Press Release /
May 2, 2016

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.

  





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,

December31,

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)

Additionalpaid-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



 
Investor Contact:

Andy Brimmer / Mahmoud Siddig 

Joele Frank, Wilkinson Brimmer Katcher

212-355-4449