EX-99.1 2 a3q21uveex-991xearningspre.htm EX-99.1 Document
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Exhibit 99.1
Universal Insurance Holdings Reports Third Quarter 2021 Results

•3Q21 direct premiums earned up 15.0% driven by primary rate increases earning-in
•3Q21 diluted GAAP earnings per share (“EPS”) of $0.64, non-GAAP adjusted EPS1 of $0.63
•3Q21 combined ratio of 98.6%
•3Q21 annualized return on average equity of 16.4%
•Florida primary average rate increase of 14.9% for UPCIC approved during 3Q21

1 Excludes net realized and unrealized gains and losses on investments as well as any 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., October 27, 2021 – Universal Insurance Holdings (NYSE: UVE) (the “Company”) reported 2021 third quarter diluted EPS of $0.64 on a GAAP basis and $0.63 on a non-GAAP1 adjusted basis. Quarterly direct premiums earned were up 15.0% from the year-ago quarter to $410.6 million, with an annualized return on average equity of 16.4%.

“Our third quarter results demonstrate continued execution of our multi-year strategic priorities, including disciplined growth and operational improvements,” said Stephen J. Donaghy, Chief Executive Officer. “Our direct premiums earned growth of 15.0% in the third quarter was primarily driven by primary rate increases in Florida earning through the book. We have now filed for more than 34% in primary rate increases in Florida over the past 18 months, while simultaneously continuing to shape our underwriting risks with total policies-in-force relatively flat year-over-year. Our business expenses were lower from continued expense management controls, including lower agency commissions and employee productivity gains, in addition to lower executive compensation accruals. These results were highlighted by a 16.4% annualized return on average equity in the quarter.”


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Summary Financial Results
($thousands, except per share data)Three Months Ended September 30,Nine Months Ended September 30,
20212020Change20212020Change
(GAAP comparison)
Total revenue$287,254 $311,665 (7.8)%$829,192 $799,644 3.7 %
Income (loss) before income taxes26,464 (3,792)NM92,874 51,230 81.3 %
Income (loss) before income taxes margin9.2 %(1.2)%NM11.2 %6.4 %4.8 pts
Diluted EPS$0.64 $(0.10)NM$2.19 $1.14 92.1 %
Annualized return on average equity (ROE)16.4 %(2.5)%NM19.3 %10.0 %9.3 pts
Book value per share, end of period$15.86 $15.15 4.7 %$15.86 $15.15 4.7 %
(Non-GAAP comparison) 2
Adjusted operating income25,943 (59,594)NM90,638 (817)NM
Adjusted EPS$0.63 $(1.43)NM$2.13 $(0.08)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 any 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 declined 7.8% for the quarter, driven primarily by the realized gain on investments of $53.8 million in the third quarter of the prior year, versus a $4.3 million realized gain in the current quarter. Total revenue for the quarter benefited from continued primary rate increases earning through the book as policies renew. GAAP diluted EPS and non-GAAP adjusted EPS results for the quarter were driven primarily by a lower impact from weather events and lower prior years’ development when compared to the prior year’s quarter, partially offset by the impact of current year strengthening. The Company produced an annualized return on average equity of 16.4%.


Underwriting
($thousands, except policies in force)Three Months Ended September 30,Nine Months Ended September 30,
20212020Change20212020Change
Policies in force (as of end of period)967,821 965,462 0.2 %967,821 965,462 0.2 %
Premiums in force (as of end of period)$1,649,546 $1,459,971 13.0 %$1,649,546 $1,459,971 13.0 %
Direct premiums written$432,984 $409,418 5.8 %$1,271,925 $1,148,656 10.7 %
Direct premiums earned410,621 357,208 15.0 %1,178,801 1,020,798 15.5 %
Net premiums earned264,654 234,191 13.0 %764,131 681,390 12.1 %
Expense ratio 3
27.7 %32.9 %(5.2) pts31.1 %32.8 %(1.7) pts
Loss & LAE ratio70.9 %101.8 %(30.9)pts65.3 %77.0 %(11.7)pts
Combined ratio98.6 %134.7 %(36.1)pts96.4 %109.8 %(13.4)pts
3 Expense ratio excludes interest expense.

Direct premiums earned were up 15.0% for the quarter, led by primary rate increases in Florida and other states, while policies-in-force remained relatively flat.

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On the expense side, the combined ratio improved 36.1 points for the quarter. The improvement was driven primarily by decreased weather events and lower prior years’ reserve development, in addition to business expense management, partially offset by current year strengthening and higher reinsurance costs impact on the ratio.

•The expense ratio improved 3.7 points on a direct premiums earned basis due to continued focus on operating efficiencies. On a net basis, the expense ratio improved 5.2 points for the quarter.

•The net loss and LAE ratio improved 30.9 points for the quarter. Quarterly drivers include:

◦A 29.0 point net improvement related to weather events being within the plan.

◦Adverse prior year’s reserve development of $11.5 million ($30.1 million in 3Q20) resulted in an 8.5 point net improvement for the quarter. Net adverse development in the current quarter was driven primarily by continued adjusting and settlement of Hurricane Irma and non-CAT claims on accident years prior to 2020.

◦Core losses of $176.1 million for the quarter ($140.4 million in 3Q20) resulted in a 3.6 point increase on a direct premium earned basis, driven by current year strengthening. On a net basis, core losses increased 6.6 points for the quarter.

Services
($thousands)Three Months Ended September 30,Nine Months Ended September 30,
20212020Change 20212020Change
Commission revenue$11,418 $8,997 26.9 %$30,404 $23,770 27.9 %
Policy fees5,859 6,167 (5.0)%17,821 18,253 (2.4)%
Other revenue1,966 1,935 1.6 %5,862 6,529 (10.2)%
Total$19,243 $17,099 12.5 %$54,087 $48,552 11.4 %

Total services revenue increased 12.5% for the quarter. The increase was primarily driven by commission revenue earned on ceded premiums, partially offset by lower policy fees.


Investments
($thousands)Three Months Ended September 30,Nine Months Ended September 30,
20212020Change 20212020Change
Net investment income$2,797 $4,557 (38.6)%$8,641 $17,570 (50.8)%
Realized gains (losses)4,319 53,827 (92.0)%5,357 54,294 (90.1)%
Unrealized gains (losses)(3,759)1,991 NM(3,024)(2,162)39.9 %
NM = Not Meaningful

Net investment income decreased 38.6% for the quarter as well as a significant decline in realized gains when compared to the prior year’s quarter. Both decreases 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.

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Capital Deployment

During the third quarter, the Company repurchased approximately 101 thousand shares at an aggregate cost of $1.4 million. The Company’s current share repurchase authorization program has $17.8 million remaining as of September 30, 2021 and runs through November 3, 2022.

On July 19, 2021, the Board of Directors declared a quarterly cash dividend of 16 cents per share of common stock, which was paid 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, October 28, 2021 at 9:00 a.m. ET
•U.S. Dial-in Number: (855) 752-6647
•International: (503) 343-6667
•Participant code: 3793583
•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: 3793583 through November 12, 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 any extraordinary reinstatement premiums and associated commissions. Extraordinary reinstatement premiums are not covered by
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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 any 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 Quarterly Report on Form 10-Q for the quarter ended September 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)
September 30,December 31,
20212020
ASSETS:
Invested Assets
  Fixed maturities, at fair value$1,029,157 $819,861 
  Equity securities, at fair value77,099 84,887 
  Assets held for sale253 — 
  Investment real estate, net5,934 15,176 
  Total invested assets1,112,443 919,924 
Cash and cash equivalents224,822 167,156 
Restricted cash and cash equivalents15,836 12,715 
Prepaid reinsurance premiums386,466 215,723 
Reinsurance recoverable134,935 160,417 
Premiums receivable, net71,132 66,883 
Property and equipment, net53,222 53,572 
Deferred policy acquisition costs113,979 110,614 
Goodwill2,319 2,319 
Other assets28,074 49,418 
TOTAL ASSETS$2,143,228 $1,758,741 
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Unpaid losses and loss adjustment expenses$212,488 $322,465 
Unearned premiums876,259 783,135 
Advance premium71,069 49,562 
Reinsurance payable, net399,905 10,312 
Debt7,353 8,456 
Other liabilities81,879 135,549 
     Total liabilities1,648,953 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 capital107,382 103,445 
Accumulated other comprehensive income (loss), net of taxes(7,398)3,343 
Retained earnings620,936 567,512 
     Total stockholders' equity494,275 449,262 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$2,143,228 $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 31,167 and 31,137 shares.

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UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands)
Three Months EndedNine Months Ended
September 30,September 30,
2021202020212020
REVENUES
Net premiums earned$264,654 $234,191 $764,131 $681,390 
Net investment income2,797 4,557 8,641 17,570 
Net realized gains/(losses) on investments4,319 53,827 5,357 54,294 
Net change in unrealized gains/(losses) of equity securities(3,759)1,991 (3,024)(2,162)
Commission revenue11,418 8,997 30,404 23,770 
Policy fees5,859 6,167 17,821 18,253 
Other revenue1,966 1,935 5,862 6,529 
     Total revenues287,254 311,665 829,192 799,644 
EXPENSES
Losses and loss adjustment expenses187,581 238,477 498,765 524,870 
Policy acquisition costs57,062 51,594 170,287 146,982 
Other operating expenses16,108 25,370 67,169 76,477 
Interest expense39 16 97 85 
     Total expenses260,790 315,457 736,318 748,414 
Income (loss) before income tax expense26,464 (3,792)92,874 51,230 
     Income tax expense (benefit)6,281 (623)24,342 14,450 
NET INCOME (LOSS)$20,183 $(3,169)$68,532 $36,780 


UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
SHARE AND PER SHARE INFORMATION
(in thousands, except per share data)
Three Months EndedNine Months Ended
September 30,September 30,
2021202020212020
Weighted average common shares outstanding - basic31,247 31,659 31,232 32,116 
Weighted average common shares outstanding - diluted31,337 31,659 31,302 32,202 
Shares outstanding, end of period31,167 31,334 31,167 31,334 
Basic earnings (loss) per common share$0.65 $(0.10)$2.19 $1.14 
Diluted earnings (loss) per common share$0.64 $(0.10)$2.19 $1.14 
Cash dividend declared per common share$0.16 $0.16 $0.48 $0.48 
Book value per share, end of period$15.86 $15.15 $15.86 $15.15 
Annualized return on average equity (ROE)16.4 %(2.5)%19.3 %10.0 %



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UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
SUPPLEMENTARY INFORMATION
(in thousands, except for Policies In Force data)
Three Months EndedNine Months Ended
September 30,September 30,
2021202020212020
Premiums
     Direct premiums written - Florida$354,799 $334,916 $1,062,180 $948,196 
     Direct premiums written - Other States78,185 74,502 209,745 200,460 
Direct premiums written - Total$432,984 $409,418 $1,271,925 $1,148,656 
Direct premiums earned$410,621 $357,208 $1,178,801 $1,020,798 
Net premiums earned$264,654 $234,191 $764,131 $681,390 
Underwriting Ratios - Net
Loss and loss adjustment expense ratio70.9 %101.8 %65.3 %77.0 %
  Policy acquisition cost ratio21.6 %22.1 %22.3 %21.6 %
  Other operating expense ratio6
6.1 %10.8 %8.8 %11.2 %
General and administrative expense ratio6
27.7 %32.9 %31.1 %32.8 %
Combined ratio98.6 %134.7 %96.4 %109.8 %
Other Items
(Favorable)/Unfavorable prior year's reserve development$11,489 $30,085 $17,983 $34,904 
Points on the loss and loss adjustment expense ratio4.4 pts12.9 pts2.4 pts5.1 pts
6 Expense ratio excludes interest expense.
As of
September 30,
20212020
Policies in force
Florida716,767 715,130 
Other States251,054 250,332 
Total967,821 965,462 
Premiums in force
Florida$1,371,760 $1,202,318 
Other States277,786 257,653 
Total$1,649,546 $1,459,971 
Total Insured Value
Florida$204,334,645 $185,382,817 
Other States114,992,734 105,432,408 
Total$319,327,379 $290,815,225 

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 Three Months Ended September 30, 2021
 DirectLoss RatioCededLoss RatioNetLoss Ratio
Premiums earned$410,621  $145,967  $264,654  
Loss and loss adjustment expenses:      
Core losses$176,161 42.9 %$69 — %$176,092 66.5 %
Weather events7
— — %— — %— — %
Prior year’s reserve development87,907 21.4 %76,418 52.4 %11,489 4.4 %
Total losses and loss adjustment expenses$264,068 64.3 %$76,487 52.4 %$187,581 70.9 %
7 Includes only current year weather events beyond those expected.

 Nine Months Ended September 30, 2021
 DirectLoss RatioCededLoss RatioNetLoss Ratio
Premiums earned$1,178,801  $414,670  $764,131 
Loss and loss adjustment expenses:      
Core losses$480,801 40.8 %$19 — %$480,782 62.9 %
Weather events7
— — %— — %— — %
Prior year’s reserve development296,867 25.2 %278,884 67.3 %17,983 2.4 %
Total losses and loss adjustment expenses$777,668 66.0 %$278,903 67.3 %$498,765 65.3 %
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 EndedNine Months EndedGuidance
September 30,September 30,Full Year 2021E
2021202020212020
Income (Loss) Before Income Taxes$26,464 $(3,792)$92,874 $51,230 
Adjustments:
    Net unrealized (gains)/losses on equity securities3,759 (1,991)3,024 2,162 
    Net realized (gains)/losses on investments(4,319)(53,827)(5,357)(54,294)
    Interest Expense39 16 97 85 
    Total Adjustments(521)(55,802)(2,236)(52,047)
Non-GAAP Adjusted Operating Income (Loss)$25,943 $(59,594)$90,638 $(817)
GAAP Diluted EPS$0.64 $(0.10)$2.19 $1.14 $ 2.75 - 3.00
Adjustments:
    Net unrealized (gains)/losses on equity securities0.12 (0.06)0.09 0.07 — 
    Net realized (gains)/losses on investments(0.14)(1.70)(0.17)(1.69)— 
    Total Pre-Tax Adjustments(0.02)(1.76)(0.08)(1.62)— 
    Income Tax on Above Adjustments0.01 0.43 0.02 0.40 — 
    Total Adjustments(0.01)(1.33)(0.06)(1.22)— 
Non-GAAP Adjusted EPS$0.63 $(1.43)$2.13 $(0.08)$ 2.75 - 3.00


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