Universal Insurance Holdings, Inc. Reports Second-Quarter 2010 Financial Results

Policy Count Increased by Approximately 22,000 in the Second Quarter; Diluted Earnings per Share Improved by 42.1 Percent Compared to the Same Quarter of 2009; Stockholders’ Equity Increased 7.7 Percent in the Second Quarter

FORT LAUDERDALE, CA–(Marketwire – August 10, 2010) –  Universal Insurance Holdings, Inc. (the Company or Universal) (NYSE Amex: UVE), a vertically integrated insurance holding company, announced second-quarter 2010 net income of $10.8 million, or $0.27 per diluted share, compared to $7.6 million, or $0.19 per diluted share, in the second quarter of 2009.

The Company’s net income and diluted earnings per share increased by 41.0 and 42.1 percent, respectively, for the 2010 second quarter compared to the same period last year. The increases were primarily attributable to growth in net premiums earned and higher realized gains on investments, but were mitigated by state-mandated wind mitigation credits and increased general and administrative expenses. The Company’s investment portfolio generated $4.5 million in realized gains on investments in the second quarter of 2010.

The number of homeowners’ and dwelling fire insurance policies serviced by Universal Property & Casualty Insurance Company (UPCIC), the Company’s wholly-owned subsidiary, and the related direct premiums written increased during the second quarter of 2010. UPCIC’s recent premium rate increases, 14.6 percent statewide for its homeowners’ program and 14.8 percent statewide for its dwelling fire policies, positively affected premiums and profitability. UPCIC continued to recoup the mandatory Florida Insurance Guaranty Association (FIGA) assessment of $4.1 million, which contributed to the improved second quarter 2010 results. As 2010 progresses, the Company believes that the premium rate increases and FIGA assessment recovery will continue to have a positive effect on profitability.

UPCIC’s policy count continued to grow, servicing approximately 566,000 homeowners’ and dwelling fire insurance policies as of June 30, 2010, up from 544,000 policies at March 31, 2010, and 520,000 policies at June 30, 2009. The increase in the number of policies in-force is the result of heightened relationships with existing agents, an increase in the number of new agents, and continued expansion within Florida and in South Carolina, North Carolina, and Hawaii. Within South Carolina, North Carolina, and Hawaii, UPCIC had approximately 6,800 policies totaling approximately $9.5 million of in-force premiums at June 30, 2010.

Net premiums earned increased 10.7 percent in the second quarter of 2010 compared to the same quarter in 2009. Meanwhile, second-quarter 2010 general and administrative expenses increased 26.3 percent to $13.4 million from $10.6 million in the 2009 second quarter. The increase in general and administrative expenses was primarily attributable to higher direct and ceded commissions paid, and increased insurance premium taxes, all of which are related to growth in direct written premiums.

At June 30, 2010, stockholders’ equity increased to $123.6 million from $114.8 million at March 31, 2010, representing growth of 7.7 percent. 

Investment Portfolio Update
Realized gains on investments increased to $4.5 million for the three-month period ended June 30, 2010, from $0.3 million for the same period ended June 30, 2009. The increase in realized gains on investments is the result of the expansion of the Company’s investment portfolio into fixed securities and equity securities and the related sales of certain of these securities.

As of June 30, 2010, the Company’s investments in equity securities and fixed maturities totaled $137.9 million, compared to $132.5 million at March 31, 2010. At June 30, 2010, approximately 56.2 percent of the investments were in equity securities considered available for sale and 43.8 percent were in fixed maturities available for sale. As of June 30, 2010, the Company’s investment portfolio contained $0.6 million of pre-tax net unrealized losses.

The Company restated its financial statements for the quarter ended March 31, 2010 to reflect the correction of an error in the accounting for an other-than-temporary impairment of an investment security.

The Company’s results for the second quarter reported herein and in the Form 10-Q for the quarter ended June 30, 2010 are inclusive of the Company’s restatement of its Condensed Consolidated Financial Statements for the three-month period ended March 31, 2010, as filed in the Company’s Form 10-Q/A for the quarter ended March 31, 2010.

Cash Dividend
On May 24, 2010, Universal’s board of directors declared a cash dividend of $0.10 per share payable on July 15, 2010, to shareholders of record as of June 17, 2010.

About Universal Insurance Holdings, Inc.
Universal Insurance Holdings, Inc. is a vertically integrated insurance holding company, which through its subsidiaries, covers substantially all aspects of insurance underwriting, distribution, claims processing and exposure management. Universal Property & Casualty Insurance Company (UPCIC), a wholly owned subsidiary of the Company, is one of the five leading writers of homeowners’ insurance in Florida and is now fully licensed and has commenced its operations in Hawaii, North Carolina and South Carolina. For additional information on the Company, please visit our investor relations website at www.universalinsuranceholdings.com.

Readers should refer generally to reports filed by the Company with the Securities and Exchange Commission (SEC), specifically the Company’s Form 10-K for the year ended December 31, 2009, and the Company’s Form 10-Q/A for the quarterly period ended March 31, 2010 and Form 10-Q for the quarterly period ended June 30, 2010, for a discussion of the risk factors that could affect its operations. Such factors include, without limitation, exposure to catastrophic losses; reliance on the Company’s reinsurance program; underwriting performance on catastrophe and non-catastrophe risks; the ability to maintain relationships with customers, employees or suppliers; competition and its effect on pricing, spending and third-party relationships; the Company’s financial stability rating; product pricing and revenues; and the effect of Federal or state laws and regulations. Additional factors that may affect future results are contained in the Company’s filings with the SEC, which are available on the SEC’s web site at https://www.sec.gov. The Company disclaims any obligation to update and revise statements contained in this press release based on new information or otherwise.

Cautionary Language Concerning Forward-Looking Statements
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 “project,” and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Such statements may include, but not be limited to, projections of revenues, income or loss, expenses, plans, 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 in forward-looking statements.

Investor Contact:
Philip Kranz
Dresner Corporate Services
312-780-7240
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