- 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
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 $410.6 million,
with an annualized return on average equity of 16.4%.
1 Excludes net realized and unrealized gains and losses on
investments as well as any extraordinary reinstatement premiums and
associated commissions (“non-GAAP adjusted EPS”). Reconciliations
of GAAP to non-GAAP financial measures are provided in the attached
tables.
“Our third quarter results demonstrate continued execution of
our multi-year strategic priorities, including disciplined growth
and operational improvements,” said Stephen J. Donaghy, Chief
Executive Officer. “Our direct premiums earned growth of 15.0% in
the third quarter was primarily driven by primary rate increases in
Florida earning through the book. We have now filed for more than
34% in primary rate increases in Florida over the past 18 months,
while simultaneously continuing to shape our underwriting risks
with total policies-in-force relatively flat year-over-year. Our
business expenses were lower from continued expense management
controls, including lower agency commissions and employee
productivity gains, in addition to lower executive compensation
accruals. These results were highlighted by a 16.4% annualized
return on average equity in the quarter.”
Summary Financial Results
($thousands, except per share
data)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
Change
2021
2020
Change
(GAAP comparison)
Total revenue
$
287,254
$
311,665
(7.8)
%
$
829,192
$
799,644
3.7
%
Income (loss) before income taxes
26,464
(3,792)
NM
92,874
51,230
81.3
%
Income (loss) before income taxes
margin
9.2
%
(1.2)
%
NM
11.2
%
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)
%
NM
19.3
%
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 income
25,943
(59,594)
NM
90,638
(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,
2021
2020
Change
2021
2020
Change
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 earned
410,621
357,208
15.0
%
1,178,801
1,020,798
15.5
%
Net premiums earned
264,654
234,191
13.0
%
764,131
681,390
12.1
%
Expense ratio 3
27.7
%
32.9
%
(5.2)
pts
31.1
%
32.8
%
(1.7)
pts
Loss & LAE ratio
70.9
%
101.8
%
(30.9)
pts
65.3
%
77.0
%
(11.7)
pts
Combined ratio
98.6
%
134.7
%
(36.1)
pts
96.4
%
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.
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 pointson 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,
2021
2020
Change
2021
2020
Change
Commission revenue
$
11,418
$
8,997
26.9
%
$
30,404
$
23,770
27.9
%
Policy fees
5,859
6,167
(5.0)
%
17,821
18,253
(2.4)
%
Other revenue
1,966
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,
2021
2020
Change
2021
2020
Change
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.
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
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.
UNIVERSAL INSURANCE HOLDINGS,
INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except per
share data)
September 30,
December 31,
2021
2020
ASSETS:
Invested Assets
Fixed maturities, at fair value
$
1,029,157
$
819,861
Equity securities, at fair value
77,099
84,887
Assets held for sale
253
—
Investment real estate, net
5,934
15,176
Total invested assets
1,112,443
919,924
Cash and cash equivalents
224,822
167,156
Restricted cash and cash equivalents
15,836
12,715
Prepaid reinsurance premiums
386,466
215,723
Reinsurance recoverable
134,935
160,417
Premiums receivable, net
71,132
66,883
Property and equipment, net
53,222
53,572
Deferred policy acquisition costs
113,979
110,614
Goodwill
2,319
2,319
Other assets
28,074
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 premiums
876,259
783,135
Advance premium
71,069
49,562
Reinsurance payable, net
399,905
10,312
Debt
7,353
8,456
Other liabilities
81,879
135,549
Total liabilities
1,648,953
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 capital
107,382
103,445
Accumulated other comprehensive income
(loss), net of taxes
(7,398)
3,343
Retained earnings
620,936
567,512
Total stockholders' equity
494,275
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.
UNIVERSAL INSURANCE HOLDINGS,
INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME (UNAUDITED)
(in thousands)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
REVENUES
Net premiums earned
$
264,654
$
234,191
$
764,131
$
681,390
Net investment income
2,797
4,557
8,641
17,570
Net realized gains/(losses) on
investments
4,319
53,827
5,357
54,294
Net change in unrealized gains/(losses) of
equity securities
(3,759)
1,991
(3,024)
(2,162)
Commission revenue
11,418
8,997
30,404
23,770
Policy fees
5,859
6,167
17,821
18,253
Other revenue
1,966
1,935
5,862
6,529
Total revenues
287,254
311,665
829,192
799,644
EXPENSES
Losses and loss adjustment expenses
187,581
238,477
498,765
524,870
Policy acquisition costs
57,062
51,594
170,287
146,982
Other operating expenses
16,108
25,370
67,169
76,477
Interest expense
39
16
97
85
Total expenses
260,790
315,457
736,318
748,414
Income (loss) before income tax
expense
26,464
(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 Ended
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
Weighted average common shares outstanding
- basic
31,247
31,659
31,232
32,116
Weighted average common shares outstanding
- diluted
31,337
31,659
31,302
32,202
Shares outstanding, end of period
31,167
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
%
UNIVERSAL INSURANCE HOLDINGS,
INC. AND SUBSIDIARIES
SUPPLEMENTARY
INFORMATION
(in thousands, except for
Policies In Force data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
Premiums
Direct premiums written - Florida
$
354,799
$
334,916
$
1,062,180
$
948,196
Direct premiums written - Other States
78,185
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 ratio
70.9
%
101.8
%
65.3
%
77.0
%
Policy acquisition cost ratio
21.6
%
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 ratio
98.6
%
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 ratio
4.4 pts
12.9
pts
2.4
pts
5.1
pts
6 Expense ratio excludes interest
expense.
As of
September 30,
2021
2020
Policies in force
Florida
716,767
715,130
Other States
251,054
250,332
Total
967,821
965,462
Premiums in force
Florida
$
1,371,760
$
1,202,318
Other States
277,786
257,653
Total
$
1,649,546
$
1,459,971
Total Insured Value
Florida
$
204,334,645
$
185,382,817
Other States
114,992,734
105,432,408
Total
$
319,327,379
$
290,815,225
Three Months Ended September
30, 2021
Direct
Loss Ratio
Ceded
Loss Ratio
Net
Loss 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 development
87,907
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
Direct
Loss Ratio
Ceded
Loss Ratio
Net
Loss 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 development
296,867
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.
UNIVERSAL INSURANCE HOLDINGS,
INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
(in thousands, except for per
share data)
Three Months Ended
Nine Months Ended
Guidance
September 30,
September 30,
Full Year 2021E
2021
2020
2021
2020
Income (Loss) Before Income
Taxes
$
26,464
$
(3,792)
$
92,874
$
51,230
Adjustments:
Net unrealized (gains)/losses on equity
securities
3,759
(1,991)
3,024
2,162
Net realized (gains)/losses on
investments
(4,319)
(53,827)
(5,357)
(54,294)
Interest Expense
39
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
securities
0.12
(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 Adjustments
0.01
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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211027005823/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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