Universal Reports Second Quarter 2022 Results

• Diluted GAAP earnings per share (“EPS”) of $0.24, adjusted EPS¹ of $0.47

• Annualized return on average common equity (“ROCE”) of 7.7%, adjusted¹ ROCE of 12.8%

• Direct premiums written of $532.5 million, up 12.4% from the prior year quarter

• Repurchased 282,552 shares for $3.5 million. Total capital returned to shareholders of $8.5 million, including $0.16 per share regular quarterly dividend.

Universal Insurance Holdings (NYSE: UVE) (“Universal” or the “Company”) reported 2022 second quarter diluted GAAP EPS of $0.24 and adjusted EPS of $0.47.

¹ Reconciliations of GAAP to non-GAAP financial measures are provided in the attached tables.

“We reported a 12.8% annualized adjusted return on common equity in the quarter, an impressive feat in the current environment,” said Stephen J. Donaghy, Chief Executive Officer. “Direct premiums written growth of 12.4% accelerated from 8.5% in the first quarter of this year, and significantly outpaced an 8.5% policies in force decline. In addition to rate increases, we continue to optimize and rebalance our portfolio, increasing exposure to more profitable regions, while reducing exposure to less profitable geographies. Our capital position remains strong at both of our insurance subsidiaries and on an enterprise-wide basis, and I’m particularly proud of the robust reinsurance program that we completed prior to the June 1 renewal date. Despite the challenging reinsurance market, our program includes full protection for both hurricanes and tropical storms, has no gaps in coverage and no co-participation and provides coverage across multiple events. We are well prepared for hurricane season and expect the actions we’ve taken to bear fruit in future periods.”

Net Income and Adjusted Net Income

Net income was $7.4 million, down from $21.9 million in the prior year quarter, and adjusted net income was $14.6 million, down from $20.6 million in the prior year quarter. The decline in adjusted net income primarily stems from a higher net loss ratio, partly offset by a lower net expense ratio and higher commission revenue and net investment income.

Revenues

Overall revenue was $292.0 million, up 4.6% from the prior year quarter and core revenue was $301.6 million, up 8.7% from the prior year quarter. The increase in core revenue primarily stems from higher net premiums earned, net investment income and commission revenue.

Direct premiums written were $532.5 million, up 12.4% from the prior year quarter. The increase stems from 13.2% growth in Florida and 8.3% growth in other states. Overall growth primarily reflects rate increases, partly offset by lower policies in force.

Direct premiums earned were $428.8 million, up 9.2% from the prior year quarter. The increase stems from direct premiums written growth over the past twelve months.

The ceded premium ratio was 35.4%, up from 34.7% in the prior year quarter. The increase primarily reflects higher reinsurance pricing and higher reinsurance costs associated with the increase in insured values.

Net premiums earned were $277.1 million, up 8.2% from the prior year quarter. The increase is primarily attributable to higher direct premiums earned, partly offset by higher ceded premiums earned, as described above.

Net investment income was $5.2 million, up from $2.9 million in the prior year quarter. The increase primarily stems from higher fixed income reinvestment yields and higher average invested assets.

Commissions, policy fees and other revenue were $19.3 million, up 4.9% from the prior year quarter. The increase primarily reflects higher reinsurance brokerage commission revenue, which benefited from higher ceded premiums and the difference in our reinsurance program’s structure relative to the prior year quarter, partly offset by policy fee and other revenue declines associated with lower policies in force.

Margins

The income before income taxes margin was 3.7%, down 7.1 points from the prior year quarter and the adjusted operating margin was 7.3%, down from 10.2% in the prior year. The lower adjusted operating margin primarily reflects a higher net combined ratio, partly offset by higher net investment income and commission revenues.

The net loss ratio was 72.3%, up 7.0 points compared to the prior year quarter. The increase primarily reflects a higher initial accident year attritional loss pick associated with the challenging Florida claims environment and inflationary and weather trends, partly offset by lower adverse prior year reserve development as a percentage of net premiums earned.

The net expense ratio was 28.6%, down 3.4 points compared to the prior year quarter. The reduction primarily reflects lower renewal commission rates paid to distribution partners, economies of scale and disciplined expense management.

The net combined ratio was 100.9%, up 3.6 points compared to the prior year quarter. The increase reflects a higher net loss ratio, partly offset by a lower net expense ratio, as described above.

Capital Deployment

During the second quarter, the Company repurchased approximately 283 thousand shares at an aggregate cost of $3.5 million. The Company’s current share repurchase authorization program has $10.4 million remaining as of June 30, 2022 and runs through November 3, 2022.

On July 19, 2022, the Board of Directors declared a quarterly cash dividend of 16 cents per share of common stock, payable on August 9, 2022, to shareholders of record as of the close of business on August 2, 2022.

Guidance

The Company is maintaining its guidance for 2022 (assuming no further extraordinary weather events):

• Adjusted EPS in a range of $1.80 - $2.20

• Annualized adjusted ROCE in a range of 12.5% - 15.0%

Conference Call and Webcast

• Thursday, July 28, 2022 at 10:00 a.m. ET

• Investors and other interested parties may listen to the call by accessing the online, real-time webcast at universalinsuranceholdings.com/investors or by registering in advance via teleconference at https://register.vevent.com/register/BIdd1435dd6e8c4f96b2f705a2f37d27d0. Once registration is completed, participants will be provided with a dial-in number containing a personalized conference code to access the call. An online replay of the call will be available at universalinsuranceholdings.com/investors shortly after the investor call concludes.

About Universal

Universal Insurance Holdings, Inc. (NYSE: UVE) is a holding company offering property and casualty insurance and value-added insurance services. We develop, market, and write insurance products for consumers predominantly in the personal residential homeowners lines of business and perform substantially all other insurance-related services for our primary insurance entities, including risk management, claims management and distribution. We sell insurance products through both our appointed independent agents and through our direct online distribution channels in the United States across 19 states (primarily Florida). Learn more at universalinsuranceholdings.com.

Non-GAAP Financial Measures and Key Performance Indicators

This press release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the U.S. Securities and Exchange Commission (“SEC”), including core revenue, adjusted net income attributable to common stockholders and diluted adjusted earnings per common share, which exclude the impact of net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities. Adjusted operating income and adjusted operating income margin exclude the impact of net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities and interest and amortization of debt issuance costs. Adjusted common stockholders’ equity and adjusted book value per share exclude accumulated other comprehensive income (AOCI), net of taxes. Adjusted return on common equity excludes after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities from the numerator and AOCI, net of taxes, and current period after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities from the denominator. A “non-GAAP financial measure” is generally defined as a numerical measure of a company’s historical or future performance that excludes or includes amounts, or is subject to adjustments, so as to be different from the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles (“GAAP”). UVE management believes that these non-GAAP financial measures are meaningful, as they allow investors to evaluate underlying revenue and profitability trends and enhance comparability across periods. When considered together with the GAAP financial measures, management believes these metrics provide information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionately positive or negative impact on results in any particular period. UVE management also believes that these non-GAAP financial measures enhance the ability of investors to analyze UVE’s business trends and to understand UVE’s operational performance. UVE’s management utilizes these non-GAAP financial measures as guides in long-term planning. Non-GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, financial measures presented in accordance with GAAP. For more information regarding our key performance indicators, please refer to the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Key Performance Indicators” in our forthcoming Quarterly Report on Form 10-Q for the quarter ended June 30, 2022.

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,” “will,” ���plan,” 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, including those risks and uncertainties described under the heading “Risk Factors” and “Liquidity and Capital Resources” in our 2021 Annual Report on Form 10-K, and supplemented in our subsequent Quarterly Reports on Form 10-Q. Future results could differ materially from those described, and the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. 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 Company’s Annual Report on Form 10-K and the most recent quarterly reports on Form 10-Q.

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