- Diluted GAAP earnings per share (“EPS”) of $0.56, non-GAAP
adjusted EPS1 of $0.64
- Annualized return on average equity (“ROE”) of 16.9%
- Direct premiums written of $396.5 million, up 8.5% from the
prior year quarter
- Direct premiums earned up 10.4% from the prior year
quarter
- Net combined ratio of 97.9%, up 4.8 points from the prior year
quarter
- Repurchased 320,528 shares for $3.9 million. Total capital
returned to shareholders of $8.9 million, including $0.16 per share
regular quarterly dividend.
Universal Insurance Holdings (NYSE: UVE) (“Universal” or the
“Company”) reported 2022 first quarter diluted EPS of $0.56 on a
GAAP basis and $0.64 on a non-GAAP1 adjusted basis.
1 Reconciliations of GAAP to non-GAAP financial measures are
provided in the attached tables.
“We reported a 16.9% annualized ROE despite the challenging
external environment, which is a testament to the strength and
resilience of our business,” said Stephen J. Donaghy, Chief
Executive Officer. “Direct premiums written were up 8.5% from the
prior year quarter, significantly outpacing a 6.1% policies in
force decline, as meaningful rate increases benefited premium
volumes. We are laser focused on improving underwriting
profitability, as we prioritize combined ratio improvement over top
line growth. In addition to raising rates across Florida and our
broader footprint, we’ve reduced exposure to less profitable
geographies, tightened underwriting criteria, renegotiated
commission rates with our agency partners and exercised prudent
expense management. Lastly, rising yields are benefiting our
investment income results, and should continue to serve as a
tailwind moving forward. Given our strong capital position, the
profitability of our business and the steps we continue to take to
improve results, we believe we stand out favorably as reinsurers
increasingly differentiate amongst cedants in the current
market.”
Quarterly Financial
Results
Summary Financial Results
($thousands, except per share
data)
Three Months Ended March
31,
2022
2021
Change
GAAP comparison
Total revenue
$
287,482
$
262,757
9.4
%
Income before income taxes
$
22,471
$
36,351
(38.2
) %
Income before income taxes margin
7.8
%
13.8
%
(6.0) pts
Net income
$
17,537
$
26,408
(33.6
) %
Diluted EPS
$
0.56
$
0.84
(33.3
) %
Annualized ROE
16.9
%
23.2
%
(6.3) pts
Non-GAAP comparison2
Adjusted operating income
$
27,417
$
36,323
(24.5
) %
Adjusted net income
$
20,052
$
26,371
(24.0
) %
Adjusted EPS
$
0.64
$
0.84
(23.8
) %
Underwriting Summary
Premiums:
Premiums in force
$
1,703,151
$
1,548,657
10.0
%
Policies in force
916,745
976,250
(6.1
) %
Direct premiums written
$
396,481
$
365,314
8.5
%
Direct premiums earned
$
414,603
$
375,606
10.4
%
Ceded premiums earned
$
(145,539
)
$
(132,301
)
10.0
%
Ceded premium ratio
35.1
%
35.2
%
(0.1) pts
Net premiums earned
$
269,064
$
243,305
10.6
%
Net ratios:
Loss ratio
68.8
%
59.2
%
9.6 pts
Expense ratio3
29.1
%
33.9
%
(4.8) pts
Combined ratio
97.9
%
93.1
%
4.8 pts
2 Reconciliation of GAAP to non-GAAP
financial measures are provided in the attached tables. Non-GAAP
adjusted EPS excludes net realized and unrealized gains and losses
on investments, as well as extraordinary reinstatement premiums and
associated commissions. Adjusted operating income excludes net
realized and unrealized gains and losses on investments, interest
expense, and any extraordinary reinstatement premiums and
associated commissions.
3 Expense ratio excludes interest
expense.
Net Income and Adjusted Net
Income
Net income was $17.5 million, down from $26.4 million in the
prior year quarter, and adjusted net income was $20.1 million, down
from $26.4 million in the prior year quarter. The decline in
adjusted net income primarily stems from a higher net combined
ratio, partly offset by higher net premiums earned, commission
revenue, net investment income and a lower effective tax rate.
Revenues
Overall revenue was $287.5 million, up 9.4% from the prior year
quarter. The increase in revenue primarily stems from higher direct
premiums earned associated with rate increases in the Florida
homeowners book of business, partly offset by unrealized losses on
equity securities.
Direct premiums written were $396.5 million, up 8.5% from the
prior year quarter. The increase stems from 8.9% growth in Florida
and 6.4% growth in other states. Overall growth primarily reflects
rate increases, partly offset by lower policies in force.
Direct premiums earned were $414.6 million, up 10.4% from the
prior year quarter. The increase stems from direct premiums written
growth over the past twelve months.
The ceded premium ratio was 35.1%, basically in line with 35.2%
in the prior year quarter.
Net premiums earned were $269.1 million, up 10.6% from the prior
year quarter. The increase is primarily attributable to higher
direct premiums earned, as described above.
Net investment income was $4.0 million, up from $3.0 million in
the prior year quarter. The increase stems from higher fixed income
reinvestment yields.
Commissions, policy fees and other revenue were $17.7 million,
up 7.9% from the prior year quarter. The increase primarily
reflects higher commission revenue, which benefited from higher
ceded premiums, partly offset by policy fee and other revenue
declines associated with lower policies in force.
Margins
The income before income taxes margin was 7.8%, down 6.0 points
from the prior year quarter, with the decrease stemming from a
higher net combined ratio and unrealized losses on equity
securities, partly offset by higher commission revenues.
The net loss ratio was 68.8%, up 9.6 points compared to the
prior year quarter. The increase primarily reflects a higher
initial accident year attritional loss pick associated with the
challenging Florida claims environment, higher weather above plan
and a smaller benefit from our claims adjusting affiliate.
The net expense ratio (excludes interest expense) was 29.1%,
down 4.8 points compared to the prior year quarter. The reduction
primarily reflects lower renewal commission rates paid to our
agents, lower employee compensation and benefits expense and
economies of scale.
The net combined ratio was 97.9%, up 4.8 points compared to the
prior year quarter. The increase reflects a higher net loss ratio,
partly offset by a lower net expense ratio, as described above.
Capital Deployment
During the first quarter, the Company repurchased approximately
321 thousand shares at an aggregate cost of $3.9 million. The
Company’s current share repurchase authorization program has $13.9
million remaining as of March 31, 2022 and runs through November 3,
2022.
On April 20, 2022, the Board of Directors declared a quarterly
cash dividend of 16 cents per share of common stock, payable on May
20, 2022, to shareholders of record as of the close of business on
May 13, 2022.
Guidance
The Company is maintaining its guidance for 2022 (assuming no
further extraordinary weather events and no realized or unrealized
gains in 2022):
- GAAP and Non-GAAP Adjusted EPS in a range of $1.80 - $2.20
- Annualized return on average equity in a range of 12.5% -
15.0%
Conference Call and Webcast
- Friday, April 29, 2022 at 10:00 a.m. ET
- U.S. Dial-in Number: (855) 752-6647
- International: (503) 343-6667
- Participant code: 9789558
- Listen to live webcast:
UniversalInsuranceHoldings.com/investors
- 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 May 13, 2022
About Universal
Universal Insurance Holdings, Inc. (NYSE: 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 net income and
adjusted earnings per share, which exclude 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, extraordinary
reinstatement premiums and associated commissions and interest
expense. 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 year ended March
31, 2022.
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)
March 31,
December 31,
2022
2021
ASSETS:
Invested Assets
Fixed maturities, at fair value
$
1,014,677
$
1,040,455
Equity securities, at fair value
65,126
47,334
Investment real estate, net
5,845
5,891
Total invested assets
1,085,648
1,093,680
Cash and cash equivalents
165,398
250,508
Restricted cash and cash equivalents
2,635
2,635
Prepaid reinsurance premiums
109,401
240,993
Reinsurance recoverable
104,660
185,589
Premiums receivable, net
61,670
64,923
Property and equipment, net
54,170
53,682
Deferred policy acquisition costs
103,622
108,822
Goodwill
2,319
2,319
Other assets
59,432
52,990
TOTAL ASSETS
$
1,748,955
$
2,056,141
LIABILITIES AND STOCKHOLDERS'
EQUITY
LIABILITIES:
Unpaid losses and loss adjustment
expenses
$
244,482
$
346,216
Unearned premiums
839,647
857,769
Advance premium
85,120
53,694
Reinsurance payable, net
12,723
188,662
Long-term debt, net
103,384
103,676
Other liabilities
67,258
76,422
Total liabilities
1,352,614
1,626,439
STOCKHOLDERS' EQUITY:
Cumulative convertible preferred stock
($0.01 par value)4
—
—
Common stock ($0.01 par value)5
471
470
Treasury shares, at cost - 16,117 and
15,797
(230,994
)
(227,115
)
Additional paid-in capital
109,099
108,202
Accumulated other comprehensive income
(loss), net of taxes
(58,478
)
(15,568
)
Retained earnings
576,243
563,713
Total stockholders' equity
396,341
429,702
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
1,748,955
$
2,056,141
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 - 47,063 and 47,018 shares;
Outstanding 30,946 and 31,221 shares.
UNIVERSAL INSURANCE HOLDINGS, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED) (in thousands)
Three Months Ended
March 31,
2022
2021
REVENUES
Net premiums earned
$
269,064
$
243,305
Net investment income
4,042
2,986
Net realized gains on investments
58
542
Net change in unrealized (losses) of
equity securities
(3,396
)
(494
)
Commission revenue
11,161
9,126
Policy fees
4,779
5,387
Other revenue
1,774
1,905
Total revenues
287,482
262,757
EXPENSES
Losses and loss adjustment expenses
185,106
143,963
Policy acquisition costs
54,723
56,458
Other operating expenses
23,574
25,965
Total operating costs and expenses
263,403
226,386
Interest expense
1,608
20
Income before income taxes
22,471
36,351
Income tax expense
4,934
9,943
NET INCOME
$
17,537
$
26,408
UNIVERSAL INSURANCE HOLDINGS, INC. AND
SUBSIDIARIES SHARE AND PER SHARE INFORMATION (in
thousands, except per share data)
Three Months Ended
March 31,
2022
2021
Weighted average common shares outstanding
- basic
31,147
31,208
Weighted average common shares outstanding
- diluted
31,227
31,277
Shares outstanding, end of period
30,946
31,216
Basic earnings per common share
$
0.56
$
0.85
Diluted earnings per common share
$
0.56
$
0.84
Cash dividend declared per common
share
$
0.16
$
0.16
Book value per share, end of period
$
12.80
$
14.56
Annualized return on average equity
(ROE)
16.9
%
23.2
%
UNIVERSAL INSURANCE HOLDINGS, INC. AND
SUBSIDIARIES SUPPLEMENTARY INFORMATION (in thousands,
except for Policies In Force data)
Three Months Ended
March 31,
2022
2021
Premiums
Direct premiums written - Florida
$
334,437
$
307,011
Direct premiums written - Other States
62,044
58,303
Direct premiums written - Total
$
396,481
$
365,314
Direct premiums earned
$
414,603
$
375,606
Net premiums earned
$
269,064
$
243,305
Underwriting Ratios - Net
Loss and loss adjustment expense ratio
68.8
%
59.2
%
Policy acquisition cost ratio
20.3
%
23.2
%
Other operating expense ratio6
8.8
%
10.7
%
Expense ratio6
29.1
%
33.9
%
Combined ratio
97.9
%
93.1
%
Other Items
(Favorable)/Unfavorable prior year's
reserve development
$
655
$
(1,237
)
Points on the loss and loss adjustment
expense ratio
0.2 pts
(0.5) pts
6 Expense ratio excludes interest
expense.
As of
March 31,
2022
2021
Policies in force
Florida
672,029
721,321
Other States
244,716
254,929
Total
916,745
976,250
Premiums in force
Florida
$
1,416,185
$
1,279,464
Other States
286,966
269,193
Total
$
1,703,151
$
1,548,657
Total Insured Value
Florida
$
201,091,861
$
194,421,426
Other States
118,041,945
110,930,255
Total
$
319,133,806
$
305,351,681
Three Months Ended March 31,
2022
Direct
Loss Ratio
Ceded
Loss Ratio
Net
Loss Ratio
Premiums earned
$
414,603
$
145,539
$
269,064
Loss and loss adjustment
expenses:
Core losses
$
179,950
43.4
%
$
44
—
%
$
179,906
66.9
%
Weather events7
4,545
1.1
%
—
—
%
4,545
1.7
%
Prior year’s reserve development
10,660
2.6
%
10,005
6.9
%
655
0.2
%
Total losses and loss adjustment
expenses
$
195,155
47.1
%
$
10,049
6.9
%
$
185,106
68.8
%
7 Includes only current year weather
events beyond those expected.
Three Months Ended March 31,
2021
Direct
Loss Ratio
Ceded
Loss Ratio
Net
Loss Ratio
Premiums earned
$
375,606
132,301
$
243,305
Loss and loss adjustment
expenses:
Core losses
$
145,228
38.7
%
$
28
—
%
$
145,200
59.7
%
Weather events7
—
—
%
—
—
%
—
—
%
Prior year’s reserve development
92,070
24.5
%
93,307
70.5
%
(1,237
)
(0.5
) %
Total losses and loss adjustment
expenses
$
237,298
63.2
%
$
93,335
70.5
%
$
143,963
59.2
%
7 Includes only current year weather
events beyond those expected.
UNIVERSAL INSURANCE HOLDINGS, INC. AND
SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES (in thousands, except for per share data)
Three Months Ended
Guidance
March 31,
Full Year 2022E
2022
2021
GAAP Operating Income to Adjusted
Operating Income
Income Before Income Taxes
$
22,471
$
36,351
less: Net realized gains on
investments
58
542
less: Net change in unrealized (losses) of
equity securities
(3,396
)
(494
)
less: Interest (expense)
(1,608
)
(20
)
Adjusted Operating Income
$
27,417
$
36,323
GAAP Net Income to Adjusted Net
Income
GAAP Net Income
$
17,537
$
26,408
less: Net realized gains on
investments
58
542
less: Net change in unrealized (losses) of
equity securities
(3,396
)
(494
)
Total pre-tax adjustments
(3,338
)
48
less: Income tax (expense) benefit on
above adjustments
823
(11
)
Total adjustments
(2,515
)
37
Adjusted Net Income
$
20,052
$
26,371
GAAP Diluted EPS to Adjusted
EPS
GAAP Diluted EPS
$
0.56
$
0.84
$ 1.80 - 2.20
less: Net realized gains on
investments
—
0.02
—
less: Net change in unrealized (losses) of
equity securities
(0.11
)
(0.02
)
—
Total pre-tax adjustments
(0.11
)
—
—
less: Income (tax) benefit on above
adjustments
0.03
—
—
Total adjustments
(0.08
)
—
—
Adjusted EPS
$
0.64
$
0.84
$ 1.80 - 2.20
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220428005499/en/
Investor Contact: Arash Soleimani, CFA, CPA Chief
Strategy Officer 954-804-8874 asoleimani@universalproperty.com
Universal Insurance (NYSE:UVE)
Historical Stock Chart
From Mar 2024 to Apr 2024
Universal Insurance (NYSE:UVE)
Historical Stock Chart
From Apr 2023 to Apr 2024