EX-99.1 2 q221uveex-991xpressrelease.htm EX-99.1 Document
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Exhibit 99.1
Universal Insurance Holdings Reports Second Quarter 2021 Results

•2Q21 total revenue up 10.5% to $279.2 million
•2Q21 direct premiums written up 17.0%
•2Q21 diluted GAAP earnings per share (“EPS”) of $0.70, non-GAAP adjusted EPS1 of $0.65
•2Q21 combined ratio of 97.3%
•2Q21 annualized return on average equity of 18.7%
•Florida primary average rate increase of 14.9% for UPCIC filed during 2Q21

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., July 28, 2021 – Universal Insurance Holdings (NYSE: UVE) (the “Company”) reported 2021 second quarter diluted EPS of $0.70 on a GAAP basis and $0.65 on a non-GAAP1 adjusted basis. Quarterly direct premiums written were up 17.0% from the year-ago quarter to $473.6 million, with an annualized return on average equity of 18.7%.

“We delivered solid second quarter results, highlighted by an 18.7% annualized return on average equity, despite continued social inflation within the state of Florida impacting loss costs,” said Stephen J. Donaghy, Chief Executive Officer. “We continue to address these trends, in part, with primary rate increase filings, which was a driver of our direct written premium growth during the quarter. We expect primary rate increases to be a tailwind over the medium to long term as they earn-in, but are relentlessly focused on performing through the near term pressure on carriers in the Florida property insurance marketplace, and lament about the unfortunate derivative consequence of price increases on consumers.”


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Summary Financial Results
($thousands, except per share data)Three Months Ended June 30,Six Months Ended June 30,
20212020Change20212020Change
(GAAP comparison)
Total revenue$279,181 $252,704 10.5 %$541,938 $487,979 11.1 %
Income (loss) before income taxes30,059 27,438 9.6 %66,410 55,022 20.7 %
Income (loss) before income taxes margin10.8 %10.9 %(10.0)bps12.3 %11.3 %1.0 pt
Diluted EPS$0.70 $0.62 12.9 %$1.54 $1.23 25.2 %
Annualized return on average equity (ROE)18.7 %15.6 %3.1 pts20.7 %15.5 %5.2 pts
Book value per share, end of period$15.37 $16.56 (7.2)%$15.37 $16.56 (7.2)%
(Non-GAAP comparison)2
Adjusted operating income28,372 23,416 21.2 %64,695 58,777 10.1 %
Adjusted EPS$0.65 $0.52 25.0 %$1.50 $1.32 13.6 %
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.

Total revenue grew double digits for the quarter driven primarily by rate increases from 2020 earning through the book as policies renew, an increase in policies-in-force when compared to the prior years quarter, and commissions earned on ceded premiums. Total revenue growth was partially offset by the impact of higher reinsurance costs when compared to 2020 and the investment portfolio’s performance. GAAP diluted EPS and non-GAAP adjusted EPS results for the quarter were driven primarily by an improvement in weather events when compared to the prior years quarter, and the benefit of a reduced share count, partially offset by the impact of loss cost trends on prior and current accident years. The Company produced an annualized return on average equity of 18.7%.


Underwriting
($thousands, except policies in force)Three Months Ended June 30,Six Months Ended June 30,
20212020Change20212020Change
Policies in force (as of end of period)977,251 937,277 4.3 %977,251 937,277 4.3 %
Premiums in force (as of end of period)$1,618,576 $1,389,703 16.5 %$1,618,576 $1,389,703 16.5 %
Direct premiums written$473,627 $404,685 17.0 %$838,941 $739,238 13.5 %
Direct premiums earned392,574 337,639 16.3 %768,180 663,590 15.8 %
Net premiums earned256,172 226,370 13.2 %499,477 447,199 11.7 %
Expense ratio3
32.0 %32.6 %(60.0)bps32.9 %32.8 %10.0 bps
Loss & LAE ratio65.3 %66.9 %(1.6)pts62.3 %64.0 %(1.7)pts
Combined ratio97.3 %99.5 %(2.2)pts95.2 %96.8 %(1.6)pts
3 Expense ratio excludes interest expense.

Direct premiums written were up 17.0% for the quarter, led by direct premium growth of 19.6% in Florida.

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On the expense side, the combined ratio improved 2.2 points for the quarter. The improvement was driven primarily by decreased weather events, partially offset by prior year's reserve development, current year strengthening and higher reinsurance costs impact on the ratio.

•The expense ratio decreased 1.0 point on a direct premiums earned basis due to continued focus on operating efficiencies, which was partially offset by the impact of increased reinsurance costs on the net ratio, resulting in a 60 basis point improvement in the net expense ratio for the quarter.

•The net loss and LAE ratio improved 1.6 points for the quarter. Quarterly drivers include:

◦A 7.5 point net improvement related to no weather events being above plan.

◦Adverse prior year’s reserve development of $7.7 million ($0.5 million in 2Q20) resulted in a 2.8 point net increase for the quarter. Net adverse development in the current quarter was driven primarily by continued adjusting and settlement of non-CAT claims on prior accident years.

◦Core losses of $159.5 million for the quarter ($133.9 million in 2Q20) resulted in a 90 basis point increase on a direct premium earned basis, driven by current year strengthening, which was further magnified by the impact of increased reinsurance costs on the net ratio, which led to a 3.1 point increase for the quarter on a net basis.

Services
($thousands)Three Months Ended June 30,Six Months Ended June 30,
20212020Change 20212020Change
Commission revenue$9,860 $7,758 27.1 %$18,986 $14,773 28.5 %
Policy fees6,575 6,546 0.4 %11,962 12,086 (1.0)%
Other revenue1,991 1,812 9.9 %3,896 4,594 (15.2)%
Total$18,426 $16,116 14.3 %$34,844 $31,453 10.8 %

Total services revenue increased 14.3% for the quarter. The increase was primarily driven by commission revenue earned on ceded premiums.


Investments
($thousands)Three Months Ended June 30,Six Months Ended June 30,
20212020Change 20212020Change
Net investment income$2,858 $6,179 (53.7)%$5,844 $13,013 (55.1)%
Realized gains (losses)496 168 195.2 %1,038 467 122.3 %
Unrealized gains (losses)1,229 3,871 (68.3)%735 (4,153)NM
NM = Not Meaningful

Net investment income decreased 53.7% for the quarter. The decrease is largely attributable to significantly lower yields on the reinvested portfolio following the sale of a majority of securities in the portfolio that were in an unrealized gain position in the third and fourth quarters of 2020.

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Capital Deployment

On July 19, 2021, the Board of Directors declared a quarterly cash dividend of 16 cents per share of common stock, payable on August 9, 2021, to shareholders of record as of the close of business on August 2, 2021.


Guidance

The Company is maintaining its guidance for 2021 (assuming no further extraordinary weather events and no realized or unrealized gains in 2021):

•GAAP and Non-GAAP Adjusted EPS in a range of $2.75 - $3.00
•Annualized return on average equity in a range of 17.0% - 19.0%


Conference Call and Webcast

•Thursday, July 29, 2021 at 9:00 a.m. ET
•U.S. Dial-in Number: (855) 752-6647
•International: (503) 343-6667
•Participant code: 5571912
•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: 5571912 through August 13, 2021


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 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 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
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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 Quarterly Report on Form 10-Q for the quarter ended June 30, 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 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 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, 954-958-1200 ext. 6750
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)
June 30,December 31,
20212020
ASSETS:
Invested Assets
  Fixed maturities, at fair value$921,800 $819,861 
  Equity securities, at fair value95,690 84,887 
  Assets held for sale7,053 — 
  Investment real estate, net5,981 15,176 
  Total invested assets1,030,524 919,924 
Cash and cash equivalents286,493 167,156 
Restricted cash and cash equivalents6,134 12,715 
Prepaid reinsurance premiums532,308 215,723 
Reinsurance recoverable196,294 160,417 
Premiums receivable, net74,072 66,883 
Property and equipment, net53,023 53,572 
Deferred policy acquisition costs115,971 110,614 
Goodwill2,319 2,319 
Other assets44,397 49,418 
TOTAL ASSETS$2,341,535 $1,758,741 
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Unpaid losses and loss adjustment expenses$278,658 $322,465 
Unearned premiums853,896 783,135 
Advance premium68,287 49,562 
Reinsurance payable, net581,818 10,312 
Long-term debt7,721 8,456 
Other liabilities70,313 135,549 
     Total liabilities1,860,693 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 - 15,695 and 15,680(225,751)(225,506)
Additional paid-in capital105,904 103,445 
Accumulated other comprehensive income (loss), net of taxes(5,571)3,343 
Retained earnings605,790 567,512 
     Total stockholders' equity480,842 449,262 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$2,341,535 $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 - 46,964 and 46,817 shares; Outstanding 31,269 and 31,137 shares.

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UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands)
Three Months EndedSix Months Ended
June 30,June 30,
2021202020212020
REVENUES
Net premiums earned$256,172 $226,370 $499,477 $447,199 
Net investment income2,858 6,179 5,844 13,013 
Net realized gains/(losses) on investments496 168 1,038 467 
Net change in unrealized gains/(losses) of equity securities1,229 3,871 735 (4,153)
Commission revenue9,860 7,758 18,986 14,773 
Policy fees6,575 6,546 11,962 12,086 
Other revenue1,991 1,812 3,896 4,594 
     Total revenues279,181 252,704 541,938 487,979 
EXPENSES
Losses and loss adjustment expenses167,221 151,345 311,184 286,393 
Policy acquisition costs56,766 48,524 113,224 95,388 
Other operating expenses25,097 25,380 51,062 51,107 
Interest expense38 17 58 69 
     Total expenses249,122 225,266 475,528 432,957 
Income before income tax expense30,059 27,438 66,410 55,022 
     Income tax expense (benefit)8,118 7,556 18,061 15,073 
NET INCOME$21,941 $19,882 $48,349 $39,949 


UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
SHARE AND PER SHARE INFORMATION
(in thousands, except per share data)
Three Months EndedSix Months Ended
June 30,June 30,
2021202020212020
Weighted average common shares outstanding - basic31,240 32,102 31,224 32,347 
Weighted average common shares outstanding - diluted31,310 32,170 31,292 32,440 
Shares outstanding, end of period31,269 31,853 31,269 31,853 
Basic earnings (loss) per common share$0.70 $0.62 $1.55 $1.23 
Diluted earnings (loss) per common share$0.70 $0.62 $1.54 $1.23 
Cash dividend declared per common share$0.16 $0.16 $0.32 $0.32 
Book value per share, end of period$15.37 $16.56 $15.37 $16.56 
Annualized return on average equity (ROE)18.7 %15.6 %20.7 %15.5 %



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UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
SUPPLEMENTARY INFORMATION
(in thousands, except for Policies In Force data)
Three Months EndedSix Months Ended
June 30,June 30,
2021202020212020
Premiums
     Direct premiums written - Florida$400,370 $334,769 $707,381 $613,280 
     Direct premiums written - Other States73,25769,916131,560125,958
Direct premiums written - Total$473,627 $404,685 $838,941 $739,238 
Direct premiums earned$392,574 $337,639 $768,180 $663,590 
Net premiums earned$256,172 $226,370 $499,477 $447,199 
Underwriting Ratios - Net
Loss and loss adjustment expense ratio65.3 %66.9 %62.3 %64.0 %
  Policy acquisition cost ratio22.2 %21.5 %22.7 %21.4 %
  Other operating expense ratio6
9.8 %11.2 %10.2 %11.4 %
General and administrative expense ratio6
32.0 %32.6 %32.9 %32.8 %
Combined ratio97.3 %99.5 %95.2 %96.8 %
Other Items
(Favorable)/Unfavorable prior year's reserve development$7,731$478$6,494$4,819
Points on the loss and loss adjustment expense ratio300 bps21 bps130 bps108 bps
6 Expense ratio excludes interest expense.
As of
June 30,
20212020
Policies in force
Florida723,390 696,829 
Other States253,861 240,448 
Total977,251 937,277 
Premiums in force
Florida$1,345,532 $1,144,326 
Other States273,044 245,377 
Total$1,618,576 $1,389,703 
Total Insured Value
Florida$200,600,028 $177,854,339 
Other States112,637,726 99,662,951 
Total$313,237,754 $277,517,290 

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 Three Months Ended June 30, 2021
 DirectLoss RatioCededLoss RatioNetLoss Ratio
Premiums earned$392,574  $136,402  $256,172  
Loss and loss adjustment expenses:      
Core losses$159,412 40.6 %$(78)(0.1)%$159,490 62.3 %
Weather events7
— — %— — %— — %
Prior year’s reserve development116,890 29.8 %109,159 80.0 %7,731 3.0 %
Total losses and loss adjustment expenses$276,302 70.4 %$109,081 80.0 %$167,221 65.3 %
7 Includes only current year weather events beyond those expected.

 Six Months Ended June 30, 2021
 DirectLoss RatioCededLoss RatioNetLoss Ratio
Premiums earned$768,180  $268,703  $499,477 
Loss and loss adjustment expenses:      
Core losses$304,640 39.7 %$(50)— %$304,690 61.0 %
Weather events7
— — %— — %— — %
Prior year’s reserve development208,960 27.2 %202,466 75.3 %6,494 1.3 %
Total losses and loss adjustment expenses$513,600 66.9 %$202,416 75.3 %$311,184 62.3 %
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 EndedSix Months EndedGuidance
June 30,June 30,Full Year 2021E
2021202020212020
Income (Loss) Before Income Taxes$30,059 $27,438 $66,410 $55,022 
Adjustments:
    Reinstatement premium, net of commissions8
— — — — 
    Net unrealized (gains)/losses on equity securities(1,229)(3,871)(735)4,153 
    Net realized (gains)/losses on investments(496)(168)(1,038)(467)
    Interest Expense38 17 58 69 
    Total Adjustments(1,687)(4,022)(1,715)3,755 
Non-GAAP Adjusted Operating Income $28,372 $23,416 $64,695 $58,777 
GAAP Diluted EPS$0.70 $0.62 $1.54 $1.23 $ 2.75 - 3.00
Adjustments:
    Reinstatement premium, net of commissions8
— — — — — 
    Net unrealized (gains)/losses on equity securities(0.04)(0.12)(0.02)0.12 — 
    Net realized (gains)/losses on investments(0.02)(0.01)(0.03)(0.01)— 
    Total Pre-Tax Adjustments(0.06)(0.13)(0.05)0.11 — 
    Income Tax on Above Adjustments0.01 0.03 0.01 (0.02)— 
    Total Adjustments(0.05)(0.10)(0.04)0.09 — 
Non-GAAP Adjusted EPS$0.65 $0.52 $1.50 $1.32 $ 2.75 - 3.00
8 Includes extraordinary reinstatement premiums not covered by reinstatement premium protection and related commissions.



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