity (ROE)(41.6)%(15.4)%(26.2) pts4.6 %4.1 %50 bps
Book value per share, end of period13.76 14.43 (4.6)%13.76 14.43 (4.6)%
(Non-GAAP comparison)2
Adjusted operating income(63,433)(38,227)(65.9)%27,205 (39,044)NM
Adjusted EPS(1.53)(0.84)(82.1)%0.61 (0.90)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 7.2% for the quarter and 4.6% for the year, driven primarily by growth in net premiums earned from primary rate increases, partially offset, primarily by lower policies-in-force, and lower realized gains on the investment portfolio, and increased reinsurance costs. GAAP diluted EPS and non-GAAP adjusted EPS results for the quarter and the year benefited from continued primary rate increases earnings-in, but were predominantly impacted by strengthening of reserves due to inflationary trends and a reduction in realized gains on the investment portfolio when compared to the prior year period.


Underwriting
($thousands, except policies in force)
Three Months Ended December 31,Twelve Months Ended December 31,
20212020Change20212020Change
Policies in force (as of end of period)943,593 984,830 (4.2)%943,593 984,830 (4.2)%
Premiums in force (as of end of period)$1,679,822 $1,519,949 10.5%$1,679,822 $1,519,949 10.5%
Direct premiums written399,327 368,823 8.3%1,671,252 1,517,479 10.1%
Direct premiums earned417,817 374,825 11.5%1,596,618 1,395,623 14.4%
Net premiums earned271,332 242,173 12.0%1,035,463 923,563 12.1%
Expense ratio3
28.1 %27.3 %80 bps30.2 %31.4 %(1.2) pts
Loss & LAE ratio103.3 %96.7 %6.6 pts75.3 %82.2 %(6.9) pts
Combined ratio131.4 %124.0 %7.4 pts105.5 %113.6 %(8.1) pts
3 Expense ratio excludes interest expense.

Direct premiums earned were up 11.5% for the quarter, and 14.4% for the year, led by primary rate increases in Florida and other states, while policies-in-force declined 4.2% as a result of continuing to shape our underwriting risks.

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On the expense side, the combined ratio increased 7.4 points for the quarter driven primarily by strengthening reserves for the full accident year 2021 as a result of inflationary pressures and increased reinsurance costs impact on the ratio. For the full year, the combined ratio improved 8.1 points as a result of decreased weather events in 2021, lower prior years’ adverse reserve development, and continued business expense management.

•The expense ratio increased 50 basis points on a direct premiums earned basis for the quarter. For the year, the expense ratio improved 1.2 points on a direct premiums earned basis due to business expense management, including a reduction in agent commissions, advertising, and lower executive compensation, as well as primary rate increases impact on the ratio.

•The net loss and loss adjustment expense ratio increased 6.6 points for the quarter, but improved 6.9 points for the year. Quarterly and full year drivers for 2021 include:

◦Core losses of $216.0 million for the quarter ($134.5 million in 4Q20) and $696.8 million for the year ($538.5 million in 2020) resulted in a 15.8 point increase on a direct premiums earned basis for the quarter and a 5.0 point increase for the year, primarily driven by accruing incremental reserves as a result of materials, labor, and social inflation. On a net basis, core losses increased 24.0 points for the quarter and 9.0 points for the year.

◦A 21.1 point net improvement for the quarter and a 14.9 point net improvement for the year related to weather events being more in line with plan.

◦Net prior years’ adverse reserve development of $36.5 million for the quarter ($23.4 million in 4Q20) and $54.5 million for the year ($58.3 million in 2020) resulted in a 3.7 point net increase for the quarter and a 1.0 point net improvement for the year. The net prior years’ adverse reserve development for the year was primarily driven by Non-CAT claims, and to a lesser extent Hurricane Irma related claims.

Services
($thousands)Three Months Ended December 31,Twelve Months Ended December 31,
20212020Change 20212020Change
Commission revenue$11,245 $9,393 19.7 %$41,649 $33,163 25.6 %
Policy fees4,892 5,520 (11.4)%22,713 23,773 (4.5)%
Other revenue1,769 1,972 (10.3)%7,631 8,501 (10.2)%
Total$17,906 $16,885 6.0 %$71,993 $65,437 10.0 %

Total services revenue increased 6.0% for the quarter and 10.0% for the full year. The increases were driven by commission revenue earned on ceded premiums, partially offset by a decrease in policies fees due to a decrease in volume and other revenue.








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Investments
($thousands)Three Months Ended December 31,Twelve Months Ended December 31,
20212020Change 20212020Change
Net investment income$3,894 $2,823 37.9 %$12,535 $20,393 (38.5)%
Realized gains (losses)535 9,058 (94.1)%5,892 63,352 (90.7)%
Unrealized gains (losses)(1,008)2,187 NM(4,032)25 NM
NM = Not Meaningful

Net investment income increased 37.9% for the quarter, primarily due to higher levels of invested assets. For the full year, net investment income decreased 38.5% as well as a significant decline in realized gains for the quarter and full year. The declines are the result of the sale, and subsequent reinvestment at lower yields, of a majority of securities in the portfolio that were in an unrealized gain position in the third and fourth quarters of 2020 to recognize the fair value benefits in surplus. Unrealized losses for the quarter and for the full year were driven by market fluctuations in invested assets resulting in an unfavorable outcome for the quarter and the full year.

Capital Deployment

For the full year, the Company repurchased approximately 117 thousand shares at an aggregate cost of $1.6 million. The Company’s current share repurchase authorization program has $17.8 million remaining as of December 31, 2021 and runs through November 3, 2022.

During the fourth quarter the Board of Directors declared a quarterly regular and special cash dividend, together totaling 29 cents per share of common stock, which was paid on December 17, 2021, to shareholders of record as of the close of business on December 10, 2021. This marked more than 10 consecutive years declaring a fourth quarter special dividend. The 29 cents per share dividend consists of a regular quarterly cash dividend of 16 cents per share and a special cash dividend of 13 cents per share, bringing the total regular and special dividends declared in 2021 to 77 cents per share.

Guidance

Universal initiated the following guidance for fiscal 2022:

•GAAP and Non-GAAP Adjusted EPS in a range of $1.80 - $2.20 (assuming no extraordinary weather events in 2022)
•Annualized return on average equity in a range of 12.5% - 15.0%


Conference Call and Webcast

•Friday, February 25, 2022 at 9:00 a.m. ET
•U.S. Dial-in Number: (855) 752-6647
•International: (503) 343-6667
•Participant code: 7899332
•Listen to live webcast: UniversalInsuranceHoldings.com
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•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: 7899332 through March 12, 2022

About Universal Insurance Holdings, Inc.

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, 2021.

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
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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 2021 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.


Investor Relations Contact:
Rob Luther, 954-892-6487
VP, Corporate Development, Strategy & IR
rluther@universalproperty.com

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UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except per share data)
December 31,December 31,
20212020
ASSETS
Invested Assets
  Fixed maturities, at fair value$1,040,455 $819,861 
  Equity securities, at fair value47,334 84,887 
  Investment real estate, net5,891 15,176 
  Total invested assets1,093,680 919,924 
Cash and cash equivalents250,508 167,156 
Restricted cash and cash equivalents2,635 12,715 
Prepaid reinsurance premiums240,993 215,723 
Reinsurance recoverable185,589 160,417 
Premiums receivable, net64,923 66,883 
Property and equipment, net53,682 53,572 
Deferred policy acquisition costs108,822 110,614 
Goodwill2,319 2,319 
Other assets52,990 49,418 
TOTAL ASSETS$2,056,141 $1,758,741 
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Unpaid losses and loss adjustment expenses$346,216 $322,465 
Unearned premiums857,769 783,135 
Advance premium53,694 49,562 
Reinsurance payable, net188,662 10,312 
Long-term debt, net103,676 8,456 
Other liabilities76,422 135,549 
     Total liabilities1,626,439 1,309,479 
STOCKHOLDERS' EQUITY:
Cumulative convertible preferred stock ($0.01 par value)4
— — 
Common stock ($0.01 par value)5
470 468 
Treasury shares, at cost - 15,797 and 15,680(227,115)(225,506)
Additional paid-in capital108,202 103,445 
Accumulated other comprehensive income (loss), net of taxes(15,568)3,343 
Retained earnings563,713 567,512 
     Total stockholders' equity429,702 449,262 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$2,056,141 $1,758,741 
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 - 47,018 and 46,817 shares; Outstanding - 31,221 and 31,137 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,
2021202020212020
REVENUES
Net premiums earned$271,332 $242,173 $1,035,463 $923,563 
Net investment income3,894 2,823 12,535 20,393 
Net realized gains (losses) on sale of investments535 9,058 5,892 63,352 
Net change in unrealized gains (losses) of equity securities(1,008)2,187 (4,032)25 
Commission revenue11,245 9,393 41,649 33,163 
Policy fees4,892 5,520 22,713 23,773 
Other revenue1,769 1,972 7,631 8,501 
  Total revenues292,659 273,126 1,121,851 1,072,770 
EXPENSES
Losses and loss adjustment expenses280,440 233,940 779,205 758,810 
Policy acquisition costs55,880 52,120 226,167 199,102 
Other operating expenses20,245 14,048 87,414 90,525 
Interest expense555 17 652 102 
     Total expenses357,120 300,125 1,093,438 1,048,539 
Income (loss) before income tax expense(64,461)(26,999)28,413 24,231 
     Income tax expense (benefit)(16,336)(9,324)8,006 5,126 
NET INCOME (LOSS)$(48,125)$(17,675)$20,407 $19,105 

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,
2021202020212020
Weighted average common shares outstanding - basic31,177 31,193 31,218 31,884 
Weighted average common shares outstanding - diluted31,177 31,295 31,307 31,972 
Shares outstanding, end of period31,221 31,137 31,221 31,137 
Basic earnings (loss) per common share$(1.54)$(0.57)$0.65 $0.60 
Diluted earnings (loss) per common share$(1.54)$(0.57)$0.65 $0.60 
Cash dividend declared per common share$0.29 $0.29 $0.77 $0.77 
Book value per share, end of period$13.76 $14.43 $13.76 $14.43 
Annualized return on average equity (ROE)(41.6)%(15.4)%4.6 %4.1 %

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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,
2021202020212020
Premiums
     Direct premiums written - Florida$326,138 $302,552 $1,388,318 $1,250,748 
     Direct premiums written - Other States73,189 66,271 282,934 266,731 
Direct premiums written - Total$399,327 $368,823 $1,671,252 $1,517,479 
Direct premiums earned$417,817 $374,825 $1,596,618 $1,395,623 
Net premiums earned$271,332 $242,173 $1,035,463 $923,563 
Underwriting Ratios - Net
Loss and loss adjustment expense ratio103.3 %96.7 %75.3 %82.2 %
General and administrative expense ratio6
28.1 %27.3 %30.2 %31.4 %
  Policy acquisition cost ratio20.6 %21.5 %21.8 %21.6 %
  Other operating expense ratio6
7.5 %5.8 %8.4 %9.8 %
Combined ratio131.4 %124.0 %105.5 %113.6 %
Other Items
   (Favorable)/Unfavorable prior year reserve
   development		$36,467 $23,433 $54,450 $58,337 
   Points on the loss and loss adjustment
   expense ratio		13.4  pts9.7  pts5.3  pts6.3  pts
6 Expense ratio excludes interest expense.
As of
December 31,
20212020
Policies in force
Florida695,533 728,211 
Other States248,060 256,619 
Total943,593 984,830 
Premiums in force
Florida$1,395,476 $1,252,916 
Other States284,346 267,033 
Total1,679,822 1,519,949 
Total Insured Value
Florida$203,062,948 $192,504,430 
Other States117,835,486 109,976,625 
Total320,898,434 302,481,055 




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 Three Months Ended December 31, 2021
 DirectLoss RatioCededLoss RatioNetLoss Ratio
Premiums earned$417,817  $146,485  $271,332  
Loss and loss adjustment expenses:      
Core losses$215,974 51.7 %$1 — %$215,973 79.6 %
Weather events7
28,000 6.7 %— — %28,000 10.3 %
Prior years’ reserve development167,802 40.2 %131,335 89.7 %36,467 13.4 %
Total losses and loss adjustment expenses$411,776 98.6 %$131,336 89.7 %$280,440 103.3 %
7 Includes only current year weather events beyond those expected.


Twelve Months Ended December 31, 2021
DirectLoss RatioCededLoss RatioNetLoss Ratio
Premiums earned$1,596,618 $561,155 $1,035,463 
Loss and loss adjustment expenses:
Core losses$696,775 43.6 %$20 — %$696,755 67.3 %
Weather events7
28,000 1.8 %— — %28,000 2.7 %
Prior years’ reserve development464,669 29.1 %410,219 73.1 %54,450 5.3 %
Total losses and loss adjustment expenses$1,189,444 74.5 %$410,239 73.1 %$779,205 75.3 %
7 Includes only current year weather events beyond those expected.
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UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, except for per share data)
Three Months EndedTwelve Months EndedGuidance
December 31,December 31,Full Year 2022E
2021202020212020
Income (Loss) Before Income Taxes$(64,461)$(26,999)$28,413 $24,231 
Adjustments:
    Net unrealized (gains)/losses on equity securities1,008 (2,187)4,032 (25)
    Net realized (gains)/losses on investments(535)(9,058)(5,892)(63,352)
    Interest Expense555 17 652 102 
    Total Adjustments1,028 (11,228)(1,208)(63,275)
Non-GAAP Adjusted Operating Income (Loss)$(63,433)$(38,227)$27,205 $(39,044)
GAAP Diluted EPS$(1.54)$(0.57)$0.65 $0.60 $1.80 - $2.20
Adjustments:
    Net unrealized (gains)/losses on equity securities0.03 (0.07)0.13 — 
    Net realized (gains)/losses on investments(0.02)(0.29)(0.19)(1.98)
    Total Pre-Tax Adjustments0.01 (0.36)(0.06)(1.98)
    Income Tax on Above Adjustments— 0.09 0.02 0.48 
    Total Adjustments0.01 (0.27)(0.04)(1.50)
Non-GAAP Adjusted EPS$(1.53)$(0.84)$0.61 $(0.90)$1.80 - $2.20
8 Includes reinstatement premiums not covered by reinstatement premium protection and related commissions.

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