Press Release /
August 6, 2014

Universal Insurance Holdings, Inc. Reports Second Quarter 2014 Financial Results

Second Quarter 2014 Diluted EPS Grows 11 Percent Year-over-Year to $0.49

Achieved Highest Quarterly Revenue in Company History

 Fort Lauderdale, FL, August 6, 2014 – Universal Insurance Holdings, Inc. (NYSE: UVE) (or the “Company”) today reported net income of $17.1 million, or $0.49 per diluted share, an increase of $0.05, for the second quarter of 2014, compared to net income of $17.0 million, or $0.44 per diluted share, for the same period in 2013.

“We are pleased to report strong second quarter operational and financial results, demonstrating the merits of our strategy and our prudent and disciplined approach to underwriting,” said Sean P. Downes, the Company’s Chairman, President and Chief Executive Officer. “The reduction in costs that we were able to secure for our 2014-2015 reinsurance program have allowed us to write more high quality, rate adequate business. As a result, we are seeing increasing momentum in direct premiums written, with a  year-over-year increase in both new and renewal policy submissions in Florida during the second quarter. In addition, we have continued to increase our geographic diversity, growing our policy count for new business in states outside of Florida by over 40 percent year-over-year. Looking ahead, we will continue to maintain disciplined pricing analytics, and continue to make investments in personnel to improve our processes and continue our entry into new markets.  We believe we are well positioned to grow organically and drive shareholder returns as we enter the second half of the year.”

Second-Quarter 2014 & Recent Highlights

  •  Net income and diluted EPS grew by $97 thousand and $0.05, respectively, compared to Q2 2013.
  •  Submitted applications to expand into Pennsylvania, consistent with the Company’s geographic diversification strategy.
  •  Received approval to and wrote first homeowners insurance policy in Delaware.
  •  Repurchased in the open market common shares having value of approximately $5 million through June 30, 2014.
  •  Authorized an additional $10 million open market share repurchase program through August 1, 2015, of which $498,000 has been deployed through June 30, 2014.
  •  Paid dividends of $0.10 per share compared to $0.08 per share in Q2 2013.
  •  Affirmed a Financial Stability Rating ® of “A” from Demotech, Inc. for insurance subsidiaries APPCIC and UPCIC.

Second-Quarter 2014 Results

Net income for the second quarter of 2014 of $17.1 million reflects an improvement across multiple measures including direct written premiums, net earned premiums, net investment income, realized gains, policy fees, other revenues, total revenues and income before income taxes. Total revenues of $87.0 million are higher than any other quarter in the Company’s history.

Diluted EPS of $0.49 benefitted from lower outstanding shares as a result of the cumulative share repurchases made by the Company.

At June 30, 2014, stockholders’ equity was $178.1 million compared to $175.6 million at December 31, 2013 reflecting an increase in retained earnings of $23.7 million and share repurchases of $20.2 million.

 

First Six-Months 2014 Results

For the first six months of 2014, the Company’s net income increased by $1.7 million, or 5.8 percent, compared to the same period of 2013.  Diluted earnings per share for the first six months of 2014 increased by $0.14, or 19.2 percent, compared to the same period of 2013.

Net premiums earned increased by $4.9 million to $137.2 million for the six months of 2014 compared to the same period of 2013.

 

Share Repurchases

During the second quarter of 2014, the Company repurchased 446,271 shares of its common stock at an average purchase price of $12.28 per share. In addition, on June 17, 2014, the Company announced that its board of directors authorized a share repurchase program under which the Company may repurchase in the open market up to $10 million of its outstanding shares of common stock through August 1, 2015. Of the newly authorized $10 million repurchase program, $498,000 has been deployed through June 30, 2014.  The total remaining authorization as of June 30, 2014 is approximately $9.5 million.

The Company intends to be disciplined and opportunistic with respect to its remaining authorization to repurchase shares as market conditions and other factors permit.

 

Cash Dividends

On April 16, 2014, the Company announced that its board of directors declared a cash dividend of $0.10 per share of common stock which was paid on July 3, 2014, to shareholders of record on June 19, 2014.

 

Financial Results Presentation

The Company will make available an audio recording of a presentation discussing its second quarter 2014 financial results on August 6, 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 September 8, 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, Maryland and Delaware. 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 BALANCE SHEETS (Unaudited)

(in thousands, except per share data)


 


 


 


 


 

June 30,

December31,

ASSETS

2014

2013

Cash and cash equivalents

$         201,357

$      117,275

Restricted cash and cash equivalents

2,635

2,600

Fixed maturities, at fair value

323,145

289,418

Equity securities, at fair value

12,420

65,022

Prepaid reinsurance premiums

193,811

241,214

Reinsurance recoverable

77,566

107,847

Reinsurance receivable, net

 

26,352

 

203

Premiums receivable, net

55,005

46,461

Other receivables

3,340

2,587

Property and equipment, net

9,815

9,289

Deferred policy acquisition costs, net

28,077

15,899

Income taxes recoverable

2,824

8,152

Deferred income tax asset, net

11,813

12,051

Other assets

2,242

2,072

Total assets

$         950,402

$      920,090


LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES:

Unpaid losses and loss adjustment expenses

$         144,625

$      159,222

Unearned premiums

412,709

383,488

Advance premium

22,671

22,959

Accounts payable

4,809

3,441

Book overdraft

4,312

14,947

Payable for securities purchased

1,026

Reinsurance payable, net

120,095

86,232

Income taxes payable

407

2,566

Dividends payable to shareholders

3,503

Other liabilities and accrued expenses

27,161

34,386

Long-term debt

30,984

37,240

Total liabilities

772,302

744,481

STOCKHOLDERS’ EQUITY:

Cumulative convertible preferred stock, $.01 par value

Authorized shares – 1,000

Issued shares – 12 and 30

Outstanding shares – 12 and 30

Minimum liquidation preference, $8.49 and $6.98 per share

Common stock, $.01 par value

449

436

Authorized shares – 55,000

Issued shares – 44,935 and 43,641

Outstanding shares – 34,988 and 35,366

Treasury shares, at cost – 9,947 and 8,275

(55,701)

(35,467)

Additional paid-in capital

41,539

42,282

Accumulated other comprehensive income (loss), net of taxes

(623)

(376)

Retained earnings

192,436

168,734

Total stockholders’ equity

178,100

175,609

Total liabilities and stockholders’ equity

$         950,402

$      920,090

 



 

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

Three Months Ended

June 30,

 

2014

2013

PREMIUMS EARNED AND OTHER REVENUES

Direct premiums written

$  220,009

$     219,946

Ceded premiums written

(76,483)

(133,897)

Net premiums written

143,526

86,049

Change in net unearned premium

(70,164)

(19,182)

Premiums earned, net

73,362

66,867

Net investment income (expense)

412

137

Net realized gains (losses) on investments

3,950

(1)

Net change in unrealized gains (losses) on investments

23

Commission revenue

3,670

5,271

Policy fees

3,899

3,819

Other revenue

1,696

1,640

Total premiums earned and other revenues

86,989

77,756

OPERATING COSTS AND EXPENSES

Losses and loss adjustment expenses

27,679

25,199

General and administrative expenses

28,901

22,869

Total operating costs and expenses

56,580

48,068

INCOME BEFORE INCOME TAXES

30,409

29,688

Income taxes, current

13,398

12,351

Income taxes, deferred

(115)

308

Income taxes, net

13,283

12,659

NET INCOME

$      17,126

$       17,029

Basic earnings per common share

$           0.50

$           0.47

Weighted
average common shares outstanding – Basic

33,968

36,378

Fully diluted earnings per common share

$           0.49

$           0.44

Weighted average common shares outstanding – Diluted

35,174

38,314

Cash dividend declared per common share

$           0.10

$           0.08


 


 


 
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

Six Months Ended

June 30,

 

2014

2013

PREMIUMS EARNED AND OTHER REVENUES

Direct premiums written

$      411,926

$     424,085

Ceded premiums written

(198,132)

(275,214)

Net premiums written

213,794

148,871

Change in net unearned premium

(76,625)

(16,595)

Premiums earned, net

137,169

132,276

Net investment income (expense)

930

149

Net realized gains (losses) on investments

4,852

(16,038)

Net change in unrealized gains (losses) on investments

7,597

Commission revenue

7,759

10,257

Policy fees

7,411

7,505

Other revenue

3,173

3,165

Total premiums earned and other revenues

161,294

145,211

OPERATING COSTS AND EXPENSES

Losses and loss adjustment expenses

54,504

51,682

General and administrative expenses

53,264

44,079

Total operating costs and expenses

107,768

95,761

INCOME BEFORE INCOME TAXES

53,526

49,450

Income taxes, current

22,457

16,298

Income taxes, deferred

394

4,164

Income taxes, net

22,851

20,462

NET INCOME

$       30,675

$       28,988

Basic earnings per common share

$           0.91

$           0.76

Weighted average common shares outstanding – Basic

33,696

38,138

Fully diluted earnings per common share

$           0.87

$           0.73

Weighted average common shares outstanding – Diluted

35,450

39,760

Cash dividend declared per common share

$           0.20

$           0.16

 

 

 

 

 

 

 

 

 

 

Investor Contact:
Andy Brimmer / Mahmoud Siddig
Joele Frank, Wilkinson Brimmer Katcher
212-355-4449