- 4Q19 total revenue up 10.6% to $239.4 million; FY19 up 14.0% to
$939.4 million
- 4Q19 other states direct premiums written up 23.3%; FY19 other
states up 27.6%
- 4Q19 diluted GAAP earnings per share (EPS) of $(1.55), non-GAAP
adjusted EPS1 of $(1.57)
- FY19 diluted GAAP EPS of $1.36, non-GAAP adjusted EPS1 of
$1.18
- FY19 return on average equity of 9.2%; Debt-to-equity ratio of
2.0%
- Full year EPS driven by 4Q19 pre-tax charges, $43.7 million in
prior years adverse development, $40.7 million reduction in prior
years anticipated subrogation recoveries, $24.7 million in current
year strengthening, and $16.7 million in strengthening for current
year weather events above plan
- FY19 returned a record $92.3 million to shareholders through
share repurchases and dividends
- UPCIC filed for a 12.4% overall primary rate increase in
Florida
- Over 75% of reinsurance capacity for June 1st, 2020 renewals
already secured
- Initiating FY20 guidance: GAAP and non-GAAP adjusted EPS1 of
$2.80 - $3.10 (assuming no extraordinary weather events in 2020);
ROAE 17% - 20%
Universal Insurance Holdings (NYSE: UVE) (the “Company”)
reported 2019 fourth quarter diluted EPS of $(1.55) on a GAAP basis
and $(1.57) non-GAAP adjusted EPS1. Quarterly direct premiums
written were up 12.5% from the year-ago quarter to $302.7 million.
Book value per share grew to $15.13, an increase of 4.9% with a
return on average equity of 9.2% for the year.
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.
“We ended the year with strong top line growth thanks to our
effective marketing strategy, agent relations and customer
service,” said Stephen J. Donaghy, Chief Executive Officer. “Since
taking over as CEO in July of 2019, we have continued to respond to
the well-documented current Florida dynamics that have affected all
industry participants. In spite of these challenges, we produced an
annualized return on average equity of 9.2%. This annual result
includes enhanced conservatism across many different fronts,
including the run up of claims prior to the effective date of new
AOB legislation, the impact of a hardening reinsurance market, and
the overall influence of social inflation. We focused on prior and
current years along with our subrogation expectation even though
2019 was our highest subrogation receivable in company history. Our
financial strength, along with filing for double digit primary rate
increases in Florida and our direct to consumer platform,
CloveredSM, have positioned us for long-term, sustainable bottom
line growth going forward into 2020 and beyond. We believe the
diligent work we have put forth, puts us in position to provide
FY20 guidance of a GAAP and non-GAAP adjusted EPS range of $2.80 -
$3.10 assuming no extraordinary weather events in 2020, and a
Return on Average Equity of 17% - 20%.”
Summary Financial Results
($thousands, except per share
data)
Fourth Quarter
Full Year
FY19
FY18
Change
FY19
FY18
Change
(GAAP comparison)
Total revenue
$
239,402
$
216,373
10.6 %
$
939,351
$
823,816
14.0%
Income (loss) before income taxes
(69,053
)
(11,241
)
NM
63,517
152,873
(58.5)%
Income (loss) before income taxes
margin
(28.8
)%
(5.2
)%
(23.6) pts
6.8
%
18.6
%
(11.8) pts
Diluted EPS
(1.55
)
(0.19
)
NM
1.36
3.27
(58.4)%
Annualized return on average equity
(ROE)
NM
NM
NM
9.2
%
24.1
%
(14.9) pts
Book value per share, end of period
15.13
14.42
4.9%
15.13
14.42
4.9%
(Non-GAAP comparison) 2
Adjusted Operating Income
(69,687
)
3,324
NM
55,833
192,842
(71.0)%
Adjusted EPS
(1.57
)
0.12
NM
1.18
4.11
(71.3)%
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 higher organic premium volume and
retention due to our marketing and customer service efforts,
premium pricing flowing through the book, and our investment
portfolio performance, partially offset by increased reinsurance
costs. Income before income tax was down 58.5% for the year and
adjusted operating income was down 71.0% for the year, primarily
impacted by a lower benefit from our claims adjusting business as
prior years’ catastrophe claims conclude, current year reserve
strengthening, and current year weather events above plan. Income
before income tax produced a 6.8% margin for the year. GAAP diluted
EPS and non-GAAP adjusted EPS results for the quarter and the year
benefited from premium growth, investment performance, and
commission revenue, offset by the aforementioned items. The Company
produced an annualized return on average equity of 9.2% and book
value per share growth of 4.9% for the year, despite where the
industry sits in the current cycle and the number of factors
affecting Florida.
Underwriting
($thousands, except policies in
force)
Fourth Quarter
Full Year
FY19
FY18
Change
FY19
FY18
Change
Policies in force
888,361
828,653
7.2%
888,361
828,653
7.2%
In-force premium
$
1,296,416
$
1,193,019
8.7%
$
1,296,416
$
1,193,019
8.7%
Direct premiums written
302,655
268,934
12.5%
1,292,721
1,190,875
8.6%
Direct premiums earned
321,571
296,948
8.3%
1,233,121
1,121,640
9.9%
Net premiums earned
215,819
204,595
5.5%
842,502
768,382
9.6%
Expense ratio 3
29.6
%
31.7
%
(2.1) pts
32.3
%
33.4
%
(1.1) pts
Loss & LAE ratio
113.3
%
79.5
%
33.8 pts
71.6
%
53.9
%
17.7 pts
Combined ratio
142.9
%
111.2
%
31.7 pts
103.9
%
87.3
%
16.6 pts
3 Expense ratio excludes interest
expense.
Direct premiums written were up double digits for the quarter,
led by the continued impact of rate increases in Florida and other
states, as well as strong direct premium growth of 23.3% in Other
States (non-Florida). For the year, direct premiums written were up
8.6% led by the rate increases, as well as strong direct premium
growth of 27.6% in Other States and a slightly improved policy
retention.
On the expense side, the combined ratio increased 31.7 points
for the quarter and 16.6 points for the year. The increases were
driven primarily by reduced benefits from claim settlement fees as
prior years’ catastrophe claims conclude, conservatism on prior
years’ anticipated subrogation recoveries, current year reserve
strengthening, and weather events above plan, partially offset by
an improvement in the expense ratio as set forth below:
- The expense ratio improved 2.1 points for the quarter driven by
a 1.8 point improvement in the other operating expense ratio,
further aided by a 30 basis point decrease in the policy
acquisition cost ratio. For the year, the expense ratio improved
1.1 points driven by a 1.7 point improvement in the other operating
expense ratio, partially offset by a 60 basis point increase in the
policy acquisition cost ratio.
- The net loss and loss adjustment expense ratio increased 33.8
points for the quarter and 17.7 points for the year. Quarterly and
full year drivers for 2019 include:
- Prior year reserve development was primarily made up of a $40.7
million reduction in anticipated subrogation recoveries in the
fourth quarter, and $43.7 million of prior accident years adverse
development in the fourth quarter resulting in a total of $84.4
million or 39.1 points for the quarter and $88.1 million or 10.4
points for the year.
- Weather events in excess of plan of $16.7 million or 7.7 points
($9.8 million in 4Q18) for the quarter were directly related to
strengthening IBNR for weather events in 2019. For the full year,
weather events in excess of plan were $38.7 million or 4.6 points
($14.8 million in FY18).
- All other losses and loss adjustment expense of $143.4 million
or 66.5 points for the quarter and $476.7 million or 56.6 points
for the year, were primarily related to diversified growth, $24.7
million in the fourth quarter of incremental reserve strengthening
for accident year 2019 as the industry continues to see increased
severity in represented claims, and a reduced benefit from our
adjusting business as prior years’ catastrophe claims
conclude.
Services
($thousands)
Fourth Quarter
Full Year
FY19
FY18
Change
FY19
FY18
Change
Commission revenue
$
7,168
$
5,800
23.6%
$
26,101
$
22,438
16.3%
Policy fees
4,973
4,532
9.7%
21,560
20,275
6.3%
Other revenue
2,603
1,905
36.6%
7,972
7,163
11.3%
Total
14,744
12,237
20.5%
55,633
49,876
11.5%
Total services revenue increased 20.5% for the quarter and 11.5%
for the full year. The increase was driven by commission revenue
earned on ceded premiums and an increase in policy fees and other
revenue related to volume.
Investments
($thousands)
Fourth Quarter
Full Year
FY19
FY18
Change
FY19
FY18
Change
Net investment income
$
7,578
$
7,603
(0.3)%
$
30,743
$
24,816
23.9%
Realized gains (losses)
437
4
NM
(12,715
)
(2,089
)
NM
Unrealized gains (losses)
824
(8,066
)
NM
23,188
(17,169
)
NM
NM = Not Meaningful
Net investment income decreased 0.3% for the quarter, but
increased 23.9% for the year, primarily due to increased assets
under management and an asset mix shift to higher yielding
investment grade bonds during 2018 and 2019. These results were
partially offset by a lower trend in yields on cash and short term
investments during the second half of 2019. Realized losses in 2019
resulted primarily from the sale of equity securities. Unrealized
gains were driven by market volatility in equity securities.
Capital Deployment
During the fourth quarter, the Company repurchased approximately
567 thousand shares at an aggregate cost of $16.3 million. For the
full year the Company repurchased approximately 2.3 million shares
at an aggregate cost of $66.2 million. The Company’s current share
repurchase authorization program has $28.3 million remaining as of
December 31, 2019 and runs through December 31, 2021.
On February 11th, 2020 the Board of Directors of the Company
declared a quarterly cash dividend of 16 cents per share of common
stock, payable March 19, 2020, to shareholders of record as of the
close of business on March 12, 2020.
Guidance
Universal initiated the following guidance for fiscal 2020:
- GAAP and Non-GAAP Adjusted EPS in a range of $2.80 - $3.10
(assuming no extraordinary weather events in 2020)
- Annualized return on average equity in a range of 17% -
20%
Conference Call and Webcast
- Tuesday, March 3, 2020 at 9:00 a.m. ET
- U.S. Dial-in Number: (855) 752-6647
- International: (503) 343-6667
- Participant code: 4299054
- Listen to live webcast and view presentation:
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: 4299054 through March 18, 2020
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
18 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.
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,” “predict,” “project,”
“should,” “anticipate,” “will,” “plan,” and similar expressions
identify forward-looking statements, which speak only as of the
date the statements were made and include, but are not limited to,
statements regarding the outlook for the Company’s future business
and financial performance. Such statements may also include
commentary on plans, products and lines of business, marketing
arrangements, reinsurance programs and other business developments
and assumptions relating to the foregoing. Such forward-looking
statements are based on the current beliefs of our management as
well as assumptions made by and information currently available to
them, which are subject to inherent uncertainties, risks and
changes in circumstances that are difficult to predict. 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.
UNIVERSAL INSURANCE HOLDINGS,
INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except per
share data)
December 31,
December 31,
2019
2018
ASSETS
Invested Assets
Fixed maturities, at fair value
$
855,284
$
820,438
Equity securities, at fair value
43,717
63,277
Investment real estate, net
15,585
24,439
Total invested assets
914,586
908,154
Cash and cash equivalents
182,109
166,428
Restricted cash and cash equivalents
2,635
2,635
Prepaid reinsurance premiums
175,208
142,750
Reinsurance recoverable
193,236
418,603
Premiums receivable, net
63,883
59,858
Property and equipment, net
41,351
34,991
Deferred policy acquisition costs
91,882
84,686
Goodwill
2,319
2,319
Other assets
52,643
37,966
TOTAL ASSETS
$
1,719,852
$
1,858,390
LIABILITIES AND STOCKHOLDERS'
EQUITY
LIABILITIES:
Unpaid losses and loss adjustment
expenses
$
267,760
$
472,829
Unearned premiums
661,279
601,679
Advance premium
30,975
26,222
Reinsurance payable, net
122,581
93,306
Long-term debt
9,926
11,397
Other liabilities
133,430
151,324
Total liabilities
1,225,951
1,356,757
STOCKHOLDERS' EQUITY:
Cumulative convertible preferred stock
($0.01 par value) 4
—
—
Common stock ($0.01 par value) 5
467
465
Treasury shares, at cost - 14,069 and
11,731
(196,585
)
(130,399
)
Additional paid-in capital
96,036
86,353
Accumulated other comprehensive income
(loss), net of taxes
20,364
(8,010
)
Retained earnings
573,619
553,224
Total stockholders' equity
493,901
501,633
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
1,719,852
$
1,858,390
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 - 46,707 and 46,514 shares;
Outstanding 32,638 and 34,783 shares.
UNIVERSAL INSURANCE HOLDINGS,
INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME (LOSS) (UNAUDITED)
(in thousands)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2019
2018
2019
2018
REVENUES
Net premiums earned
$
215,819
$
204,595
$
842,502
$
768,382
Net investment income
7,578
7,603
30,743
24,816
Net realized gains/(losses) on
investments
437
4
(12,715
)
(2,089
)
Net unrealized gains/(losses) on equity
securities
824
(8,066
)
23,188
(17,169
)
Commission revenue
7,168
5,800
26,101
22,438
Policy fees
4,973
4,532
21,560
20,275
Other revenue
2,603
1,905
7,972
7,163
Total revenues
239,402
216,373
939,351
823,816
EXPENSES
Losses and loss adjustment expenses
244,445
162,740
603,406
414,455
Policy acquisition costs
44,667
42,994
177,530
157,327
Other operating expenses
19,298
21,792
94,650
98,815
Interest expense
45
88
248
346
Total expenses
308,455
227,614
875,834
670,943
Income (loss) before income tax
expense
(69,053
)
(11,241
)
63,517
152,873
Income tax expense (benefit)
(17,980
)
(4,773
)
17,003
35,822
NET INCOME (LOSS)
$
(51,073
)
$
(6,468
)
$
46,514
$
117,051
UNIVERSAL INSURANCE HOLDINGS,
INC. AND SUBSIDIARIES
SHARE AND PER SHARE
INFORMATION
(in thousands, except per
share data)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2019
2018
2019
2018
Weighted average common shares outstanding
- basic
32,889
34,814
33,893
34,856
Weighted average common shares outstanding
- diluted
32,889
34,814
34,233
35,786
Shares outstanding, end of period
32,638
34,783
32,638
34,783
Basic earnings (loss) per common share
$
(1.55
)
$
(0.19
)
$
1.37
$
3.36
Diluted earnings (loss) per common
share
$
(1.55
)
$
(0.19
)
$
1.36
$
3.27
Cash dividend declared per common
share
$
0.29
$
0.29
$
0.77
$
0.73
Book value per share, end of period
$
15.13
$
14.42
$
15.13
$
14.42
Annualized return on average equity
(ROE)
NM
NM
9.2
%
24.1
%
NM = Not Meaningful
UNIVERSAL INSURANCE HOLDINGS,
INC. AND SUBSIDIARIES
SUPPLEMENTARY
INFORMATION
(in thousands, except for
Policies In-Force data)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2019
2018
2019
2018
Premiums
Direct premiums written - Florida
$
246,927
$
223,751
$
1,066,112
$
1,013,290
Direct premiums written - Other States
55,728
45,183
226,609
177,585
Direct premiums written - Total
$
302,655
$
268,934
$
1,292,721
$
1,190,875
Direct premiums earned
$
321,571
$
296,948
$
1,233,121
$
1,121,640
Net premiums earned
$
215,819
$
204,595
$
842,502
$
768,382
Underwriting Ratios - Net
Loss and loss adjustment expense ratio
113.3
%
79.5
%
71.6
%
53.9
%
Policy acquisition cost ratio
20.7
%
21.0
%
21.1
%
20.5
%
Other operating expense ratio6
8.9
%
10.7
%
11.2
%
12.9
%
General and administrative expense
ratio6
29.6
%
31.7
%
32.3
%
33.4
%
Combined ratio
142.9
%
111.2
%
103.9
%
87.3
%
Other Items
(Favorable)/Unfavorable prior year reserve
development
$
84,365
$
97,295
$
88,068
$
99,522
Points on the loss and loss adjustment
expense ratio
39.1
pts
47.6
pts
10.4
pts
13.0
pts
6 Expense ratio excludes interest
expense.
As of
December 31,
2019
2018
Policies in force
Florida
662,343
637,926
Other States
226,018
190,727
Total
888,361
828,653
In-force premium
Florida
$
1,070,034
$
1,015,666
Other States
226,382
177,353
Total
1,296,416
1,193,019
Total Insured Value
Florida
$
164,654,848
$
156,118,955
Other States
91,401,560
72,588,067
Total
256,056,408
228,707,022
UNIVERSAL INSURANCE HOLDINGS,
INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
(in thousands, except for per
share data)
Fourth Quarter
Full Year
FY19
FY18
FY19
FY18
Income (Loss) Before Income
Taxes
$
(69,053
)
(11,241
)
63,517
152,873
Adjustments:
Reinstatement premium, net of commissions
7
582
6,415
2,541
20,365
Net unrealized (gains)/losses on equity
securities
(824
)
8,066
(23,188
)
17,169
Net realized (gains)/losses on
investments
(437
)
(4
)
12,715
2,089
Interest Expense
45
88
248
346
Total Adjustments
(634
)
14,565
(7,684
)
39,969
Non-GAAP Adjusted Operating
Income8
(69,687
)
3,324
55,833
192,842
GAAP Diluted EPS
$
(1.55
)
$
(0.19
)
$
1.36
$
3.27
Adjustments:
Reinstatement premium, net of commissions
7
0.02
0.18
0.07
0.57
Net unrealized (gains)/losses on equity
securities
(0.03
)
0.23
(0.68
)
0.48
Net realized (gains)/losses on
investments
(0.01
)
—
0.37
0.06
Total Pre-Tax Adjustments
(0.02
)
0.41
(0.24
)
1.11
Income Tax on Above Adjustments
—
(0.10
)
0.06
(0.27
)
Total Adjustments
(0.02
)
0.31
(0.18
)
0.84
Non-GAAP Adjusted EPS8
$
(1.57
)
$
0.12
$
1.18
$
4.11
7 Includes reinstatement premiums not
covered by reinstatement premium protection and related
commissions.
8 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200302005906/en/
Media Relations Contact: Andy Brimmer / Mahmoud Siddig,
212-355-4449 Joele Frank, Wilkinson Brimmer Katcher
Investor Relations Contact: Rob Luther, 954-595-7272 VP,
Corporate Development, Strategy & IR
rluther@universalproperty.com
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