Universal Insurance Holdings, Inc. Reports Record Financial Results for the Second Quarter of 2016

Achieved Highest Quarterly Net Income and Diluted EPS in Company History

 

Fort Lauderdale, FL, July 28, 2016 - Universal Insurance Holdings, Inc. (NYSE: UVE) today reported record quarterly net income of $33.6 million, an increase of 36.2%, or $8.9 million, over the same quarter in 2015.  Diluted earnings per share (EPS) were $0.94 for the second quarter of 2016, an increase of 36.2%, or $0.25 per share, over the same quarter in 2015. 

 

“Our record second quarter results reflect the strength of our integrated business model and consistent operational execution across the company,” said Sean P. Downes, Universal’s Chairman and Chief Executive Officer. “We are pleased with our continued geographic expansion efforts, with our recent launch in Alabama marking the thirteenth state of operation for Universal Property & Casualty Insurance Company. The early results from our Direct-to-Consumer online platform, Universal DirectSM, that is now available in five states with the recent additions of South Carolina and Indiana have been extremely positive, and we are encouraged by the future prospects of this innovative source of organic business.  As we move forward into the second half of the year, we are confident in our positioning and ability to generate profitable growth and value creation for all shareholders."

 

Second-Quarter 2016 & Recent Highlights

  • Net earned premiums grew by $43.6 million, or 38.6%, to $156.5 million.
  • Total revenues increased by $46.2 million, or 37.4%, to $169.8 million.
  • Net income increased by $8.9 million, or 36.2%, to $33.6 million.
  • Diluted EPS grew by $0.25, or 36.2%, to $0.94 per share.
  • Declared dividend of $0.14 per share.
  • Completed our 2016-2017 reinsurance programs.
  • Wrote our first policy in Alabama.
  • Expanded Universal DirectSM, a Direct-to-Consumer online platform for homeowners insurance, into five states

 

Second-Quarter 2016 Results

 

Net income for the second quarter of 2016 of $33.6 million reflects an improvement in multiple revenue measures. The increase in net earned premiums includes both organic growth in policies in force and the elimination of quota share reinsurance arrangements effective June 2015. 

 

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

 

Stockholders’ equity reached an all-time high of $351.4 million as of June 30, 2016 compared to $293.1 million as of December 31, 2015.  Book value per common share also reached an all-time high of $10.02 as June 30, 2016 compared to $8.34 as of December 31, 2015.

 

Share Repurchases

 

On June 13, 2016, the Company announced the completion of a $10 million share repurchase program with 527,107 shares repurchased at an average price of $18.93 per share on the open market pursuant to the Board authorized share repurchase program announced on November 19, 2015.

 

The Company also announced that its Board of Directors authorized a new share repurchase program under which the Company may repurchase up to $20 million of its outstanding shares of common stock through December 31, 2017. Pursuant to this program, the Company has repurchased 25,000 shares of its common stock at an average price of $19.42 per share, with $19.5 million remaining to be deployed.

 

Cash Dividends

 

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, which was 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 Thursday, July 28, 2016 at 4:45 PM ET to discuss the second 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.: 52662993).  A live audio webcast of the call will also be accessible on the Universal Insurance website at www.universalinsuranceholdings.com.  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.: 52662993), and will be available through August 12, 2016.

 

 

About Universal Insurance Holdings, Inc.

Universal Insurance Holdings, Inc., with its wholly-owned subsidiaries, is a vertically integrated insurance 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 operations in North Carolina, South Carolina, Hawaii, Georgia, Massachusetts, Maryland, Delaware, Indiana, Pennsylvania, Minnesota, Michigan and Alabama.  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 by 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.

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

June 30,

 

 

2016

 

2015

PREMIUMS EARNED AND OTHER REVENUES

 

 

 

 

Direct premiums written

 

 $             271,921

 

 $            249,971

Ceded premiums written

 

          (72,874)

 

            (7,933)

Net premiums written

 

         199,047

 

         242,038

Change in net unearned premiums

 

          (42,586)

 

        (129,150)

     Premiums earned, net

 

         156,461

 

         112,888

     Net investment income (expense)

 

             2,142

 

             1,207

     Net realized gains (losses) on investments

 

                576

 

                110

     Commission revenue

 

             4,210

 

             3,474

     Policy fees

 

             4,753

 

             4,352

     Other revenue

 

             1,660

 

             1,560

Total premiums earned and other revenues

 

         169,802

 

         123,591

OPERATING COSTS AND EXPENSES

 

 

 

 

     Losses and loss adjustment expenses

 

           60,083

 

           39,704

     General and administrative expenses

 

           54,825

 

           42,667

Total operating costs and expenses

 

         114,908

 

           82,371

INCOME BEFORE INCOME TAXES

 

           54,894

 

           41,220

Income tax expense

 

           21,247

 

           16,516

NET INCOME

 

 $               33,647

 

 $               24,704

Basic earnings per common share

 

 $                   0.96

 

 $                   0.71

Weighted average common shares outstanding - Basic

 

                  35,062

 

                  35,019

Fully diluted earnings per common share

 

 $                   0.94

 

 $                   0.69

Weighted average common shares outstanding - Diluted

 

                  35,649

 

                  36,002

Cash dividend declared per common share

 

 $                   0.14

 

 $                   0.12

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

June 30,

 

 

2016

 

2015

PREMIUMS EARNED AND OTHER REVENUES

 

 

 

 

Direct premiums written

 

 $           499,894

 

 $          461,576

Ceded premiums written

 

        (146,933)

 

        (114,430)

Net premiums written

 

         352,961

 

         347,146

Change in net unearned premiums

 

          (44,052)

 

        (139,898)

     Premiums earned, net

 

         308,909

 

         207,248

     Net investment income (expense)

 

             3,747

 

             2,069

     Net realized gains (losses) on investments

 

             1,243

 

                281

     Commission revenue

 

             8,323

 

             6,642

     Policy fees

 

             8,867

 

             8,184

     Other revenue

 

             3,159

 

             2,977

Total premiums earned and other revenues

 

         334,248

 

         227,401

OPERATING COSTS AND EXPENSES

 

 

 

 

     Losses and loss adjustment expenses

 

         126,200

 

           73,294

     General and administrative expenses

 

         112,055

 

           74,864

Total operating costs and expenses

 

         238,255

 

         148,158

INCOME BEFORE INCOME TAXES

 

           95,993

 

           79,243

Income tax expense

 

           37,120

 

           32,209

NET INCOME

 

 $             58,873

 

$             47,034

Basic earnings per common share

 

 $                1.69

 

 $                1.35

Weighted average common shares outstanding - Basic

 

               34,795

 

               34,800

Fully diluted earnings per common share

 

 $                1.65

 

 $                1.31

Weighted average common shares outstanding - Diluted

 

               35,575

 

               35,987

Cash dividend declared per common share

 

 $                0.28

 

 $                0.24

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

June 30,

 

December 31,

ASSETS

 

2016

 

2015

 

Cash and cash equivalents

 

 $          215,283

 

 $       197,014

 

Restricted cash and cash equivalents

 

                 2,635

 

              2,635

 

Fixed maturities, at fair value

 

             577,810

 

          416,083

 

Equity securities, at fair value

 

               35,543

 

            42,214

 

Short-term investments, at fair value

 

                 5,004

 

            25,021

 

Investment real estate, net

 

                 8,102

 

              6,117

 

Prepaid reinsurance premiums

 

             122,444

 

          114,673

 

Reinsurance recoverable

 

                 6,355

 

            22,853

 

Premiums receivable, net

 

               61,433

 

            50,980

 

Other receivables

 

                 6,203

 

              4,979

 

Property and equipment, net

 

               29,706

 

            27,065

 

Deferred policy acquisition costs, net

 

               67,190

 

            60,019

 

Income taxes recoverable

 

                    156

 

              5,420

 

Deferred income tax asset, net

 

                 6,599

 

            13,912

 

Other assets

 

                 5,046

 

              4,563

 

          Total assets

 

 $       1,149,509

 

 $       993,548

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

Unpaid losses and loss adjustment expenses

 

 $            60,144

 

 $         98,840

 

Unearned premiums

 

             494,189

 

          442,366

 

Advance premium

 

               29,589

 

            24,813

 

Accounts payable

 

                 2,926

 

                 378

 

Book overdraft

 

                    539

 

                   —

 

Reinsurance payable, net

 

             147,444

 

            73,585

 

Dividends payable

 

                 4,912

 

                   —

 

Other liabilities and accrued expenses

 

               42,640

 

            36,424

 

Long-term debt

 

               15,763

 

            24,050

 

          Total liabilities

 

             798,146

 

          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 - 45,262 and 45,525

 

 

 

 

 

Outstanding shares - 35,064 and 35,110

 

 

 

 

 

Treasury shares, at cost - 10,198 and 10,415

 

             (85,399)

 

          (80,802)

 

Additional paid-in capital

 

               78,496

 

            70,789

 

Accumulated other comprehensive income (loss), net of taxes

 

                 2,116

 

            (4,006)

 

Retained earnings

 

             355,697

 

          306,656

 

          Total stockholders' equity

 

             351,363

 

          293,092

 

          Total liabilities and stockholders' equity

 

 $       1,149,509

 

 $       993,548

Investor Contact: 

Andy Brimmer / Mahmoud Siddig

Joele Frank, Wilkinson Brimmer Katcher

212-355-4449