Universal Insurance Holdings, Inc. Reports Another Record Quarter for Third Quarter 2015
Reports Highest Quarterly Net Income in Company History
Fort Lauderdale, FL, October 29, 2015 – Universal Insurance Holdings, Inc. (NYSE: UVE) (or the “Company”) today reported third quarter 2015 net income of $30.3 million, an increase of 42.0% ($9.0 million) over the same period in 2014 and a record in Company history. Diluted earnings per share (EPS) were $0.84 for the third quarter of 2015, an increase of 37.7% ($0.23 per share) over the same quarter in 2014, and also represented a Company record. This compares to net income of $21.3 million, or $0.61 per diluted share, for the same period in 2014.
“We are pleased to report our third consecutive quarter of achieving the highest quarterly net income in Company history,” said Sean P. Downes, Universal’s Chairman, President and Chief Executive Officer. “Our results demonstrate, once again, the strength and diversity of our business model and continued execution on our strategic initiatives to write high quality, rate adequate business, expand our geographic footprint and drive enhanced value for shareholders.”
“This quarter we announced that we received licenses to operate in Virginia, West Virginia and Alabama, expanding our presence to 15 states. Through the first nine-months of the year, our successful expansion outside of Florida has resulted in a growth in policy count of 35.6% outside Florida. Supported by a peer leading independent agency force, Universal has grown from a leading provider of homeowners insurance in Florida to one of the leading writers of homeowners insurance nationally. This expansion and top-line growth in Florida, coupled with the improvements we have made to our reinsurance program is driving our strong bottom-line performance.”
Third-Quarter 2015 & Recent Highlights
- Net earned premiums grew by $51.9 million, or 55.0%, to $146.2 million.
- Total revenues increased by $53.5 million, or 51.7%, to $157.0 million.
- Net income increased by $9.0 million, or 42.0%, to $30.3 million.
- Diluted EPS grew by $0.23, or 37.7%, to $0.84 per share.
- Paid dividends of $0.12 per share.
- Announced $10 million share repurchase program.
- Received Certificates of Authority from Virginia, West Virginia and Alabama.
Third-Quarter 2015 Results
Net income for the third quarter of 2015 of $30.3 million reflects an improvement across multiple measures including an increase in direct premiums written, net premiums written, net earned premiums, net investment income, commissions, policy fees, other revenues and income before taxes. The increase in net earned premiums reflects both growth in policies in force and lower reinsurance costs, including the elimination of quota share reinsurance effective June 2015.
Stockholders’ equity reached an all-time high of $283.0 million as of September 30, 2015 compared to $218.9 million (pro-forma) as of December 31, 2014.
First Nine-Months 2015 Results
For the first nine months of 2015, the Company’s net income was $77.3 million, an increase of $25.3 million, or 48.7%, compared to the same period of 2014. Diluted earnings per share for the first nine months of 2015 was $2.15, an increase of $0.67, or 45.3%, compared to the same period of 2014.
Share Repurchases
On September 2, 2015, the Company announced that its Board of Directors authorized a share repurchase program under which the Company may repurchase up to $10 million of its outstanding shares of common stock through December 31, 2016. As of September 30, 2015, the Company had repurchased 100,000 shares of its common stock at an average price of $25.84 per share, with $7.4 million remaining to be deployed.
Cash Dividends
On August 31, 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 October 8, 2015 to shareholders of record on September 23, 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 third quarter 2015 financial results at approximately 5:00 pm Eastern on October 29, 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 November 27, 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, Pennsylvania and Minnesota. 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 September 30, 2015.
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UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES |
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CONSOLIDATED BALANCE SHEETS (Unaudited) |
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(in thousands, except per share data) |
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September 30, |
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December 31, |
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ASSETS |
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2015 |
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2014 |
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Cash and cash equivalents |
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$ 201,774 |
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$ 115,397 |
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Restricted cash and cash equivalents |
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2,635 |
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2,635 |
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Fixed maturities, at fair value |
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417,769 |
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353,949 |
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Equity securities, at fair value |
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46,627 |
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19,642 |
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Short-term investments, at fair value |
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75,023 |
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49,990 |
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Investment real estate, net |
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5,820 |
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— |
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Prepaid reinsurance premiums |
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113,240 |
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190,505 |
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Reinsurance recoverable |
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36,135 |
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55,187 |
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Reinsurance receivable, net |
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166 |
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7,468 |
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Premiums receivable, net |
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56,617 |
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50,987 |
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Other receivables |
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5,195 |
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2,763 |
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Property and equipment, net |
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26,302 |
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17,254 |
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Deferred policy acquisition costs, net |
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63,003 |
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25,660 |
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Income taxes recoverable |
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10,964 |
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5,675 |
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Deferred income tax asset, net |
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12,196 |
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11,850 |
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Other assets |
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4,900 |
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2,812 |
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Total assets |
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$ 1,078,366 |
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$ 911,774 |
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LIABILITIES, CONTINGENTLY REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ EQUITY |
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LIABILITIES: |
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Unpaid losses and loss adjustment expenses |
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$ 101,059 |
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$ 134,353 |
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Unearned premiums |
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463,651 |
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395,748 |
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Advance premium |
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26,029 |
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17,919 |
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Accounts payable |
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1,582 |
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4,121 |
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Book overdraft |
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3,728 |
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5,924 |
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Payable for securities purchased |
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7,937 |
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— |
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Reinsurance payable, net |
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125,427 |
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66,066 |
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Income taxes payable |
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— |
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1,799 |
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Dividends payable to shareholders |
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4,287 |
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— |
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Other liabilities and accrued expenses |
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37,388 |
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36,318 |
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Long-term debt |
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24,324 |
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30,610 |
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Total liabilities |
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795,412 |
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692,858 |
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Contingently redeemable common stock |
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— |
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19,000 |
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Issued shares – 0 and 1,000 |
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Outstanding shares – 0 and 1,000 |
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STOCKHOLDERS’ EQUITY: |
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Cumulative convertible preferred stock, $.01 par value |
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— |
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— |
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Authorized shares – 1,000 |
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Issued shares – 10 and 12 |
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Outstanding shares – 10 and 12 |
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Minimum liquidation preference, $9.99 and $8.49 per share |
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Common stock, $.01 par value |
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456 |
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448 |
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Authorized shares – 55,000 |
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Issued shares – 45,595 and 43,769 |
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Outstanding shares – 35,628 and 34,102 |
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Treasury |
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(69,818) |
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(62,153) |
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Additional paid-in capital |
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67,845 |
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40,987 |
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Accumulated other comprehensive income (loss), net of |
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(2,515) |
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(1,835) |
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Retained earnings |
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286,986 |
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222,469 |
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Total stockholders’ equity |
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282,954 |
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199,916 |
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Total liabilities, contingently redeemable |
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$ 1,078,366 |
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$ 911,774 |
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UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES |
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CONSOLIDATED STATEMENTS OF INCOME (Unaudited) |
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(in thousands, except per share data) |
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Three Months Ended |
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September 30, |
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2015 |
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2014 |
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PREMIUMS |
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Direct premiums written |
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$ 222,572 |
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$ 195,435 |
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Ceded premiums written |
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(71,150) |
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(103,492) |
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Net premiums written |
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151,422 |
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91,943 |
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Change in net unearned premiums |
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(5,269) |
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2,345 |
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Premiums earned, net |
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146,153 |
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94,288 |
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Net investment income (expense) |
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1,307 |
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644 |
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Net realized gains (losses) on investments |
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11 |
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501 |
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Commission revenue |
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4,115 |
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3,123 |
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Policy fees |
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3,820 |
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3,416 |
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Other revenue |
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1,637 |
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1,528 |
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Total premiums earned and other revenues |
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157,043 |
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103,500 |
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OPERATING COSTS AND EXPENSES |
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Losses and loss adjustment expenses |
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53,854 |
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34,181 |
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General and administrative expenses |
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55,289 |
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32,167 |
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Total operating costs and expenses |
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109,143 |
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66,348 |
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INCOME BEFORE INCOME TAXES |
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47,900 |
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37,152 |
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Income tax expense |
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17,602 |
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15,811 |
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NET INCOME |
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$ 30,298 |
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$ 21,341 |
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Basic earnings per common share |
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$ 0.87 |
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$ 0.64 |
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Weighted average common shares outstanding – Basic |
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34,911 |
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33,432 |
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Fully diluted earnings per common share |
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$ 0.84 |
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$ 0.61 |
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Weighted average common shares outstanding – Diluted |
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35,999 |
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34,812 |
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Cash dividend declared per common share |
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$ 0.12 |
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$ 0.10 |
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UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES |
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CONSOLIDATED STATEMENTS OF INCOME (Unaudited) |
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(in thousands, except per share data) |
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Nine Months Ended |
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September 30, |
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2015 |
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2014 |
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PREMIUMS EARNED AND OTHER REVENUES |
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Direct premiums written |
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$ 684,147 |
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$ 607,361 |
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Ceded premiums written |
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(185,578) |
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(301,624) |
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Net premiums written |
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498,569 |
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305,737 |
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Change in net unearned premiums |
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(145,168) |
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(74,280) |
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Premiums earned, net |
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353,401 |
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231,457 |
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Net investment income (expense) |
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3,376 |
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1,574 |
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Net realized gains (losses) on investments |
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292 |
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5,353 |
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Commission revenue |
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10,757 |
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10,882 |
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Policy fees |
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12,003 |
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10,827 |
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Other revenue |
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4,614 |
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4,701 |
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Total premiums earned and other revenues |
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384,443 |
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264,794 |
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OPERATING COSTS AND EXPENSES |
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Losses and loss adjustment expenses |
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127,148 |
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88,685 |
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General and administrative expenses |
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130,152 |
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85,431 |
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Total operating costs and expenses |
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257,300 |
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174,116 |
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INCOME BEFORE INCOME TAXES |
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127,143 |
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90,678 |
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Income tax expense |
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49,811 |
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38,662 |
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NET INCOME |
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$ 77,332 |
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$ 52,016 |
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Basic earnings per common share |
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$ 2.22 |
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$ 1.55 |
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Weighted average common shares outstanding – Basic |
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34,837 |
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33,607 |
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Fully diluted earnings per common share |
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$ 2.15 |
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$ 1.48 |
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Weighted average common shares outstanding – Diluted |
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35,918 |
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35,097 |
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Cash dividend declared per common share |
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$ 0.36 |
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$ 0.30 |
Investor Contact:
Andy Brimmer / Mahmoud Siddig
Joele Frank, Wilkinson Brimmer Katcher
212-355-4449