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

Achieved Highest Earned Premiums, Total Revenues, Net Income and Diluted EPS in Company History

Fort Lauderdale, FL, October 30, 2014 - Universal Insurance Holdings, Inc. (NYSE: UVE) (or the “Company”) today reported net income of $21.3 million, or $0.61 per diluted share, an increase of $6.9 million, for the third quarter of 2014, compared to net income of $14.4 million, or $0.40 per diluted share, for the same period in 2013.

 

“Our record third quarter results highlight the successful execution of our strategy to grow our business, increase profitability and deliver value to our shareholders,” said Sean P. Downes, the Company’s Chairman, President and Chief Executive Officer.  “Consistent with our strategy, we continued to maintain disciplined underwriting standards along with a focus on writing high quality, rate adequate, organically grown business. From a growth perspective, earlier this year we decided to reduce our quota share reinsurance which resulted in us retaining a greater portion of our business. In addition, this quarter we have seen an increase in policy count in each and every state in which we are currently writing business.  We also continue to diversify our portfolio via geographic expansion and have recently been approved to write business in the state of Indiana. We believe the underlying organic growth drivers of our business remain strong and expect to build on our strong momentum in the fourth quarter.”  

Third-Quarter 2014 & Recent Highlights

·          Earned premiums grew by $25.4 million to $94.3 million.

·          Total revenues increased by $25.1 million to $103.5 million.

·          Net income and diluted EPS grew by $6.9 million and $0.21, respectively, compared to Q3 2013.

·          Completed $10 million share repurchase program announced on June 17, 2014.

·          Paid dividends of $0.10 per share.

·          The Indiana Department of Insurance issued a Certificate of Authority in October 2014 to UPCIC, a wholly-owned subsidiary of Universal Insurance Holdings, Inc., approving UPCIC as a licensed insurance entity in the state of Indiana.

 

 

Third-Quarter 2014 Results

Net income for the third quarter of 2014 of $21.3 million reflects an improvement across multiple measures including an increase in net earned premiums, policy fees and income generated from the Company’s investment portfolio, partially offset by a decrease in commission revenue and increases in operating expenses. Earned premiums, total revenues, net income and diluted EPS are all higher than any other quarter in the Company’s history.

Diluted EPS of $0.61 benefitted from lower outstanding shares as a result of the cumulative share repurchases made by the Company.  

At September 30, 2014, stockholders’ equity was $189.1 million compared to $175.6 million at December 31, 2013 reflecting year-to-date net income of $52.0 million, share repurchases of $29.7 million and dividend payments of $10.4 million.

First Nine-Month Results

For the first nine months of 2014, the Company’s net income increased by $8.6 million, or 19.9 percent, compared to the same period of 2013. Diluted earnings per share for the first nine months of 2014 increased by $0.35, or 31 percent, compared to the same period of 2013.

Net premiums earned increased by $30.3 million to $231.5 million for the first nine months of 2014 compared to the same period of 2013.

Share Repurchases

During the third quarter of 2014, the Company repurchased 719,937 shares of its common stock at an average purchase price of $13.16 per share.  As announced on September 25, 2014, the Company completed its $10 million share repurchase program announced on June 17, 2014, having repurchased a total of 758,361 shares of common stock in the open market at an average price of $13.15 per share.

The Company noted that the completion of its share repurchase program underscores its confident outlook, solid financial position and commitment to effectively deploying capital when it sees clear value. The Board of Directors and management team expect to continue to consider ways to enhance shareholder value, both through strategic growth initiatives and capital returns to shareholders.

Cash Dividends

On August 26, 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 October 1, 2014, to shareholders of record on September 23, 2014.

 

Financial Results Presentation

The Company will make available an audio recording of a presentation discussing its second quarter 2014 financial results on Thursday, October 30, 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 December 1, 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 and the Form 10-Q for the quarter ended September 30, 2014.


 

 

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

September 30,

 

December 31,

ASSETS

 

2014

 

2013

Cash and cash equivalents

 

$          170,352

 

$       117,275

Restricted cash and cash equivalents

 

6,597

 

2,600

Fixed maturities, at fair value

 

328,010

 

289,418

Equity securities, at fair value

 

20,387

 

65,022

Short-term investments, at fair value

 

37,473

 

Prepaid reinsurance premiums

 

195,322

 

241,214

Reinsurance recoverable

 

56,241

 

107,847

Reinsurance receivable, net

 

12,535

 

203

Premiums receivable, net

 

54,647

 

46,461

Other receivables

 

3,196

 

2,587

Property and equipment, net

 

9,961

 

9,289

Deferred policy acquisition costs, net

 

27,832

 

15,899

Income taxes recoverable

 

2,914

 

8,152

Deferred income tax asset, net

 

11,958

 

12,051

Other assets

 

2,840

 

2,072

Total assets

 

$          940,265

 

$       920,090

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

LIABILITIES:

 

 

 

 

Unpaid losses and loss adjustment expenses

 

$          136,915

 

$       159,222

Unearned premiums

 

411,875

 

383,488

Advance premium

 

21,302

 

22,959

Accounts payable

 

4,457

 

3,441

Book overdraft

 

5,861

 

14,947

Reinsurance payable, net

 

102,251

 

86,232

Income taxes payable

 

 

2,566

Dividends payable to shareholders

 

3,429

 

Other liabilities and accrued expenses

 

34,240

 

34,386

Long-term debt

 

30,796

 

37,240

Total liabilities

 

751,126

 

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 - 44,955 and 43,641

 

 

 

 

Outstanding shares - 34,289 and 35,366

 

 

 

 

Treasury shares, at cost - 10,666 and 8,275

 

(65,203)

 

(35,467)

Additional paid-in capital

 

45,096

 

42,282

Accumulated other comprehensive income (loss), net of taxes

 

(1,547)

 

(376)

Retained earnings

 

210,344

 

168,734

Total stockholders' equity

 

189,139

 

175,609

Total liabilities and stockholders' equity

 

$          940,265

 

$       920,090

 

 


 

 

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

September 30,

 

 

2014

 

2013

PREMIUMS EARNED AND OTHER REVENUES

 

 

 

 

Direct premiums written

 

$      195,435

 

$      186,079

Ceded premiums written

 

(103,492)

 

(124,961)

Net premiums written

 

91,943

 

61,118

Change in net unearned premium

 

2,345

 

7,809

Premiums earned, net

 

94,288

 

68,927

Net investment income (expense)

 

644

 

382

Net realized gains (losses) on investments

 

501

 

56

Net change in unrealized gains (losses) on investments

 

 

15

Commission revenue

 

3,123

 

4,180

Policy fees

 

3,416

 

3,231

Other revenue

 

1,528

 

1,577

Total premiums earned and other revenues

 

103,500

 

78,368

OPERATING COSTS AND EXPENSES

 

 

 

 

Losses and loss adjustment expenses

 

34,181

 

28,335

General and administrative expenses

 

32,167

 

24,920

Total operating costs and expenses

 

66,348

 

53,255

INCOME BEFORE INCOME TAXES

 

37,152

 

25,113

Income taxes, current

 

15,376

 

9,142

Income taxes, deferred

 

435

 

1,564

Income taxes, net

 

15,811

 

10,706

NET INCOME

 

$        21,341

 

$        14,407

 

 

 

 

 

Basic earnings per common share

 

$            0.64

 

$            0.43

Weighted average common shares outstanding - Basic

 

33,432

 

33,658

 

 

 

 

 

Fully diluted earnings per common share

 

$            0.61

 

$            0.40

Weighted average common shares outstanding - Diluted

 

34,812

 

35,611

 

 

 

 

 

Cash dividend declared per common share

 

$            0.10

 

$            0.10

 


 

 

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

September 30,

 

 

2014

 

2013

PREMIUMS EARNED AND OTHER REVENUES

 

 

 

 

Direct premiums written

 

$      607,361

 

$      610,164

Ceded premiums written

 

(301,624)

 

(400,175)

Net premiums written

 

305,737

 

209,989

Change in net unearned premium

 

(74,280)

 

(8,787)

Premiums earned, net

 

231,457

 

201,202

Net investment income (expense)

 

1,574

 

530

Net realized gains (losses) on investments

 

5,353

 

(15,982)

Net change in unrealized gains (losses) on investments

 

 

7,912

Commission revenue

 

10,882

 

14,437

Policy fees

 

10,827

 

10,737

Other revenue

 

4,701

 

4,743

Total premiums earned and other revenues

 

264,794

 

223,579

OPERATING COSTS AND EXPENSES

 

 

 

 

Losses and loss adjustment expenses

 

88,685

 

80,018

General and administrative expenses

 

85,431

 

68,998

Total operating costs and expenses

 

174,116

 

149,016

INCOME BEFORE INCOME TAXES

 

90,678

 

74,563

Income taxes, current

 

37,833

 

25,440

Income taxes, deferred

 

829

 

5,728

Income taxes, net

 

38,662

 

31,168

NET INCOME

 

$        52,016

 

$        43,395

 

 

 

 

 

Basic earnings per common share

 

$            1.55

 

$            1.18

Weighted average common shares outstanding - Basic

 

33,607

 

36,628

 

 

 

 

 

Fully diluted earnings per common share

 

$            1.48

 

$            1.13

Weighted average common shares outstanding - Diluted

 

35,097

 

38,352

 

 

 

 

 

Cash dividend declared per common share

 

$            0.30

 

$            0.26



Investor Contact:
Andy Brimmer / Mahmoud Siddig
Joele Frank, Wilkinson Brimmer Katcher
212-355-4449