Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Universal Reports Third Quarter 2022 Results By: Universal Insurance Holdings via Business Wire October 27, 2022 at 16:05 PM EDT Diluted GAAP loss per common share of $2.36, diluted adjusted loss per common share* of $2.27 Direct premiums written of $500.7 million, up 15.6% from the prior year quarter Repurchased 203,244 shares for $2.4 million. Total capital returned to shareholders of $7.4 million, including $0.16 per share regular quarterly dividend. Universal Insurance Holdings (NYSE: UVE) (“Universal” or the “Company”) reported third quarter 2022 results. “Our thoughts continue to be with all impacted policyholders,” said Stephen J. Donaghy, Chief Executive Officer. “Since landfall, we’ve had boots on the ground, helping our insureds in their time of need. As we recently disclosed, our portfolio is underweight in the most impacted regions and is further cushioned by our high proportion of condo unit and renters policies, which provide interior and contents coverage. To date, claims volume from Hurricane Ian reflects approximately 50% of Irma’s volume received at this point. We maintain one of the largest claims and legal teams in the state of Florida, providing us with significant resources and capacity to efficiently close Ian-related claims. Despite our $1 billion estimated gross loss from Hurricane Ian, we have a $3 billion reinsurance tower in place for a subsequent event in the 2022 Atlantic hurricane season and our consolidated retention would be meaningfully lower, highlighting the strength and breadth of our catastrophe reinsurance program. We’ve started the planning process for the 2023 Atlantic hurricane season and are already well underway, as we have almost $400 million of pre-negotiated multi-year capacity below the Florida Hurricane Catastrophe Fund’s (FHCF) attachment point, approximately $200 million of estimated cost free coverage from the Reinsurance to Assist Policyholders (RAP) program and a projected $150 million from our catastrophe bond. Coupled with our 90% participation in the FHCF, we estimate that the vast majority of our first event 2023 catastrophe reinsurance program will be insulated from open market pricing dynamics. We value our reinsurance partner relationships and appreciate their support.” *Reconciliations of GAAP to non-GAAP financial measures are provided in the attached tables. Quarterly Financial Results Summary Financial Results ($thousands, except per share data) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 Change 2022 2021 Change GAAP comparison Total revenues $ 312,810 $ 287,254 8.9 % $ 892,298 $ 829,192 7.6 % GAAP operating income (loss) $ (91,607 ) $ 26,493 NM $ (55,117 ) $ 92,958 NM GAAP operating income (loss) margin (29.3 )% 9.2 % NM (6.2 )% 11.2 % NM Net income (loss) $ (72,275 ) $ 20,183 NM $ (47,368 ) $ 68,532 NM Diluted earnings (loss) per common share $ (2.36 ) $ 0.64 NM $ (1.54 ) $ 2.19 NM Annualized ROCE NM* 16.6 % NM (18.3 )% 19.4 % NM Book value per share, end of period $ 8.54 $ 15.86 (46.2 )% 8.54 $ 15.86 (46.2 )% Non-GAAP comparison1 Core revenue $ 316,668 $ 286,694 10.5 % $ 909,103 $ 826,859 9.9 % Adjusted operating income (loss) $ (87,749 ) $ 25,933 NM $ (38,312 ) $ 90,625 NM Adjusted operating income (loss) margin (27.7 )% 9.0 % NM (4.2 )% 11.0 % NM Adjusted net income (loss) $ (69,369 ) $ 19,751 NM $ (34,705 ) $ 66,736 NM Adjusted diluted earnings (loss) per common share $ (2.27 ) $ 0.63 NM $ (1.12 ) $ 2.13 NM Annualized adjusted ROCE NM* 16.0 % NM (11.1 )% 18.8 % NM Adjusted book value per share, end of period $ 12.33 $ 16.09 (23.4 )% $ 12.33 $ 16.09 (23.4 )% Underwriting Summary Premiums: Premiums in force $ 1,833,034 $ 1,649,546 11.1 % $ 1,833,034 $ 1,649,546 11.1 % Policies in force 872,926 967,821 (9.8 )% 872,926 967,821 (9.8 )% Direct premiums written $ 500,677 $ 432,984 15.6 % $ 1,429,685 $ 1,271,925 12.4 % Direct premiums earned $ 452,450 $ 410,621 10.2 % $ 1,295,858 $ 1,178,801 9.9 % Ceded premiums earned $ (161,819 ) $ (145,967 ) 10.9 % $ (459,102 ) $ (414,670 ) 10.7 % Ceded premium ratio 35.8 % 35.5 % 0.3 pts 35.4 % 35.2 % 0.2 pts Net premiums earned $ 290,631 $ 264,654 9.8 % $ 836,756 $ 764,131 9.5 % Net ratios: Loss ratio 113.7 % 70.9 % 42.8 pts 85.5 % 65.3 % 20.2 pts Expense ratio 25.5 % 27.6 % (2.1 ) pts 27.7 % 31.1 % (3.4 ) pts Combined ratio 139.2 % 98.5 % 40.7 pts 113.2 % 96.4 % 16.8 pts 1 Reconciliation of GAAP to non-GAAP financial measures are provided in the attached tables. Adjusted net income, adjusted diluted earnings per common share and core revenue exclude net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities. Adjusted operating income excludes the items above and interest and amortization of debt issuance costs. Adjusted book value per share excludes accumulated other comprehensive income, net of taxes. Adjusted ROCE is calculated by dividing annualized adjusted net income attributable to common stockholders by average adjusted book value per share, with the denominator further excluding current period after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities. *Not meaningful, as it implies full first event hurricane retentions in the first two quarters of the year, which in actuality were hurricane free, and it similarly implies a full first event retention in the fourth quarter of the year, which would instead be subject to a smaller subsequent event retention on a consolidated basis. Net Income and Adjusted Net Income Net loss was $72.3 million, down from net income of $20.2 million in the prior year quarter, and adjusted net loss was $69.4 million, down from adjusted net income of $19.8 million in the prior year quarter. The decline in adjusted net income mostly stems from $111.0 million of retained Hurricane Ian losses, partly offset by a lower net expense ratio and higher net investment income and commission revenue. Revenues Overall revenue was $312.8 million, up 8.9% from the prior year quarter and core revenue was $316.7 million, up 10.5% 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 $500.7 million, up 15.6% from the prior year quarter. The increase stems from 16.3% growth in Florida and 12.7% growth in other states. Overall growth reflects rate increases, partly offset by lower policies in force. Direct premiums earned were $452.5 million, up 10.2% from the prior year quarter. The increase stems from rate-driven direct premiums written growth over the past twelve months. The ceded premium ratio was 35.8%, up from 35.5% in the prior year quarter. The increase primarily reflects higher reinsurance pricing and higher reinsurance costs associated with the increase in insured values, partly offset by direct premiums earned growth associated with primary rate increases and reinsurance savings associated with leveraging our self-insured captive to a greater degree than the prior year. Net premiums earned were $290.6 million, up 9.8% 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 $6.1 million, up from $2.8 million in the prior year quarter. The increase primarily stems from higher fixed income reinvestment yields. Commissions, policy fees and other revenue were $20.0 million, up 3.7% 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 a decline in policy fees associated with lower policies in force. Margins The GAAP operating loss margin was 29.3%, down from a GAAP operating income margin of 9.2% in the prior year quarter and the adjusted operating loss margin was 27.7%, down from an adjusted operating income margin of 9.0% in the prior year quarter. The lower adjusted operating income margin primarily reflects a higher net combined ratio, partly offset by higher net investment income and commission revenues. The net loss ratio was 113.7%, up 42.8 points compared to the prior year quarter. The increase primarily reflects $111.0 million of retained Hurricane Ian losses and a higher attritional initial accident year loss pick, partly offset by lower adverse prior year reserve development as a percentage of net premiums earned. The net expense ratio was 25.5%, down 2.1 points from 27.6% in the prior year quarter. The reduction primarily reflects lower renewal commission rates paid to distribution partners. The net combined ratio was 139.2%, up 40.7 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 third quarter, the Company repurchased approximately 203 thousand shares at an aggregate cost of $2.4 million. The Company’s current share repurchase authorization program has $8.0 million remaining as of September 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. Conference Call and Webcast Friday, October 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/BI7c74886531b54cae98488e2125328182. 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 (loss) 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 September 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. UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except per share data) September 30, December 31, 2022 2021 ASSETS: Invested Assets Fixed maturities, at fair value $ 996,783 $ 1,040,455 Equity securities, at fair value 82,387 47,334 Investment real estate, net 5,752 5,891 Total invested assets 1,084,922 1,093,680 Cash and cash equivalents 307,435 250,508 Restricted cash and cash equivalents 2,703 2,635 Prepaid reinsurance premiums 452,230 240,993 Reinsurance recoverable 935,810 185,589 Premiums receivable, net 79,621 64,923 Property and equipment, net 52,769 53,682 Deferred policy acquisition costs 111,861 108,822 Goodwill 2,319 2,319 Other assets 97,224 52,990 TOTAL ASSETS $ 3,126,894 $ 2,056,141 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: Unpaid losses and loss adjustment expenses $ 1,153,627 $ 346,216 Unearned premiums 991,596 857,769 Advance premium 78,269 53,694 Reinsurance payable, net 458,865 188,662 Long-term debt, net 102,968 103,676 Other liabilities 80,932 76,422 Total liabilities 2,866,257 1,626,439 STOCKHOLDERS' EQUITY: Cumulative convertible preferred stock ($0.01 par value)2 — — Common stock ($0.01 par value)3 471 470 Treasury shares, at cost - 16,603 and 15,797 (236,915 ) (227,115 ) Additional paid-in capital 111,397 108,202 Accumulated other comprehensive income (loss), net of taxes (115,665 ) (15,568 ) Retained earnings 501,349 563,713 Total stockholders' equity 260,637 429,702 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,126,894 $ 2,056,141 Notes: 2 Cumulative convertible preferred stock ($0.01 par value): Authorized - 1,000 shares; Issued - 10 and 10 shares; Outstanding - 10 and 10 shares; Minimum liquidation preference - $9.99 and $9.99 per share. 3 Common stock ($0.01 par value): Authorized - 55,000 shares; Issued - 47,116 and 47,018 shares; Outstanding 30,513 and 31,221 shares. UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 REVENUES Net premiums earned $ 290,631 $ 264,654 $ 836,756 $ 764,131 Net investment income 6,074 2,797 15,337 8,641 Net realized gains (losses) on investments 292 4,319 (375 ) 5,357 Net change in unrealized gains (losses) of equity securities (4,150 ) (3,759 ) (16,430 ) (3,024 ) Commission revenue 12,592 11,418 35,157 30,404 Policy fees 5,272 5,859 15,991 17,821 Other revenue 2,099 1,966 5,862 5,862 Total revenues 312,810 287,254 892,298 829,192 EXPENSES Losses and loss adjustment expenses 330,444 187,581 715,854 498,765 Policy acquisition costs 54,609 57,062 163,432 170,287 Other operating expenses 19,364 16,118 68,129 67,182 Total operating costs and expenses 404,417 260,761 947,415 736,234 Interest and amortization of debt issuance costs 1,630 29 4,969 84 Income (loss) before income taxes (93,237 ) 26,464 (60,086 ) 92,874 Income tax expense (benefit) (20,962 ) 6,281 (12,718 ) 24,342 NET INCOME (LOSS) $ (72,275 ) $ 20,183 $ (47,368 ) $ 68,532 UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES SHARE AND PER SHARE INFORMATION (in thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Weighted average common shares outstanding - basic 30,604 31,247 30,858 31,232 Weighted average common shares outstanding - diluted 30,604 31,337 30,858 31,302 Shares outstanding, end of period 30,513 31,167 30,513 31,167 Basic earnings (loss) per common share $ (2.36 ) $ 0.65 $ (1.54 ) $ 2.19 Diluted earnings (loss) per common share $ (2.36 ) $ 0.64 $ (1.54 ) $ 2.19 Cash dividend declared per common share $ 0.16 $ 0.16 $ 0.48 $ 0.48 Book value per share, end of period $ 8.54 $ 15.86 $ 8.54 $ 15.86 Annualized return on average common equity (ROCE) NM* 16.6 % (18.3 )% 19.4 % *Not meaningful, as it implies full first event hurricane retentions in the first two quarters of the year, which in actuality were hurricane free, and it similarly implies a full first event retention in the fourth quarter of the year, which would instead be subject to a smaller subsequent event retention on a consolidated basis. UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES SUPPLEMENTARY INFORMATION (in thousands, except for Policies In Force data) Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Premiums Direct premiums written - Florida $ 412,588 $ 354,799 $ 1,200,193 $ 1,062,180 Direct premiums written - Other States 88,089 78,185 229,492 209,745 Direct premiums written - Total $ 500,677 $ 432,984 $ 1,429,685 $ 1,271,925 Direct premiums earned $ 452,450 $ 410,621 $ 1,295,858 $ 1,178,801 Net premiums earned $ 290,631 $ 264,654 $ 836,756 $ 764,131 Underwriting Ratios - Net Loss and loss adjustment expense ratio 113.7 % 70.9 % 85.5 % 65.3 % Policy acquisition cost ratio 18.8 % 21.5 % 19.5 % 22.3 % Other operating expense ratio 6.7 % 6.1 % 8.2 % 8.8 % Expense ratio 25.5 % 27.6 % 27.7 % 31.1 % Combined ratio 139.2 % 98.5 % 113.2 % 96.4 % Other Items (Favorable)/Unfavorable prior year's reserve development $ 2,715 $ 11,489 $ 7,080 $ 17,983 Points on the loss and loss adjustment expense ratio 0.9 pts 4.4 pts 0.8 pts 2.4 pts As of September 30, 2022 2021 Policies in force Florida 636,883 716,767 Other States 236,043 251,054 Total 872,926 967,821 Premiums in force Florida $ 1,529,632 $ 1,371,760 Other States 303,402 277,786 Total $ 1,833,034 $ 1,649,546 Total Insured Value Florida $ 203,957,272 $ 204,334,645 Other States 120,648,594 114,992,734 Total $ 324,605,866 $ 319,327,379 Three Months Ended September 30, 2022 Direct Loss Ratio Ceded Loss Ratio Net Loss Ratio Premiums earned $ 452,450 $ 161,819 $ 290,631 Loss and loss adjustment expenses: Core losses $ 216,784 47.9 % $ 55 — % $ 216,729 74.6 % Weather events4 1,026,200 226.8 % 915,200 565.6 % 111,000 38.2 % Prior year’s reserve development 26,360 5.9 % 23,645 14.6 % 2,715 0.9 % Total losses and loss adjustment expenses $ 1,269,344 280.6 % $ 938,900 580.2 % $ 330,444 113.7 % 4 Includes only current year weather events beyond those expected. Three Months Ended September 30, 2021 Direct Loss Ratio Ceded Loss Ratio Net Loss Ratio Premiums earned $ 410,621 145,967 $ 264,654 Loss and loss adjustment expenses: Core losses $ 176,161 42.9 % $ 69 — % $ 176,092 66.5 % Weather events4 — — % — — % — — % Prior year’s reserve development 87,907 21.4 % 76,418 52.4 % 11,489 4.4 % Total losses and loss adjustment expenses $ 264,068 64.3 % $ 76,487 52.4 % $ 187,581 70.9 % 4 Includes only current year weather events beyond those expected. Nine Months Ended September 30, 2022 Direct Loss Ratio Ceded Loss Ratio Net Loss Ratio Premiums earned $ 1,295,858 $ 459,102 $ 836,756 Loss and loss adjustment expenses: Core losses $ 593,364 45.8 % $ 135 — % $ 593,229 70.9 % Weather events4 1,030,745 79.5 % 915,200 199.3 % 115,545 13.8 % Prior year’s reserve development 100,620 7.8 % 93,540 20.4 % 7,080 0.8 % Total losses and loss adjustment expenses $ 1,724,729 133.1 % $ 1,008,875 219.7 % $ 715,854 85.5 % 4 Includes only current year weather events beyond those expected. Nine Months Ended September 30, 2021 Direct Loss Ratio Ceded Loss Ratio Net Loss Ratio Premiums earned $ 1,178,801 $ 414,670 $ 764,131 Loss and loss adjustment expenses: Core losses $ 480,801 40.8 % $ 19 — % $ 480,782 62.9 % Weather events4 — — % — — % — — % Prior year’s reserve development 296,867 25.2 % 278,884 67.3 % 17,983 2.4 % Total losses and loss adjustment expenses $ 777,668 66.0 % $ 278,903 67.3 % $ 498,765 65.3 % 4 Includes only current year weather events beyond those expected. UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (in thousands, except for per share data) GAAP revenue to core revenue Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 GAAP revenue $ 312,810 $ 287,254 $ 892,298 $ 829,192 less: Net realized gains (losses) on investments 292 4,319 (375 ) 5,357 less: Net change in unrealized gains (losses) of equity securities (4,150 ) (3,759 ) (16,430 ) (3,024 ) Core revenue $ 316,668 $ 286,694 $ 909,103 $ 826,859 GAAP income (loss) before income taxes to adjusted operating income (loss) Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 GAAP income (loss) before income taxes $ (93,237 ) $ 26,464 $ (60,086 ) $ 92,874 add: Interest and amortization of debt issuance costs 1,630 29 4,969 84 GAAP operating income (loss) (91,607 ) 26,493 (55,117 ) 92,958 less: Net realized gains (losses) on investments 292 4,319 (375 ) 5,357 less: Net change in unrealized gains (losses) of equity securities (4,150 ) (3,759 ) (16,430 ) (3,024 ) Adjusted operating income (loss) $ (87,749 ) $ 25,933 $ (38,312 ) $ 90,625 GAAP operating income (loss) margin to adjusted operating income (loss) margin Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 GAAP operating income (loss) (a) $ (91,607 ) $ 26,493 $ (55,117 ) $ 92,958 GAAP revenue (b) 312,810 287,254 892,298 829,192 GAAP operating income (loss) margin (a÷b) (29.3 )% 9.2 % (6.2 )% 11.2 % Adjusted operating income (loss) (c) (87,749 ) 25,933 (38,312 ) 90,625 Core revenue (d) 316,668 286,694 909,103 826,859 Adjusted operating income (loss) margin (c÷d) (27.7 )% 9.0 % (4.2 )% 11.0 % GAAP net income (loss) (NI) to adjusted NI (loss) available to common stockholders Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 GAAP NI (loss) $ (72,275 ) $ 20,183 $ (47,368 ) $ 68,532 less: Preferred dividends 3 3 8 8 GAAP NI (loss) available to common stockholders (e) (72,278 ) 20,180 (47,376 ) 68,524 less: Net realized gains (losses) on investments 292 4,319 (375 ) 5,357 less: Net change in unrealized gains (losses) of equity securities (4,150 ) (3,759 ) (16,430 ) (3,024 ) add: Income tax effect on above adjustments (949 ) 131 (4,134 ) 545 Adjusted NI (loss) available to common stockholders (f) $ (69,369 ) $ 19,751 $ (34,705 ) $ 66,736 Weighted average diluted common shares outstanding (g) 30,604 31,337 30,858 31,302 Diluted earnings (loss) per common share (e÷g) $ (2.36 ) $ 0.64 $ (1.54 ) $ 2.19 Diluted adjusted earnings (loss) per common share (f÷g) $ (2.27 ) $ 0.63 $ (1.12 ) $ 2.13 GAAP stockholders’ equity to adjusted common stockholders’ equity As of September 30, September 30, December 31, 2022 2021 2021 GAAP stockholders’ equity $ 260,637 $ 494,275 $ 429,702 less: Preferred equity 100 100 100 Common stockholders’ equity (h) 260,537 494,175 429,602 less: Accumulated other comprehensive (loss), net of taxes (115,665 ) (7,398 ) (15,568 ) Adjusted common stockholders’ equity (i) $ 376,202 $ 501,573 $ 445,170 Shares outstanding (j) 30,513 31,167 31,221 Book value per common share (h÷j) $ 8.54 $ 15.86 $ 13.76 Adjusted book value per common share (i÷j) $ 12.33 $ 16.09 $ 14.26 GAAP return on common equity (ROCE) to adjusted ROCE Three Months Ended Nine Months Ended Year Ended September 30, September 30, December 31, 2022 2021 2022 2021 2021 Annualized NI (loss) attributable to common stockholders (k) $ (289,112 ) $ 80,720 $ (63,168 ) $ 91,365 $ 20,397 Average common stockholders’ equity (l) 313,494 487,459 345,070 471,669 439,382 ROCE (k÷l) NM* 16.6 % (18.3 )% 19.4 % 4.6 % Annualized adjusted NI (loss) attributable to common stockholders (m) $ (277,476 ) $ 79,004 $ (46,273 ) $ 88,981 $ 18,959 Adjusted average common stockholders’ equity5 (n) 416,848 493,729 417,022 472,802 444,775 Adjusted ROCE (m÷n) NM* 16.0 % (11.1 )% 18.8 % 4.3 % 5 Adjusted average common stockholders’ equity excludes current period after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities. *Not meaningful, as it implies full first event hurricane retentions in the first two quarters of the year, which in actuality were hurricane free, and it similarly implies a full first event retention in the fourth quarter of the year, which would instead be subject to a smaller subsequent event retention on a consolidated basis. View source version on businesswire.com: https://www.businesswire.com/news/home/20221027005749/en/Contacts Investors/Media: Arash Soleimani, CFA, CPA Chief Strategy Officer 954-804-8874 asoleimani@universalproperty.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Universal Reports Third Quarter 2022 Results By: Universal Insurance Holdings via Business Wire October 27, 2022 at 16:05 PM EDT Diluted GAAP loss per common share of $2.36, diluted adjusted loss per common share* of $2.27 Direct premiums written of $500.7 million, up 15.6% from the prior year quarter Repurchased 203,244 shares for $2.4 million. Total capital returned to shareholders of $7.4 million, including $0.16 per share regular quarterly dividend. Universal Insurance Holdings (NYSE: UVE) (“Universal” or the “Company”) reported third quarter 2022 results. “Our thoughts continue to be with all impacted policyholders,” said Stephen J. Donaghy, Chief Executive Officer. “Since landfall, we’ve had boots on the ground, helping our insureds in their time of need. As we recently disclosed, our portfolio is underweight in the most impacted regions and is further cushioned by our high proportion of condo unit and renters policies, which provide interior and contents coverage. To date, claims volume from Hurricane Ian reflects approximately 50% of Irma’s volume received at this point. We maintain one of the largest claims and legal teams in the state of Florida, providing us with significant resources and capacity to efficiently close Ian-related claims. Despite our $1 billion estimated gross loss from Hurricane Ian, we have a $3 billion reinsurance tower in place for a subsequent event in the 2022 Atlantic hurricane season and our consolidated retention would be meaningfully lower, highlighting the strength and breadth of our catastrophe reinsurance program. We’ve started the planning process for the 2023 Atlantic hurricane season and are already well underway, as we have almost $400 million of pre-negotiated multi-year capacity below the Florida Hurricane Catastrophe Fund’s (FHCF) attachment point, approximately $200 million of estimated cost free coverage from the Reinsurance to Assist Policyholders (RAP) program and a projected $150 million from our catastrophe bond. Coupled with our 90% participation in the FHCF, we estimate that the vast majority of our first event 2023 catastrophe reinsurance program will be insulated from open market pricing dynamics. We value our reinsurance partner relationships and appreciate their support.” *Reconciliations of GAAP to non-GAAP financial measures are provided in the attached tables. Quarterly Financial Results Summary Financial Results ($thousands, except per share data) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 Change 2022 2021 Change GAAP comparison Total revenues $ 312,810 $ 287,254 8.9 % $ 892,298 $ 829,192 7.6 % GAAP operating income (loss) $ (91,607 ) $ 26,493 NM $ (55,117 ) $ 92,958 NM GAAP operating income (loss) margin (29.3 )% 9.2 % NM (6.2 )% 11.2 % NM Net income (loss) $ (72,275 ) $ 20,183 NM $ (47,368 ) $ 68,532 NM Diluted earnings (loss) per common share $ (2.36 ) $ 0.64 NM $ (1.54 ) $ 2.19 NM Annualized ROCE NM* 16.6 % NM (18.3 )% 19.4 % NM Book value per share, end of period $ 8.54 $ 15.86 (46.2 )% 8.54 $ 15.86 (46.2 )% Non-GAAP comparison1 Core revenue $ 316,668 $ 286,694 10.5 % $ 909,103 $ 826,859 9.9 % Adjusted operating income (loss) $ (87,749 ) $ 25,933 NM $ (38,312 ) $ 90,625 NM Adjusted operating income (loss) margin (27.7 )% 9.0 % NM (4.2 )% 11.0 % NM Adjusted net income (loss) $ (69,369 ) $ 19,751 NM $ (34,705 ) $ 66,736 NM Adjusted diluted earnings (loss) per common share $ (2.27 ) $ 0.63 NM $ (1.12 ) $ 2.13 NM Annualized adjusted ROCE NM* 16.0 % NM (11.1 )% 18.8 % NM Adjusted book value per share, end of period $ 12.33 $ 16.09 (23.4 )% $ 12.33 $ 16.09 (23.4 )% Underwriting Summary Premiums: Premiums in force $ 1,833,034 $ 1,649,546 11.1 % $ 1,833,034 $ 1,649,546 11.1 % Policies in force 872,926 967,821 (9.8 )% 872,926 967,821 (9.8 )% Direct premiums written $ 500,677 $ 432,984 15.6 % $ 1,429,685 $ 1,271,925 12.4 % Direct premiums earned $ 452,450 $ 410,621 10.2 % $ 1,295,858 $ 1,178,801 9.9 % Ceded premiums earned $ (161,819 ) $ (145,967 ) 10.9 % $ (459,102 ) $ (414,670 ) 10.7 % Ceded premium ratio 35.8 % 35.5 % 0.3 pts 35.4 % 35.2 % 0.2 pts Net premiums earned $ 290,631 $ 264,654 9.8 % $ 836,756 $ 764,131 9.5 % Net ratios: Loss ratio 113.7 % 70.9 % 42.8 pts 85.5 % 65.3 % 20.2 pts Expense ratio 25.5 % 27.6 % (2.1 ) pts 27.7 % 31.1 % (3.4 ) pts Combined ratio 139.2 % 98.5 % 40.7 pts 113.2 % 96.4 % 16.8 pts 1 Reconciliation of GAAP to non-GAAP financial measures are provided in the attached tables. Adjusted net income, adjusted diluted earnings per common share and core revenue exclude net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities. Adjusted operating income excludes the items above and interest and amortization of debt issuance costs. Adjusted book value per share excludes accumulated other comprehensive income, net of taxes. Adjusted ROCE is calculated by dividing annualized adjusted net income attributable to common stockholders by average adjusted book value per share, with the denominator further excluding current period after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities. *Not meaningful, as it implies full first event hurricane retentions in the first two quarters of the year, which in actuality were hurricane free, and it similarly implies a full first event retention in the fourth quarter of the year, which would instead be subject to a smaller subsequent event retention on a consolidated basis. Net Income and Adjusted Net Income Net loss was $72.3 million, down from net income of $20.2 million in the prior year quarter, and adjusted net loss was $69.4 million, down from adjusted net income of $19.8 million in the prior year quarter. The decline in adjusted net income mostly stems from $111.0 million of retained Hurricane Ian losses, partly offset by a lower net expense ratio and higher net investment income and commission revenue. Revenues Overall revenue was $312.8 million, up 8.9% from the prior year quarter and core revenue was $316.7 million, up 10.5% 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 $500.7 million, up 15.6% from the prior year quarter. The increase stems from 16.3% growth in Florida and 12.7% growth in other states. Overall growth reflects rate increases, partly offset by lower policies in force. Direct premiums earned were $452.5 million, up 10.2% from the prior year quarter. The increase stems from rate-driven direct premiums written growth over the past twelve months. The ceded premium ratio was 35.8%, up from 35.5% in the prior year quarter. The increase primarily reflects higher reinsurance pricing and higher reinsurance costs associated with the increase in insured values, partly offset by direct premiums earned growth associated with primary rate increases and reinsurance savings associated with leveraging our self-insured captive to a greater degree than the prior year. Net premiums earned were $290.6 million, up 9.8% 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 $6.1 million, up from $2.8 million in the prior year quarter. The increase primarily stems from higher fixed income reinvestment yields. Commissions, policy fees and other revenue were $20.0 million, up 3.7% 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 a decline in policy fees associated with lower policies in force. Margins The GAAP operating loss margin was 29.3%, down from a GAAP operating income margin of 9.2% in the prior year quarter and the adjusted operating loss margin was 27.7%, down from an adjusted operating income margin of 9.0% in the prior year quarter. The lower adjusted operating income margin primarily reflects a higher net combined ratio, partly offset by higher net investment income and commission revenues. The net loss ratio was 113.7%, up 42.8 points compared to the prior year quarter. The increase primarily reflects $111.0 million of retained Hurricane Ian losses and a higher attritional initial accident year loss pick, partly offset by lower adverse prior year reserve development as a percentage of net premiums earned. The net expense ratio was 25.5%, down 2.1 points from 27.6% in the prior year quarter. The reduction primarily reflects lower renewal commission rates paid to distribution partners. The net combined ratio was 139.2%, up 40.7 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 third quarter, the Company repurchased approximately 203 thousand shares at an aggregate cost of $2.4 million. The Company’s current share repurchase authorization program has $8.0 million remaining as of September 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. Conference Call and Webcast Friday, October 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/BI7c74886531b54cae98488e2125328182. 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 (loss) 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 September 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. UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except per share data) September 30, December 31, 2022 2021 ASSETS: Invested Assets Fixed maturities, at fair value $ 996,783 $ 1,040,455 Equity securities, at fair value 82,387 47,334 Investment real estate, net 5,752 5,891 Total invested assets 1,084,922 1,093,680 Cash and cash equivalents 307,435 250,508 Restricted cash and cash equivalents 2,703 2,635 Prepaid reinsurance premiums 452,230 240,993 Reinsurance recoverable 935,810 185,589 Premiums receivable, net 79,621 64,923 Property and equipment, net 52,769 53,682 Deferred policy acquisition costs 111,861 108,822 Goodwill 2,319 2,319 Other assets 97,224 52,990 TOTAL ASSETS $ 3,126,894 $ 2,056,141 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: Unpaid losses and loss adjustment expenses $ 1,153,627 $ 346,216 Unearned premiums 991,596 857,769 Advance premium 78,269 53,694 Reinsurance payable, net 458,865 188,662 Long-term debt, net 102,968 103,676 Other liabilities 80,932 76,422 Total liabilities 2,866,257 1,626,439 STOCKHOLDERS' EQUITY: Cumulative convertible preferred stock ($0.01 par value)2 — — Common stock ($0.01 par value)3 471 470 Treasury shares, at cost - 16,603 and 15,797 (236,915 ) (227,115 ) Additional paid-in capital 111,397 108,202 Accumulated other comprehensive income (loss), net of taxes (115,665 ) (15,568 ) Retained earnings 501,349 563,713 Total stockholders' equity 260,637 429,702 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,126,894 $ 2,056,141 Notes: 2 Cumulative convertible preferred stock ($0.01 par value): Authorized - 1,000 shares; Issued - 10 and 10 shares; Outstanding - 10 and 10 shares; Minimum liquidation preference - $9.99 and $9.99 per share. 3 Common stock ($0.01 par value): Authorized - 55,000 shares; Issued - 47,116 and 47,018 shares; Outstanding 30,513 and 31,221 shares. UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 REVENUES Net premiums earned $ 290,631 $ 264,654 $ 836,756 $ 764,131 Net investment income 6,074 2,797 15,337 8,641 Net realized gains (losses) on investments 292 4,319 (375 ) 5,357 Net change in unrealized gains (losses) of equity securities (4,150 ) (3,759 ) (16,430 ) (3,024 ) Commission revenue 12,592 11,418 35,157 30,404 Policy fees 5,272 5,859 15,991 17,821 Other revenue 2,099 1,966 5,862 5,862 Total revenues 312,810 287,254 892,298 829,192 EXPENSES Losses and loss adjustment expenses 330,444 187,581 715,854 498,765 Policy acquisition costs 54,609 57,062 163,432 170,287 Other operating expenses 19,364 16,118 68,129 67,182 Total operating costs and expenses 404,417 260,761 947,415 736,234 Interest and amortization of debt issuance costs 1,630 29 4,969 84 Income (loss) before income taxes (93,237 ) 26,464 (60,086 ) 92,874 Income tax expense (benefit) (20,962 ) 6,281 (12,718 ) 24,342 NET INCOME (LOSS) $ (72,275 ) $ 20,183 $ (47,368 ) $ 68,532 UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES SHARE AND PER SHARE INFORMATION (in thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Weighted average common shares outstanding - basic 30,604 31,247 30,858 31,232 Weighted average common shares outstanding - diluted 30,604 31,337 30,858 31,302 Shares outstanding, end of period 30,513 31,167 30,513 31,167 Basic earnings (loss) per common share $ (2.36 ) $ 0.65 $ (1.54 ) $ 2.19 Diluted earnings (loss) per common share $ (2.36 ) $ 0.64 $ (1.54 ) $ 2.19 Cash dividend declared per common share $ 0.16 $ 0.16 $ 0.48 $ 0.48 Book value per share, end of period $ 8.54 $ 15.86 $ 8.54 $ 15.86 Annualized return on average common equity (ROCE) NM* 16.6 % (18.3 )% 19.4 % *Not meaningful, as it implies full first event hurricane retentions in the first two quarters of the year, which in actuality were hurricane free, and it similarly implies a full first event retention in the fourth quarter of the year, which would instead be subject to a smaller subsequent event retention on a consolidated basis. UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES SUPPLEMENTARY INFORMATION (in thousands, except for Policies In Force data) Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Premiums Direct premiums written - Florida $ 412,588 $ 354,799 $ 1,200,193 $ 1,062,180 Direct premiums written - Other States 88,089 78,185 229,492 209,745 Direct premiums written - Total $ 500,677 $ 432,984 $ 1,429,685 $ 1,271,925 Direct premiums earned $ 452,450 $ 410,621 $ 1,295,858 $ 1,178,801 Net premiums earned $ 290,631 $ 264,654 $ 836,756 $ 764,131 Underwriting Ratios - Net Loss and loss adjustment expense ratio 113.7 % 70.9 % 85.5 % 65.3 % Policy acquisition cost ratio 18.8 % 21.5 % 19.5 % 22.3 % Other operating expense ratio 6.7 % 6.1 % 8.2 % 8.8 % Expense ratio 25.5 % 27.6 % 27.7 % 31.1 % Combined ratio 139.2 % 98.5 % 113.2 % 96.4 % Other Items (Favorable)/Unfavorable prior year's reserve development $ 2,715 $ 11,489 $ 7,080 $ 17,983 Points on the loss and loss adjustment expense ratio 0.9 pts 4.4 pts 0.8 pts 2.4 pts As of September 30, 2022 2021 Policies in force Florida 636,883 716,767 Other States 236,043 251,054 Total 872,926 967,821 Premiums in force Florida $ 1,529,632 $ 1,371,760 Other States 303,402 277,786 Total $ 1,833,034 $ 1,649,546 Total Insured Value Florida $ 203,957,272 $ 204,334,645 Other States 120,648,594 114,992,734 Total $ 324,605,866 $ 319,327,379 Three Months Ended September 30, 2022 Direct Loss Ratio Ceded Loss Ratio Net Loss Ratio Premiums earned $ 452,450 $ 161,819 $ 290,631 Loss and loss adjustment expenses: Core losses $ 216,784 47.9 % $ 55 — % $ 216,729 74.6 % Weather events4 1,026,200 226.8 % 915,200 565.6 % 111,000 38.2 % Prior year’s reserve development 26,360 5.9 % 23,645 14.6 % 2,715 0.9 % Total losses and loss adjustment expenses $ 1,269,344 280.6 % $ 938,900 580.2 % $ 330,444 113.7 % 4 Includes only current year weather events beyond those expected. Three Months Ended September 30, 2021 Direct Loss Ratio Ceded Loss Ratio Net Loss Ratio Premiums earned $ 410,621 145,967 $ 264,654 Loss and loss adjustment expenses: Core losses $ 176,161 42.9 % $ 69 — % $ 176,092 66.5 % Weather events4 — — % — — % — — % Prior year’s reserve development 87,907 21.4 % 76,418 52.4 % 11,489 4.4 % Total losses and loss adjustment expenses $ 264,068 64.3 % $ 76,487 52.4 % $ 187,581 70.9 % 4 Includes only current year weather events beyond those expected. Nine Months Ended September 30, 2022 Direct Loss Ratio Ceded Loss Ratio Net Loss Ratio Premiums earned $ 1,295,858 $ 459,102 $ 836,756 Loss and loss adjustment expenses: Core losses $ 593,364 45.8 % $ 135 — % $ 593,229 70.9 % Weather events4 1,030,745 79.5 % 915,200 199.3 % 115,545 13.8 % Prior year’s reserve development 100,620 7.8 % 93,540 20.4 % 7,080 0.8 % Total losses and loss adjustment expenses $ 1,724,729 133.1 % $ 1,008,875 219.7 % $ 715,854 85.5 % 4 Includes only current year weather events beyond those expected. Nine Months Ended September 30, 2021 Direct Loss Ratio Ceded Loss Ratio Net Loss Ratio Premiums earned $ 1,178,801 $ 414,670 $ 764,131 Loss and loss adjustment expenses: Core losses $ 480,801 40.8 % $ 19 — % $ 480,782 62.9 % Weather events4 — — % — — % — — % Prior year’s reserve development 296,867 25.2 % 278,884 67.3 % 17,983 2.4 % Total losses and loss adjustment expenses $ 777,668 66.0 % $ 278,903 67.3 % $ 498,765 65.3 % 4 Includes only current year weather events beyond those expected. UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (in thousands, except for per share data) GAAP revenue to core revenue Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 GAAP revenue $ 312,810 $ 287,254 $ 892,298 $ 829,192 less: Net realized gains (losses) on investments 292 4,319 (375 ) 5,357 less: Net change in unrealized gains (losses) of equity securities (4,150 ) (3,759 ) (16,430 ) (3,024 ) Core revenue $ 316,668 $ 286,694 $ 909,103 $ 826,859 GAAP income (loss) before income taxes to adjusted operating income (loss) Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 GAAP income (loss) before income taxes $ (93,237 ) $ 26,464 $ (60,086 ) $ 92,874 add: Interest and amortization of debt issuance costs 1,630 29 4,969 84 GAAP operating income (loss) (91,607 ) 26,493 (55,117 ) 92,958 less: Net realized gains (losses) on investments 292 4,319 (375 ) 5,357 less: Net change in unrealized gains (losses) of equity securities (4,150 ) (3,759 ) (16,430 ) (3,024 ) Adjusted operating income (loss) $ (87,749 ) $ 25,933 $ (38,312 ) $ 90,625 GAAP operating income (loss) margin to adjusted operating income (loss) margin Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 GAAP operating income (loss) (a) $ (91,607 ) $ 26,493 $ (55,117 ) $ 92,958 GAAP revenue (b) 312,810 287,254 892,298 829,192 GAAP operating income (loss) margin (a÷b) (29.3 )% 9.2 % (6.2 )% 11.2 % Adjusted operating income (loss) (c) (87,749 ) 25,933 (38,312 ) 90,625 Core revenue (d) 316,668 286,694 909,103 826,859 Adjusted operating income (loss) margin (c÷d) (27.7 )% 9.0 % (4.2 )% 11.0 % GAAP net income (loss) (NI) to adjusted NI (loss) available to common stockholders Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 GAAP NI (loss) $ (72,275 ) $ 20,183 $ (47,368 ) $ 68,532 less: Preferred dividends 3 3 8 8 GAAP NI (loss) available to common stockholders (e) (72,278 ) 20,180 (47,376 ) 68,524 less: Net realized gains (losses) on investments 292 4,319 (375 ) 5,357 less: Net change in unrealized gains (losses) of equity securities (4,150 ) (3,759 ) (16,430 ) (3,024 ) add: Income tax effect on above adjustments (949 ) 131 (4,134 ) 545 Adjusted NI (loss) available to common stockholders (f) $ (69,369 ) $ 19,751 $ (34,705 ) $ 66,736 Weighted average diluted common shares outstanding (g) 30,604 31,337 30,858 31,302 Diluted earnings (loss) per common share (e÷g) $ (2.36 ) $ 0.64 $ (1.54 ) $ 2.19 Diluted adjusted earnings (loss) per common share (f÷g) $ (2.27 ) $ 0.63 $ (1.12 ) $ 2.13 GAAP stockholders’ equity to adjusted common stockholders’ equity As of September 30, September 30, December 31, 2022 2021 2021 GAAP stockholders’ equity $ 260,637 $ 494,275 $ 429,702 less: Preferred equity 100 100 100 Common stockholders’ equity (h) 260,537 494,175 429,602 less: Accumulated other comprehensive (loss), net of taxes (115,665 ) (7,398 ) (15,568 ) Adjusted common stockholders’ equity (i) $ 376,202 $ 501,573 $ 445,170 Shares outstanding (j) 30,513 31,167 31,221 Book value per common share (h÷j) $ 8.54 $ 15.86 $ 13.76 Adjusted book value per common share (i÷j) $ 12.33 $ 16.09 $ 14.26 GAAP return on common equity (ROCE) to adjusted ROCE Three Months Ended Nine Months Ended Year Ended September 30, September 30, December 31, 2022 2021 2022 2021 2021 Annualized NI (loss) attributable to common stockholders (k) $ (289,112 ) $ 80,720 $ (63,168 ) $ 91,365 $ 20,397 Average common stockholders’ equity (l) 313,494 487,459 345,070 471,669 439,382 ROCE (k÷l) NM* 16.6 % (18.3 )% 19.4 % 4.6 % Annualized adjusted NI (loss) attributable to common stockholders (m) $ (277,476 ) $ 79,004 $ (46,273 ) $ 88,981 $ 18,959 Adjusted average common stockholders’ equity5 (n) 416,848 493,729 417,022 472,802 444,775 Adjusted ROCE (m÷n) NM* 16.0 % (11.1 )% 18.8 % 4.3 % 5 Adjusted average common stockholders’ equity excludes current period after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities. *Not meaningful, as it implies full first event hurricane retentions in the first two quarters of the year, which in actuality were hurricane free, and it similarly implies a full first event retention in the fourth quarter of the year, which would instead be subject to a smaller subsequent event retention on a consolidated basis. View source version on businesswire.com: https://www.businesswire.com/news/home/20221027005749/en/Contacts Investors/Media: Arash Soleimani, CFA, CPA Chief Strategy Officer 954-804-8874 asoleimani@universalproperty.com
Diluted GAAP loss per common share of $2.36, diluted adjusted loss per common share* of $2.27 Direct premiums written of $500.7 million, up 15.6% from the prior year quarter Repurchased 203,244 shares for $2.4 million. Total capital returned to shareholders of $7.4 million, including $0.16 per share regular quarterly dividend.
Universal Insurance Holdings (NYSE: UVE) (“Universal” or the “Company”) reported third quarter 2022 results. “Our thoughts continue to be with all impacted policyholders,” said Stephen J. Donaghy, Chief Executive Officer. “Since landfall, we’ve had boots on the ground, helping our insureds in their time of need. As we recently disclosed, our portfolio is underweight in the most impacted regions and is further cushioned by our high proportion of condo unit and renters policies, which provide interior and contents coverage. To date, claims volume from Hurricane Ian reflects approximately 50% of Irma’s volume received at this point. We maintain one of the largest claims and legal teams in the state of Florida, providing us with significant resources and capacity to efficiently close Ian-related claims. Despite our $1 billion estimated gross loss from Hurricane Ian, we have a $3 billion reinsurance tower in place for a subsequent event in the 2022 Atlantic hurricane season and our consolidated retention would be meaningfully lower, highlighting the strength and breadth of our catastrophe reinsurance program. We’ve started the planning process for the 2023 Atlantic hurricane season and are already well underway, as we have almost $400 million of pre-negotiated multi-year capacity below the Florida Hurricane Catastrophe Fund’s (FHCF) attachment point, approximately $200 million of estimated cost free coverage from the Reinsurance to Assist Policyholders (RAP) program and a projected $150 million from our catastrophe bond. Coupled with our 90% participation in the FHCF, we estimate that the vast majority of our first event 2023 catastrophe reinsurance program will be insulated from open market pricing dynamics. We value our reinsurance partner relationships and appreciate their support.” *Reconciliations of GAAP to non-GAAP financial measures are provided in the attached tables. Quarterly Financial Results Summary Financial Results ($thousands, except per share data) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 Change 2022 2021 Change GAAP comparison Total revenues $ 312,810 $ 287,254 8.9 % $ 892,298 $ 829,192 7.6 % GAAP operating income (loss) $ (91,607 ) $ 26,493 NM $ (55,117 ) $ 92,958 NM GAAP operating income (loss) margin (29.3 )% 9.2 % NM (6.2 )% 11.2 % NM Net income (loss) $ (72,275 ) $ 20,183 NM $ (47,368 ) $ 68,532 NM Diluted earnings (loss) per common share $ (2.36 ) $ 0.64 NM $ (1.54 ) $ 2.19 NM Annualized ROCE NM* 16.6 % NM (18.3 )% 19.4 % NM Book value per share, end of period $ 8.54 $ 15.86 (46.2 )% 8.54 $ 15.86 (46.2 )% Non-GAAP comparison1 Core revenue $ 316,668 $ 286,694 10.5 % $ 909,103 $ 826,859 9.9 % Adjusted operating income (loss) $ (87,749 ) $ 25,933 NM $ (38,312 ) $ 90,625 NM Adjusted operating income (loss) margin (27.7 )% 9.0 % NM (4.2 )% 11.0 % NM Adjusted net income (loss) $ (69,369 ) $ 19,751 NM $ (34,705 ) $ 66,736 NM Adjusted diluted earnings (loss) per common share $ (2.27 ) $ 0.63 NM $ (1.12 ) $ 2.13 NM Annualized adjusted ROCE NM* 16.0 % NM (11.1 )% 18.8 % NM Adjusted book value per share, end of period $ 12.33 $ 16.09 (23.4 )% $ 12.33 $ 16.09 (23.4 )% Underwriting Summary Premiums: Premiums in force $ 1,833,034 $ 1,649,546 11.1 % $ 1,833,034 $ 1,649,546 11.1 % Policies in force 872,926 967,821 (9.8 )% 872,926 967,821 (9.8 )% Direct premiums written $ 500,677 $ 432,984 15.6 % $ 1,429,685 $ 1,271,925 12.4 % Direct premiums earned $ 452,450 $ 410,621 10.2 % $ 1,295,858 $ 1,178,801 9.9 % Ceded premiums earned $ (161,819 ) $ (145,967 ) 10.9 % $ (459,102 ) $ (414,670 ) 10.7 % Ceded premium ratio 35.8 % 35.5 % 0.3 pts 35.4 % 35.2 % 0.2 pts Net premiums earned $ 290,631 $ 264,654 9.8 % $ 836,756 $ 764,131 9.5 % Net ratios: Loss ratio 113.7 % 70.9 % 42.8 pts 85.5 % 65.3 % 20.2 pts Expense ratio 25.5 % 27.6 % (2.1 ) pts 27.7 % 31.1 % (3.4 ) pts Combined ratio 139.2 % 98.5 % 40.7 pts 113.2 % 96.4 % 16.8 pts 1 Reconciliation of GAAP to non-GAAP financial measures are provided in the attached tables. Adjusted net income, adjusted diluted earnings per common share and core revenue exclude net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities. Adjusted operating income excludes the items above and interest and amortization of debt issuance costs. Adjusted book value per share excludes accumulated other comprehensive income, net of taxes. Adjusted ROCE is calculated by dividing annualized adjusted net income attributable to common stockholders by average adjusted book value per share, with the denominator further excluding current period after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities. *Not meaningful, as it implies full first event hurricane retentions in the first two quarters of the year, which in actuality were hurricane free, and it similarly implies a full first event retention in the fourth quarter of the year, which would instead be subject to a smaller subsequent event retention on a consolidated basis. Net Income and Adjusted Net Income Net loss was $72.3 million, down from net income of $20.2 million in the prior year quarter, and adjusted net loss was $69.4 million, down from adjusted net income of $19.8 million in the prior year quarter. The decline in adjusted net income mostly stems from $111.0 million of retained Hurricane Ian losses, partly offset by a lower net expense ratio and higher net investment income and commission revenue. Revenues Overall revenue was $312.8 million, up 8.9% from the prior year quarter and core revenue was $316.7 million, up 10.5% 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 $500.7 million, up 15.6% from the prior year quarter. The increase stems from 16.3% growth in Florida and 12.7% growth in other states. Overall growth reflects rate increases, partly offset by lower policies in force. Direct premiums earned were $452.5 million, up 10.2% from the prior year quarter. The increase stems from rate-driven direct premiums written growth over the past twelve months. The ceded premium ratio was 35.8%, up from 35.5% in the prior year quarter. The increase primarily reflects higher reinsurance pricing and higher reinsurance costs associated with the increase in insured values, partly offset by direct premiums earned growth associated with primary rate increases and reinsurance savings associated with leveraging our self-insured captive to a greater degree than the prior year. Net premiums earned were $290.6 million, up 9.8% 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 $6.1 million, up from $2.8 million in the prior year quarter. The increase primarily stems from higher fixed income reinvestment yields. Commissions, policy fees and other revenue were $20.0 million, up 3.7% 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 a decline in policy fees associated with lower policies in force. Margins The GAAP operating loss margin was 29.3%, down from a GAAP operating income margin of 9.2% in the prior year quarter and the adjusted operating loss margin was 27.7%, down from an adjusted operating income margin of 9.0% in the prior year quarter. The lower adjusted operating income margin primarily reflects a higher net combined ratio, partly offset by higher net investment income and commission revenues. The net loss ratio was 113.7%, up 42.8 points compared to the prior year quarter. The increase primarily reflects $111.0 million of retained Hurricane Ian losses and a higher attritional initial accident year loss pick, partly offset by lower adverse prior year reserve development as a percentage of net premiums earned. The net expense ratio was 25.5%, down 2.1 points from 27.6% in the prior year quarter. The reduction primarily reflects lower renewal commission rates paid to distribution partners. The net combined ratio was 139.2%, up 40.7 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 third quarter, the Company repurchased approximately 203 thousand shares at an aggregate cost of $2.4 million. The Company’s current share repurchase authorization program has $8.0 million remaining as of September 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. Conference Call and Webcast Friday, October 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/BI7c74886531b54cae98488e2125328182. 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 (loss) 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 September 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. UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except per share data) September 30, December 31, 2022 2021 ASSETS: Invested Assets Fixed maturities, at fair value $ 996,783 $ 1,040,455 Equity securities, at fair value 82,387 47,334 Investment real estate, net 5,752 5,891 Total invested assets 1,084,922 1,093,680 Cash and cash equivalents 307,435 250,508 Restricted cash and cash equivalents 2,703 2,635 Prepaid reinsurance premiums 452,230 240,993 Reinsurance recoverable 935,810 185,589 Premiums receivable, net 79,621 64,923 Property and equipment, net 52,769 53,682 Deferred policy acquisition costs 111,861 108,822 Goodwill 2,319 2,319 Other assets 97,224 52,990 TOTAL ASSETS $ 3,126,894 $ 2,056,141 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: Unpaid losses and loss adjustment expenses $ 1,153,627 $ 346,216 Unearned premiums 991,596 857,769 Advance premium 78,269 53,694 Reinsurance payable, net 458,865 188,662 Long-term debt, net 102,968 103,676 Other liabilities 80,932 76,422 Total liabilities 2,866,257 1,626,439 STOCKHOLDERS' EQUITY: Cumulative convertible preferred stock ($0.01 par value)2 — — Common stock ($0.01 par value)3 471 470 Treasury shares, at cost - 16,603 and 15,797 (236,915 ) (227,115 ) Additional paid-in capital 111,397 108,202 Accumulated other comprehensive income (loss), net of taxes (115,665 ) (15,568 ) Retained earnings 501,349 563,713 Total stockholders' equity 260,637 429,702 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,126,894 $ 2,056,141 Notes: 2 Cumulative convertible preferred stock ($0.01 par value): Authorized - 1,000 shares; Issued - 10 and 10 shares; Outstanding - 10 and 10 shares; Minimum liquidation preference - $9.99 and $9.99 per share. 3 Common stock ($0.01 par value): Authorized - 55,000 shares; Issued - 47,116 and 47,018 shares; Outstanding 30,513 and 31,221 shares. UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 REVENUES Net premiums earned $ 290,631 $ 264,654 $ 836,756 $ 764,131 Net investment income 6,074 2,797 15,337 8,641 Net realized gains (losses) on investments 292 4,319 (375 ) 5,357 Net change in unrealized gains (losses) of equity securities (4,150 ) (3,759 ) (16,430 ) (3,024 ) Commission revenue 12,592 11,418 35,157 30,404 Policy fees 5,272 5,859 15,991 17,821 Other revenue 2,099 1,966 5,862 5,862 Total revenues 312,810 287,254 892,298 829,192 EXPENSES Losses and loss adjustment expenses 330,444 187,581 715,854 498,765 Policy acquisition costs 54,609 57,062 163,432 170,287 Other operating expenses 19,364 16,118 68,129 67,182 Total operating costs and expenses 404,417 260,761 947,415 736,234 Interest and amortization of debt issuance costs 1,630 29 4,969 84 Income (loss) before income taxes (93,237 ) 26,464 (60,086 ) 92,874 Income tax expense (benefit) (20,962 ) 6,281 (12,718 ) 24,342 NET INCOME (LOSS) $ (72,275 ) $ 20,183 $ (47,368 ) $ 68,532 UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES SHARE AND PER SHARE INFORMATION (in thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Weighted average common shares outstanding - basic 30,604 31,247 30,858 31,232 Weighted average common shares outstanding - diluted 30,604 31,337 30,858 31,302 Shares outstanding, end of period 30,513 31,167 30,513 31,167 Basic earnings (loss) per common share $ (2.36 ) $ 0.65 $ (1.54 ) $ 2.19 Diluted earnings (loss) per common share $ (2.36 ) $ 0.64 $ (1.54 ) $ 2.19 Cash dividend declared per common share $ 0.16 $ 0.16 $ 0.48 $ 0.48 Book value per share, end of period $ 8.54 $ 15.86 $ 8.54 $ 15.86 Annualized return on average common equity (ROCE) NM* 16.6 % (18.3 )% 19.4 % *Not meaningful, as it implies full first event hurricane retentions in the first two quarters of the year, which in actuality were hurricane free, and it similarly implies a full first event retention in the fourth quarter of the year, which would instead be subject to a smaller subsequent event retention on a consolidated basis. UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES SUPPLEMENTARY INFORMATION (in thousands, except for Policies In Force data) Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Premiums Direct premiums written - Florida $ 412,588 $ 354,799 $ 1,200,193 $ 1,062,180 Direct premiums written - Other States 88,089 78,185 229,492 209,745 Direct premiums written - Total $ 500,677 $ 432,984 $ 1,429,685 $ 1,271,925 Direct premiums earned $ 452,450 $ 410,621 $ 1,295,858 $ 1,178,801 Net premiums earned $ 290,631 $ 264,654 $ 836,756 $ 764,131 Underwriting Ratios - Net Loss and loss adjustment expense ratio 113.7 % 70.9 % 85.5 % 65.3 % Policy acquisition cost ratio 18.8 % 21.5 % 19.5 % 22.3 % Other operating expense ratio 6.7 % 6.1 % 8.2 % 8.8 % Expense ratio 25.5 % 27.6 % 27.7 % 31.1 % Combined ratio 139.2 % 98.5 % 113.2 % 96.4 % Other Items (Favorable)/Unfavorable prior year's reserve development $ 2,715 $ 11,489 $ 7,080 $ 17,983 Points on the loss and loss adjustment expense ratio 0.9 pts 4.4 pts 0.8 pts 2.4 pts As of September 30, 2022 2021 Policies in force Florida 636,883 716,767 Other States 236,043 251,054 Total 872,926 967,821 Premiums in force Florida $ 1,529,632 $ 1,371,760 Other States 303,402 277,786 Total $ 1,833,034 $ 1,649,546 Total Insured Value Florida $ 203,957,272 $ 204,334,645 Other States 120,648,594 114,992,734 Total $ 324,605,866 $ 319,327,379 Three Months Ended September 30, 2022 Direct Loss Ratio Ceded Loss Ratio Net Loss Ratio Premiums earned $ 452,450 $ 161,819 $ 290,631 Loss and loss adjustment expenses: Core losses $ 216,784 47.9 % $ 55 — % $ 216,729 74.6 % Weather events4 1,026,200 226.8 % 915,200 565.6 % 111,000 38.2 % Prior year’s reserve development 26,360 5.9 % 23,645 14.6 % 2,715 0.9 % Total losses and loss adjustment expenses $ 1,269,344 280.6 % $ 938,900 580.2 % $ 330,444 113.7 % 4 Includes only current year weather events beyond those expected. Three Months Ended September 30, 2021 Direct Loss Ratio Ceded Loss Ratio Net Loss Ratio Premiums earned $ 410,621 145,967 $ 264,654 Loss and loss adjustment expenses: Core losses $ 176,161 42.9 % $ 69 — % $ 176,092 66.5 % Weather events4 — — % — — % — — % Prior year’s reserve development 87,907 21.4 % 76,418 52.4 % 11,489 4.4 % Total losses and loss adjustment expenses $ 264,068 64.3 % $ 76,487 52.4 % $ 187,581 70.9 % 4 Includes only current year weather events beyond those expected. Nine Months Ended September 30, 2022 Direct Loss Ratio Ceded Loss Ratio Net Loss Ratio Premiums earned $ 1,295,858 $ 459,102 $ 836,756 Loss and loss adjustment expenses: Core losses $ 593,364 45.8 % $ 135 — % $ 593,229 70.9 % Weather events4 1,030,745 79.5 % 915,200 199.3 % 115,545 13.8 % Prior year’s reserve development 100,620 7.8 % 93,540 20.4 % 7,080 0.8 % Total losses and loss adjustment expenses $ 1,724,729 133.1 % $ 1,008,875 219.7 % $ 715,854 85.5 % 4 Includes only current year weather events beyond those expected. Nine Months Ended September 30, 2021 Direct Loss Ratio Ceded Loss Ratio Net Loss Ratio Premiums earned $ 1,178,801 $ 414,670 $ 764,131 Loss and loss adjustment expenses: Core losses $ 480,801 40.8 % $ 19 — % $ 480,782 62.9 % Weather events4 — — % — — % — — % Prior year’s reserve development 296,867 25.2 % 278,884 67.3 % 17,983 2.4 % Total losses and loss adjustment expenses $ 777,668 66.0 % $ 278,903 67.3 % $ 498,765 65.3 % 4 Includes only current year weather events beyond those expected. UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (in thousands, except for per share data) GAAP revenue to core revenue Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 GAAP revenue $ 312,810 $ 287,254 $ 892,298 $ 829,192 less: Net realized gains (losses) on investments 292 4,319 (375 ) 5,357 less: Net change in unrealized gains (losses) of equity securities (4,150 ) (3,759 ) (16,430 ) (3,024 ) Core revenue $ 316,668 $ 286,694 $ 909,103 $ 826,859 GAAP income (loss) before income taxes to adjusted operating income (loss) Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 GAAP income (loss) before income taxes $ (93,237 ) $ 26,464 $ (60,086 ) $ 92,874 add: Interest and amortization of debt issuance costs 1,630 29 4,969 84 GAAP operating income (loss) (91,607 ) 26,493 (55,117 ) 92,958 less: Net realized gains (losses) on investments 292 4,319 (375 ) 5,357 less: Net change in unrealized gains (losses) of equity securities (4,150 ) (3,759 ) (16,430 ) (3,024 ) Adjusted operating income (loss) $ (87,749 ) $ 25,933 $ (38,312 ) $ 90,625 GAAP operating income (loss) margin to adjusted operating income (loss) margin Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 GAAP operating income (loss) (a) $ (91,607 ) $ 26,493 $ (55,117 ) $ 92,958 GAAP revenue (b) 312,810 287,254 892,298 829,192 GAAP operating income (loss) margin (a÷b) (29.3 )% 9.2 % (6.2 )% 11.2 % Adjusted operating income (loss) (c) (87,749 ) 25,933 (38,312 ) 90,625 Core revenue (d) 316,668 286,694 909,103 826,859 Adjusted operating income (loss) margin (c÷d) (27.7 )% 9.0 % (4.2 )% 11.0 % GAAP net income (loss) (NI) to adjusted NI (loss) available to common stockholders Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 GAAP NI (loss) $ (72,275 ) $ 20,183 $ (47,368 ) $ 68,532 less: Preferred dividends 3 3 8 8 GAAP NI (loss) available to common stockholders (e) (72,278 ) 20,180 (47,376 ) 68,524 less: Net realized gains (losses) on investments 292 4,319 (375 ) 5,357 less: Net change in unrealized gains (losses) of equity securities (4,150 ) (3,759 ) (16,430 ) (3,024 ) add: Income tax effect on above adjustments (949 ) 131 (4,134 ) 545 Adjusted NI (loss) available to common stockholders (f) $ (69,369 ) $ 19,751 $ (34,705 ) $ 66,736 Weighted average diluted common shares outstanding (g) 30,604 31,337 30,858 31,302 Diluted earnings (loss) per common share (e÷g) $ (2.36 ) $ 0.64 $ (1.54 ) $ 2.19 Diluted adjusted earnings (loss) per common share (f÷g) $ (2.27 ) $ 0.63 $ (1.12 ) $ 2.13 GAAP stockholders’ equity to adjusted common stockholders’ equity As of September 30, September 30, December 31, 2022 2021 2021 GAAP stockholders’ equity $ 260,637 $ 494,275 $ 429,702 less: Preferred equity 100 100 100 Common stockholders’ equity (h) 260,537 494,175 429,602 less: Accumulated other comprehensive (loss), net of taxes (115,665 ) (7,398 ) (15,568 ) Adjusted common stockholders’ equity (i) $ 376,202 $ 501,573 $ 445,170 Shares outstanding (j) 30,513 31,167 31,221 Book value per common share (h÷j) $ 8.54 $ 15.86 $ 13.76 Adjusted book value per common share (i÷j) $ 12.33 $ 16.09 $ 14.26 GAAP return on common equity (ROCE) to adjusted ROCE Three Months Ended Nine Months Ended Year Ended September 30, September 30, December 31, 2022 2021 2022 2021 2021 Annualized NI (loss) attributable to common stockholders (k) $ (289,112 ) $ 80,720 $ (63,168 ) $ 91,365 $ 20,397 Average common stockholders’ equity (l) 313,494 487,459 345,070 471,669 439,382 ROCE (k÷l) NM* 16.6 % (18.3 )% 19.4 % 4.6 % Annualized adjusted NI (loss) attributable to common stockholders (m) $ (277,476 ) $ 79,004 $ (46,273 ) $ 88,981 $ 18,959 Adjusted average common stockholders’ equity5 (n) 416,848 493,729 417,022 472,802 444,775 Adjusted ROCE (m÷n) NM* 16.0 % (11.1 )% 18.8 % 4.3 % 5 Adjusted average common stockholders’ equity excludes current period after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities. *Not meaningful, as it implies full first event hurricane retentions in the first two quarters of the year, which in actuality were hurricane free, and it similarly implies a full first event retention in the fourth quarter of the year, which would instead be subject to a smaller subsequent event retention on a consolidated basis. 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Investors/Media: Arash Soleimani, CFA, CPA Chief Strategy Officer 954-804-8874 asoleimani@universalproperty.com