Universal Insurance Holdings, Inc. Reports First-Quarter 2014 Financial Results

Universal Insurance Holdings, Inc. Reports First-Quarter 2014 Financial Results

First-Quarter 2014 Diluted EPS Grows 31 Percent Year-over-Year

Achieved Highest First Quarter Revenue in Company History

Fort Lauderdale, FL, May 8, 2014 - Universal Insurance Holdings, Inc. (NYSE: UVE) today reported net income of $13.5 million, or $0.38 per diluted share, an increase of $0.09, for the first quarter of 2014, compared to net income of $12.0 million, or $0.29 per diluted share, for the same period in 2013.

“Our strong top- and bottom-line performance in the first quarter reflects actions that we have taken over the past several quarters,” said Sean P. Downes, the Company’s Chairman, President and Chief Executive Officer. “We believe that our focused initiatives, including a controlled exposure reduction in Florida and prudent expansion in other states, should lead to significant savings in reinsurance costs while enhancing our competitive position.  We also believe that our disciplined pricing analytics and underwriting practices have provided us with a book of business that will continue to strengthen and grow organically.  We remain committed to increasing shareholder returns by executing our strategy and maintaining the long-term financial strength of our company.”  

First-Quarter 2014 & Recent Highlights

·          Net income and diluted EPS grew by $1.6 million and $0.09, respectively, compared to Q1 2013.

·          Continued growth in states outside of Florida, resulting in a 47.8% year-over-year increase in policy count.

·          Received a Certificate of Authority authorizing UPCIC to do business in Delaware, and submitted applications to expand into Indiana, Minnesota and Pennsylvania.

·          Paid dividends of $0.10 per share compared to $0.08 per share in Q1 2013.

First-Quarter 2014 Results

Net income for the first quarter of 2014 increased $1.6 million, or $0.09 per diluted share, compared to the first quarter of 2013, reflecting an increase in net investment income and the absence of net trading losses that occurred during the first quarter of 2013. Additionally, first quarter 2014 EPS benefitted from lower outstanding shares as a result of the cumulative share repurchases made by the Company since April 2013.

 

 

Net income increased notwithstanding decreases in net earned premiums, policy fees and other revenues due in part to a reduction in the number of policies in force in Florida. The Company has taken a disciplined approach to its underwriting standards in Florida and has in certain cases decided not to renew policies that it believes had inadequate premiums relative to projected risks and expenses.  However, the Company has recently taken action to reduce or reverse attrition in Florida including reducing overall rates for homeowners’ insurance by 2.4% effective in January 2014 for new business and March 2014 for renewals. These actions have resulted in an increase in policy count for new business in the first quarter of 2014 compared to 2013. The Company has also taken steps it believes will result in an improvement in retention and new business by investing in personnel to expedite the payment of claims and streamline the underwriting process.  The Company believes these efforts have resulted in a more robust, rate adequate and profitable book of business.  

At March 31, 2014, stockholders’ equity was $171.0 million compared to $175.6 million at December 31, 2013 reflecting share repurchases of $14.7 million and an increase in retained earnings of $10.1 million.

Share Repurchases

During the first quarter of 2014, the Company repurchased approximately 1.2 million shares of its common stock at a weighted average purchase price of $12.03 per share. Each repurchase was at a discount to the then-current market price of the Company’s common stock.

Cash Dividends

On January 30, 2014, the Company announced that its board of directors declared a cash dividend of $0.10 per share of common stock which was paid on March 3, 2014, to shareholders of record on February19, 2014 consistent with the Company’s previously announced intention to increase its regular quarterly dividend to $0.10 per share from $0.08 per share beginning with the first quarter of 2014.

Also, on April 16, 2014, the Company announced that its board of directors declared a cash dividend of $0.10 per share of common stock, payable on July 3, 2014 to shareholders of record on June 19, 2014.

If declared and paid as intended, the annual aggregate dividend in 2014 would be $0.40 for each common share.

 

 

 

 

Financial Results Presentation

The Company will make available an audio recording of a presentation discussing its first quarter 2014 financial results on May 8, 2014, at approximately 5:00 p.m. Eastern. The presentation will be pre-recorded and there will be no opportunity for live questions. The audio recording will be available at www.universalinsuranceholdings.com until June 8, 2014.

About Universal Insurance Holdings, Inc.

Universal Insurance Holdings, Inc., with its wholly-owned subsidiaries, is a vertically integrated insurance holding company performing all aspects of insurance underwriting, distribution and claims. Universal Property & Casualty Insurance Company (UPCIC), a wholly-owned subsidiary of the Company, is one of the leading writers of homeowners insurance in Florida and is now fully licensed and has commenced its operations in North Carolina, South Carolina, Hawaii, Georgia, Massachusetts and Maryland. American Platinum Property and Casualty Insurance Company, also a wholly-owned subsidiary, currently writes homeowners multi-peril insurance on Florida homes valued in excess of $1 million, which are limits and coverages currently not targeted through its affiliate UPCIC. For additional information on the Company, please visit our investor relations website at www.universalinsuranceholdings.com.

Forward-Looking Statements and Risk Factors

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,” 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. Future results could differ materially from those described and the Company undertakes no obligation to correct or update any forward-looking statements. 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 Form 10-K for the year ended December 31, 2013 and the Form 10-Q for the quarter ended March 31, 2014.


 

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

March 31,

 

December 31,

ASSETS

 

2014

 

2013

Cash and cash equivalents

 

 $          122,771

 

 $       117,275

Restricted cash and cash equivalents

 

                 2,635

 

              2,600

Fixed maturities, at fair value

 

             300,346

 

          289,418

Equity securities, at fair value

 

               60,152

 

            65,022

Prepaid reinsurance premiums

 

             236,026

 

          241,214

Reinsurance recoverable

 

               76,097

 

          107,847

Reinsurance receivable, net

 

                 7,004

 

                 203

Premiums receivable, net

 

               48,105

 

            46,461

Other receivables

 

                 3,261

 

              2,587

Property and equipment, net

 

                 9,749

 

              9,289

Deferred policy acquisition costs, net

 

               15,893

 

            15,899

Income taxes recoverable

 

                 6,199

 

              8,152

Deferred income tax asset, net

 

               11,472

 

            12,051

Other assets

 

                 1,722

 

              2,072

          Total assets

 

 $          901,432

 

 $       920,090

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

LIABILITIES:

 

 

 

 

Unpaid losses and loss adjustment expenses

 

 $          150,557

 

 $       159,222

Unearned premiums

 

             384,761

 

          383,488

Advance premium

 

               25,413

 

            22,959

Accounts payable

 

                 4,499

 

              3,441

Book overdraft

 

                 2,985

 

            14,947

Payable for securities purchased

 

                 2,185

 

                      -

Reinsurance payable, net

 

               93,654

 

            86,232

Income taxes payable

 

                    915

 

              2,566

Other liabilities and accrued expenses

 

               28,357

 

            34,386

Long-term debt

 

               37,122

 

            37,240

          Total liabilities

 

             730,448

 

          744,481

 

 

 

 

 

STOCKHOLDERS' EQUITY:

 

 

 

 

Cumulative convertible preferred stock, $.01 par value

 

                         -

 

                      -

     Authorized shares - 1,000

 

 

 

 

     Issued shares - 22 and 30

 

 

 

 

     Outstanding shares - 22 and 30

 

 

 

 

     Minimum liquidation preference, $9.17 and $6.98 per share

 

 

 

 

Common stock, $.01 par value

 

                    443

 

                 436

     Authorized shares - 55,000

 

 

 

 

     Issued shares - 44,276 and 43,641

 

 

 

 

     Outstanding shares - 34,776 and 35,366

 

 

 

 

Treasury shares, at cost - 9,500 and 8,275

 

             (50,204)

 

          (35,467)

Additional paid-in capital

 

               42,195

 

            42,282

Accumulated other comprehensive income (loss), net of taxes

 

                  (264)

 

               (376)

Retained earnings

 

             178,814

 

          168,734

          Total stockholders' equity

 

             170,984

 

          175,609

          Total liabilities and stockholders' equity

 

 $          901,432

 

 $       920,090

 


 

 

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

 

2014

 

2013

PREMIUMS EARNED AND OTHER REVENUES

 

 

 

 

Direct premiums written

 

 $      191,917

 

 $      204,139

Ceded premiums written

 

        (121,649)

 

        (141,317)

Net premiums written

 

           70,268

 

           62,822

Change in net unearned premium

 

            (6,461)

 

             2,587

     Premiums earned, net

 

           63,807

 

           65,409

     Net investment income (expense)

 

                518

 

                  12

     Net realized gains (losses) on investments

 

                902

 

          (16,037)

     Net change in unrealized gains (losses) on investments

 

                     -

 

             7,874

     Commission revenue

 

             4,089

 

             4,986

     Policy fees

 

             3,512

 

             3,687

     Other revenue

 

             1,477

 

             1,524

Total premiums earned and other revenues

 

           74,305

 

           67,455

OPERATING COSTS AND EXPENSES

 

 

 

 

     Losses and loss adjustment expenses

 

           26,825

 

           26,483

     General and administrative expenses

 

           24,363

 

           21,210

Total operating costs and expenses

 

           51,188

 

           47,693

INCOME BEFORE INCOME TAXES

 

           23,117

 

           19,762

     Income taxes, current

 

             9,059

 

             3,947

     Income taxes, deferred

 

                509

 

             3,856

        Income taxes, net

 

             9,568

 

             7,803

NET INCOME

 

 $        13,549

 

 $        11,959

 

 

 

 

 

Basic earnings per common share

 

 $            0.41

 

 $            0.30

Weighted average common shares outstanding - Basic

 

           33,422

 

           39,917

 

 

 

 

Fully diluted earnings per common share

 

 $            0.38

 

 $            0.29

Weighted average common shares outstanding - Diluted

 

           35,641

 

           41,199

 

 

 

 

 

Cash dividend declared per common share

 

 $            0.10

 

 $            0.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Investor Contact:  

Andy Brimmer / Mahmoud Siddig

Joele Frank, Wilkinson Brimmer Katcher

212-355-4449