- 1Q21 total revenue up 11.7% to $262.8 million
- 1Q21 direct premiums written up 9.2%
- 1Q21 diluted GAAP and non-GAAP1 adjusted earnings per share
(“EPS”) of $0.84
- 1Q21 combined ratio of 93.1%
- 1Q21 margin expansion in excess of 200 basis points
- 1Q21 annualized return on average equity of 23.2%
Universal Insurance Holdings (NYSE: UVE) (the “Company”)
reported 2021 first quarter diluted EPS of $0.84 on a GAAP and
non-GAAP1 adjusted basis. Total revenue was up 11.7% from the year
ago quarter to $262.8 million. Margins expanded in excess of 200
basis points, with an annualized return on average equity of
23.2%.
1 Excludes net realized and unrealized
gains and losses on investments as well as extraordinary
reinstatement premiums and associated commissions (“non-GAAP
adjusted EPS”). Reconciliations of GAAP to non-GAAP financial
measures are provided in the attached tables.
“We are off to a strong start to 2021 with solid first quarter
results, including close to 12% top line growth, margin expansion
in excess of 200 basis points, and a total annualized return on
average equity of 23.2%,” said Stephen J. Donaghy, Chief Executive
Officer. “We continue to make progress on our reinsurance program
renewal, and were oversubscribed on our first CAT bond in March at
rates below the low end of our initial range. We have now completed
procurement of our All States first event reinsurance program for
UPCIC for the 2021 wind season and will have additional details in
May as we finalize the remainder. In addition, we were encouraged
earlier this month when the Florida Senate passed Bill 76, which
would enable Floridians to have reliable access to property
insurance. For a number of years Florida has been a significant
outlier compared to the rest of the country when it comes to
litigated property claims, which has put significant pressure on
the Florida property insurance marketplace. We have not been immune
to these market dynamics and during the first quarter we actively
reduced our policies in force sequentially and reduced new and
renewal policy counts in aggregate this quarter when compared to
the first quarter of 2020. That being said, we continue to monitor
closely the companion bill in the House (House Bill 305), which has
differences from Senate Bill 76.”
Summary Financial Results
($thousands, except per share
data)
Three Months Ended March
31,
2021
2020
Change
(GAAP comparison)
Total revenue
$
262,757
$
235,275
11.7
%
Income (loss) before income taxes
36,351
27,584
31.8
%
Income (loss) before income taxes
margin
13.8
%
11.7
%
2.1
pts
Diluted EPS
$
0.84
$
0.61
37.7
%
Annualized return on average equity
(ROE)
23.2
%
16.1
%
7.1
pts
Book value per share, end of period
$
14.56
$
15.26
(4.6)
%
(Non-GAAP comparison)2
Adjusted operating income
36,323
35,361
2.7
%
Adjusted EPS
$
0.84
$
0.79
6.3
%
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.
Total revenue grew double digits for the quarter driven by
primary rate increases from 2020 earning through the book as
policies renew and an improvement in the unrealized portion of the
investment portfolio, partially offset by the impact of higher
reinsurance costs when compared to the first quarter of 2020.
Margins expanded more than 200 basis points for the quarter driven
by the incremental fall through profit from the top line as
previously described, lower losses and LAE and lower operating
expenses as a percent of direct premiums earned. GAAP diluted EPS
and non-GAAP adjusted EPS results for the quarter were driven by
the aforementioned factors, including a benefit from a reduced
share count. The Company produced an annualized return on average
equity of 23.2%.
Underwriting
($thousands, except policies in
force)
Three Months Ended March
31,
2021
2020
Change
Policies in force (as of end of
period)
976,250
910,579
7.2
%
Premiums in force (as of end of
period)
$
1,548,657
$
1,340,321
15.5
%
Direct premiums written
$
365,314
$
334,553
9.2
%
Direct premiums earned
375,606
325,951
15.2
%
Net premiums earned
243,305
220,829
10.2
%
Expense ratio3
33.9
%
32.9
%
1.0
pt
Loss & LAE ratio
59.2
%
61.2
%
(2.0
)pts
Combined ratio
93.1
%
94.1
%
(1.0
)pt
3 Expense ratio excludes interest
expense.
Direct premiums written were up 9.2% for the quarter, led by
direct premium growth of 10.2% in Florida.
On the expense side, the combined ratio improved 1.0 point for
the quarter. The improvement was driven primarily by decreased
weather, favorable prior year's reserve development, and an
increased benefit from our claims adjusting business, partially
offset by higher reinsurance costs impact on the ratio and current
year strengthening.
- The expense ratio decreased 33 basis points on a direct
premiums earned basis due to operating efficiencies, which was more
than offset by the impact of increased reinsurance costs on the net
ratio, resulting in a 1.0 point increase in the net expense ratio
for the quarter.
- The net loss and LAE ratio improved 2.0 points for the quarter.
Quarterly drivers include:
- A 45 basis point net improvement related to no weather events
being above plan.
- Favorable prior year’s reserve development of $1.2 million
(adverse development of $4.3 million in 1Q20) resulted in a 2.5
point net improvement for the quarter. Favorable development in the
current quarter was driven by ceded recoveries on the Other States
reinsurance program.
- Core losses of $145.2 million ($129.7 million in 1Q20) resulted
in a 1.1 point improvement for the quarter on a direct premium
earned basis, driven by a benefit from our claims adjusting
business, which was more than offset by increased reinsurance costs
and less than a point of current year strengthening on a direct
basis, which lead to a 1.0 point increase for the quarter on a net
basis.
Services
($thousands)
Three Months Ended March
31,
2021
2020
Change
Commission revenue
$
9,126
$
7,015
30.1
%
Policy fees
5,387
5,540
(2.8
)%
Other revenue
1,905
2,782
(31.5
)%
Total
$
16,418
$
15,337
7.0
%
Total services revenue increased 7.0% for the quarter. The
increase was primarily driven by commission revenue earned on ceded
premiums, partially offset by a decrease in new and renewal
business policy fees volume and other revenue.
Investments
($thousands)
Three Months Ended March
31,
2021
2020
Change
Net investment income
$
2,986
$
6,834
(56.3
)%
Realized gains (losses)
542
299
81.3
%
Unrealized gains (losses)
(494
)
(8,024
)
93.8
%
NM = Not Meaningful
Net investment income decreased 56.3% 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. Unrealized
equity losses improved substantially during the quarter when
compared to the market volatility seen last March as a result of
the COVID-19 pandemic. Total invested assets increased 10.6% to
$1.0 billion since year-end 2020.
Capital Deployment
During the first quarter, the Company repurchased approximately
15 thousand shares at an aggregate cost of $245 thousand.
On April 22, 2021, the Board of Directors declared a quarterly
cash dividend of 16 cents per share of common stock, payable on May
21, 2021, to shareholders of record as of the close of business on
May 14, 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, April 29, 2021 at 9:00 a.m. ET
- U.S. Dial-in Number: (855) 752-6647
- International: (503) 343-6667
- Participant code: 4597049
- 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: 4597049 through May 14, 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 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
March 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 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.
UNIVERSAL INSURANCE HOLDINGS,
INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except per
share data)
March 31,
December 31,
2021
2020
ASSETS:
Invested Assets
Fixed maturities, at fair value
$
913,131
$
819,861
Equity securities, at fair value
91,291
84,887
Assets held for sale
6,855
—
Investment real estate, net
6,027
15,176
Total invested assets
1,017,304
919,924
Cash and cash equivalents
90,829
167,156
Restricted cash and cash equivalents
12,715
12,715
Prepaid reinsurance premiums
100,221
215,723
Reinsurance recoverable
217,625
160,417
Premiums receivable, net
62,488
66,883
Property and equipment, net
53,178
53,572
Deferred policy acquisition costs
111,193
110,614
Goodwill
2,319
2,319
Other assets
49,581
49,418
TOTAL ASSETS
$
1,717,453
$
1,758,741
LIABILITIES AND STOCKHOLDERS'
EQUITY
LIABILITIES:
Unpaid losses and loss adjustment
expenses
$
315,780
$
322,465
Unearned premiums
772,843
783,135
Advance premium
73,738
49,562
Reinsurance payable, net
24,527
10,312
Long-term debt
8,088
8,456
Other liabilities
67,812
135,549
Total liabilities
1,262,788
1,309,479
STOCKHOLDERS' EQUITY:
Cumulative convertible preferred stock
($0.01 par value) 4
—
—
Common stock ($0.01 par value) 5
469
468
Treasury shares, at cost - 15,695 and
15,680
(225,751
)
(225,506
)
Additional paid-in capital
104,624
103,445
Accumulated other comprehensive income
(loss), net of taxes
(13,567
)
3,343
Retained earnings
588,890
567,512
Total stockholders' equity
454,665
449,262
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
1,717,453
$
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 - 46,911 and 46,817 shares;
Outstanding 31,216 and 31,137 shares.
UNIVERSAL INSURANCE HOLDINGS,
INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME (UNAUDITED)
(in thousands)
Three Months Ended
March 31,
2021
2020
REVENUES
Net premiums earned
$
243,305
$
220,829
Net investment income
2,986
6,834
Net realized gains/(losses) on
investments
542
299
Net change in unrealized gains/(losses) of
equity securities
(494
)
(8,024
)
Commission revenue
9,126
7,015
Policy fees
5,387
5,540
Other revenue
1,905
2,782
Total revenues
262,757
235,275
EXPENSES
Losses and loss adjustment expenses
143,963
135,048
Policy acquisition costs
56,458
46,864
Other operating expenses
25,965
25,727
Interest expense
20
52
Total expenses
226,406
207,691
Income before income tax expense
36,351
27,584
Income tax expense (benefit)
9,943
7,517
NET INCOME
$
26,408
$
20,067
UNIVERSAL INSURANCE HOLDINGS,
INC. AND SUBSIDIARIES
SHARE AND PER SHARE
INFORMATION
(in thousands, except per
share data)
Three Months Ended
March 31,
2021
2020
Weighted average common shares outstanding
- basic
31,208
32,591
Weighted average common shares outstanding
- diluted
31,277
32,731
Shares outstanding, end of period
31,216
32,385
Basic earnings (loss) per common share
$
0.85
$
0.62
Diluted earnings (loss) per common
share
$
0.84
$
0.61
Cash dividend declared per common
share
$
0.16
$
0.16
Book value per share, end of period
$
14.56
$
15.26
Annualized return on average equity
(ROE)
23.2
%
16.1
%
UNIVERSAL INSURANCE HOLDINGS,
INC. AND SUBSIDIARIES
SUPPLEMENTARY
INFORMATION
(in thousands, except for
Policies In Force data)
Three Months Ended
March 31,
2021
2020
Premiums
Direct premiums written - Florida
$
307,011
$
278,511
Direct premiums written - Other States
58,303
56,042
Direct premiums written - Total
$
365,314
$
334,553
Direct premiums earned
$
375,606
$
325,951
Net premiums earned
$
243,305
$
220,829
Underwriting Ratios - Net
Loss and loss adjustment expense ratio
59.2
%
61.2
%
Policy acquisition cost ratio
23.2
%
21.2
%
Other operating expense ratio6
10.7
%
11.7
%
General and administrative expense
ratio6
33.9
%
32.9
%
Combined ratio
93.1
%
94.1
%
Other Items
(Favorable)/Unfavorable prior year's
reserve development
$
(1,237
)
$
4,341
Points on the loss and loss adjustment
expense ratio
(50) bps
197 bps
6 Expense ratio excludes interest
expense.
As of
March 31,
2021
2020
Policies in force
Florida
721,321
677,225
Other States
254,929
233,354
Total
976,250
910,579
Premiums in force
Florida
$
1,279,464
$
1,104,559
Other States
269,193
235,761
Total
$
1,548,657
$
1,340,321
Total Insured Value
Florida
$
194,421,426
$
169,764,009
Other States
110,930,255
95,464,246
Total
$
305,351,681
$
265,228,255
Three Months Ended March 31,
2021
Direct
Loss Ratio
Ceded
Loss Ratio
Net
Loss Ratio
Premiums earned
$
375,606
$
132,301
$
243,305
Loss and loss adjustment
expenses:
Core losses
$
145,228
38.7
%
$
28
—
%
$
145,200
59.7
%
Weather events7
—
—
%
—
—
%
—
—
%
Prior year’s reserve development
92,070
24.5
%
93,307
70.5
%
(1,237
)
(0.5
)%
Total losses and loss adjustment
expenses
$
237,298
63.2
%
$
93,335
70.5
%
$
143,963
59.2
%
7 Includes only current year weather
events beyond those expected.
UNIVERSAL INSURANCE HOLDINGS,
INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
(in thousands, except for per
share data)
Three Months Ended
Guidance
March 31,
Full Year 2021E
2021
2020
Income (Loss) Before Income
Taxes
$
36,351
$
27,584
Adjustments:
Reinstatement premium, net of
commissions8
—
—
Net unrealized (gains)/losses on equity
securities
494
8,024
Net realized (gains)/losses on
investments
(542
)
(299
)
Interest Expense
20
52
Total Adjustments
(28
)
7,777
Non-GAAP Adjusted Operating
Income
$
36,323
$
35,361
GAAP Diluted EPS
$
0.84
$
0.61
$ 2.75 - 3.00
Adjustments:
Reinstatement premium, net of
commissions8
—
—
—
Net unrealized (gains)/losses on equity
securities
0.02
0.25
—
Net realized (gains)/losses on
investments
(0.02
)
(0.01
)
—
Total Pre-Tax Adjustments
—
0.24
—
Income Tax on Above Adjustments
—
(0.06
)
—
Total Adjustments
—
0.18
—
Non-GAAP Adjusted EPS
$
0.84
$
0.79
$ 2.75 - 3.00
8 Includes extraordinary reinstatement
premiums not covered by reinstatement premium protection and
related commissions.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210428006004/en/
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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