Press Release /
November 4, 2013

UVE Reports Third-Quarter 2013 Net Income Growth of 75 Percent and Earnings per Share Growth of 100 Percent

FORT LAUDERDALE, FL–(Marketwired – Nov 4, 2013) –  Universal Insurance Holdings, Inc. (Company) (NYSE MKT: UVE) reported net income of $14.4 million, or $0.40 per diluted share, for the third quarter of 2013, compared to net income of $8.3 million, or $0.20 per diluted share, for the same period in 2012.

Third-Quarter 2013 Highlights

  • Best third-quarter net income and earnings per share (EPS) in Company history.
  • Net income and EPS grew 75 percent and 100 percent, respectively, compared to Q3 2012.
  • Net earned premiums grew nearly 16 percent versus Q3 2012.
  • Losses and loss adjustment expenses declined by nearly 22 percent versus Q3 2012.
  • Repurchased 591,333 shares of common stock during Q3 2013 at a discount to then-current market price.

Chairman, President and CEO Sean Downes commented, “Our efforts to improve rate adequacy, streamline claims handling, and reduce reinsurance costs, while also managing our risks, collectively contributed to substantially improved underwriting margins during the quarter. In turn, this improvement contributed to our best third-quarter net income in Company history. In addition, third-quarter EPS, partially reflecting our share repurchases, was the best in Company history for the quarter. We are proud of these results, as they reflect the continued execution of our business plan, and our commitment to achieving our strategic objectives.”

Third-Quarter 2013 Results
Comparing the third quarter of 2013 to the third quarter of 2012, net income improved $6.2 million, or $0.20 per diluted share, reflecting an improvement in underwriting income, partially offset by the absence of net trading portfolio gains that were generated during the third quarter of 2012. Additionally, third-quarter 2013 EPS benefited from lower outstanding shares related to the share repurchases made by the Company during the first nine months of 2013.

Net earned premiums grew $9.4 million, or 15.8 percent, in the third quarter of 2013 compared to the same quarter in 2012, primarily as a result of increases in premium rates over the past 24 months, and partly attributable to lower reinsurance costs effective with the 2013-2014 reinsurance program.

Third-quarter 2013 operating costs decreased 12.1 percent compared to the same quarter last year, as losses and loss adjustment expenses decreased $8.0 million, or 21.9 percent, primarily attributable to an improvement in the adjustments made in the current years related to prior accident years. The decrease in operating costs was partially mitigated by nominally higher general and administrative expenses, which increased $0.7 million, or 2.7 percent.

First Nine-Month 2013 Results
For the first nine months of 2013, the Company’s net income and diluted earnings per share grew 67.5 percent and 76.6 percent, respectively, compared to the same period of 2012.

Net premiums earned increased 22.8 percent for the first nine months of 2013 compared to the same period of 2012, primarily as a result of increases in premium rates over the past 24 months, a reduction in the quota-share cession rate from 50 percent for the 2011-2012 reinsurance program to 45 percent for the 2012-2013 and 2013-2014 reinsurance programs, and lower reinsurance costs effective with the 2013-2014 reinsurance program.

Share Repurchases
During the third quarter of 2013, the Company repurchased 591,333 shares of its common stock at a weighted average purchase price of $7.24, a discount compared to the then-current market price of the stock.

Collectively, through the first nine months of 2013, the Company repurchased approximately 7.3 million shares of its common stock at a weighted average purchase price of $4.46 per share, a significant discount to the then-current market price of its stock.

Cash Dividends
On August 27, 2013, the Company announced that its board of directors declared a cash dividend of $0.10 per share of common stock, which was paid on September 30, 2013, to shareholders of record on September 23, 2013. The $0.10 per share dividend included the expected $0.08 per share third-quarter dividend and an additional dividend of $0.02 per share. As previously announced, the board expects to declare a dividend of $0.08 per share in the fourth quarter of 2013. If declared and paid as intended, the annual dividend in 2013 would be $0.34 for each common share.

Financial Results Presentation
The Company will make available an audio recording of a presentation discussing its third quarter 2013 financial results on November 4, 2013, at approximately 5:00 pm 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 December 4, 2013.

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 and Maryland. American Platinum Property and Casualty Insurance Company (APPCIC), 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, 2012 and the Form 10-Q for the quarter ended September 30, 2013.

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in thousands, except per share data)
Three Months Ended September 30,
2013 2012
PREMIUMS EARNED AND OTHER REVENUES
Direct premiums written $ 186,079 $ 192,986
Ceded premiums written (124,961 ) (132,776 )
Net premiums written 61,118 60,210
Change in net unearned premium 7,809 (698 )
Premiums earned, net 68,927 59,512
Net investment income (expense) 382 215
Net realized gains (losses) on investments 56 (3,142 )
Net change in unrealized gains (losses) on investments 15 8,091
Commission revenue 4,180 4,822
Policy fees 3,231 3,461
Other revenue 1,577 1,578
Total premiums earned and other revenues 78,368 74,537
OPERATING COSTS AND EXPENSES
Losses and loss adjustment expenses 28,335 36,301
General and administrative expenses 24,920 24,262
Total operating costs and expenses 53,255 60,563
INCOME BEFORE INCOME TAXES 25,113 13,974
Income taxes, current 9,142 624
Income taxes, deferred 1,564 5,094
Income taxes, net 10,706 5,718
NET INCOME $ 14,407 $ 8,256
Basic earnings per common share $ 0.43 $ 0.21
Weighted average common shares outstanding – Basic 33,658 39,679
Fully diluted earnings per common share $ 0.40 $ 0.20
Weighted average common shares outstanding – Diluted 35,611 40,450
Cash dividend declared per common share $ 0.10 $ 0.08
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in thousands, except per share data)
Nine Months Ended September 30,
2013 2012
PREMIUMS EARNED AND OTHER REVENUES
Direct premiums written $ 610,164 $ 605,557
Ceded premiums written (400,175 ) (398,643 )
Net premiums written 209,989 206,914
Change in net unearned premium (8,787 ) (43,068 )
Premiums earned, net 201,202 163,846
Net investment income (expense) 530 163
Net realized gains (losses) on investments (15,982 ) (12,296 )
Net change in unrealized gains (losses) on investments 7,912 11,490
Net foreign currency gains (losses) on investments 23
Commission revenue 14,437 15,494
Policy fees 10,737 11,434
Other revenue 4,743 4,558
Total premiums earned and other revenues 223,579 194,712
OPERATING COSTS AND EXPENSES
Losses and loss adjustment expenses 80,018 91,912
General and administrative expenses 68,998 59,605
Total operating costs and expenses 149,016 151,517
INCOME BEFORE INCOME TAXES 74,563 43,195
Income taxes, current 25,440 10,484
Income taxes, deferred 5,728 6,805
Income taxes, net 31,168 17,289
NET INCOME $ 43,395 $ 25,906
Basic earnings per common share $ 1.18 $ 0.65
Weighted average common shares outstanding – Basic 36,628 39,579
Fully diluted earnings per common share $ 1.13 $ 0.64
Weighted average common shares outstanding – Diluted 38,352 40,458
Cash dividend declared per common share $ 0.26 $ 0.26
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands, except per share data)
As of
ASSETS September 30, 2013 December 31, 2012
Cash and cash equivalents $ 137,286 $ 347,392
Restricted cash and cash equivalents 2,600 33,009
Fixed maturities (trading), at fair value 4,009
Equity securities (trading), at fair value 85,041
Fixed maturities (available for sale), at fair value 298,504
Equity securities (available for sale), at fair value 70,862
Prepaid reinsurance premiums 250,506 239,921
Reinsurance recoverable 74,900 89,191
Reinsurance receivable, net 24,268 24,334
Premiums receivable, net 52,399 50,125
Receivable from securities sold 1,096
Other receivables 3,446 2,017
Property and equipment, net 9,300 8,968
Deferred policy acquisition costs, net 16,953 17,282
Income taxes recoverable 14,498 2,594
Deferred income tax asset, net 13,756 19,178
Other assets 3,066 1,578
Total assets $ 972,344 $ 925,735
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
Unpaid losses and loss adjustment expenses $ 157,374 $ 193,241
Unearned premiums 407,443 388,071
Advance premium 23,692 15,022
Accounts payable 3,863 4,368
Bank overdraft 22,209 25,994
Payable for securities purchased 1,275
Reinsurance payable, net 118,573 85,259
Income taxes payable 1,450 699
Other liabilities and accrued expenses 33,982 28,071
Long-term debt 37,356 20,221
Total liabilities 805,942 762,221
STOCKHOLDERS’ EQUITY:
Cumulative convertible preferred stock, $.01 par value 1 1
Authorized shares – 1,000
Issued shares – 64
Outstanding shares – 64
Minimum liquidation preference, $2.66 per share
Common stock, $.01 par value 434 419
Authorized shares – 55,000
Issued shares – 43,387 and 41,889
Outstanding shares – 35,111 and 40,871
Treasury shares, at cost – 8,276 and 1,018 (35,467 ) (3,101 )
Additional paid-in capital 40,631 38,684
Accumulated other comprehensive income, net of taxes (488 )
Retained earnings 161,291 127,511
Total stockholders’ equity 166,402 163,514
Total liabilities and stockholders’ equity $ 972,344 $ 925,735

 

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Dresner Corporate Services
312-780-7240
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