- 4Q21 direct premiums earned up 11.5%; FY21 up 14.4% driven by
primary rate increases
- 4Q21 diluted GAAP earnings per share (EPS) of $(1.54), non-GAAP
adjusted EPS1 of $(1.53) predominantly driven by inflationary
trends
- FY21 diluted GAAP EPS of $0.65, non-GAAP adjusted EPS1 of
$0.61
- Clovered.com, our digital agency subsidiary surpassed $40
million in placed premiums in 2021
- 4Q21 completed private placement of $100 million senior
unsecured notes
Universal Insurance Holdings (NYSE: UVE) (the “Company”)
reported fourth quarter and full year 2021 results.
1 Excludes net realized and unrealized gains and losses on
investments as well as extraordinary reinstatement premiums and
associated commissions (“non-GAAP adjusted EPS”). Reconciliations
of GAAP to non-GAAP financial measures are provided in the attached
tables.
“We ended the year with a record of approximately $1.7 billion
of premiums in force and a return on average equity of 4.6%,
despite the accelerated inflationary trends we announced on
February 10th, which resulted in the Company increasing reserves,”
said Stephen J. Donaghy, Chief Executive Officer. “Additionally,
Clovered.com, our digital agency subsidiary surpassed $40 million
in placed premiums during 2021. The lion’s share of our approved
rate filings for UPCIC in Florida over the past several quarters
for new and renewal business are now effective. We continue to
sharpen our pencils on our 2022 Florida primary rate filing in the
coming months and are hitting the ground running on our reinsurance
renewal, with over 77% of capacity on our first event All States
tower already secured. We look forward to continuing to focus on
resiliency through this cycle and are monitoring closely the
actions in the Florida legislature in regards to several bills,
including SB1728, SB1402 and SB186, amongst others.”
Summary Financial Results
($thousands, except per share
data)
Three Months Ended December
31,
Twelve Months Ended December
31,
2021
2020
Change
2021
2020
Change
(GAAP comparison)
Total revenue
$
292,659
$
273,126
7.2
%
$
1,121,851
$
1,072,770
4.6
%
Income (loss) before income taxes
(64,461
)
(26,999
)
(138.8
) %
28,413
24,231
17.3
%
Income (loss) before income taxes
margin
(22.0
) %
(9.9
) %
(12.1) pts
2.5
%
2.3
%
20 bps
Diluted EPS
(1.54
)
(0.57
)
(170.2
) %
0.65
0.60
8.3
%
Annualized return on average equity
(ROE)
(41.6
) %
(15.4
) %
(26.2) pts
4.6
%
4.1
%
50 bps
Book value per share, end of period
13.76
14.43
(4.6
) %
13.76
14.43
(4.6
) %
(Non-GAAP comparison)2
Adjusted operating income
(63,433
)
(38,227
)
(65.9
) %
27,205
(39,044
)
NM
Adjusted EPS
(1.53
)
(0.84
)
(82.1
) %
0.61
(0.90
)
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 extraordinary
reinstatement premiums and associated commissions. Non-GAAP
adjusted EPS excludes net realized and unrealized gains and losses
on investments, as well as extraordinary reinstatement premiums and
associated commissions.
NM = Not Meaningful
Total revenue grew 7.2% for the quarter and 4.6% for the year,
driven primarily by growth in net premiums earned from primary rate
increases, partially offset, primarily by lower policies-in-force,
and lower realized gains on the investment portfolio, and increased
reinsurance costs. GAAP diluted EPS and non-GAAP adjusted EPS
results for the quarter and the year benefited from continued
primary rate increases earnings-in, but were predominantly impacted
by strengthening of reserves due to inflationary trends and a
reduction in realized gains on the investment portfolio when
compared to the prior year period.
Underwriting
($thousands, except policies in
force)
Three Months Ended December
31,
Twelve Months Ended December
31,
2021
2020
Change
2021
2020
Change
Policies in force (as of end of
period)
943,593
984,830
(4.2
)%
943,593
984,830
(4.2
)%
Premiums in force (as of end of
period)
$
1,679,822
$
1,519,949
10.5
%
$
1,679,822
$
1,519,949
10.5
%
Direct premiums written
399,327
368,823
8.3
%
1,671,252
1,517,479
10.1
%
Direct premiums earned
417,817
374,825
11.5
%
1,596,618
1,395,623
14.4
%
Net premiums earned
271,332
242,173
12.0
%
1,035,463
923,563
12.1
%
Expense ratio3
28.1
%
27.3
%
80 bps
30.2
%
31.4
%
(1.2) pts
Loss & LAE ratio
103.3
%
96.7
%
6.6 pts
75.3
%
82.2
%
(6.9) pts
Combined ratio
131.4
%
124.0
%
7.4 pts
105.5
%
113.6
%
(8.1) pts
3 Expense ratio excludes interest
expense.
Direct premiums earned were up 11.5% for the quarter, and 14.4%
for the year, led by primary rate increases in Florida and other
states, while policies-in-force declined 4.2% as a result of
continuing to shape our underwriting risks.
On the expense side, the combined ratio increased 7.4 points for
the quarter driven primarily by strengthening reserves for the full
accident year 2021 as a result of inflationary pressures and
increased reinsurance costs impact on the ratio. For the full year,
the combined ratio improved 8.1 points as a result of decreased
weather events in 2021, lower prior years’ adverse reserve
development, and continued business expense management.
- The expense ratio increased 50 basis points on a direct
premiums earned basis for the quarter. For the year, the expense
ratio improved 1.2 points on a direct premiums earned basis due to
business expense management, including a reduction in agent
commissions, advertising, and lower executive compensation, as well
as primary rate increases impact on the ratio.
- The net loss and loss adjustment expense ratio increased 6.6
points for the quarter, but improved 6.9 points for the year.
Quarterly and full year drivers for 2021 include:
- Core losses of $216.0 million for the quarter ($134.5 million
in 4Q20) and $696.8 million for the year ($538.5 million in 2020)
resulted in a 15.8 point increase on a direct premiums earned basis
for the quarter and a 5.0 point increase for the year, primarily
driven by accruing incremental reserves as a result of materials,
labor, and social inflation. On a net basis, core losses increased
24.0 points for the quarter and 9.0 points for the year.
- A 21.1 point net improvement for the quarter and a 14.9 point
net improvement for the year related to weather events being more
in line with plan.
- Net prior years’ adverse reserve development of $36.5 million
for the quarter ($23.4 million in 4Q20) and $54.5 million for the
year ($58.3 million in 2020) resulted in a 3.7 point net increase
for the quarter and a 1.0 point net improvement for the year. The
net prior years’ adverse reserve development for the year was
primarily driven by Non-CAT claims, and to a lesser extent
Hurricane Irma related claims.
Services
($thousands)
Three Months Ended December
31,
Twelve Months Ended December
31,
2021
2020
Change
2021
2020
Change
Commission revenue
$
11,245
$
9,393
19.7
%
$
41,649
$
33,163
25.6
%
Policy fees
4,892
5,520
(11.4
) %
22,713
23,773
(4.5
) %
Other revenue
1,769
1,972
(10.3
) %
7,631
8,501
(10.2
) %
Total
$
17,906
$
16,885
6.0
%
$
71,993
$
65,437
10.0
%
Total services revenue increased 6.0% for the quarter and 10.0%
for the full year. The increases were driven by commission revenue
earned on ceded premiums, partially offset by a decrease in
policies fees due to a decrease in volume and other revenue.
Investments
($thousands)
Three Months Ended December
31,
Twelve Months Ended December
31,
2021
2020
Change
2021
2020
Change
Net investment income
$
3,894
$
2,823
37.9
%
$
12,535
$
20,393
(38.5
) %
Realized gains (losses)
535
9,058
(94.1
) %
5,892
63,352
(90.7
) %
Unrealized gains (losses)
(1,008
)
2,187
NM
(4,032
)
25
NM
NM = Not Meaningful
Net investment income increased 37.9% for the quarter, primarily
due to higher levels of invested assets. For the full year, net
investment income decreased 38.5% as well as a significant decline
in realized gains for the quarter and full year. The declines 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. Unrealized
losses for the quarter and for the full year were driven by market
fluctuations in invested assets resulting in an unfavorable outcome
for the quarter and the full year.
Capital Deployment
For the full year, the Company repurchased approximately 117
thousand shares at an aggregate cost of $1.6 million. The Company’s
current share repurchase authorization program has $17.8 million
remaining as of December 31, 2021 and runs through November 3,
2022.
During the fourth quarter the Board of Directors declared a
quarterly regular and special cash dividend, together totaling 29
cents per share of common stock, which was paid on December 17,
2021, to shareholders of record as of the close of business on
December 10, 2021. This marked more than 10 consecutive years
declaring a fourth quarter special dividend. The 29 cents per share
dividend consists of a regular quarterly cash dividend of 16 cents
per share and a special cash dividend of 13 cents per share,
bringing the total regular and special dividends declared in 2021
to 77 cents per share.
Guidance
Universal initiated the following guidance for fiscal 2022:
- GAAP and Non-GAAP Adjusted EPS in a range of $1.80 - $2.20
(assuming no extraordinary weather events in 2022)
- Annualized return on average equity in a range of 12.5% -
15.0%
Conference Call and Webcast
- Friday, February 25, 2022 at 9:00 a.m. ET
- U.S. Dial-in Number: (855) 752-6647
- International: (503) 343-6667
- Participant code: 7899332
- 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: 7899332 through March 12, 2022
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
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 Annual Report on Form 10-K for the year ended December
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 2021
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)
December 31,
December 31,
2021
2020
ASSETS
Invested Assets
Fixed maturities, at fair value
$
1,040,455
$
819,861
Equity securities, at fair value
47,334
84,887
Investment real estate, net
5,891
15,176
Total invested assets
1,093,680
919,924
Cash and cash equivalents
250,508
167,156
Restricted cash and cash equivalents
2,635
12,715
Prepaid reinsurance premiums
240,993
215,723
Reinsurance recoverable
185,589
160,417
Premiums receivable, net
64,923
66,883
Property and equipment, net
53,682
53,572
Deferred policy acquisition costs
108,822
110,614
Goodwill
2,319
2,319
Other assets
52,990
49,418
TOTAL ASSETS
$
2,056,141
$
1,758,741
LIABILITIES AND STOCKHOLDERS'
EQUITY
LIABILITIES:
Unpaid losses and loss adjustment
expenses
$
346,216
$
322,465
Unearned premiums
857,769
783,135
Advance premium
53,694
49,562
Reinsurance payable, net
188,662
10,312
Long-term debt, net
103,676
8,456
Other liabilities
76,422
135,549
Total liabilities
1,626,439
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
108,202
103,445
Accumulated other comprehensive income
(loss), net of taxes
(15,568
)
3,343
Retained earnings
563,713
567,512
Total stockholders' equity
429,702
449,262
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
2,056,141
$
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 - 47,018 and 46,817 shares;
Outstanding - 31,221 and 31,137 shares.
UNIVERSAL INSURANCE HOLDINGS,
INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME (LOSS) (UNAUDITED)
(in thousands)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2021
2020
2021
2020
REVENUES
Net premiums earned
$
271,332
$
242,173
$
1,035,463
$
923,563
Net investment income
3,894
2,823
12,535
20,393
Net realized gains (losses) on sale of
investments
535
9,058
5,892
63,352
Net change in unrealized gains (losses) of
equity securities
(1,008
)
2,187
(4,032
)
25
Commission revenue
11,245
9,393
41,649
33,163
Policy fees
4,892
5,520
22,713
23,773
Other revenue
1,769
1,972
7,631
8,501
Total revenues
292,659
273,126
1,121,851
1,072,770
EXPENSES
Losses and loss adjustment expenses
280,440
233,940
779,205
758,810
Policy acquisition costs
55,880
52,120
226,167
199,102
Other operating expenses
20,245
14,048
87,414
90,525
Interest expense
555
17
652
102
Total expenses
357,120
300,125
1,093,438
1,048,539
Income (loss) before income tax
expense
(64,461
)
(26,999
)
28,413
24,231
Income tax expense (benefit)
(16,336
)
(9,324
)
8,006
5,126
NET INCOME (LOSS)
$
(48,125
)
$
(17,675
)
$
20,407
$
19,105
UNIVERSAL INSURANCE HOLDINGS,
INC. AND SUBSIDIARIES
SHARE AND PER SHARE
INFORMATION
(in thousands, except per
share data)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2021
2020
2021
2020
Weighted average common shares outstanding
- basic
31,177
31,193
31,218
31,884
Weighted average common shares outstanding
- diluted
31,177
31,295
31,307
31,972
Shares outstanding, end of period
31,221
31,137
31,221
31,137
Basic earnings (loss) per common share
$
(1.54
)
$
(0.57
)
$
0.65
$
0.60
Diluted earnings (loss) per common
share
$
(1.54
)
$
(0.57
)
$
0.65
$
0.60
Cash dividend declared per common
share
$
0.29
$
0.29
$
0.77
$
0.77
Book value per share, end of period
$
13.76
$
14.43
$
13.76
$
14.43
Annualized return on average equity
(ROE)
(41.6
) %
(15.4
) %
4.6
%
4.1
%
UNIVERSAL INSURANCE HOLDINGS,
INC. AND SUBSIDIARIES
SUPPLEMENTARY
INFORMATION
(in thousands, except for
Policies In-Force data)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2021
2020
2021
2020
Premiums
Direct premiums written - Florida
$
326,138
$
302,552
$
1,388,318
$
1,250,748
Direct premiums written - Other States
73,189
66,271
282,934
266,731
Direct premiums written - Total
$
399,327
$
368,823
$
1,671,252
$
1,517,479
Direct premiums earned
$
417,817
$
374,825
$
1,596,618
$
1,395,623
Net premiums earned
$
271,332
$
242,173
$
1,035,463
$
923,563
Underwriting Ratios - Net
Loss and loss adjustment expense ratio
103.3
%
96.7
%
75.3
%
82.2
%
General and administrative expense
ratio6
28.1
%
27.3
%
30.2
%
31.4
%
Policy acquisition cost ratio
20.6
%
21.5
%
21.8
%
21.6
%
Other operating expense ratio6
7.5
%
5.8
%
8.4
%
9.8
%
Combined ratio
131.4
%
124.0
%
105.5
%
113.6
%
Other Items
(Favorable)/Unfavorable prior year reserve
development
$
36,467
$
23,433
$
54,450
$
58,337
Points on the loss and loss adjustment
expense ratio
13.4 pts
9.7 pts
5.3 pts
6.3 pts
6 Expense ratio excludes interest
expense.
As of
December 31,
2021
2020
Policies in force
Florida
695,533
728,211
Other States
248,060
256,619
Total
943,593
984,830
Premiums in force
Florida
$
1,395,476
$
1,252,916
Other States
284,346
267,033
Total
1,679,822
1,519,949
Total Insured Value
Florida
$
203,062,948
$
192,504,430
Other States
117,835,486
109,976,625
Total
320,898,434
302,481,055
Three Months Ended December
31, 2021
Direct
Loss Ratio
Ceded
Loss Ratio
Net
Loss Ratio
Premiums earned
$
417,817
$
146,485
$
271,332
Loss and loss adjustment
expenses:
Core losses
$
215,974
51.7
%
$
1
—
%
$
215,973
79.6
%
Weather events7
28,000
6.7
%
—
—
%
28,000
10.3
%
Prior years’ reserve development
167,802
40.2
%
131,335
89.7
%
36,467
13.4
%
Total losses and loss adjustment
expenses
$
411,776
98.6
%
$
131,336
89.7
%
$
280,440
103.3
%
7 Includes only current year weather
events beyond those expected.
Twelve Months Ended December
31, 2021
Direct
Loss Ratio
Ceded
Loss Ratio
Net
Loss Ratio
Premiums earned
$
1,596,618
$
561,155
$
1,035,463
Loss and loss adjustment
expenses:
Core losses
$
696,775
43.6
%
$
20
—
%
$
696,755
67.3
%
Weather events7
28,000
1.8
%
—
—
%
28,000
2.7
%
Prior years’ reserve development
464,669
29.1
%
410,219
73.1
%
54,450
5.3
%
Total losses and loss adjustment
expenses
$
1,189,444
74.5
%
$
410,239
73.1
%
$
779,205
75.3
%
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
Twelve Months Ended
Guidance
December 31,
December 31,
Full Year 2022E
2021
2020
2021
2020
Income (Loss) Before Income
Taxes
$
(64,461
)
$
(26,999
)
$
28,413
$
24,231
Adjustments:
Net unrealized (gains)/losses on equity
securities
1,008
(2,187
)
4,032
(25
)
Net realized (gains)/losses on
investments
(535
)
(9,058
)
(5,892
)
(63,352
)
Interest Expense
555
17
652
102
Total Adjustments
1,028
(11,228
)
(1,208
)
(63,275
)
Non-GAAP Adjusted Operating Income
(Loss)
$
(63,433
)
$
(38,227
)
$
27,205
$
(39,044
)
GAAP Diluted EPS
$
(1.54
)
$
(0.57
)
$
0.65
$
0.60
$1.80 - $2.20
Adjustments:
Net unrealized (gains)/losses on equity
securities
0.03
(0.07
)
0.13
—
Net realized (gains)/losses on
investments
(0.02
)
(0.29
)
(0.19
)
(1.98
)
Total Pre-Tax Adjustments
0.01
(0.36
)
(0.06
)
(1.98
)
Income Tax on Above Adjustments
—
0.09
0.02
0.48
Total Adjustments
0.01
(0.27
)
(0.04
)
(1.50
)
Non-GAAP Adjusted EPS
$
(1.53
)
$
(0.84
)
$
0.61
$
(0.90
)
$1.80 - $2.20
8 Includes reinstatement premiums not
covered by reinstatement premium protection and related
commissions.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220224005457/en/
Investor Relations Contact: Rob Luther, 954-892-6487 VP,
Corporate Development, Strategy & IR
rluther@universalproperty.com
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