Universal Insurance Holdings, Inc. Reports Record First Quarter 2016 Financial Results

Achieved Highest First Quarter Net Income and Diluted EPS in Company History

 

Fort Lauderdale, FL, May 2, 2016 - Universal Insurance Holdings, Inc. (NYSE: UVE) today reported record first quarter net income of $25.2 million, an increase of 13.0%, or $2.9 million, over the same quarter in 2015.  Diluted earnings per share (EPS) were $0.71 for the first quarter of 2016, an increase of 14.5%, or $0.09 per share, over the same quarter in 2015. 

 

“I am very pleased with our outstanding first quarter results, which we achieved notwithstanding the most active severe weather experienced in the first quarter in Florida in company history,” said Sean P. Downes, Universal’s Chairman and Chief Executive Officer.  “Our record performance in the quarter highlights the strength of our underwriting standards, our claims handling ability and the high quality of our book of business. We continued to execute well on our key strategic initiatives, including further progress on our geographic expansion efforts as we wrote our first homeowners insurance policy in Michigan and received certificates of authority from New York and New Jersey.  We enter the second quarter with a robust financial position and confidence in our underlying growth prospects and will continue to maintain our focus on writing high quality, rate-adequate organic business to drive increasing value for Universal shareholders.” 

 

First-Quarter 2016 & Recent Highlights

 

·          Net earned premiums grew by $58.1 million, or 61.6%, to $152.4 million.

·          Total revenues increased by $60.6 million, or 58.4%, to $164.4 million.

·          Net income increased by $2.9 million, or 13.0%, to $25.2 million.

·          Diluted EPS grew by $0.09, or 14.5%, to $0.71 per share.

·          Paid dividends of $0.14 per share.

·          Received Certificates of Authority from New York and New Jersey.

·          Wrote our first policy in Michigan.

·   Launched beta test of Universal Direct®, a Direct-to-Consumer online platform for homeowners insurance and wrote our first policy on Universal Direct®.

 

First-Quarter 2016 Results

 

Net income for the first quarter of 2016 of $25.2 million reflects an improvement across all revenue measures. The increase in net earned premiums includes both organic growth in policies in force and lower reinsurance costs, including the elimination of quota share reinsurance arrangements effective June 2015. 

 

Earned premiums, total revenues, net income and diluted EPS were higher than any other first quarter in the Company’s history.

 

Net income was offset by $8.5 million beyond originally projected pre-tax net losses and loss adjustment expenses attributable to first quarter weather events in Florida. These losses and loss adjustment expenses were incremental to amounts provided for in the underlying loss ratio based on historical experience for such events.

 

Losses and loss adjustment expenses as a percentage of net earned premiums increased 7.8 percentage points resulting in a net loss ratio of 43.4% for the first quarter, compared to 35.6% for the same period last year. The key driver of this increase was the severe weather events in the first quarter of 2016.

 

Stockholders’ equity reached an all-time high of $314.3 million as of March 31, 2016 compared to $293.1 million as of December 31, 2015.  Book value per common share also reached an all-time high of $9.03 as March 31, 2016 compared to $8.34 as of December 31, 2015.

 

Cash Dividends

 

On January 14, 2016, the Company announced that its Board of Directors had declared an increased cash dividend of $0.14 per share of common stock, up $0.02 from the $0.12 per share paid during the past four quarters, and that the Board expected to declare and pay a proposed regular quarterly dividend during fiscal year 2016 of $0.14 per share. Payment was made on March 2, 2016 to shareholders of record on February 18, 2016. 

 

On April 13, 2016, the Company announced that its Board of Directors had declared a cash dividend of $0.14 per share of common stock to be paid on July 5, 2016 to shareholders of record on June 15, 2016.

 

Conference Call

 

Members of the Universal management team will host a conference call on Tuesday, May 3, 2016 at 10:00 AM ET to discuss the first quarter 2016 financial results.   Following prepared remarks, management will conduct a question and answer session.  

 

The call will be accessible by dialing toll free at (888) 887-7180 or toll at (270) 823-1518 (using the Conference I.D.: 97089515).  A replay of the call can be accessed toll free at (855) 859-2056 or toll at (404) 537-3406 (using the Conference I.D.: 97089515).

 

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, Pennsylvania, Minnesota and Michigan.  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, 2015.

 

 

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UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

 

2016

 

2015

PREMIUMS EARNED AND OTHER REVENUES

 

 

 

 

Direct premiums written

 

 $      227,973

 

 $      211,605

Ceded premiums written

 

          (74,059)

 

        (106,497)

Net premiums written

 

         153,914

 

         105,108

Change in net unearned premium

 

            (1,466)

 

          (10,748)

     Premiums earned, net

 

         152,448

 

           94,360

     Net investment income (expense)

 

             1,605

 

                862

     Net realized gains (losses) on investments

 

                667

 

                171

     Commission revenue

 

             4,113

 

             3,168

     Policy fees

 

             4,114

 

             3,832

     Other revenue

 

             1,499

 

             1,417

Total premiums earned and other revenues

 

         164,446

 

         103,810

OPERATING COSTS AND EXPENSES

 

 

 

 

     Losses and loss adjustment expenses

 

           66,117

 

           33,590

     General and administrative expenses

 

           57,230

 

           32,197

Total operating costs and expenses

 

         123,347

 

           65,787

INCOME BEFORE INCOME TAXES

 

           41,099

 

           38,023

Income tax expense

 

           15,873

 

           15,693

NET INCOME

 

 $        25,226

 

 $        22,330

Basic earnings per common share

 

 $            0.73

 

 $            0.65

Weighted average common shares outstanding - Basic

 

           34,527

 

           34,578

Fully diluted earnings per common share

 

 $            0.71

 

 $            0.62

Weighted average common shares outstanding - Diluted

 

           35,594

 

           36,081

Cash dividend declared per common share

 

 $            0.14

 

 $            0.12

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

March 31,

 

December 31,

ASSETS

 

2016

 

2015

Cash and cash equivalents

 

 $          160,034

 

 $       197,014

Restricted cash and cash equivalents

 

                 2,635

 

              2,635

Fixed maturities, at fair value

 

             488,725

 

          416,083

Equity securities, at fair value

 

               31,754

 

            42,214

Short-term investments, at fair value

 

               12,505

 

            25,021

Investment real estate, net

 

                 8,110

 

              6,117

Prepaid reinsurance premiums

 

             119,927

 

          114,673

Reinsurance recoverable

 

               17,162

 

            22,853

Reinsurance receivable, net

 

                    186

 

                 353

Premiums receivable, net

 

               54,719

 

            50,980

Other receivables

 

               21,754

 

              4,626

Property and equipment, net

 

               28,070

 

            27,065

Deferred policy acquisition costs, net

 

               61,158

 

            60,019

Income taxes recoverable

 

                 5,420

 

              5,420

Deferred income tax asset, net

 

               11,840

 

            13,912

Other assets

 

                 4,997

 

              4,563

          Total assets

 

 $       1,028,996

 

 $       993,548

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

LIABILITIES:

 

 

 

 

Unpaid losses and loss adjustment expenses

 

 $            84,975

 

 $         98,840

Unearned premiums

 

             449,086

 

          442,366

Advance premium

 

               32,289

 

            24,813

Accounts payable

 

                 3,894

 

                 378

Reinsurance payable, net

 

               75,446

 

            73,585

Income taxes payable

 

               17,383

 

                   —

Other liabilities and accrued expenses

 

               28,549

 

            36,424

Long-term debt

 

               23,077

 

            24,050

          Total liabilities

 

             714,699

 

          700,456

STOCKHOLDERS' EQUITY:

 

 

 

 

Cumulative convertible preferred stock, $.01 par value

 

                      —

 

                   —

Authorized shares - 1,000

 

 

 

 

Issued shares - 10 and 10

 

 

 

 

Outstanding shares - 10 and 10

 

 

 

 

Minimum liquidation preference, $9.99 and $9.99 per share

 

 

 

 

Common stock, $.01 par value

 

                    453

 

                 455

Authorized shares - 55,000

 

 

 

 

Issued shares - 45,315 and 45,525

 

 

 

 

Outstanding shares - 34,800 and 35,110

 

 

 

 

Treasury shares, at cost - 10,515 and 10,415

 

             (82,676)

 

          (80,802)

Additional paid-in capital

 

               70,280

 

            70,789

Accumulated other comprehensive income (loss), net of taxes

 

                  (725)

 

            (4,006)

Retained earnings

 

             326,965

 

          306,656

          Total stockholders' equity

 

             314,297

 

          293,092

          Total liabilities, contingently redeemable
          common stock and stockholders' equity

 

 $       1,028,996

 

 $       993,548

 

 

 

 

 

 

 

 



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212-355-4449