Universal Insurance Holdings, Inc. Reports Record Results for Second Quarter 2015

Achieved Highest Quarterly Net Income and Diluted EPS in Company History

Fort Lauderdale, FL, August 4, 2015 - Universal Insurance Holdings, Inc. (NYSE: UVE) (or the “Company”) today reported record net income for the second quarter of 2015 of $24.7 million, an increase of 44.2% ($7.6 million) over the same period in 2014. Diluted earnings per share (EPS) was $0.69 for the second quarter of 2015, an increase of 40.9% ($0.20 per share) over the same quarter in 2014.  This compares to net income of $17.1 million, or $0.49 per diluted share, for the same period in 2014.

“We are pleased to report another record quarter with sequential improvement in multiple financial measures as we continue to focus on excellence in all aspects of our business,” said Sean P. Downes, the Company’s Chairman, President and Chief Executive Officer.  “The hard work and dedication of our tremendous employees as well as our loyal agency force continue to be key factors to our success.  With the help of our peer leading agency force, we continue to focus on writing organically grown rate adequate business in all of our active states.

“We believe that the strategic changes and improvements we made to our reinsurance program will continue to drive financial improvements.  Specifically, our 2015/2016 reinsurance program provides us with the necessary protection from significant storms and allows us, as a result of our improved capital position, to retain a greater share of our profitable business through the elimination of the quota share agreement.  Our second quarter results reflect just one month of this quota share elimination, and we look forward to realizing additional value moving forward.  

“As we enter the second half of the year, we remain confident in our ability to increase market share by targeting profitable, rate adequate business from our growing distribution channels, improve our financial condition, continue our geographic expansion efforts and deliver increasing returns to shareholders.”

Second-Quarter 2015 & Recent Highlights

·         Net earned premiums grew by $39.5 million, or 53.9%, to $112.9 million.

·         Total revenues increased by $36.6 million, or 42.1%, to $123.6 million.

·         Net income increased by $7.6 million, or 44.2%, to $24.7 million.

·         Diluted EPS grew by $0.20, or 40.9%, to $0.69 per share.

·         Paid dividends of $0.12 per share.

·         Eliminated quota share reinsurance with 2015-2016 reinsurance program.

·         Received Certificates of Authority from Michigan, Minnesota and Virginia.



Second-Quarter 2015 Results

Net income for the second quarter of 2015 of $24.7 million reflects an improvement across multiple measures including an increase in direct premiums written, net premiums written, net earned premiums, policy fees, net investment income and improvements in our loss ratio. The increase in net earned premiums reflects both growth in policies in force and lower reinsurance costs, including the reduction in the cession rate of the Company’s quota share reinsurance contracts to 30% effective June 2014, followed by the elimination of quota share reinsurance effective June 2015.  To a lesser degree but an important strategic initiative is diversification of premium outside of Florida as the Company is now licensed to write premium in 13 states. The loss and loss adjustment expense ratio was improved to 35.2% in the second quarter of 2015 compared to 37.7% for the second quarter of 2014.  The Company’s initiatives to expedite claims have resulted in savings, reducing the severity and duration of claims and costs associated with handling of claims. 

Stockholders’ equity reached an all-time high of $255.3 million as of June 30, 2015 compared to $218.9 million (pro-forma) as of December 31, 2014.

First Six-Months 2015 Results

For the first six months of 2015, the Company’s net income was $47.0 million, an increase of $16.4 million, or 53.3%, compared to the same period of 2014.  Diluted earnings per share for the first six months of 2015 was $1.31, an increase of $0.44, or 51.0%, compared to the same period of 2014.

Cash Dividends

On April 13, 2015, the Company announced that its board of directors declared a cash dividend of $0.12 per share of common stock which was paid on July 2, 2015 to shareholders of record on June 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 second quarter 2015 financial results at approximately 5:00 pm Eastern on August 4, 2015. The presentation will be pre-recorded and there will be no opportunity for live questions. The audio recording of this presentation will be available at www.universalinsuranceholdings.com until September 4, 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, Indiana and Pennsylvania.  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 Form 10-K for the year ended December 31, 2014 and Form 10-Q for the quarter ended June 30, 2015.




UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

June 30,

 

December 31,

ASSETS

 

2015

 

2014

Cash and cash equivalents

 

 $          213,330

 

 $       115,397

Restricted cash and cash equivalents

 

                 2,635

 

              2,635

Fixed maturities, at fair value

 

             359,589

 

          353,949

Equity securities, at fair value

 

               38,515

 

            19,642

Short-term investments, at fair value

 

             100,025

 

            49,990

Investment real estate, net

 

                 5,849

 

                   —

Prepaid reinsurance premiums

 

             110,739

 

          190,505

Reinsurance recoverable

 

               38,157

 

            55,187

Reinsurance receivable, net

 

                    716

 

              7,468

Premiums receivable, net

 

               59,171

 

            50,987

Other receivables

 

                 4,524

 

              2,763

Property and equipment, net

 

               23,818

 

            17,254

Deferred policy acquisition costs, net

 

               62,181

 

            25,660

Income taxes recoverable

 

               12,949

 

              5,675

Deferred income tax asset, net

 

               10,250

 

            11,850

Other assets

 

                 4,919

 

              2,812

          Total assets

 

 $       1,047,367

 

 $       911,774




LIABILITIES, CONTINGENTLY REDEEMABLE COMMON STOCK AND STOCKHOLDERS' EQUITY

 

 

 

 

 

LIABILITIES:

 

 

 

 

Unpaid losses and loss adjustment expenses

$

112,117

 $

134,353

Unearned premiums

 

       455,882

 

    395,748

Advance premium

 

         29,303

 

      17,919

Accounts payable

 

           1,981

 

        4,121

Book overdraft

 

           2,725

 

        5,924

Reinsurance payable, net

 

       131,738

 

      66,066

Income taxes payable

 

           1,659

 

        1,799

Dividends payable to shareholders

 

           4,283

 

             —

Other liabilities and accrued expenses

 

         27,751

 

      36,318

Long-term debt

 

         24,600

 

      30,610

          Total liabilities

 

       792,039

 

    692,858

Contingently redeemable common stock

 

                —

 

      19,000

Issued shares - 0 and 1,000

 

 

 

 

Outstanding shares - 0 and 1,000

 

 

 

 

STOCKHOLDERS' EQUITY:

 

 

 

 

Cumulative convertible preferred stock, $.01 par value

 

                —

 

             —

     Authorized shares - 1,000

 

 

 

 

     Issued shares - 10 and 12

 

 

 

 

     Outstanding shares - 10 and 12

 

 

 

 

     Minimum liquidation preference, $9.99 and $8.49 per share

 

 

 

 

Common stock, $.01 par value

 

              456

 

           448

     Authorized shares - 55,000

 

 

 

 

     Issued shares - 45,562 and 43,769

 

 

 

 

     Outstanding shares - 35,695 and 34,102

 

 

 

 

Treasury shares, at cost - 9,867 and 9,667

 

       (67,229)

 

    (62,153)

Additional paid-in capital

 

         62,845

 

      40,987

Accumulated other comprehensive income (loss), net of taxes

 

         (1,721)

 

      (1,835)

Retained earnings

 

       260,977

 

    222,469

          Total stockholders' equity

 

       255,328

 

    199,916

          Total liabilities, contingently redeemable
          common stock and stockholders' equity

 

 $ 1,047,367

 

 $ 911,774




UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

June 30,

 

 

2015

 

2014

PREMIUMS EARNED AND OTHER REVENUES

 

 

 

 

Direct premiums written

 

 $      249,971

 

 $      220,009

Ceded premiums written

 

            (7,933)

 

          (76,483)

Net premiums written

 

         242,038

 

         143,526

Change in net unearned premiums

 

        (129,150)

 

          (70,164)

     Premiums earned, net

 

         112,888

 

           73,362

     Net investment income (expense)

 

             1,207

 

                412

     Net realized gains (losses) on investments

 

                110

 

             3,950

     Commission revenue

 

             3,474

 

             3,670

     Policy fees

 

             4,352

 

             3,899

     Other revenue

 

             1,560

 

             1,696

Total premiums earned and other revenues

 

         123,591

 

           86,989

OPERATING COSTS AND EXPENSES

 

 

 

 

     Losses and loss adjustment expenses

 

           39,704

 

           27,679

     General and administrative expenses

 

           42,667

 

           28,901

Total operating costs and expenses

 

           82,371

 

           56,580

INCOME BEFORE INCOME TAXES

 

           41,220

 

           30,409

Income tax expense

 

           16,516

 

           13,283

NET INCOME

 

 $        24,704

 

 $        17,126

Basic earnings per common share

 

 $            0.71

 

 $            0.50

Weighted average common shares outstanding - Basic

 

           35,019

 

           33,968

Fully diluted earnings per common share

 

 $            0.69

 

 $            0.49

Weighted average common shares outstanding - Diluted

 

           36,002

 

           35,174

Cash dividend declared per common share

 

 $            0.12

 

 $            0.10




UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

June 30,

 

 

2015

 

2014

PREMIUMS EARNED AND OTHER REVENUES

 

 

 

 

Direct premiums written

 

 $      461,576

 

 $      411,926

Ceded premiums written

 

        (114,430)

 

        (198,132)

Net premiums written

 

         347,146

 

         213,794

Change in net unearned premiums

 

        (139,898)

 

          (76,625)

     Premiums earned, net

 

         207,248

 

         137,169

     Net investment income (expense)

 

             2,069

 

                930

     Net realized gains (losses) on investments

 

                281

 

             4,852

     Commission revenue

 

             6,642

 

             7,759

     Policy fees

 

             8,184

 

             7,411

     Other revenue

 

             2,977

 

             3,173

Total premiums earned and other revenues

 

         227,401

 

         161,294

OPERATING COSTS AND EXPENSES

 

 

 

 

     Losses and loss adjustment expenses

 

           73,294

 

           54,504

     General and administrative expenses

 

           74,864

 

           53,264

Total operating costs and expenses

 

         148,158

 

         107,768

INCOME BEFORE INCOME TAXES

 

           79,243

 

           53,526

Income tax expense

 

           32,209

 

           22,851

NET INCOME

 

 $        47,034

 

 $        30,675

Basic earnings per common share

 

 $            1.35

 

 $            0.91

Weighted average common shares outstanding - Basic

 

           34,800

 

           33,696

Fully diluted earnings per common share

 

 $            1.31

 

 $            0.87

Weighted average common shares outstanding - Diluted

 

           35,987

 

           35,450

Cash dividend declared per common share

 

 $            0.24

 

 $            0.20



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