Universal Insurance Holdings, Inc. Reports Second Quarter 2014 Financial Results

Second Quarter 2014 Diluted EPS Grows 11 Percent Year-over-Year to $0.49

Achieved Highest Quarterly Revenue in Company History

Fort Lauderdale, FL, August 6, 2014 - Universal Insurance Holdings, Inc. (NYSE: UVE) (or the “Company”) today reported net income of $17.1 million, or $0.49 per diluted share, an increase of $0.05, for the second quarter of 2014, compared to net income of $17.0 million, or $0.44 per diluted share, for the same period in 2013.

“We are pleased to report strong second quarter operational and financial results, demonstrating the merits of our strategy and our prudent and disciplined approach to underwriting,” said Sean P. Downes, the Company’s Chairman, President and Chief Executive Officer. “The reduction in costs that we were able to secure for our 2014-2015 reinsurance program have allowed us to write more high quality, rate adequate business. As a result, we are seeing increasing momentum in direct premiums written, with a  year-over-year increase in both new and renewal policy submissions in Florida during the second quarter. In addition, we have continued to increase our geographic diversity, growing our policy count for new business in states outside of Florida by over 40 percent year-over-year. Looking ahead, we will continue to maintain disciplined pricing analytics, and continue to make investments in personnel to improve our processes and continue our entry into new markets.  We believe we are well positioned to grow organically and drive shareholder returns as we enter the second half of the year.” 

Second-Quarter 2014 & Recent Highlights

·          Net income and diluted EPS grew by $97 thousand and $0.05, respectively, compared to Q2 2013.

·          Submitted applications to expand into Pennsylvania, consistent with the Company’s geographic diversification strategy. 

·          Received approval to and wrote first homeowners insurance policy in Delaware.

·          Repurchased in the open market common shares having value of approximately $5 million through June 30, 2014.

·          Authorized an additional $10 million open market share repurchase program through August 1, 2015, of which $498,000 has been deployed through June 30, 2014. 

·          Paid dividends of $0.10 per share compared to $0.08 per share in Q2 2013.

·          Affirmed a Financial Stability Rating ® of “A” from Demotech, Inc. for insurance subsidiaries APPCIC and UPCIC. 

Second-Quarter 2014 Results

Net income for the second quarter of 2014 of $17.1 million reflects an improvement across multiple measures including direct written premiums, net earned premiums, net investment income, realized gains, policy fees, other revenues, total revenues and income before income taxes. Total revenues of $87.0 million are higher than any other quarter in the Company’s history.

Diluted EPS of $0.49 benefitted from lower outstanding shares as a result of the cumulative share repurchases made by the Company.  

At June 30, 2014, stockholders’ equity was $178.1 million compared to $175.6 million at December 31, 2013 reflecting an increase in retained earnings of $23.7 million and share repurchases of $20.2 million.

First Six-Months 2014 Results

For the first six months of 2014, the Company’s net income increased by $1.7 million, or 5.8 percent, compared to the same period of 2013.  Diluted earnings per share for the first six months of 2014 increased by $0.14, or 19.2 percent, compared to the same period of 2013.

Net premiums earned increased by $4.9 million to $137.2 million for the six months of 2014 compared to the same period of 2013.

Share Repurchases

During the second quarter of 2014, the Company repurchased 446,271 shares of its common stock at an average purchase price of $12.28 per share. In addition, on June 17, 2014, the Company announced that its board of directors authorized a share repurchase program under which the Company may repurchase in the open market up to $10 million of its outstanding shares of common stock through August 1, 2015. Of the newly authorized $10 million repurchase program, $498,000 has been deployed through June 30, 2014.  The total remaining authorization as of June 30, 2014 is approximately $9.5 million. 

 

The Company intends to be disciplined and opportunistic with respect to its remaining authorization to repurchase shares as market conditions and other factors permit.

Cash Dividends

On April 16, 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 July 3, 2014, to shareholders of record on June 19, 2014.

Financial Results Presentation

The Company will make available an audio recording of a presentation discussing its second quarter 2014 financial results on August 6, 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 September 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, Maryland and Delaware. 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.


 


UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

June 30,

 

December 31,

ASSETS

 

2014

 

2013

Cash and cash equivalents

 

$          201,357

 

$       117,275

Restricted cash and cash equivalents

 

2,635

 

2,600

Fixed maturities, at fair value

 

323,145

 

289,418

Equity securities, at fair value

 

12,420

 

65,022

Prepaid reinsurance premiums

 

193,811

 

241,214

Reinsurance recoverable

 

77,566

 

107,847

Reinsurance receivable, net

 

26,352

 

203

Premiums receivable, net

 

55,005

 

46,461

Other receivables

 

3,340

 

2,587

Property and equipment, net

 

9,815

 

9,289

Deferred policy acquisition costs, net

 

28,077

 

15,899

Income taxes recoverable

 

2,824

 

8,152

Deferred income tax asset, net

 

11,813

 

12,051

Other assets

 

2,242

 

2,072

Total assets

 

$          950,402

 

$       920,090

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

LIABILITIES:

 

 

 

 

Unpaid losses and loss adjustment expenses

 

$          144,625

 

$       159,222

Unearned premiums

 

412,709

 

383,488

Advance premium

 

22,671

 

22,959

Accounts payable

 

4,809

 

3,441

Book overdraft

 

4,312

 

14,947

Payable for securities purchased

 

1,026

 

-

Reinsurance payable, net

 

120,095

 

86,232

Income taxes payable

 

407

 

2,566

Dividends payable to shareholders

 

3,503

 

-

Other liabilities and accrued expenses

 

27,161

 

34,386

Long-term debt

 

30,984

 

37,240

Total liabilities

 

772,302

 

744,481

 

 

 

 

 

STOCKHOLDERS' EQUITY:

 

 

 

 

Cumulative convertible preferred stock, $.01 par value

 

-

 

-

Authorized shares - 1,000

 

 

 

 

Issued shares - 12 and 30

 

 

 

 

Outstanding shares - 12 and 30

 

 

 

 

Minimum liquidation preference, $8.49 and $6.98 per share

 

 

 

 

Common stock, $.01 par value

 

449

 

436

Authorized shares - 55,000

 

 

 

 

Issued shares - 44,935 and 43,641

 

 

 

 

Outstanding shares - 34,988 and 35,366

 

 

 

 

Treasury shares, at cost - 9,947 and 8,275

 

(55,701)

 

(35,467)

Additional paid-in capital

 

41,539

 

42,282

Accumulated other comprehensive income (loss), net of taxes

 

(623)

 

(376)

Retained earnings

 

192,436

 

168,734

Total stockholders' equity

 

178,100

 

175,609

Total liabilities and stockholders' equity

 

$          950,402

 

$       920,090

 


 

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

June 30,

 

 

2014

 

2013

PREMIUMS EARNED AND OTHER REVENUES

 

 

 

 

Direct premiums written

 

$      220,009

 

$      219,946

Ceded premiums written

 

(76,483)

 

(133,897)

Net premiums written

 

143,526

 

86,049

Change in net unearned premium

 

(70,164)

 

(19,182)

Premiums earned, net

 

73,362

 

66,867

Net investment income (expense)

 

412

 

137

Net realized gains (losses) on investments

 

3,950

 

(1)

Net change in unrealized gains (losses) on investments

 

-

 

23

Commission revenue

 

3,670

 

5,271

Policy fees

 

3,899

 

3,819

Other revenue

 

1,696

 

1,640

Total premiums earned and other revenues

 

86,989

 

77,756

OPERATING COSTS AND EXPENSES

 

 

 

 

Losses and loss adjustment expenses

 

27,679

 

25,199

General and administrative expenses

 

28,901

 

22,869

Total operating costs and expenses

 

56,580

 

48,068

INCOME BEFORE INCOME TAXES

 

30,409

 

29,688

Income taxes, current

 

13,398

 

12,351

Income taxes, deferred

 

(115)

 

308

Income taxes, net

 

13,283

 

12,659

NET INCOME

 

$        17,126

 

$        17,029

 

 

 

 

 

Basic earnings per common share

 

$            0.50

 

$            0.47

Weighted average common shares outstanding - Basic

 

33,968

 

36,378

 

 

 

 

 

Fully diluted earnings per common share

 

$            0.49

 

$            0.44

Weighted average common shares outstanding - Diluted

 

35,174

 

38,314

 

 

 

 

 

Cash dividend declared per common share

 

$            0.10

 

$            0.08

 

 

 

 

 

 

 

 

 

 

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

June 30,

 

 

2014

 

2013

PREMIUMS EARNED AND OTHER REVENUES

 

 

 

 

Direct premiums written

 

$      411,926

 

$      424,085

Ceded premiums written

 

(198,132)

 

(275,214)

Net premiums written

 

213,794

 

148,871

Change in net unearned premium

 

(76,625)

 

(16,595)

Premiums earned, net

 

137,169

 

132,276

Net investment income (expense)

 

930

 

149

Net realized gains (losses) on investments

 

4,852

 

(16,038)

Net change in unrealized gains (losses) on investments

 

-

 

7,597

Commission revenue

 

7,759

 

10,257

Policy fees

 

7,411

 

7,505

Other revenue

 

3,173

 

3,165

Total premiums earned and other revenues

 

161,294

 

145,211

OPERATING COSTS AND EXPENSES

 

 

 

 

Losses and loss adjustment expenses

 

54,504

 

51,682

General and administrative expenses

 

53,264

 

44,079

Total operating costs and expenses

 

107,768

 

95,761

INCOME BEFORE INCOME TAXES

 

53,526

 

49,450

Income taxes, current

 

22,457

 

16,298

Income taxes, deferred

 

394

 

4,164

Income taxes, net

 

22,851

 

20,462

NET INCOME

 

$        30,675

 

$        28,988

 

 

 

 

 

Basic earnings per common share

 

$            0.91

 

$            0.76

Weighted average common shares outstanding - Basic

 

33,696

 

38,138

 

 

 

 

Fully diluted earnings per common share

 

$            0.87

 

$            0.73

Weighted average common shares outstanding - Diluted

 

35,450

 

39,760

 

 

 

 

 

Cash dividend declared per common share

 

$            0.20

 

$            0.16

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Investor Contact:
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Joele Frank, Wilkinson Brimmer Katcher
212-355-4449