Universal Insurance Holdings, Inc. Reports Record Fourth Quarter and Full-Year 2014 Financial Results

Achieved Highest Fourth Quarter and Full-Year Net Income and EPS in Company History

 

Fort Lauderdale, FL, February 25, 2015 - Universal Insurance Holdings, Inc. (NYSE: UVE) (or the “Company”) today reported record fourth quarter net income in 2014 of $21.0 million, or $0.59 diluted earnings per share (diluted EPS), an increase of $5.4 million, or 35 percent, compared to net income of $15.6 million, or $0.44 diluted EPS, for the same period in 2013.

 

For the full year of 2014, the Company reported record net income of $73.0 million, or $2.08 diluted EPS, an increase of $14.0 million, or 24 percent, compared to net income of $59.0, or $1.56 diluted EPS, for the same period of 2013.

 

“Our record fourth quarter and full year results concluded a year in which we delivered increasing profits and significant returns to shareholders,” said Sean P. Downes, the Company’s Chairman, President and Chief Executive Officer. “We generated strong operational and financial momentum in 2014 thanks to a focus on maintaining high underwriting standards and securing profitable, rate adequate business. Our geographic expansion efforts, a key driver of our growth strategy, also remained on track. We received approval to write business in Delaware and Indiana in 2014 and more recently in Pennsylvania, and achieved increases in policy count during 2014 in all states, including Florida. Our decision in 2014 to reduce our quota share reinsurance allowed us to retain a greater portion of our business and increase profitability. We enter 2015 with a clear opportunity to build on this operational momentum.  The proceeds from our recent transaction with Nephila Capital coupled with our healthy balance sheet position us to lower our quota share percentage to zero.  This change will enable us to retain 100% of our business, an estimated additional $230 million of our own organically grown premium, and further drive profitability and shareholder value.”        

 

 

Fourth-Quarter 2014 & Recent Highlights

·          Earned premiums grew by $28.9 million to $95.4 million.

·          Total revenues increased by $26.9 million to $104.5 million.

·          Net income and diluted EPS grew by $5.4 million and $0.15, respectively, compared to Q4 2014.

 

 

 

·          Sold 1 million registered shares of UVE common stock at a price of $19.00 per share
in a privately negotiated transaction on December 2, 2014.

·          Paid fourth quarter dividend of $0.25 per share, resulting in total payments of $0.55 per share in dividends in 2014.

·          The Pennsylvania Insurance Department issued a Certificate of Authority in January 2015 to UPCIC, a wholly-owned subsidiary of Universal Insurance Holdings, Inc., approving UPCIC as a licensed insurance entity in the state of Pennsylvania.

·          Wrote first homeowners insurance policy in Indiana in January 2015.

 

Fourth-Quarter 2014 Results

The increase in the Company’s net income for the fourth quarter of 2014 of $5.4 million, compared to the same period in 2013, primarily reflects an increase in net earned premiums, partially offset by increases in operating expenses. Earned premiums, total revenues, net income and diluted EPS were higher than any other fourth quarter in the Company’s history.

 

Diluted earnings per share for the fourth quarter of 2014 increased by $0.15, or 34 percent, compared to the full year of 2013.

 

Full-Year 2014 Results

For the full year of 2014, the Company’s net income increased by $14.0 million, or 24 percent, compared to the same period in 2013. Earned premiums, total revenues, net income and diluted EPS were higher than any other year in the Company’s history.

 

Diluted earnings per share for the full year of 2014 increased by $0.52, or 33 percent, compared to the full year of 2013.  In addition to the increase in net income, diluted EPS benefited from lower outstanding shares as a result of the cumulative share repurchases made by the Company.

 

Share Repurchases

For the full year of 2014, the Company repurchased 2,391,208 shares of its common stock at an average price of $12.42 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. Additionally, the Company sold 1 million registered shares of common stock at a price of $19.00 per share in a privately negotiated transaction on December 2, 2014.

 

The Company noted that the completion of its share repurchase program and the sale of treasury

shares underscores its confident outlook, solid financial position and commitment to effectively deploying capital when it sees clear value. The shares were sold out of treasury at a significant premium to the cost of the shares, thereby adding significant value for Universal shareholders.

 

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 November 10, 2014, the Company announced that its board of directors declared a cash dividend of $0.25 per share of common stock, which was paid on December 15, 2014 to shareholders of record on December 5, 2014. The $0.25 per share dividend includes the expected $0.10 per share fourth quarter dividend, in line with the dividends paid for each of the first three quarters of 2014, and an additional special dividend of $0.15 per share.

 

On January 13, 2015, the Company announced that its board of directors had declared an increased cash dividend of $0.12 per share of common stock up $0.02 from the $0.10 per share paid the past three quarters. Payment will be made on March 2, 2015 to shareholders of record on February 18, 2015. If declared and paid as intended, the annual aggregate dividend in 2015 will be $0.48 for each common share.

 

Financial Results Presentation

The Company will make available an audio recording of a presentation discussing its fourth quarter and full-year 2014 financial results on Wednesday, February 25, 2015, 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 March 25, 2015.

 

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, Delaware and Indiana. 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, 2014.


 

 

 

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

December 31,

ASSETS

 

2014

 

2013

Cash and cash equivalents

 

$          115,397

 

$       117,275

Restricted cash and cash equivalents

 

2,635

 

2,600

Fixed maturities, at fair value

 

353,949

 

289,418

Equity securities, at fair value

 

19,642

 

65,022

Short-term investments, at fair value

 

49,990

 

Prepaid reinsurance premiums

 

190,505

 

241,214

Reinsurance recoverable

 

55,187

 

107,847

Reinsurance receivable, net

 

7,468

 

203

Premiums receivable, net

 

50,987

 

46,461

Other receivables

 

2,763

 

2,587

Property and equipment, net

 

17,254

 

9,289

Deferred policy acquisition costs, net

 

25,660

 

15,899

Income taxes recoverable

 

5,675

 

8,152

Deferred income tax asset, net

 

11,850

 

12,051

Other assets

 

2,812

 

2,072

Total assets

 

$          911,774

 

$       920,090

LIABILITIES, CONTINGENTLY REDEEMABLE COMMON STOCK AND STOCKHOLDERS' EQUITY

 

 

 

 

LIABILITIES:

 

 

 

 

Unpaid losses and loss adjustment expenses

 

$          134,353

 

$       159,222

Unearned premiums

 

395,748

 

383,488

Advance premium

 

17,919

 

22,959

Accounts payable

 

4,121

 

3,441

Book overdraft

 

5,924

 

14,947

Reinsurance payable, net

 

66,066

 

86,232

Income taxes payable

 

1,799

 

2,566

Other liabilities and accrued expenses

 

36,318

 

34,386

Long-term debt

 

30,610

 

37,240

Total liabilities

 

692,858

 

744,481

Contingently redeemable common stock (pro-forma 12/31/14 balance of zero)1

 

19,000

 

Issued shares - 1,000

 

 

 

 

Outstanding shares - 1,000

 

 

 

 

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

 

448

 

436

Authorized shares - 55,000

 

 

 

 

Issued shares - 43,769 and 43,641

 

 

 

 

Outstanding shares - 34,102 and 35,366

 

 

 

 

Treasury shares, at cost - 9,667 and 8,275

 

(62,153)

 

(35,467)

Additional paid-in capital (pro-forma 12/31/14 balance of $60.0 million)1

 

40,987

 

42,282

Accumulated other comprehensive income (loss), net of taxes

 

(1,835)

 

(376)

Retained earnings

 

222,469

 

168,734

Total stockholders' equity (pro-forma 12/31/14 balance of $218.9 million) [1]

 

199,916

 

175,609

Total liabilities, contingently redeemable
common stock and stockholders' equity

 

$          911,774

 

$       920,090

 

 


 

 

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

December 31,

 

 

2014

 

2013

PREMIUMS EARNED AND OTHER REVENUES

 

 

 

 

Direct premiums written

 

 $      182,216

 

 $      173,730

Ceded premiums written

 

          (98,106)

 

        (121,941)

Net premiums written

 

           84,110

 

           51,789

Change in net unearned premium

 

           11,310

 

           14,663

     Premiums earned, net

 

           95,420

 

           66,452

     Net investment income (expense)

 

                801

 

             1,397

     Net realized gains (losses) on investments

 

                274

 

             1,242

Net change in unrealized gains (losses) on investments

 

                  —

 

                 (62)

     Commission revenue

 

             3,323

 

             4,178

     Policy fees

 

             3,155

 

             2,924

     Other revenue

 

             1,509

 

             1,449

Total premiums earned and other revenues

 

         104,482

 

           77,580

OPERATING COSTS AND EXPENSES

 

 

 

 

     Losses and loss adjustment expenses

 

           34,590

 

           28,598

     General and administrative expenses

 

           32,966

 

           22,989

Total operating costs and expenses

 

           67,556

 

           51,587

INCOME BEFORE INCOME TAXES

 

           36,926

 

           25,993

     Income taxes, current

 

           15,665

 

             8,776

     Income taxes, deferred

 

                289

 

             1,635

        Income taxes, net

 

           15,954

 

           10,411

NET INCOME

 

 $        20,972

 

 $        15,582

Basic earnings per common share

 

 $            0.63

 

 $            0.46

Weighted average common shares outstanding - Basic

 

           33,457

 

           33,602

Fully diluted earnings per common share

 

 $            0.59

 

 $            0.44

Weighted average common shares outstanding - Diluted

 

           35,271

 

           35,685

Cash dividend declared per common share

 

 $            0.25

 

 $            0.23

 


 

 

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended

 

 

December 31,

 

 

2014

 

2013

PREMIUMS EARNED AND OTHER REVENUES

 

 

 

 

Direct premiums written

 

$      789,577

 

$      783,894

Ceded premiums written

 

(399,730)

 

(522,116)

Net premiums written

 

389,847

 

261,778

Change in net unearned premium

 

(62,970)

 

5,877

Premiums earned, net

 

326,877

 

267,655

Net investment income (expense)

 

2,375

 

1,928

Net realized gains (losses) on investments

 

5,627

 

(14,740)

Net change in unrealized gains (losses) on investments

 

 

7,850

Commission revenue

 

14,205

 

18,615

Policy fees

 

13,982

 

13,661

Other revenue

 

6,210

 

6,190

Total premiums earned and other revenues

 

369,276

 

301,159

OPERATING COSTS AND EXPENSES

 

 

 

 

Losses and loss adjustment expenses

 

123,275

 

108,615

General and administrative expenses

 

118,397

 

91,988

Total operating costs and expenses

 

241,672

 

200,603

INCOME BEFORE INCOME TAXES

 

127,604

 

100,556

Income taxes, current

 

53,498

 

34,216

Income taxes, deferred

 

1,118

 

7,363

Income taxes, net

 

54,616

 

41,579

NET INCOME

 

$        72,988

 

$        58,977

Basic earnings per common share

 

$            2.17

 

$            1.64

Weighted average common shares outstanding - Basic

 

33,569

 

35,866

Fully diluted earnings per common share

 

$            2.08

 

$            1.56

Weighted average common shares outstanding - Diluted

 

35,150

 

37,776

Cash dividend declared per common share

 

$            0.55

 

$            0.49

 

Investor Contact:

Andy Brimmer / Mahmoud Siddig

Joele Frank, Wilkinson Brimmer Katcher

212-355-4449



[1] As disclosed in the Company’s Form 10-K filed earlier today with the Securities and Exchange Commission, on February 19, 2015, the Company modified the terms of a previously disclosed agreement with a third party relating to the sale of 1 million registered shares of UVE common stock which resulted in a reclassification of mezzanine equity to permanent equity.  As a result of this reclassification, the pro-forma balance of contingently redeemable common stock, additional paid-in capital and stockholders equity as of December 31, 2014 is zero, $60.0 million and $218.9 million, respectively.  



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