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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________________________________
FORM 10-Q
________________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021

OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number 001-33251
________________________________________________________

UVE-20210930_G1.JPG
UNIVERSAL INSURANCE HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
________________________________________________________
Delaware 65-0231984
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)
1110 W. Commercial Blvd., Fort Lauderdale, Florida 33309
(Address of principal executive offices) (Zip Code)
(954) 958-1200
(Registrant’s telephone number, including area code)
________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, $0.01 Par Value UVE New York Stock Exchange
    Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No   

    Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes     No   

    Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”


“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer  
Smaller reporting company
Emerging growth company
                
    If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

    Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)      Yes      No  

    Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 31,167,628 shares of common stock, par value $0.01 per share, outstanding on October 20, 2021.




UNIVERSAL INSURANCE HOLDINGS, INC.
TABLE OF CONTENTS
Page No.
4
Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020 (unaudited)
4
5
5
6
8
9

2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors and Stockholders of
Universal Insurance Holdings, Inc.
Fort Lauderdale, Florida

RESULTS OF REVIEW OF INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


We have reviewed the accompanying condensed consolidated balance sheet of Universal Insurance Holdings, Inc. and its wholly-owned subsidiaries (the “Company”) as of September 30, 2021 and the related condensed consolidated statements of income, comprehensive income, and stockholders’ equity, for the three-month and nine-month periods ended September 30, 2021 and 2020 and the related condensed consolidated statement of cash flows for the nine-month periods ended September 30, 2021 and 2020. Based on our review, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheet of Universal Insurance Holdings, Inc. as of December 31, 2020 and the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for the year then ended (not presented herein) and we expressed an unqualified audit opinion on those consolidated financial statements in our report dated February 26, 2021. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2020, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

BASIS FOR REVIEW RESULTS

These interim financial statements are the responsibility of the Company’s management. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.


We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

/s/ Plante & Moran, PLLC
Chicago, Illinois
October 27, 2021

3

PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands, except per share data)
  As of
September 30, December 31,
2021 2020
ASSETS
Available-for-sale debt securities, at fair value, net of allowance for credit loss of $290 and $186 (amortized cost: $1,039,042 and $815,647)
$ 1,029,157  $ 819,861 
Equity securities, at fair value (cost: $79,947 and $84,667)
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 
Income taxes recoverable 9,209  30,576 
Deferred income tax asset, net 5,249  6,284 
Other assets 15,935  14,877 
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 
Book overdraft —  59,399 
Reinsurance payable, net 399,905  10,312 
Commission payable 23,857  23,809 
Other liabilities and accrued expenses 58,022  52,341 
 Debt 7,353  8,456 
Total liabilities 1,648,953  1,309,479 
Commitments and Contingencies (Note 12)
STOCKHOLDERS’ EQUITY:
Cumulative convertible preferred stock, $0.01 par value
—  — 
Authorized shares - 1,000
Issued shares - 10 and 10
Outstanding shares - 10 and 10
Minimum liquidation preference, $9.99 and $9.99 per share
Common stock, $0.01 par value
470  468 
Authorized shares - 55,000
Issued shares - 46,964 and 46,817
Outstanding shares - 31,167 and 31,137
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 

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
4

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(in thousands, except per share data)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021 2020 2021 2020
PREMIUMS EARNED AND OTHER REVENUES
Direct premiums written $ 432,984  $ 409,418  $ 1,271,925  $ 1,148,656 
Change in unearned premium (22,363) (52,210) (93,124) (127,858)
Direct premium earned 410,621  357,208  1,178,801  1,020,798 
Ceded premium earned (145,967) (123,017) (414,670) (339,408)
Premiums earned, net 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 premiums earned and other revenues 287,254  311,665  829,192  799,644 
OPERATING COSTS AND EXPENSES
Losses and loss adjustment expenses 187,581  238,477  498,765  524,870 
General and administrative expenses 73,209  76,980  237,553  223,544 
Total operating costs and expenses 260,790  315,457  736,318  748,414 
INCOME BEFORE INCOME (LOSS) TAXES 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 
Basic earnings (loss) per common share $ 0.65  $ (0.10) $ 2.19  $ 1.14 
Weighted average common shares outstanding - Basic 31,247  31,659  31,232  32,116 
Diluted earnings (loss) per common share $ 0.64  $ (0.10) $ 2.19  $ 1.14 
Weighted average common shares outstanding - Diluted 31,337  31,659  31,302  32,202 
Cash dividend declared per common share $ 0.16  $ 0.16  $ 0.48  $ 0.48 


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021 2020 2021 2020
Net income (loss) $ 20,183  $ (3,169) $ 68,532  $ 36,780 
Other comprehensive income (loss), net of taxes (1,827) (36,421) (10,741) (19,299)
Comprehensive income (loss) $ 18,356  $ (39,590) $ 57,791  $ 17,481 
The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
5

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE THREE AND NINE MONTHS ENDED September 30, 2021 AND 2020 (unaudited)
(in thousands, except per share data) 

Treasury Shares Common
Shares
Issued
Preferred
Shares
Issued
Common
Stock
Amount
Preferred
Stock
Amount
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Shares,
at Cost
Total
Stockholders’
Equity
Balance, December 31, 2020 (15,680) 46,817  10  $ 468  $ —  $ 103,445  $ 567,512  $ 3,343  $ (225,506) $ 449,262 
Vesting of performance share units (16)
(1)
62  —  —  —  —  —  —  (241) (241)
Vesting of restricted stock units (17)
(1)
65  —  —  (1) —  —  (254) (254)
Retirement of treasury shares 33 
(1)
(33) —  —  —  (495) —  —  495  — 
Purchases of treasury stock (15) —  —  —  —  —  —  —  (245) (245)
Share-based compensation —  —  —  —  —  1,675  —  —  —  1,675 
Net income —  —  —  —  —  —  26,408  —  —  26,408 
Other comprehensive loss, net of taxes —  —  —  —  —  —  —  (16,910) —  (16,910)
Declaration of dividends
($0.16 per common share and
$0.25 per preferred share)
—  —  —  —  —  —  (5,030) —  —  (5,030)
Balance, March 31, 2021 (15,695) 46,911  10  469  —  104,624  588,890  (13,567) (225,751) 454,665 
Vesting of restricted stock units (20)
(1)
73  —  —  (1) —  —  (288) (288)
Retirement of treasury shares 20 
(1)
(20) —  —  —  (288) —  —  288  — 
Share-based compensation —  —  —  —  —  1,569  —  —  —  1,569 
Net income —  —  —  —  —  —  21,941  —  —  21,941 
Other comprehensive income, net of taxes —  —  —  —  —  —  —  7,996  —  7,996 
Declaration of dividends
($0.16 per common share and
$0.25 per preferred share)
—  —  —  —  —  —  (5,041) —  —  (5,041)
Balance, June 30, 2021 (15,695) 46,964  10  470  —  105,904  605,790  (5,571) (225,751) 480,842 
Purchases of treasury stock (102) —  —  —  —  —  —  —  (1,364) (1,364)
Share-based compensation —  —  —  —  —  1,478  —  —  —  1,478 
Net income —  —  —  —  —  —  20,183  —  —  20,183 
Other comprehensive loss, net of taxes —  —  —  —  —  —  —  (1,827) —  (1,827)
Declaration of dividends
($0.16 per common share and
$0.25 per preferred share)
—  —  —  —  —  —  (5,037) —  —  (5,037)
Balance, September 30, 2021 (15,797) 46,964  10  $ 470  $ —  $ 107,382  $ 620,936  $ (7,398) $ (227,115) $ 494,275 
(1)  All shares acquired represent shares tendered to cover the strike price for options and tax withholdings on the intrinsic value of options exercised, restricted stock vested, performance share units vested, or restricted stock units vested. These shares have been cancelled by the Company.

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
6

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (continued)
(in thousands, except per share data) 

Treasury Shares Common
Shares
Issued
Preferred
Shares
Issued
Common
Stock
Amount
Preferred
Stock
Amount
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Shares,
 at Cost
Total
Stockholders’
Equity
Balance, December 31, 2019 (14,069) 46,707  10  $ 467  $ —  $ 96,036  $ 573,619  $ 20,364  $ (196,585) $ 493,901 
Cumulative effect of change in accounting principle
 (ASU 2016-13)
—  —  —  —  —  (597) 597  —  — 
Balance, January 1, 2020 (14,069) 46,707  10  $ 467  $ —  $ 96,036  $ 573,022  $ 20,961  $ (196,585) $ 493,901 
Vesting of performance share units (25)
(1)
83  —  —  (1) —  —  (646) (646)
Grant and issue of stock award — 
(1)
—  —  —  30  —  —  —  30 
Retirement of treasury shares 25 
(1)
(25) —  —  —  (646) —  —  646  — 
Purchases of treasury stock (312) —  —  —  —  —  —  —  (6,587) (6,587)
Share-based compensation —  —  —  —  —  1,691  —  —  —  1,691 
Net income —  —  —  —  —  —  20,067  —  —  20,067 
Other comprehensive loss, net of taxes —  —  —  —  —  —  —  (8,946) —  (8,946)
Declaration of dividends
($0.16 per common share and
$0.25 per preferred share)
—  —  —  —  —  —  (5,222) —  —  (5,222)
Balance, March 31, 2020 (14,381) 46,766  10  468  —  97,110  587,867  12,015  (203,172) 494,288 
Vesting of restricted stock units (25)
(1)
65  —  —  —  —  —  —  (424) (424)
Retirement of treasury shares 25 
(1)
(25) —  —  —  (424) —  —  424  — 
Purchases of treasury stock (572) —  —  —  —  —  —  —  (10,029) (10,029)
Share-based compensation —  —  —  —  —  3,082  —  —  —  3,082 
Net income —  —  —  —  —  —  19,882  —  —  19,882 
Other comprehensive income, net of taxes —  —  —  —  —  —  —  26,068  —  26,068 
Declaration of dividends
($0.16 per common share and
$0.25 per preferred share)
—  —  —  —  —  —  (5,166) —  —  (5,166)
Balance, June 30, 2020 (14,953) 46,806  10  468  —  99,768  602,583  38,083  (213,201) 527,701 
Vesting of restricted stock units (10)
(1)
25  —  —  —  —  —  —  (184) (184)
Retirement of treasury shares 10 
(1)
(10) —  —  —  (184) —  —  184  — 
Purchases of treasury stock (534) —  —  —  —  —  —  —  (9,885) (9,885)
Share-based compensation —  —  —  —  —  1,854  —  —  —  1,854 
Net loss —  —  —  —  —  —  (3,169) —  —  (3,169)
Other comprehensive loss, net of taxes —  —  —  —  —  —  —  (36,421) —  (36,421)
Declaration of dividends
($0.16 per common share and
$0.25 per preferred share)
—  —  —  —  —  —  (5,133) —  —  (5,133)
Balance, September 30, 2020 (15,487) 46,821  10  $ 468  $ —  $ 101,438  $ 594,281  $ 1,662  $ (223,086) $ 474,763 
(1)
All shares acquired represent shares tendered to cover the strike price for options and tax withholdings on the intrinsic value of options exercised, restricted stock vested, performance share units vested, or restricted stock units vested. These shares have been cancelled by the Company.

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
7

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(in thousands)
Nine Months Ended
September 30,
2021 2020
Cash flows from operating activities:
Net cash provided by operating activities $ 273,980  $ 173,545 
Cash flows from investing activities:
Proceeds from sale of property and equipment 32  141 
Purchases of property and equipment (4,880) (14,580)
Purchases of equity securities (46,532) (11,145)
Purchases of available-for-sale debt securities (354,907) (735,426)
Purchases of investment real estate, net (7) (6)
Proceeds from sales of equity securities 53,651  — 
Proceeds from sales of available-for-sale debt securities 76,516  757,812 
Proceeds from sales of investment real estate 2,591  — 
Proceeds from sale of assets held for sale 8,856  — 
Maturities of available-for-sale debt securities 70,095  115,543 
Net cash provided by (used in) investing activities (194,585) 112,339 
Cash flows from financing activities:
Preferred stock dividend (8) (8)
Common stock dividend (15,104) (15,516)
Purchase of treasury stock (1,609) (26,501)
Payments related to tax withholding for share-based compensation (784) (1,253)
Repayment of debt (1,103) (1,103)
Net cash provided by (used in) financing activities (18,608) (44,381)
Cash and cash equivalents, and restricted cash and cash equivalents:
Net increase (decrease) during the period 60,787  241,503 
Balance, beginning of period 179,871  184,744 
Balance, end of period $ 240,658  $ 426,247 

The following table summarizes our cash and cash equivalents and restricted cash and cash equivalents within the Condensed Consolidated Balance Sheets (in thousands):
  September 30, December 31,
2021 2020
Cash and cash equivalents $ 224,822  $ 167,156 
Restricted cash and cash equivalents (1) 15,836  12,715 
Total cash and cash equivalents and restricted cash and cash equivalents $ 240,658  $ 179,871 
(1)See “—Note 5 (Insurance Operations)” for a discussion of the nature of the restrictions for restricted cash and cash equivalents and “—Note 14 (Variable Interest Entities)” for a discussion of restricted cash held in a trust account.




The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
8

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Nature of Operations and Basis of Presentation
Nature of Operations
Universal Insurance Holdings, Inc. (“UIH”, and together with its wholly-owned subsidiaries, “the Company”) is a Delaware corporation incorporated in 1990. The Company is a vertically integrated insurance holding company performing all aspects of insurance underwriting, distribution and claims. Through its wholly-owned insurance company subsidiaries, Universal Property & Casualty Insurance Company (“UPCIC”) and American Platinum Property and Casualty Insurance Company (“APPCIC”, and together with UPCIC, the “Insurance Entities”), the Company is principally engaged in the property and casualty insurance business offered primarily through its network of independent agents. Risk from catastrophic losses is managed through the use of reinsurance agreements. The Company’s primary product is residential homeowners’ insurance offered in 19 states as of September 30, 2021, including Florida, which comprises the majority of the Company’s policies in force. See “—Note 5 (Insurance Operations)” for more information regarding the Company’s insurance operations.
The Company generates revenues primarily from the collection of premiums and investment returns on funds invested on cash flows in excess of those retained and used for claims-paying obligations and insurance operations. Other significant sources of revenue include brokerage commissions collected from reinsurers on certain reinsurance programs placed on behalf of the Insurance Entities, policy fees collected from policyholders by the Company’s wholly-owned managing general agent subsidiary and payment plan fees charged to policyholders who choose to pay their premiums in installments. The Company’s wholly-owned adjusting company receives claims-handling fees from the Insurance Entities. The Insurance Entities are reimbursed for these fees on claims that are subject to recovery under the Insurance Entities’ respective reinsurance programs. These fees, after expenses, are recorded in the Condensed Consolidated Financial Statements as an adjustment to losses and loss adjustment expense (“LAE”).
Basis of Presentation
The Company has prepared the accompanying unaudited Condensed Consolidated Financial Statements (“Financial Statements”) in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, the Financial Statements do not include all of the information and footnotes required by United States Generally Accepted Accounting Principles (“U.S. GAAP”) for annual financial statements. Therefore, the Financial Statements should be read in conjunction with the audited Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on February 26, 2021. The Condensed Consolidated Balance Sheet at December 31, 2020 was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation have been included in the Financial Statements. The results for interim periods do not necessarily indicate the results that may be expected for any other interim period or for the full year.
To conform to the current period presentation, certain amounts in the prior periods’ condensed consolidated financial statements and notes have been reclassified. Such reclassifications were of an immaterial amount and had no effect on net income or stockholders’ equity.
The Financial Statements include the accounts of the Company and its wholly-owned subsidiaries, as well as variable interest entities (“VIE”) in which the Company is determined to be the primary beneficiary. All material intercompany balances and transactions have been eliminated in consolidation.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. The Company’s primary use of estimates is in the recognition of liabilities for unpaid losses, loss adjustment expenses, subrogation recoveries and reinsurance recoveries. Actual results could differ from those estimates.

9

2. Significant Accounting Policies
The Company reported Significant Accounting Policies in its Annual Report on Form 10-K for the year ended December 31, 2020. The following are new or revised disclosures or disclosures required on a quarterly basis.
Accounting Policies

Assets Held for Sale. The Company considers properties, including land, to be assets held for sale when (1) management commits to a plan to sell the property; (2) it is unlikely that the disposal plan will be significantly modified or discontinued; (3) the property is available for immediate sale in its present condition; (4) actions required to complete the sale of the property have been initiated; (5) sale of the property is probable and the Company expects the completed sale will occur within one year; and (6) the property is actively being marketed for sale at a price that is reasonable given our estimate of current market value. Upon designation of a property as an asset held for sale, we record the property’s value at the lower of its carrying value or its estimated fair value, less estimated costs to sell, and the Company ceases depreciation. Assets held for sale are stated separately in the accompanying Condensed Consolidated Balance Sheets.



10

3. Investments
Available-for-Sale Securities
The following table provides the amortized cost and fair value of available-for-sale debt securities as of the dates presented (in thousands):
September 30, 2021
Amortized
Cost
Allowance for Expected Credit Losses Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
Debt Securities:
  U.S. government obligations and agencies $ 37,291  $ —  $ 102  $ (277) $ 37,116 
  Corporate bonds 640,855  (236) 1,435  (7,562) 634,492 
  Mortgage-backed and asset-backed securities 336,881  —  493  (3,620) 333,754 
  Municipal bonds 14,925  (1) (244) 14,681 
  Redeemable preferred stock 9,090  (53) 90  (13) 9,114 
Total $ 1,039,042  $ (290) $ 2,121  $ (11,716) $ 1,029,157 

December 31, 2020
Amortized
Cost
Allowance for Expected Credit Losses Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
Debt Securities:
  U.S. government obligations and agencies $ 59,529  $ —  $ 157  $ (55) $ 59,631 
  Corporate bonds 416,758  (148) 3,571  (337) 419,844 
  Mortgage-backed and asset-backed securities 319,377  —  1,175  (615) 319,937 
  Municipal bonds 11,990  —  138  —  12,128 
  Redeemable preferred stock 7,993  (38) 424  (58) 8,321 
Total $ 815,647  $ (186) $ 5,465  $ (1,065) $ 819,861 

The following table provides the credit quality of available-for-sale debt securities as of the dates presented (dollars in thousands):
September 30, 2021 December 31, 2020
Equivalent S&P Credit Ratings Fair Value % of Total
 Fair Value
Fair Value % of Total
 Fair Value
AAA $ 330,344  32.1  % $ 337,462  41.2  %
AA 143,806  14.0  % 89,681  10.9  %
A 315,761  30.7  % 230,290  28.1  %
BBB 229,208  22.2  % 160,662  19.6  %
BB and Below —  —  % 233  —  %
No Rating Available 10,038  1.0  % 1,533  0.2  %
   Total $ 1,029,157  100.0  % $ 819,861  100.0  %

The table above includes credit quality ratings by Standard and Poor’s Rating Services, Inc. (“S&P”), Moody’s Investors Service, Inc. and Fitch Ratings, Inc. The Company has presented the highest rating of the three rating agencies for each investment position.
11

The following table summarizes the amortized cost and fair value of mortgage-backed and asset-backed securities as of the dates presented (in thousands):
September 30, 2021 December 31, 2020
Amortized
Cost
Fair Value Amortized
Cost
Fair Value
Mortgage-backed Securities:
Agency $ 149,850  $ 147,723  $ 153,937  $ 153,758 
Non-agency 68,025  66,940  54,231  54,666 
Asset-backed Securities:
Auto loan receivables 71,716  71,764  68,188  68,440 
Credit card receivables 4,756  4,749  7,878  7,891 
Other receivables 42,534  42,578  35,143  35,182 
Total $ 336,881  $ 333,754  $ 319,377  $ 319,937 
The following tables summarize available-for-sale debt securities, aggregated by major security type and length of time that individual securities have been in a continuous unrealized loss position, for which no allowance for expected credit losses has been recorded as of the dates presented (in thousands):
September 30, 2021
Less Than 12 Months 12 Months or Longer
Number of
Issues
Fair Value Unrealized
Losses
Number of
Issues
Fair Value Unrealized
Losses
Debt Securities:
U.S. government obligations and agencies $ 21,069  $ (145) $ 1,981  $ (132)
Corporate bonds 216  304,464  (4,143) 12,896  (339)
Mortgage-backed and asset-backed securities 108  232,904  (3,425) 5,320  (195)
Municipal bonds 8,881  (199) —  —  — 
Redeemable preferred stock 498  (2) —  —  — 
Total 334  $ 567,816  $ (7,914) 14  $ 20,197  $ (666)

December 31, 2020
Less Than 12 Months 12 Months or Longer
Number of
Issues
Fair Value Unrealized
Losses
Number of
Issues
Fair Value Unrealized
Losses
Debt Securities:
U.S. government obligations and agencies $ 31,729  $ (55) —  $ —  $ — 
Corporate bonds 27  28,791  (162) —  —  — 
Mortgage-backed and asset-backed securities 42  112,462  (615) —  —  — 
Municipal bonds —  —  —  —  —  — 
Redeemable preferred stock 688  (12) —  —  — 
Total 79  $ 173,670  $ (844) —  $ —  $ — 

Unrealized losses on available-for-sale debt securities in the above table as of September 30, 2021 have not been recognized into income as credit losses because the issuers are of high credit quality (investment grade securities), management does not intend to sell and it is likely management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions. There were no material factors impacting any one category or specific security requiring an accrual for credit loss. The issuers continue to make principal and interest payments on the bonds. The fair value is expected to recover as the bonds approach maturity.

12


The following table presents a reconciliation of the beginning and ending balances for expected credit losses on available-for-sale debt securities (in thousands):
Corporate Bonds Municipal Bonds Redeemable
 Preferred Stock
Total
Balance, December 31, 2019 $ —  $ —  $ —  $ — 
Cumulative effect adjustment as of January 1, 2020 665  —  126  791 
Increase (decrease) (517) —  (88) (605)
Balance, December 31, 2020 148  —  38  186 
Increase (decrease) 88  15  104 
Balance, September 30, 2021 $ 236  $ $ 53  $ 290 

For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For available-for-sale debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by rating agencies, market sentiment and trends and adverse conditions specifically related to the security, among other quantitative and qualitative factors utilized for establishing an estimate for credit losses. If the assessment indicates that a credit loss exists, the present values of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.

Changes in the allowance for credit losses are recorded as a provision for (or reversal of) credit loss expense. Losses are charged against the allowance when management believes an available-for-sale debt security is confirmed as uncollected or when either of the criteria regarding intent or requirement to sell is met.
The following table presents the amortized cost and fair value of investments with maturities as of the date presented (in thousands):
September 30, 2021
Amortized Cost Fair Value
Due in one year or less $ 31,202  $ 31,275 
Due after one year through five years 609,963  606,996 
Due after five years through ten years 370,677  363,943 
Due after ten years 26,301  26,046 
Perpetual maturity securities 899  897 
Total $ 1,039,042  $ 1,029,157 

All securities, except those with perpetual maturities, were categorized in the table above utilizing years to effective maturity. Effective maturity takes into consideration all forms of potential prepayment, such as call features or prepayment schedules, that shorten the lifespan of contractual maturity dates.
13

The following table provides certain information related to available-for-sale debt securities, equity securities and investment in real estate during the periods presented (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021 2020 2021 2020
Proceeds from sales and maturities (fair value):
  Available-for-sale debt securities (1) $ 32,320  $ 773,673  $ 146,611  $ 873,355 
  Equity securities $ 48,486  $ —  $ 53,651  $ — 
Gross realized gains on sale of securities:
  Available-for-sale debt securities (1) $ 882  $ 53,893  $ 1,899  $ 54,779 
  Equity securities $ 1,315  $ —  $ 2,399  $ — 
Gross realized losses on sale of securities:
  Available-for-sale debt securities (1) $ (192) $ (66) $ (1,656) $ (485)
  Equity securities $ —  $ —  $ —  $ — 
Realized gains on sales of investment real estate (2) $ —  $ —  $ 401  $ — 
(1)
In the third quarter of 2020, the Company took advantage of the market recovery and recognized $53.8 million of net realized gains on the sale of our available-for-sale debt securities that were in an unrealized gain position.
(2)
 See the discussion below for “Investment Real Estate” sold.
The following table presents the components of net investment income, comprised primarily of interest and dividends, for the periods presented (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021 2020 2021 2020
Available-for-sale debt securities $ 2,799  $ 4,394  $ 8,393  $ 16,425 
Equity securities 544  583  1,787  1,732 
Cash and cash equivalents (1) 49  28  935 
Other (2) 274  268  809  782 
  Total investment income 3,619  5,294  11,017  19,874 
Less: Investment expenses (3) (822) (737) (2,376) (2,304)
  Net investment income $ 2,797  $ 4,557  $ 8,641  $ 17,570 
(1)
Includes interest earned on restricted cash and cash equivalents.
(2)
Includes investment income earned on real estate investments.
(3)
Includes custodial fees, investment accounting and advisory fees, and expenses associated with real estate investments.

Equity Securities
The following table provides the unrealized gains and losses recognized for the periods presented on equity securities still held at the end of the reported period (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021 2020 2021 2020
Unrealized gains (losses) recognized during the reported period on equity securities still held at the end of the reported period $ (3,418) $ 1,991  $ (2,391) $ (2,162)
14


Assets Held for Sale as of September 30, 2021
During the second quarter of 2021, the Company committed to a plan to actively market the sale of a real estate property previously included in property and equipment, net. The real estate property is located in Pompano Beach, Florida. Proceeds from the sale are expected to exceed the property’s carrying value of $0.3 million and, accordingly, no impairment loss was recognized on the classification of this real estate property as held for sale.
During the first quarter of 2021, the Company committed to a plan to actively market an income-producing investment real estate property and classified the investment property to assets held for sale. On September 30, 2021, the Company completed the sale and received net cash proceeds of approximately $8.9 million and recognized a pre-tax gain of approximately $2.3 million that is included in net realized gains (losses) on investments in the Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2021.

Investment Real Estate
Investment real estate consisted of the following as of the dates presented (in thousands):
September 30, December 31,
2021 2020
Income Producing:
Investment real estate $ 7,087  $ 14,685 
Less: Accumulated depreciation (1,153) (1,699)
5,934  12,986 
Non-Income Producing:    
Investment real estate —  2,190 
Investment real estate, net $ 5,934  $ 15,176 
During the first quarter of 2021, the Company completed the sale of a non-income producing investment real estate property. The Company received net cash proceeds of approximately $2.6 million and recognized a pre-tax gain of approximately $0.4 million that is included in net realized gains (losses) on investments in the Condensed Consolidated Statements of Income for the nine months ended September 30, 2021.
Depreciation expense related to investment real estate for the periods presented (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
  2021 2020 2021 2020
Depreciation expense on investment real estate $ 47  $ 103  $ 139  $ 311 

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4. Reinsurance
The Company seeks to reduce its risk of loss by reinsuring certain levels of risk in various areas of exposure with other insurance enterprises or reinsurers, generally as of the beginning of the hurricane season on June 1st of each year. The Company’s current reinsurance programs consist principally of catastrophe excess of loss reinsurance, subject to the terms and conditions of the applicable agreements. Notwithstanding the purchase of such reinsurance, the Company is responsible for certain retained loss amounts before reinsurance attaches and for insured losses related to catastrophes and other events that exceed coverage provided by the reinsurance programs. The Company remains responsible for the settlement of insured losses irrespective of whether any of the reinsurers fail to make payments otherwise due.
Amounts recoverable from reinsurers are estimated in a manner consistent with the provisions of the reinsurance contracts and consistent with the establishment of the gross liability for losses, LAE and other expenses. Reinsurance premiums, losses and LAE are accounted for on a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts.
To reduce credit risk for amounts due from reinsurers, the Insurance Entities seek to do business with financially sound reinsurance companies and regularly evaluate the financial strength of all reinsurers used.
The following table presents ratings from rating agencies and the unsecured amounts due from the reinsurers whose aggregate balance exceeded 3% of the Company’s stockholders’ equity as of the dates presented (in thousands):
  Ratings as of September 30, 2021 Due from as of
Reinsurer AM Best
Company
Standard
and Poor’s
Rating
Services, Inc.
Moody’s
Investors Service, Inc.
September 30, 2021 December 31, 2020
Florida Hurricane Catastrophe Fund (1) n/a n/a n/a $ 52,992  $ 121,298 
Allianz Risk Transfer (Bermuda) Ltd. A+ AA Aa3 41,553  96,652 
Allianz Risk Transfer —  21,087 
Renaissance Reinsurance Ltd. —  18,285 
Total (2) $ 94,545  $ 257,322 
(1)No rating is available because the fund is not rated.
(2)Amounts represent prepaid reinsurance premiums and net recoverables for paid and unpaid losses, including incurred but not reported reserves, and loss adjustment expenses.
The Company’s reinsurance arrangements had the following effect on certain items in the Condensed Consolidated Statements of Income for the periods presented (in thousands):
Three Months Ended September 30,
2021 2020
Premiums
Written
Premiums
Earned
Losses and Loss
Adjustment
Expenses
Premiums
Written
Premiums
Earned
Losses and Loss
Adjustment
Expenses
Direct $ 432,984  $ 410,621  $ 264,068  $ 409,418  $ 357,208  $ 347,207 
Ceded (124) (145,967) (76,487) (3,062) (123,017) (108,730)
Net $ 432,860  $ 264,654  $ 187,581  $ 406,356  $ 234,191  $ 238,477 
Nine Months Ended September 30,
2021 2020
Premiums
Written
Premiums
Earned
Losses and Loss
Adjustment
Expenses
Premiums
Written
Premiums
Earned
Losses and Loss
Adjustment
Expenses
Direct $ 1,271,925  $ 1,178,801  $ 777,668  $ 1,148,656  $ 1,020,798  $ 682,896 
Ceded (585,413) (414,670) (278,903) (497,263) (339,408) (158,026)
Net $ 686,512  $ 764,131  $ 498,765  $ 651,393  $ 681,390  $ 524,870 
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The following prepaid reinsurance premiums and reinsurance recoverable are reflected in the Condensed Consolidated Balance Sheets as of the dates presented (in thousands):
September 30, December 31,
2021 2020
Prepaid reinsurance premiums $ 386,466  $ 215,723 
Reinsurance recoverable on paid losses and LAE $ 52,215  $ 40,895 
Reinsurance recoverable on unpaid losses and LAE 82,720  119,522 
Reinsurance recoverable $ 134,935  $ 160,417 

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5. Insurance Operations
Deferred Policy Acquisition Costs
The Company defers certain costs in connection with written premium, called Deferred Policy Acquisition Costs (“DPAC”). DPAC is amortized over the effective period of the related insurance policies.
The following table presents the beginning and ending balances and the changes in DPAC for the periods presented (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021 2020 2021 2020
DPAC, beginning of period $ 115,971  $ 103,527  $ 110,614  $ 91,882 
Capitalized Costs 55,054  58,727  170,996  164,700 
Amortization of DPAC (57,046) (50,959) (167,631) (145,287)
DPAC, end of period $ 113,979  $ 111,295  $ 113,979  $ 111,295 
Regulatory Requirements and Restrictions
The Insurance Entities are subject to regulations and standards of the Florida Office of Insurance Regulation (“FLOIR”). The Insurance Entities are also subject to regulations and standards of regulatory authorities in other states where they are licensed, although as Florida-domiciled insurers, their principal regulatory authority is the FLOIR. These standards and regulations require the Insurance Entities to maintain specified levels of statutory capital and restrict the timing and amount of dividends and other distributions that may be paid by the Insurance Entities to the parent company. Except in the case of extraordinary dividends, these standards generally permit dividends to be paid from statutory unassigned funds of the regulated subsidiary and are limited based on the regulated subsidiary’s level of statutory net income and statutory capital and surplus. The maximum dividend that may be paid by the Insurance Entities to their immediate parent company, Protection Solutions, Inc. (“PSI”, formerly known as Universal Insurance Holding Company of Florida), without prior regulatory approval is limited by the provisions of the Florida Insurance Code. These dividends are referred to as “ordinary dividends.” However, if the dividend, together with other dividends paid within the preceding twelve months, exceeds this statutory limit or is paid from sources other than earned surplus, the entire dividend is generally considered an “extraordinary dividend” and must receive prior regulatory approval.
In accordance with Florida Insurance Code, and based on the calculations performed by the Company as of September 30, 2021, UPCIC and APPCIC currently are not able to pay any ordinary dividends. For the three and nine months ended September 30, 2021 and 2020, no dividends were paid from the Insurance Entities to PSI.
Effective July 1, 2021, the Florida Insurance Code requires a residential property insurance company to maintain statutory surplus as to policyholders of at least $15.0 million or ten percent of the insurer’s total liabilities, whichever is greater. As of December 31, 2020, this minimum requirement was the greater of $10.0 million or ten percent of the insurer’s total liabilities. The following table presents the amount of capital and surplus calculated in accordance with statutory accounting principles, which differ from U.S. GAAP, and an amount representing ten percent of total liabilities for each of the Insurance Entities as of the dates presented (in thousands):
September 30, 2021 December 31, 2020
Statutory capital and surplus
  UPCIC (1) (2) $ 363,465  $ 360,707 
  APPCIC $ 16,417  $ 12,918 
Ten percent of total liabilities
  UPCIC $ 129,593  $ 98,682 
  APPCIC $ 7,365  $ 1,793 
(1)
As of the dates in the table above, statutory capital and surplus for UPCIC includes a $77 million capital contribution funded in February 2021 by UIH through PSI, the Insurance Entities’ parent company, which the FLOIR permitted to be included in the statutory capital and surplus at December 31, 2020 under statutory accounting principles. This contribution was not recognized on a U.S. GAAP basis at December 31, 2020.
(2)
As of the dates in the table above, statutory capital and surplus for UPCIC includes a $20 million Subordinated Surplus Debenture funded in October 2021 by UIH through PSI, the Insurance Entities’ parent company, which the FLOIR permitted to be included in UPCIC’s statutory capital and surplus at September 30, 2021 under statutory accounting principles. This contribution was not recognized on a U.S. GAAP basis at September 30, 2021.

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As of the dates in the table above, the Insurance Entities each exceeded the minimum statutory capitalization requirement.

The Insurance Entities also met the capitalization requirements of the other states in which they were licensed as of September 30, 2021. The Insurance Entities are also required to adhere to prescribed premium-to-capital surplus ratios and each met those requirements at such dates.
Through PSI, UIH recorded contributions for the periods presented (in thousands):

Three Months Ended
September 30,
Nine Months Ended
September 30,
2021 2020 2021 2020
Capital contributions - UPCIC $ 15,000  $ 44,000  $ 92,000  $ 74,000 
The following table summarizes combined net income (loss) for the Insurance Entities determined in accordance with statutory accounting practices for the periods presented (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
  2021 2020 2021 2020
Combined net income (loss) $ (22,903) $ (41,436) $ (21,723) $ (37,034)
The Insurance Entities are required by various state laws and regulations to maintain certain assets in depository accounts. The following table represents assets held by insurance regulators as of the dates presented (in thousands):
September 30, 2021 December 31, 2020
Restricted cash and cash equivalents $ 2,635  $ 2,635 
Investments $ 3,484  $ 3,550 

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6. Liability for Unpaid Losses and Loss Adjustment Expenses
Set forth in the following table is the change in liability for unpaid losses and LAE for the periods presented (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
  2021 2020 2021 2020
Balance at beginning of period $ 278,658  $ 147,659  $ 322,465  $ 267,760 
Less: Reinsurance recoverable (113,157) (26,107) (119,522) (123,221)
Net balance at beginning of period 165,501  121,552  202,943  144,539 
Incurred related to:    
Current year 176,092  208,392  480,782  489,966 
Prior years 11,489  30,085  17,983  34,904 
Total incurred 187,581  238,477  498,765  524,870 
Paid related to:    
Current year 180,473  172,977  386,302  355,479 
Prior years 42,841  43,661  185,638  170,539 
Total paid 223,314  216,638  571,940  526,018 
Net balance at end of period 129,768  143,391  129,768  143,391 
Plus: Reinsurance recoverable 82,720  59,329  82,720  59,329 
Balance at end of period $ 212,488  $ 202,720  $ 212,488  $ 202,720 

During the three months ended September 30, 2021, there was adverse prior years’ reserve development of $87.9 million gross, less $76.4 million ceded, resulting in $11.5 million net development. The direct and net prior years’ reserve development for the quarter ended September 30, 2021 was principally due to a direct increase in the ultimate losses for hurricanes of $81.7 million offset by ceded hurricane losses of $76.4 million resulting in net unfavorable development of $5.3 million. Direct losses increased for Hurricanes Irma and Sally. Excluding hurricanes, there was $6.2 million of direct and net prior years’ reserve development for the quarter ended September 30, 2021. This development, primarily from the 2019 and prior accident years, resulted from settlements on litigated claims exceeding prior estimated amounts.

During the three months ended September 30, 2020, there was adverse prior years’ reserve development of $136.7 million gross, less $106.7 million ceded, resulting in $30.1 million net development. The net prior years’ reserve development for the quarter ended September 30, 2020 was principally due to increased ultimate losses and LAE for Hurricane Irma not recoverable from the Florida Hurricane Catastrophe Fund (”FHCF”) and increased prior years’ companion claims in the run-up to the expiration of the statutory limitations period for filing Hurricane Irma claims.

During the nine months ended September 30, 2021, there was adverse prior years’ reserve development of $296.9 million gross, less $278.9 million ceded, resulting in $18.0 million net development. The direct and net prior year reserve development for the nine months ended September 30, 2021 was principally due to a direct increase in the ultimate losses for several hurricanes of $282.9 million, offset by ceded hurricane losses of $278.9 million, resulting in net unfavorable reserve development of $4.0 million. Direct losses increased for Hurricanes Irma, Sally, Michael and Matthew. Excluding hurricanes, there was $14.0 million of direct and net prior years’ reserve development for the nine months ended September 30, 2021. This development, primarily from the 2019 and prior accident years, resulted from settlements on litigated claims exceeding prior estimated amounts.

During the nine months ended September 30, 2020, there was adverse prior years’ reserve development of $190.8 million gross, less $155.9 million ceded, resulting in $34.9 million net unfavorable development. The direct and net prior years’ reserve development for the nine months ended September 30, 2020 was principally due to increased ultimate losses and LAE for Hurricane Irma not recoverable from the FHCF and increased prior years’ companion claims in the run-up to the expiration of the statutory limitations period for Hurricane Irma.

With respect to hurricanes occurring prior to July 1, 2020, Florida law barred new, supplemental or reopened claims for losses caused by the perils of windstorms or hurricanes unless notice was provided within three years of the event. In September 2020, the three-year period following Hurricane Irma expired. The Company continues to adjust and settle Hurricane Irma claims that were reported prior to the expiration of the three-year period. Effective July 1, 2021, the Florida legislature amended the law to require a new or reopened claim, whether or not attributable to a hurricane, to be filed within two years of the date of loss.
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7. Debt
Surplus Note
Consists of the following as of the dates presented (in thousands):
September 30, December 31,
2021 2020
Surplus note $ 7,353  $ 8,456 
In 2006, UPCIC entered into a $25.0 million surplus note with the State Board of Administration of Florida (the “SBA”) under Florida’s Insurance Capital Build-Up Incentive Program. The surplus note has a twenty-year term and accrues interest, adjusted quarterly based on the 10-year Constant Maturity Treasury Index. Principal and interest are paid periodically pursuant to terms of the surplus note. UPCIC was in compliance with the terms of the surplus note as of September 30, 2021.
Unsecured Revolving Loan
In August 2021, the Company entered into a credit agreement and related revolving loan (“Revolving Loan”) with JPMorgan Chase Bank, N.A. (“JPMorgan”). The Revolving Loan makes available to the Company an unsecured revolving credit facility with an aggregate commitment not to exceed $35.0 million and carries an interest rate of prime rate plus a margin of 2%. The Company must pay an annual commitment of 0.50% of the unused portion of the commitment. Borrowings under the Revolving Loan mature 364 days after the date of the loan.
The Revolving Loan contains customary financial covenants. As of September 30, 2021, the Company was in compliance with all applicable covenants, including financial covenants. The Company has not drawn any amount under the Revolving Loan as of September 30, 2021.

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8. Stockholders’ Equity

From time to time, the Company’s Board of Directors may authorize share repurchase programs under which the Company may repurchase shares of the Company’s common stock in the open market. The following table presents repurchases of the Company’s common stock for the periods presented (in thousands, except total number of shares repurchased and per share data):

Total Number of Shares Average
Repurchased During the Aggregate Price Per
Dollar Amount Nine Months Ended September 30, Purchase Share
Date Authorized Expiration Date Authorized 2021 2020 Price  Repurchased Plan Completed
November 3, 2020 November 3, 2022 $ 20,000  116,886  —  $ 1,609  $ 13.77 
November 6, 2019 December 31, 2021 $ 40,000  —  1,418,087  $ 26,501  $ 18.69  November 2020
See the “Condensed Consolidated Statements of Stockholders’ Equity” for a roll-forward of treasury shares.



22

9. Income Taxes
During the three months ended September 30, 2021 , the Company recorded approximately $6.3 million of income tax expense compared to $0.6 million of income tax benefit for the three months ended September 30, 2020. The effective tax rate (“ETR”) for the three months ended September 30, 2021 was 23.7% compared to a 16.4% ETR for the same period in 2020.
During the nine months ended September 30, 2021 and 2020, the Company recorded approximately $24.3 million and $14.5 million of income tax expense, respectively. The ETR for the nine months ended September 30, 2021 was 26.2% compared to a 28.2% ETR for the same period in 2020.
In calculating these rates, the Company considered a variety of factors including the forecasted full year pre-tax results, the U.S. federal tax rate, expected non-deductible expenses and estimated state income taxes. The Company’s final ETR for the full year will be dependent on the level of pre-tax income, discrete items, the apportionment of taxable income among state tax jurisdictions and the extent of non-deductible expenses in relation to pre-tax income.
The Company’s income tax provision reflects an estimated annual ETR of 26.9% for 2021, calculated before the impact of discrete items. The effect of reporting discrete items through September 30, 2021 amounts to an increase to the annual estimated ETR of 10 basis points, resulting in a total annual estimated ETR of 27.0%. The annual estimated ETR includes a federal income tax rate of 21% and a state income tax rate, net of federal benefit, of 2.4%.
Deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax basis of assets and liabilities at the enacted tax rates. The Company reviews its deferred tax assets regularly for recoverability. Management has reviewed all available evidence, both positive and negative, in determining the need for a valuation allowance with respect to the gross deferred tax assets. In reviewing the gross deferred tax assets, management has concluded that the likelihood for utilization of these deferred tax assets is certain (greater than 50%) and determined that a valuation allowance on any of the deferred tax assets is not required. Management will continue to analyze the gross deferred tax assets on a quarterly basis to determine whether there is a need for a valuation allowance in the future.
The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. As of September 30, 2021, the Company’s 2017 through 2019 tax years are still subject to examination by the Internal Revenue Service and various tax years remain open to examination in certain state jurisdictions.
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10. Earnings Per Share
Basic earnings per share (“EPS”) is computed based on the weighted average number of common shares outstanding for the period, excluding any dilutive common share equivalents. Diluted EPS reflects the potential dilution resulting from exercises of stock options, vesting of performance share units, vesting of restricted stock, vesting of restricted stock units, and conversion of preferred stock.
The following table reconciles the numerator (i.e., income) and denominator (i.e., shares) of the basic and diluted EPS computations for the periods presented (in thousands, except per share data):
Three Months Ended
September 30,
Nine Months Ended
September 30,
  2021 2020 2021 2020
Numerator for EPS:
Net income (loss) $ 20,183  $ (3,169) $ 68,532  $ 36,780 
Less: Preferred stock dividends (3) (3) (8) (8)
Income (loss) available to common stockholders $ 20,180  $ (3,172) $ 68,524  $ 36,772 
Denominator for EPS:    
Weighted average common shares outstanding 31,247  31,659  31,232  32,116 
Plus: Assumed conversion of share-based compensation (1) 65  —  45  61 
     Assumed conversion of preferred stock 25  —  25  25 
Weighted average diluted common shares outstanding 31,337  31,659  31,302  32,202 
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 
(1)
Represents the dilutive effect of unexercised stock options, unvested performance share units, unvested restricted stock units and unvested restricted stock.


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11. Other Comprehensive Income (Loss)
The following table provides the components of other comprehensive income (loss) on a pre-tax and after-tax basis for the periods presented (in thousands):

  Three Months Ended September 30,