Universal Insurance Holdings, Inc. Reports Record Fourth Quarter and Full-Year 2014 Financial Results
For the full year of 2014, the Company reported record net income of $73.0 million, or $2.08 diluted EPS, an increase of $14.0 million, or 24 percent, compared to net income of $59.0, or $1.56 diluted EPS, for the same period of 2013.
“Our record fourth quarter and full year results concluded a year in which we delivered increasing profits and significant returns to shareholders,” said Sean P. Downes, the Company’s Chairman, President and Chief Executive Officer. “We generated strong operational and financial momentum in 2014 thanks to a focus on maintaining high underwriting standards and securing profitable, rate adequate business. Our geographic expansion efforts, a key driver of our growth strategy, also remained on track. We received approval to write business in Delaware and Indiana in 2014 and more recently in Pennsylvania, and achieved increases in policy count during 2014 in all states, including Florida. Our decision in 2014 to reduce our quota share reinsurance allowed us to retain a greater portion of our business and increase profitability. We enter 2015 with a clear opportunity to build on this operational momentum. The proceeds from our recent transaction with Nephila Capital coupled with our healthy balance sheet position us to lower our quota share percentage to zero. This change will enable us to retain 100% of our business, an estimated additional $230 million of our own organically grown premium, and further drive profitability and shareholder value.”
Fourth-Quarter 2014 & Recent Highlights
Fourth-Quarter 2014 Results
The increase in the Company’s net income for the fourth quarter of 2014 of $5.4 million, compared to the same period in 2013, primarily reflects an increase in net earned premiums, partially offset by increases in operating expenses. Earned premiums, total revenues, net income and diluted EPS were higher than any other fourth quarter in the Company’s history.
Diluted earnings per share for the fourth quarter of 2014 increased by $0.15, or 34 percent, compared to the full year of 2013.
Full-Year 2014 Results
For the full year of 2014, the Company’s net income increased by $14.0 million, or 24 percent, compared to the same period in 2013. Earned premiums, total revenues, net income and diluted EPS were higher than any other year in the Company’s history.
Diluted earnings per share for the full year of 2014 increased by $0.52, or 33 percent, compared to the full year of 2013. In addition to the increase in net income, diluted EPS benefited from lower outstanding shares as a result of the cumulative share repurchases made by the Company.
For the full year of 2014, the Company repurchased 2,391,208 shares of its common stock at an average price of $12.42 per share. As announced on September 25, 2014, the Company completed its $10 million share repurchase program announced on June 17, 2014, having repurchased a total of 758,361 shares of common stock in the open market at an average price of $13.15 per share. Additionally, the Company sold 1 million registered shares of common stock at a price of $19.00 per share in a privately negotiated transaction on December 2, 2014.
The Company noted that the completion of its share repurchase program and the sale of treasury
shares underscores its confident outlook, solid financial position and commitment to effectively deploying capital when it sees clear value. The shares were sold out of treasury at a significant premium to the cost of the shares, thereby adding significant value for Universal shareholders.
The Board of Directors and management team expect to continue to consider ways to enhance shareholder value, both through strategic growth initiatives and capital returns to shareholders.
On November 10, 2014, the Company announced that its board of directors declared a cash dividend of $0.25 per share of common stock, which was paid on December 15, 2014 to shareholders of record on December 5, 2014. The $0.25 per share dividend includes the expected $0.10 per share fourth quarter dividend, in line with the dividends paid for each of the first three quarters of 2014, and an additional special dividend of $0.15 per share.
On January 13, 2015, the Company announced that its board of directors had declared an increased cash dividend of $0.12 per share of common stock up $0.02 from the $0.10 per share paid the past three quarters. Payment will be made on March 2, 2015 to shareholders of record on February 18, 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 fourth quarter and full-year 2014 financial results on Wednesday, February 25, 2015, 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 March 25, 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 and Indiana. 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 atwww.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, 2014.
Joele Frank, Wilkinson Brimmer Katcher
As disclosed in the Company’s Form 10-K filed earlier today with the Securities and Exchange Commission, on February 19, 2015, the Company modified the terms of a previously disclosed agreement with a third party relating to the sale of 1 million registered shares of UVE common stock which resulted in a reclassification of mezzanine equity to permanent equity. As a result of this reclassification, the pro-forma balance of contingently redeemable common stock, additional paid-in capital and stockholders equity as of December 31, 2014 is zero, $60.0 million and $218.9 million, respectively.