Universal Insurance Holdings, Inc. Reports Fourth-Quarter and Full-Year 2013 Financial Results

 
Full-Year 2013 Diluted EPS Grows 108 Percent Versus 2012; Fourth-Quarter 2013 Diluted EPS Increases 33 Cents Versus Same Quarter Last Year
 
Fort Lauderdale, FL, March 3, 2014 - Universal Insurance Holdings, Inc. (NYSE: UVE) today reported net income of $15.6 million, or $0.44 per diluted share, an increase of $0.33, for the fourth quarter of 2013, compared to a net income of $4.4 million, or $0.11 per diluted share, for the same period in 2012.
 
For the full year of 2013, the Company reported net income of $59.0 million and diluted earnings per share (EPS) of $1.56, an increase of 108 percent, compared to net income of $30.3 million, or $0.75 per diluted share, for the same period of 2012.
 
Sean P. Downes, the Company's Chairman, President and Chief Executive Officer, stated, “Our 2013 results demonstrate the meaningful progress made against our strategic and operational initiatives to improve rate adequacy, streamline claims handling and reduce reinsurance costs. We are proud of the milestones achieved during the course of the year, including the Company’s listing on the NYSE, and believe we enter 2014 well positioned to drive additional long-term growth. Our performance during the year bolstered our healthy financial position and allowed us to deliver significant shareholder value, supporting an increase in our quarterly dividend and the completion of additional share repurchases.”
 
Mr. Downes continued, “Looking ahead, we remain focused on continuing to execute our proven strategic plan and are confident in the long-term prospects of our Company.”
 
Fourth-Quarter 2013 Highlights
  • Best fourth quarter net income and EPS in Company history.
  • Net income and EPS grew $11.2 million and $0.33, respectively, compared to Q4 2012.
  • Net investment income grew by over 400 percent versus Q4 2012.
  • Losses and loss adjustment expenses declined by nearly 17 percent versus Q4 2012.
 
Fourth-Quarter 2013 Results
Net income for the fourth quarter of 2013 increased $11.2 million, or $0.33 per diluted share, compared to the fourth quarter of 2012, reflecting an improvement in underwriting income, an increase in net investment income and net realized gains, the absence of net trading portfolio losses that occurred during the fourth quarter of 2012, and a non-recurring Florida Insurance Guaranty Association (FIGA) assessment charged to earnings in the fourth quarter of 2012, combined with a partial recovery of the same in the fourth quarter of 2013. Additionally, fourth quarter 2013 EPS benefitted from lower outstanding shares related to the share repurchases made by the Company during the first nine months of 2013. 
 
Fourth quarter 2013 losses and loss adjustment expenses decreased $5.7 million, or 16.6%, compared to the fourth quarter of 2012, primarily attributable to an improvement in the adjustments made in the current years related to prior accident years and favorable development.
 
At December 31, 2013, stockholders' equity was $175.6 million compared to $163.5 million at December 31, 2012.
 
Full-Year 2013 Results
For the full year of 2013, the Company's net income and diluted earnings per share grew by 94.6 percent and 108 percent, respectively, compared to the full year of 2012.
 
Net premiums earned increased $36.5 million, or 15.8 percent, for the full year of 2013 compared to the same period of 2012, primarily as a result of increases in premium rates over the past 24 months. Losses and loss adjustment expenses decreased $17.6 million, or 13.9 percent, from the prior year, primarily due to a reduction in charges for the current accident year combined with favorable development.
 
Share Repurchases
For the full year of 2013, the Company repurchased approximately 7.3 million shares of its common stock at a weighted average purchase price of $4.46 per share. Each repurchase was at a significant discount to the then-current market price of the Company’s common stock.
 
Cash Dividends
On November 25, 2013, the Company announced that its board of directors declared a cash dividend of $0.23 per share of common stock which was paid on December 23, 2013, to shareholders of record on December 13, 2013. The $0.23 per share dividend included the expected $0.08 per share fourth quarter dividend and an additional special dividend of $0.15 per share. In total, $0.49 per share in cash dividends were declared and paid in 2013.
 
Also, on January 30, 2014, the Company announced that its board of directors declared a cash dividend of $0.10 per share of common stock, payable on March 3, 2014 to shareholders of record on February 19, 2014, consistent with the Company's previously announced intention to increase its regular quarterly dividend to $0.10 per share from $0.08 per share beginning with the first quarter of 2014. If declared and paid as intended, the annual aggregate dividend in 2014 would be $0.40 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 2013 financial results on March 3, 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 April 3, 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 and Maryland. 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.

 
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in thousands, except per share data)
 
 
Three Months Ended December 31,
 
 
 
 
2013
 
2012
PREMIUMS EARNED AND OTHER REVENUES
 
 
 
 
Direct premiums written
 
 $      173,730
 
 $      174,571
Ceded premiums written
 
        (121,941)
 
        (118,961)
Net premiums written
 
           51,789
 
           55,610
Change in net unearned premium
 
           14,663
 
           11,664
     Premiums earned, net
 
           66,452
 
           67,274
     Net investment income (expense)
 
             1,397
 
                278
     Net realized gains (losses) on investments
 
             1,242
 
                353
     Net change in unrealized gains (losses) on investments
 
                 (62)
 
            (2,047)
     Net foreign currency gains (losses) on investments
 
                     -
 
                   (1)
     Commission revenue
 
             4,178
 
             4,889
     Policy fees
 
             2,924
 
             3,041
     Other revenue
 
             1,449
 
             1,440
Total premiums earned and other revenues
 
           77,580
 
           75,227
OPERATING COSTS AND EXPENSES
 
 
 
 
     Losses and loss adjustment expenses
 
           28,598
 
           34,275
     General and administrative expenses
 
           22,989
 
           31,588
Total operating costs and expenses
 
           51,587
 
           65,863
INCOME BEFORE INCOME TAXES
 
           25,993
 
             9,364
     Income taxes, current
 
             8,776
 
             7,950
     Income taxes, deferred
 
             1,635
 
            (2,992)
        Income taxes, net
 
           10,411
 
             4,958
NET INCOME
 
 $        15,582
 
 $          4,406
 
 
 
 
 
Basic earnings per common share
 
 $            0.46
 
 $            0.11
Weighted average number of common shares outstanding - basic
 
33,602
 
           39,719
 
 
 
 
 
Diluted earnings per common share
 
 $            0.44
 
 $            0.11
Weighted average number of common shares outstanding - diluted
 
35,685
 
           41,091
 
 
 
 
 
Cash dividend declared per common share
 
 $            0.23
 
 $            0.20
 
 
 
 
 
 

 
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
 
 
 
For the Years Ended
December 31,
 
 
2013
 
2012
PREMIUMS EARNED AND OTHER REVENUES
 
 
 
 
Direct premiums written
 
 $      783,894
 
 $      780,128
Ceded premiums written
 
        (522,116)
 
        (517,604)
Net premiums written
 
         261,778
 
         262,524
Change in net unearned premium
 
             5,877
 
          (31,404)
     Premiums earned, net
 
         267,655
 
         231,120
     Net investment income (expense)
 
             1,928
 
                441
     Net realized gains (losses) on investments
 
          (14,740)
 
          (11,943)
     Net change in unrealized gains (losses) on investments
 
             7,850
 
             9,443
     Net foreign currency gains (losses) on investments
 
                     -
 
                  22
     Commission revenue
 
           18,615
 
           20,383
     Policy fees
 
           13,661
 
           14,475
     Other revenue
 
             6,190
 
             5,998
Total premiums earned and other revenues
 
         301,159
 
         269,939
OPERATING COSTS AND EXPENSES
 
 
 
 
     Losses and loss adjustment expenses
 
         108,615
 
         126,187
     General and administrative expenses
 
           91,988
 
           91,193
Total operating costs and expenses
 
         200,603
 
         217,380
INCOME BEFORE INCOME TAXES
 
         100,556
 
           52,559
     Income taxes, current
 
           34,216
 
           18,434
     Income taxes, deferred
 
             7,363
 
             3,813
        Income taxes, net
 
           41,579
 
           22,247
NET INCOME
 
 $        58,977
 
 $        30,312
 
 
 
 
 
Basic earnings per common share
 
 $            1.64
 
 $            0.76
Weighted average common shares outstanding - Basic
 
35,866
 
39,614
 
 
 
 
 
Fully diluted earnings per common share
 
 $            1.56
 
 $            0.75
Weighted average common shares outstanding - Diluted
 
37,776
 
40,616
 
 
 
 
 
Cash dividend declared per common share
 
 $            0.49
 
 $            0.46
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
 
 
 
 
 
 
 
December 31,
ASSETS
 
2013
 
2012
Cash and cash equivalents
 
 $          117,275
 
 $       347,392
Restricted cash and cash equivalents
 
                 2,600
 
            33,009
Fixed maturities (trading), at fair value
 
                        -
 
              4,009
Equity securities (trading), at fair value
 
                        -
 
            85,041
Fixed maturities (available for sale), at fair value
 
             289,418
 
                      -
Equity securities (available for sale), at fair value
 
               65,022
 
                      -
Prepaid reinsurance premiums
 
             241,214
 
          239,921
Reinsurance recoverable
 
             107,847
 
            89,191
Reinsurance receivable, net
 
                    203
 
            24,334
Premiums receivable, net
 
               46,461
 
            50,125
Receivable from securities sold
 
                        -
 
              1,096
Other receivables
 
                 2,587
 
              2,017
Property and equipment, net
 
                 9,289
 
              8,968
Deferred policy acquisition costs, net
 
               15,899
 
            17,282
Income taxes recoverable
 
                 8,152
 
              2,594
Deferred income tax asset, net
 
               12,051
 
            19,178
Other assets
 
                 2,072
 
              1,578
          Total assets
 
 $          920,090
 
 $       925,735
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
LIABILITIES:
 
 
 
 
Unpaid losses and loss adjustment expenses
 
 $          159,222
 
 $       193,241
Unearned premiums
 
             383,488
 
          388,071
Advance premium
 
               22,959
 
            15,022
Accounts payable
 
                 3,441
 
              4,368
Bank overdraft
 
               14,947
 
            25,994
Payable for securities purchased
 
-
 
              1,275
Reinsurance payable, net
 
               86,232
 
            85,259
Income taxes payable
 
                 2,566
 
                 699
Other liabilities and accrued expenses
 
               34,386
 
            28,071
Long-term debt
 
               37,240
 
            20,221
          Total liabilities
 
             744,481
 
          762,221
 
 
 
 
 
STOCKHOLDERS' EQUITY:
 
 
 
 
Cumulative convertible preferred stock, $.01 par value
 
                         -
 
                     1
     Authorized shares - 1,000
 
 
 
 
     Issued shares - 30 and 108
 
 
 
 
     Outstanding shares - 30 and 108
 
 
 
 
     Minimum liquidation preference - $6.98 and $2.66 per share
 
 
Common stock, $.01 par value
 
                    436
 
                 419
     Authorized shares - 55,000
 
 
 
 
     Issued shares - 43,641 and 41,889
 
 
 
 
     Outstanding shares - 35,366 and 40,871
 
 
 
 
     Treasury shares, at cost - 8,275 and 1,018
 
             (35,467)
 
            (3,101)
Additional paid-in capital
 
               42,282
 
            38,684
Accumulated other comprehensive income (loss), net of taxes
                  (376)
 
                      -
Retained earnings
 
             168,734
 
          127,511
          Total stockholders' equity
 
             175,609
 
          163,514
          Total liabilities and stockholders' equity
 
 $          920,090
 
 $       925,735
 
 
Investor Contact: 
Andy Brimmer / Steve Frankel / Mahmoud Siddig
Joele Frank, Wilkinson Brimmer Katcher
212-355-4449