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 Insurance Holdings Reports Fourth Quarter 2021 Results By: Universal Insurance Holdings via Business Wire February 24, 2022 at 16:15 PM EST 4Q21 direct premiums earned up 11.5%; FY21 up 14.4% driven by primary rate increases 4Q21 diluted GAAP earnings per share (EPS) of $(1.54), non-GAAP adjusted EPS1 of $(1.53) predominantly driven by inflationary trends FY21 diluted GAAP EPS of $0.65, non-GAAP adjusted EPS1 of $0.61 Clovered.com, our digital agency subsidiary surpassed $40 million in placed premiums in 2021 4Q21 completed private placement of $100 million senior unsecured notes Universal Insurance Holdings (NYSE: UVE) (the “Company”) reported fourth quarter and full year 2021 results. 1 Excludes net realized and unrealized gains and losses on investments as well as extraordinary reinstatement premiums and associated commissions (“non-GAAP adjusted EPS”). Reconciliations of GAAP to non-GAAP financial measures are provided in the attached tables. “We ended the year with a record of approximately $1.7 billion of premiums in force and a return on average equity of 4.6%, despite the accelerated inflationary trends we announced on February 10th, which resulted in the Company increasing reserves,” said Stephen J. Donaghy, Chief Executive Officer. “Additionally, Clovered.com, our digital agency subsidiary surpassed $40 million in placed premiums during 2021. The lion’s share of our approved rate filings for UPCIC in Florida over the past several quarters for new and renewal business are now effective. We continue to sharpen our pencils on our 2022 Florida primary rate filing in the coming months and are hitting the ground running on our reinsurance renewal, with over 77% of capacity on our first event All States tower already secured. We look forward to continuing to focus on resiliency through this cycle and are monitoring closely the actions in the Florida legislature in regards to several bills, including SB1728, SB1402 and SB186, amongst others.” Summary Financial Results ($thousands, except per share data) Three Months Ended December 31, Twelve Months Ended December 31, 2021 2020 Change 2021 2020 Change (GAAP comparison) Total revenue $ 292,659 $ 273,126 7.2 % $ 1,121,851 $ 1,072,770 4.6 % Income (loss) before income taxes (64,461 ) (26,999 ) (138.8 ) % 28,413 24,231 17.3 % Income (loss) before income taxes margin (22.0 ) % (9.9 ) % (12.1) pts 2.5 % 2.3 % 20 bps Diluted EPS (1.54 ) (0.57 ) (170.2 ) % 0.65 0.60 8.3 % Annualized return on average equity (ROE) (41.6 ) % (15.4 ) % (26.2) pts 4.6 % 4.1 % 50 bps Book value per share, end of period 13.76 14.43 (4.6 ) % 13.76 14.43 (4.6 ) % (Non-GAAP comparison)2 Adjusted operating income (63,433 ) (38,227 ) (65.9 ) % 27,205 (39,044 ) NM Adjusted EPS (1.53 ) (0.84 ) (82.1 ) % 0.61 (0.90 ) NM 2 Reconciliation of GAAP to non-GAAP financial measures are provided in the attached tables. Adjusted operating income excludes net realized and unrealized gains and losses on investments, interest expense, and extraordinary reinstatement premiums and associated commissions. Non-GAAP adjusted EPS excludes net realized and unrealized gains and losses on investments, as well as extraordinary reinstatement premiums and associated commissions. NM = Not Meaningful Total revenue grew 7.2% for the quarter and 4.6% for the year, driven primarily by growth in net premiums earned from primary rate increases, partially offset, primarily by lower policies-in-force, and lower realized gains on the investment portfolio, and increased reinsurance costs. GAAP diluted EPS and non-GAAP adjusted EPS results for the quarter and the year benefited from continued primary rate increases earnings-in, but were predominantly impacted by strengthening of reserves due to inflationary trends and a reduction in realized gains on the investment portfolio when compared to the prior year period. Underwriting ($thousands, except policies in force) Three Months Ended December 31, Twelve Months Ended December 31, 2021 2020 Change 2021 2020 Change Policies in force (as of end of period) 943,593 984,830 (4.2 )% 943,593 984,830 (4.2 )% Premiums in force (as of end of period) $ 1,679,822 $ 1,519,949 10.5 % $ 1,679,822 $ 1,519,949 10.5 % Direct premiums written 399,327 368,823 8.3 % 1,671,252 1,517,479 10.1 % Direct premiums earned 417,817 374,825 11.5 % 1,596,618 1,395,623 14.4 % Net premiums earned 271,332 242,173 12.0 % 1,035,463 923,563 12.1 % Expense ratio3 28.1 % 27.3 % 80 bps 30.2 % 31.4 % (1.2) pts Loss & LAE ratio 103.3 % 96.7 % 6.6 pts 75.3 % 82.2 % (6.9) pts Combined ratio 131.4 % 124.0 % 7.4 pts 105.5 % 113.6 % (8.1) pts 3 Expense ratio excludes interest expense. Direct premiums earned were up 11.5% for the quarter, and 14.4% for the year, led by primary rate increases in Florida and other states, while policies-in-force declined 4.2% as a result of continuing to shape our underwriting risks. On the expense side, the combined ratio increased 7.4 points for the quarter driven primarily by strengthening reserves for the full accident year 2021 as a result of inflationary pressures and increased reinsurance costs impact on the ratio. For the full year, the combined ratio improved 8.1 points as a result of decreased weather events in 2021, lower prior years’ adverse reserve development, and continued business expense management. The expense ratio increased 50 basis points on a direct premiums earned basis for the quarter. For the year, the expense ratio improved 1.2 points on a direct premiums earned basis due to business expense management, including a reduction in agent commissions, advertising, and lower executive compensation, as well as primary rate increases impact on the ratio. The net loss and loss adjustment expense ratio increased 6.6 points for the quarter, but improved 6.9 points for the year. Quarterly and full year drivers for 2021 include: Core losses of $216.0 million for the quarter ($134.5 million in 4Q20) and $696.8 million for the year ($538.5 million in 2020) resulted in a 15.8 point increase on a direct premiums earned basis for the quarter and a 5.0 point increase for the year, primarily driven by accruing incremental reserves as a result of materials, labor, and social inflation. On a net basis, core losses increased 24.0 points for the quarter and 9.0 points for the year. A 21.1 point net improvement for the quarter and a 14.9 point net improvement for the year related to weather events being more in line with plan. Net prior years’ adverse reserve development of $36.5 million for the quarter ($23.4 million in 4Q20) and $54.5 million for the year ($58.3 million in 2020) resulted in a 3.7 point net increase for the quarter and a 1.0 point net improvement for the year. The net prior years’ adverse reserve development for the year was primarily driven by Non-CAT claims, and to a lesser extent Hurricane Irma related claims. Services ($thousands) Three Months Ended December 31, Twelve Months Ended December 31, 2021 2020 Change 2021 2020 Change Commission revenue $ 11,245 $ 9,393 19.7 % $ 41,649 $ 33,163 25.6 % Policy fees 4,892 5,520 (11.4 ) % 22,713 23,773 (4.5 ) % Other revenue 1,769 1,972 (10.3 ) % 7,631 8,501 (10.2 ) % Total $ 17,906 $ 16,885 6.0 % $ 71,993 $ 65,437 10.0 % Total services revenue increased 6.0% for the quarter and 10.0% for the full year. The increases were driven by commission revenue earned on ceded premiums, partially offset by a decrease in policies fees due to a decrease in volume and other revenue. Investments ($thousands) Three Months Ended December 31, Twelve Months Ended December 31, 2021 2020 Change 2021 2020 Change Net investment income $ 3,894 $ 2,823 37.9 % $ 12,535 $ 20,393 (38.5 ) % Realized gains (losses) 535 9,058 (94.1 ) % 5,892 63,352 (90.7 ) % Unrealized gains (losses) (1,008 ) 2,187 NM (4,032 ) 25 NM NM = Not Meaningful Net investment income increased 37.9% for the quarter, primarily due to higher levels of invested assets. For the full year, net investment income decreased 38.5% as well as a significant decline in realized gains for the quarter and full year. The declines are the result of the sale, and subsequent reinvestment at lower yields, of a majority of securities in the portfolio that were in an unrealized gain position in the third and fourth quarters of 2020 to recognize the fair value benefits in surplus. Unrealized losses for the quarter and for the full year were driven by market fluctuations in invested assets resulting in an unfavorable outcome for the quarter and the full year. Capital Deployment For the full year, the Company repurchased approximately 117 thousand shares at an aggregate cost of $1.6 million. The Company’s current share repurchase authorization program has $17.8 million remaining as of December 31, 2021 and runs through November 3, 2022. During the fourth quarter the Board of Directors declared a quarterly regular and special cash dividend, together totaling 29 cents per share of common stock, which was paid on December 17, 2021, to shareholders of record as of the close of business on December 10, 2021. This marked more than 10 consecutive years declaring a fourth quarter special dividend. The 29 cents per share dividend consists of a regular quarterly cash dividend of 16 cents per share and a special cash dividend of 13 cents per share, bringing the total regular and special dividends declared in 2021 to 77 cents per share. Guidance Universal initiated the following guidance for fiscal 2022: GAAP and Non-GAAP Adjusted EPS in a range of $1.80 - $2.20 (assuming no extraordinary weather events in 2022) Annualized return on average equity in a range of 12.5% - 15.0% Conference Call and Webcast Friday, February 25, 2022 at 9:00 a.m. ET U.S. Dial-in Number: (855) 752-6647 International: (503) 343-6667 Participant code: 7899332 Listen to live webcast: UniversalInsuranceHoldings.com Replay of the call will be available on the UVE website and by phone at (855) 859-2056 or internationally at (404) 537-3406 using the participant code: 7899332 through March 12, 2022 About Universal Insurance Holdings, Inc. Universal Insurance Holdings (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 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 adjusted earnings per diluted share, which excludes the impact of the net realized and unrealized gains and losses on investments as well as extraordinary reinstatement premiums and associated commissions. Extraordinary reinstatement premiums are not covered by reinstatement premium protection and attach just below the Florida Hurricane Catastrophe Fund (“FHCF”) reinsurance layer. Adjusted operating income excludes the impact of the net realized and unrealized gains and losses on investments, as well as interest expense and extraordinary reinstatement premiums and associated commissions. 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, when considered together with the GAAP financial measures, 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 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 Annual Report on Form 10-K for the year ended December 31, 2021. 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) December 31, December 31, 2021 2020 ASSETS Invested Assets Fixed maturities, at fair value $ 1,040,455 $ 819,861 Equity securities, at fair value 47,334 84,887 Investment real estate, net 5,891 15,176 Total invested assets 1,093,680 919,924 Cash and cash equivalents 250,508 167,156 Restricted cash and cash equivalents 2,635 12,715 Prepaid reinsurance premiums 240,993 215,723 Reinsurance recoverable 185,589 160,417 Premiums receivable, net 64,923 66,883 Property and equipment, net 53,682 53,572 Deferred policy acquisition costs 108,822 110,614 Goodwill 2,319 2,319 Other assets 52,990 49,418 TOTAL ASSETS $ 2,056,141 $ 1,758,741 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: Unpaid losses and loss adjustment expenses $ 346,216 $ 322,465 Unearned premiums 857,769 783,135 Advance premium 53,694 49,562 Reinsurance payable, net 188,662 10,312 Long-term debt, net 103,676 8,456 Other liabilities 76,422 135,549 Total liabilities 1,626,439 1,309,479 STOCKHOLDERS' EQUITY: Cumulative convertible preferred stock ($0.01 par value)4 — — Common stock ($0.01 par value)5 470 468 Treasury shares, at cost - 15,797 and 15,680 (227,115 ) (225,506 ) Additional paid-in capital 108,202 103,445 Accumulated other comprehensive income (loss), net of taxes (15,568 ) 3,343 Retained earnings 563,713 567,512 Total stockholders' equity 429,702 449,262 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,056,141 $ 1,758,741 Notes: 4 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. 5 Common stock ($0.01 par value): Authorized - 55,000 shares; Issued - 47,018 and 46,817 shares; Outstanding - 31,221 and 31,137 shares. UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED) (in thousands) Three Months Ended Twelve Months Ended December 31, December 31, 2021 2020 2021 2020 REVENUES Net premiums earned $ 271,332 $ 242,173 $ 1,035,463 $ 923,563 Net investment income 3,894 2,823 12,535 20,393 Net realized gains (losses) on sale of investments 535 9,058 5,892 63,352 Net change in unrealized gains (losses) of equity securities (1,008 ) 2,187 (4,032 ) 25 Commission revenue 11,245 9,393 41,649 33,163 Policy fees 4,892 5,520 22,713 23,773 Other revenue 1,769 1,972 7,631 8,501 Total revenues 292,659 273,126 1,121,851 1,072,770 EXPENSES Losses and loss adjustment expenses 280,440 233,940 779,205 758,810 Policy acquisition costs 55,880 52,120 226,167 199,102 Other operating expenses 20,245 14,048 87,414 90,525 Interest expense 555 17 652 102 Total expenses 357,120 300,125 1,093,438 1,048,539 Income (loss) before income tax expense (64,461 ) (26,999 ) 28,413 24,231 Income tax expense (benefit) (16,336 ) (9,324 ) 8,006 5,126 NET INCOME (LOSS) $ (48,125 ) $ (17,675 ) $ 20,407 $ 19,105 UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES SHARE AND PER SHARE INFORMATION (in thousands, except per share data) Three Months Ended Twelve Months Ended December 31, December 31, 2021 2020 2021 2020 Weighted average common shares outstanding - basic 31,177 31,193 31,218 31,884 Weighted average common shares outstanding - diluted 31,177 31,295 31,307 31,972 Shares outstanding, end of period 31,221 31,137 31,221 31,137 Basic earnings (loss) per common share $ (1.54 ) $ (0.57 ) $ 0.65 $ 0.60 Diluted earnings (loss) per common share $ (1.54 ) $ (0.57 ) $ 0.65 $ 0.60 Cash dividend declared per common share $ 0.29 $ 0.29 $ 0.77 $ 0.77 Book value per share, end of period $ 13.76 $ 14.43 $ 13.76 $ 14.43 Annualized return on average equity (ROE) (41.6 ) % (15.4 ) % 4.6 % 4.1 % UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES SUPPLEMENTARY INFORMATION (in thousands, except for Policies In-Force data) Three Months Ended Twelve Months Ended December 31, December 31, 2021 2020 2021 2020 Premiums Direct premiums written - Florida $ 326,138 $ 302,552 $ 1,388,318 $ 1,250,748 Direct premiums written - Other States 73,189 66,271 282,934 266,731 Direct premiums written - Total $ 399,327 $ 368,823 $ 1,671,252 $ 1,517,479 Direct premiums earned $ 417,817 $ 374,825 $ 1,596,618 $ 1,395,623 Net premiums earned $ 271,332 $ 242,173 $ 1,035,463 $ 923,563 Underwriting Ratios - Net Loss and loss adjustment expense ratio 103.3 % 96.7 % 75.3 % 82.2 % General and administrative expense ratio6 28.1 % 27.3 % 30.2 % 31.4 % Policy acquisition cost ratio 20.6 % 21.5 % 21.8 % 21.6 % Other operating expense ratio6 7.5 % 5.8 % 8.4 % 9.8 % Combined ratio 131.4 % 124.0 % 105.5 % 113.6 % Other Items (Favorable)/Unfavorable prior year reserve development $ 36,467 $ 23,433 $ 54,450 $ 58,337 Points on the loss and loss adjustment expense ratio 13.4 pts 9.7 pts 5.3 pts 6.3 pts 6 Expense ratio excludes interest expense. As of December 31, 2021 2020 Policies in force Florida 695,533 728,211 Other States 248,060 256,619 Total 943,593 984,830 Premiums in force Florida $ 1,395,476 $ 1,252,916 Other States 284,346 267,033 Total 1,679,822 1,519,949 Total Insured Value Florida $ 203,062,948 $ 192,504,430 Other States 117,835,486 109,976,625 Total 320,898,434 302,481,055 Three Months Ended December 31, 2021 Direct Loss Ratio Ceded Loss Ratio Net Loss Ratio Premiums earned $ 417,817 $ 146,485 $ 271,332 Loss and loss adjustment expenses: Core losses $ 215,974 51.7 % $ 1 — % $ 215,973 79.6 % Weather events7 28,000 6.7 % — — % 28,000 10.3 % Prior years’ reserve development 167,802 40.2 % 131,335 89.7 % 36,467 13.4 % Total losses and loss adjustment expenses $ 411,776 98.6 % $ 131,336 89.7 % $ 280,440 103.3 % 7 Includes only current year weather events beyond those expected. Twelve Months Ended December 31, 2021 Direct Loss Ratio Ceded Loss Ratio Net Loss Ratio Premiums earned $ 1,596,618 $ 561,155 $ 1,035,463 Loss and loss adjustment expenses: Core losses $ 696,775 43.6 % $ 20 — % $ 696,755 67.3 % Weather events7 28,000 1.8 % — — % 28,000 2.7 % Prior years’ reserve development 464,669 29.1 % 410,219 73.1 % 54,450 5.3 % Total losses and loss adjustment expenses $ 1,189,444 74.5 % $ 410,239 73.1 % $ 779,205 75.3 % 7 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) Three Months Ended Twelve Months Ended Guidance December 31, December 31, Full Year 2022E 2021 2020 2021 2020 Income (Loss) Before Income Taxes $ (64,461 ) $ (26,999 ) $ 28,413 $ 24,231 Adjustments: Net unrealized (gains)/losses on equity securities 1,008 (2,187 ) 4,032 (25 ) Net realized (gains)/losses on investments (535 ) (9,058 ) (5,892 ) (63,352 ) Interest Expense 555 17 652 102 Total Adjustments 1,028 (11,228 ) (1,208 ) (63,275 ) Non-GAAP Adjusted Operating Income (Loss) $ (63,433 ) $ (38,227 ) $ 27,205 $ (39,044 ) GAAP Diluted EPS $ (1.54 ) $ (0.57 ) $ 0.65 $ 0.60 $1.80 - $2.20 Adjustments: Net unrealized (gains)/losses on equity securities 0.03 (0.07 ) 0.13 — Net realized (gains)/losses on investments (0.02 ) (0.29 ) (0.19 ) (1.98 ) Total Pre-Tax Adjustments 0.01 (0.36 ) (0.06 ) (1.98 ) Income Tax on Above Adjustments — 0.09 0.02 0.48 Total Adjustments 0.01 (0.27 ) (0.04 ) (1.50 ) Non-GAAP Adjusted EPS $ (1.53 ) $ (0.84 ) $ 0.61 $ (0.90 ) $1.80 - $2.20 8 Includes reinstatement premiums not covered by reinstatement premium protection and related commissions. View source version on businesswire.com: https://www.businesswire.com/news/home/20220224005457/en/ We continue to sharpen our pencils on our 2022 Florida primary rate filing in the coming months and are hitting the ground running on our reinsurance renewal, with over 77% of capacity on our first event All States tower already secured. Contacts Investor Relations Contact: Rob Luther, 954-892-6487 VP, Corporate Development, Strategy & IR rluther@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 Insurance Holdings Reports Fourth Quarter 2021 Results By: Universal Insurance Holdings via Business Wire February 24, 2022 at 16:15 PM EST 4Q21 direct premiums earned up 11.5%; FY21 up 14.4% driven by primary rate increases 4Q21 diluted GAAP earnings per share (EPS) of $(1.54), non-GAAP adjusted EPS1 of $(1.53) predominantly driven by inflationary trends FY21 diluted GAAP EPS of $0.65, non-GAAP adjusted EPS1 of $0.61 Clovered.com, our digital agency subsidiary surpassed $40 million in placed premiums in 2021 4Q21 completed private placement of $100 million senior unsecured notes Universal Insurance Holdings (NYSE: UVE) (the “Company”) reported fourth quarter and full year 2021 results. 1 Excludes net realized and unrealized gains and losses on investments as well as extraordinary reinstatement premiums and associated commissions (“non-GAAP adjusted EPS”). Reconciliations of GAAP to non-GAAP financial measures are provided in the attached tables. “We ended the year with a record of approximately $1.7 billion of premiums in force and a return on average equity of 4.6%, despite the accelerated inflationary trends we announced on February 10th, which resulted in the Company increasing reserves,” said Stephen J. Donaghy, Chief Executive Officer. “Additionally, Clovered.com, our digital agency subsidiary surpassed $40 million in placed premiums during 2021. The lion’s share of our approved rate filings for UPCIC in Florida over the past several quarters for new and renewal business are now effective. We continue to sharpen our pencils on our 2022 Florida primary rate filing in the coming months and are hitting the ground running on our reinsurance renewal, with over 77% of capacity on our first event All States tower already secured. We look forward to continuing to focus on resiliency through this cycle and are monitoring closely the actions in the Florida legislature in regards to several bills, including SB1728, SB1402 and SB186, amongst others.” Summary Financial Results ($thousands, except per share data) Three Months Ended December 31, Twelve Months Ended December 31, 2021 2020 Change 2021 2020 Change (GAAP comparison) Total revenue $ 292,659 $ 273,126 7.2 % $ 1,121,851 $ 1,072,770 4.6 % Income (loss) before income taxes (64,461 ) (26,999 ) (138.8 ) % 28,413 24,231 17.3 % Income (loss) before income taxes margin (22.0 ) % (9.9 ) % (12.1) pts 2.5 % 2.3 % 20 bps Diluted EPS (1.54 ) (0.57 ) (170.2 ) % 0.65 0.60 8.3 % Annualized return on average equity (ROE) (41.6 ) % (15.4 ) % (26.2) pts 4.6 % 4.1 % 50 bps Book value per share, end of period 13.76 14.43 (4.6 ) % 13.76 14.43 (4.6 ) % (Non-GAAP comparison)2 Adjusted operating income (63,433 ) (38,227 ) (65.9 ) % 27,205 (39,044 ) NM Adjusted EPS (1.53 ) (0.84 ) (82.1 ) % 0.61 (0.90 ) NM 2 Reconciliation of GAAP to non-GAAP financial measures are provided in the attached tables. Adjusted operating income excludes net realized and unrealized gains and losses on investments, interest expense, and extraordinary reinstatement premiums and associated commissions. Non-GAAP adjusted EPS excludes net realized and unrealized gains and losses on investments, as well as extraordinary reinstatement premiums and associated commissions. NM = Not Meaningful Total revenue grew 7.2% for the quarter and 4.6% for the year, driven primarily by growth in net premiums earned from primary rate increases, partially offset, primarily by lower policies-in-force, and lower realized gains on the investment portfolio, and increased reinsurance costs. GAAP diluted EPS and non-GAAP adjusted EPS results for the quarter and the year benefited from continued primary rate increases earnings-in, but were predominantly impacted by strengthening of reserves due to inflationary trends and a reduction in realized gains on the investment portfolio when compared to the prior year period. Underwriting ($thousands, except policies in force) Three Months Ended December 31, Twelve Months Ended December 31, 2021 2020 Change 2021 2020 Change Policies in force (as of end of period) 943,593 984,830 (4.2 )% 943,593 984,830 (4.2 )% Premiums in force (as of end of period) $ 1,679,822 $ 1,519,949 10.5 % $ 1,679,822 $ 1,519,949 10.5 % Direct premiums written 399,327 368,823 8.3 % 1,671,252 1,517,479 10.1 % Direct premiums earned 417,817 374,825 11.5 % 1,596,618 1,395,623 14.4 % Net premiums earned 271,332 242,173 12.0 % 1,035,463 923,563 12.1 % Expense ratio3 28.1 % 27.3 % 80 bps 30.2 % 31.4 % (1.2) pts Loss & LAE ratio 103.3 % 96.7 % 6.6 pts 75.3 % 82.2 % (6.9) pts Combined ratio 131.4 % 124.0 % 7.4 pts 105.5 % 113.6 % (8.1) pts 3 Expense ratio excludes interest expense. Direct premiums earned were up 11.5% for the quarter, and 14.4% for the year, led by primary rate increases in Florida and other states, while policies-in-force declined 4.2% as a result of continuing to shape our underwriting risks. On the expense side, the combined ratio increased 7.4 points for the quarter driven primarily by strengthening reserves for the full accident year 2021 as a result of inflationary pressures and increased reinsurance costs impact on the ratio. For the full year, the combined ratio improved 8.1 points as a result of decreased weather events in 2021, lower prior years’ adverse reserve development, and continued business expense management. The expense ratio increased 50 basis points on a direct premiums earned basis for the quarter. For the year, the expense ratio improved 1.2 points on a direct premiums earned basis due to business expense management, including a reduction in agent commissions, advertising, and lower executive compensation, as well as primary rate increases impact on the ratio. The net loss and loss adjustment expense ratio increased 6.6 points for the quarter, but improved 6.9 points for the year. Quarterly and full year drivers for 2021 include: Core losses of $216.0 million for the quarter ($134.5 million in 4Q20) and $696.8 million for the year ($538.5 million in 2020) resulted in a 15.8 point increase on a direct premiums earned basis for the quarter and a 5.0 point increase for the year, primarily driven by accruing incremental reserves as a result of materials, labor, and social inflation. On a net basis, core losses increased 24.0 points for the quarter and 9.0 points for the year. A 21.1 point net improvement for the quarter and a 14.9 point net improvement for the year related to weather events being more in line with plan. Net prior years’ adverse reserve development of $36.5 million for the quarter ($23.4 million in 4Q20) and $54.5 million for the year ($58.3 million in 2020) resulted in a 3.7 point net increase for the quarter and a 1.0 point net improvement for the year. The net prior years’ adverse reserve development for the year was primarily driven by Non-CAT claims, and to a lesser extent Hurricane Irma related claims. Services ($thousands) Three Months Ended December 31, Twelve Months Ended December 31, 2021 2020 Change 2021 2020 Change Commission revenue $ 11,245 $ 9,393 19.7 % $ 41,649 $ 33,163 25.6 % Policy fees 4,892 5,520 (11.4 ) % 22,713 23,773 (4.5 ) % Other revenue 1,769 1,972 (10.3 ) % 7,631 8,501 (10.2 ) % Total $ 17,906 $ 16,885 6.0 % $ 71,993 $ 65,437 10.0 % Total services revenue increased 6.0% for the quarter and 10.0% for the full year. The increases were driven by commission revenue earned on ceded premiums, partially offset by a decrease in policies fees due to a decrease in volume and other revenue. Investments ($thousands) Three Months Ended December 31, Twelve Months Ended December 31, 2021 2020 Change 2021 2020 Change Net investment income $ 3,894 $ 2,823 37.9 % $ 12,535 $ 20,393 (38.5 ) % Realized gains (losses) 535 9,058 (94.1 ) % 5,892 63,352 (90.7 ) % Unrealized gains (losses) (1,008 ) 2,187 NM (4,032 ) 25 NM NM = Not Meaningful Net investment income increased 37.9% for the quarter, primarily due to higher levels of invested assets. For the full year, net investment income decreased 38.5% as well as a significant decline in realized gains for the quarter and full year. The declines are the result of the sale, and subsequent reinvestment at lower yields, of a majority of securities in the portfolio that were in an unrealized gain position in the third and fourth quarters of 2020 to recognize the fair value benefits in surplus. Unrealized losses for the quarter and for the full year were driven by market fluctuations in invested assets resulting in an unfavorable outcome for the quarter and the full year. Capital Deployment For the full year, the Company repurchased approximately 117 thousand shares at an aggregate cost of $1.6 million. The Company’s current share repurchase authorization program has $17.8 million remaining as of December 31, 2021 and runs through November 3, 2022. During the fourth quarter the Board of Directors declared a quarterly regular and special cash dividend, together totaling 29 cents per share of common stock, which was paid on December 17, 2021, to shareholders of record as of the close of business on December 10, 2021. This marked more than 10 consecutive years declaring a fourth quarter special dividend. The 29 cents per share dividend consists of a regular quarterly cash dividend of 16 cents per share and a special cash dividend of 13 cents per share, bringing the total regular and special dividends declared in 2021 to 77 cents per share. Guidance Universal initiated the following guidance for fiscal 2022: GAAP and Non-GAAP Adjusted EPS in a range of $1.80 - $2.20 (assuming no extraordinary weather events in 2022) Annualized return on average equity in a range of 12.5% - 15.0% Conference Call and Webcast Friday, February 25, 2022 at 9:00 a.m. ET U.S. Dial-in Number: (855) 752-6647 International: (503) 343-6667 Participant code: 7899332 Listen to live webcast: UniversalInsuranceHoldings.com Replay of the call will be available on the UVE website and by phone at (855) 859-2056 or internationally at (404) 537-3406 using the participant code: 7899332 through March 12, 2022 About Universal Insurance Holdings, Inc. Universal Insurance Holdings (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 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 adjusted earnings per diluted share, which excludes the impact of the net realized and unrealized gains and losses on investments as well as extraordinary reinstatement premiums and associated commissions. Extraordinary reinstatement premiums are not covered by reinstatement premium protection and attach just below the Florida Hurricane Catastrophe Fund (“FHCF”) reinsurance layer. Adjusted operating income excludes the impact of the net realized and unrealized gains and losses on investments, as well as interest expense and extraordinary reinstatement premiums and associated commissions. 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, when considered together with the GAAP financial measures, 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 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 Annual Report on Form 10-K for the year ended December 31, 2021. 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) December 31, December 31, 2021 2020 ASSETS Invested Assets Fixed maturities, at fair value $ 1,040,455 $ 819,861 Equity securities, at fair value 47,334 84,887 Investment real estate, net 5,891 15,176 Total invested assets 1,093,680 919,924 Cash and cash equivalents 250,508 167,156 Restricted cash and cash equivalents 2,635 12,715 Prepaid reinsurance premiums 240,993 215,723 Reinsurance recoverable 185,589 160,417 Premiums receivable, net 64,923 66,883 Property and equipment, net 53,682 53,572 Deferred policy acquisition costs 108,822 110,614 Goodwill 2,319 2,319 Other assets 52,990 49,418 TOTAL ASSETS $ 2,056,141 $ 1,758,741 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: Unpaid losses and loss adjustment expenses $ 346,216 $ 322,465 Unearned premiums 857,769 783,135 Advance premium 53,694 49,562 Reinsurance payable, net 188,662 10,312 Long-term debt, net 103,676 8,456 Other liabilities 76,422 135,549 Total liabilities 1,626,439 1,309,479 STOCKHOLDERS' EQUITY: Cumulative convertible preferred stock ($0.01 par value)4 — — Common stock ($0.01 par value)5 470 468 Treasury shares, at cost - 15,797 and 15,680 (227,115 ) (225,506 ) Additional paid-in capital 108,202 103,445 Accumulated other comprehensive income (loss), net of taxes (15,568 ) 3,343 Retained earnings 563,713 567,512 Total stockholders' equity 429,702 449,262 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,056,141 $ 1,758,741 Notes: 4 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. 5 Common stock ($0.01 par value): Authorized - 55,000 shares; Issued - 47,018 and 46,817 shares; Outstanding - 31,221 and 31,137 shares. UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED) (in thousands) Three Months Ended Twelve Months Ended December 31, December 31, 2021 2020 2021 2020 REVENUES Net premiums earned $ 271,332 $ 242,173 $ 1,035,463 $ 923,563 Net investment income 3,894 2,823 12,535 20,393 Net realized gains (losses) on sale of investments 535 9,058 5,892 63,352 Net change in unrealized gains (losses) of equity securities (1,008 ) 2,187 (4,032 ) 25 Commission revenue 11,245 9,393 41,649 33,163 Policy fees 4,892 5,520 22,713 23,773 Other revenue 1,769 1,972 7,631 8,501 Total revenues 292,659 273,126 1,121,851 1,072,770 EXPENSES Losses and loss adjustment expenses 280,440 233,940 779,205 758,810 Policy acquisition costs 55,880 52,120 226,167 199,102 Other operating expenses 20,245 14,048 87,414 90,525 Interest expense 555 17 652 102 Total expenses 357,120 300,125 1,093,438 1,048,539 Income (loss) before income tax expense (64,461 ) (26,999 ) 28,413 24,231 Income tax expense (benefit) (16,336 ) (9,324 ) 8,006 5,126 NET INCOME (LOSS) $ (48,125 ) $ (17,675 ) $ 20,407 $ 19,105 UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES SHARE AND PER SHARE INFORMATION (in thousands, except per share data) Three Months Ended Twelve Months Ended December 31, December 31, 2021 2020 2021 2020 Weighted average common shares outstanding - basic 31,177 31,193 31,218 31,884 Weighted average common shares outstanding - diluted 31,177 31,295 31,307 31,972 Shares outstanding, end of period 31,221 31,137 31,221 31,137 Basic earnings (loss) per common share $ (1.54 ) $ (0.57 ) $ 0.65 $ 0.60 Diluted earnings (loss) per common share $ (1.54 ) $ (0.57 ) $ 0.65 $ 0.60 Cash dividend declared per common share $ 0.29 $ 0.29 $ 0.77 $ 0.77 Book value per share, end of period $ 13.76 $ 14.43 $ 13.76 $ 14.43 Annualized return on average equity (ROE) (41.6 ) % (15.4 ) % 4.6 % 4.1 % UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES SUPPLEMENTARY INFORMATION (in thousands, except for Policies In-Force data) Three Months Ended Twelve Months Ended December 31, December 31, 2021 2020 2021 2020 Premiums Direct premiums written - Florida $ 326,138 $ 302,552 $ 1,388,318 $ 1,250,748 Direct premiums written - Other States 73,189 66,271 282,934 266,731 Direct premiums written - Total $ 399,327 $ 368,823 $ 1,671,252 $ 1,517,479 Direct premiums earned $ 417,817 $ 374,825 $ 1,596,618 $ 1,395,623 Net premiums earned $ 271,332 $ 242,173 $ 1,035,463 $ 923,563 Underwriting Ratios - Net Loss and loss adjustment expense ratio 103.3 % 96.7 % 75.3 % 82.2 % General and administrative expense ratio6 28.1 % 27.3 % 30.2 % 31.4 % Policy acquisition cost ratio 20.6 % 21.5 % 21.8 % 21.6 % Other operating expense ratio6 7.5 % 5.8 % 8.4 % 9.8 % Combined ratio 131.4 % 124.0 % 105.5 % 113.6 % Other Items (Favorable)/Unfavorable prior year reserve development $ 36,467 $ 23,433 $ 54,450 $ 58,337 Points on the loss and loss adjustment expense ratio 13.4 pts 9.7 pts 5.3 pts 6.3 pts 6 Expense ratio excludes interest expense. As of December 31, 2021 2020 Policies in force Florida 695,533 728,211 Other States 248,060 256,619 Total 943,593 984,830 Premiums in force Florida $ 1,395,476 $ 1,252,916 Other States 284,346 267,033 Total 1,679,822 1,519,949 Total Insured Value Florida $ 203,062,948 $ 192,504,430 Other States 117,835,486 109,976,625 Total 320,898,434 302,481,055 Three Months Ended December 31, 2021 Direct Loss Ratio Ceded Loss Ratio Net Loss Ratio Premiums earned $ 417,817 $ 146,485 $ 271,332 Loss and loss adjustment expenses: Core losses $ 215,974 51.7 % $ 1 — % $ 215,973 79.6 % Weather events7 28,000 6.7 % — — % 28,000 10.3 % Prior years’ reserve development 167,802 40.2 % 131,335 89.7 % 36,467 13.4 % Total losses and loss adjustment expenses $ 411,776 98.6 % $ 131,336 89.7 % $ 280,440 103.3 % 7 Includes only current year weather events beyond those expected. Twelve Months Ended December 31, 2021 Direct Loss Ratio Ceded Loss Ratio Net Loss Ratio Premiums earned $ 1,596,618 $ 561,155 $ 1,035,463 Loss and loss adjustment expenses: Core losses $ 696,775 43.6 % $ 20 — % $ 696,755 67.3 % Weather events7 28,000 1.8 % — — % 28,000 2.7 % Prior years’ reserve development 464,669 29.1 % 410,219 73.1 % 54,450 5.3 % Total losses and loss adjustment expenses $ 1,189,444 74.5 % $ 410,239 73.1 % $ 779,205 75.3 % 7 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) Three Months Ended Twelve Months Ended Guidance December 31, December 31, Full Year 2022E 2021 2020 2021 2020 Income (Loss) Before Income Taxes $ (64,461 ) $ (26,999 ) $ 28,413 $ 24,231 Adjustments: Net unrealized (gains)/losses on equity securities 1,008 (2,187 ) 4,032 (25 ) Net realized (gains)/losses on investments (535 ) (9,058 ) (5,892 ) (63,352 ) Interest Expense 555 17 652 102 Total Adjustments 1,028 (11,228 ) (1,208 ) (63,275 ) Non-GAAP Adjusted Operating Income (Loss) $ (63,433 ) $ (38,227 ) $ 27,205 $ (39,044 ) GAAP Diluted EPS $ (1.54 ) $ (0.57 ) $ 0.65 $ 0.60 $1.80 - $2.20 Adjustments: Net unrealized (gains)/losses on equity securities 0.03 (0.07 ) 0.13 — Net realized (gains)/losses on investments (0.02 ) (0.29 ) (0.19 ) (1.98 ) Total Pre-Tax Adjustments 0.01 (0.36 ) (0.06 ) (1.98 ) Income Tax on Above Adjustments — 0.09 0.02 0.48 Total Adjustments 0.01 (0.27 ) (0.04 ) (1.50 ) Non-GAAP Adjusted EPS $ (1.53 ) $ (0.84 ) $ 0.61 $ (0.90 ) $1.80 - $2.20 8 Includes reinstatement premiums not covered by reinstatement premium protection and related commissions. View source version on businesswire.com: https://www.businesswire.com/news/home/20220224005457/en/ We continue to sharpen our pencils on our 2022 Florida primary rate filing in the coming months and are hitting the ground running on our reinsurance renewal, with over 77% of capacity on our first event All States tower already secured. Contacts Investor Relations Contact: Rob Luther, 954-892-6487 VP, Corporate Development, Strategy & IR rluther@universalproperty.com
4Q21 direct premiums earned up 11.5%; FY21 up 14.4% driven by primary rate increases 4Q21 diluted GAAP earnings per share (EPS) of $(1.54), non-GAAP adjusted EPS1 of $(1.53) predominantly driven by inflationary trends FY21 diluted GAAP EPS of $0.65, non-GAAP adjusted EPS1 of $0.61 Clovered.com, our digital agency subsidiary surpassed $40 million in placed premiums in 2021 4Q21 completed private placement of $100 million senior unsecured notes
Universal Insurance Holdings (NYSE: UVE) (the “Company”) reported fourth quarter and full year 2021 results. 1 Excludes net realized and unrealized gains and losses on investments as well as extraordinary reinstatement premiums and associated commissions (“non-GAAP adjusted EPS”). Reconciliations of GAAP to non-GAAP financial measures are provided in the attached tables. “We ended the year with a record of approximately $1.7 billion of premiums in force and a return on average equity of 4.6%, despite the accelerated inflationary trends we announced on February 10th, which resulted in the Company increasing reserves,” said Stephen J. Donaghy, Chief Executive Officer. “Additionally, Clovered.com, our digital agency subsidiary surpassed $40 million in placed premiums during 2021. The lion’s share of our approved rate filings for UPCIC in Florida over the past several quarters for new and renewal business are now effective. We continue to sharpen our pencils on our 2022 Florida primary rate filing in the coming months and are hitting the ground running on our reinsurance renewal, with over 77% of capacity on our first event All States tower already secured. We look forward to continuing to focus on resiliency through this cycle and are monitoring closely the actions in the Florida legislature in regards to several bills, including SB1728, SB1402 and SB186, amongst others.” Summary Financial Results ($thousands, except per share data) Three Months Ended December 31, Twelve Months Ended December 31, 2021 2020 Change 2021 2020 Change (GAAP comparison) Total revenue $ 292,659 $ 273,126 7.2 % $ 1,121,851 $ 1,072,770 4.6 % Income (loss) before income taxes (64,461 ) (26,999 ) (138.8 ) % 28,413 24,231 17.3 % Income (loss) before income taxes margin (22.0 ) % (9.9 ) % (12.1) pts 2.5 % 2.3 % 20 bps Diluted EPS (1.54 ) (0.57 ) (170.2 ) % 0.65 0.60 8.3 % Annualized return on average equity (ROE) (41.6 ) % (15.4 ) % (26.2) pts 4.6 % 4.1 % 50 bps Book value per share, end of period 13.76 14.43 (4.6 ) % 13.76 14.43 (4.6 ) % (Non-GAAP comparison)2 Adjusted operating income (63,433 ) (38,227 ) (65.9 ) % 27,205 (39,044 ) NM Adjusted EPS (1.53 ) (0.84 ) (82.1 ) % 0.61 (0.90 ) NM 2 Reconciliation of GAAP to non-GAAP financial measures are provided in the attached tables. Adjusted operating income excludes net realized and unrealized gains and losses on investments, interest expense, and extraordinary reinstatement premiums and associated commissions. Non-GAAP adjusted EPS excludes net realized and unrealized gains and losses on investments, as well as extraordinary reinstatement premiums and associated commissions. NM = Not Meaningful Total revenue grew 7.2% for the quarter and 4.6% for the year, driven primarily by growth in net premiums earned from primary rate increases, partially offset, primarily by lower policies-in-force, and lower realized gains on the investment portfolio, and increased reinsurance costs. GAAP diluted EPS and non-GAAP adjusted EPS results for the quarter and the year benefited from continued primary rate increases earnings-in, but were predominantly impacted by strengthening of reserves due to inflationary trends and a reduction in realized gains on the investment portfolio when compared to the prior year period. Underwriting ($thousands, except policies in force) Three Months Ended December 31, Twelve Months Ended December 31, 2021 2020 Change 2021 2020 Change Policies in force (as of end of period) 943,593 984,830 (4.2 )% 943,593 984,830 (4.2 )% Premiums in force (as of end of period) $ 1,679,822 $ 1,519,949 10.5 % $ 1,679,822 $ 1,519,949 10.5 % Direct premiums written 399,327 368,823 8.3 % 1,671,252 1,517,479 10.1 % Direct premiums earned 417,817 374,825 11.5 % 1,596,618 1,395,623 14.4 % Net premiums earned 271,332 242,173 12.0 % 1,035,463 923,563 12.1 % Expense ratio3 28.1 % 27.3 % 80 bps 30.2 % 31.4 % (1.2) pts Loss & LAE ratio 103.3 % 96.7 % 6.6 pts 75.3 % 82.2 % (6.9) pts Combined ratio 131.4 % 124.0 % 7.4 pts 105.5 % 113.6 % (8.1) pts 3 Expense ratio excludes interest expense. Direct premiums earned were up 11.5% for the quarter, and 14.4% for the year, led by primary rate increases in Florida and other states, while policies-in-force declined 4.2% as a result of continuing to shape our underwriting risks. On the expense side, the combined ratio increased 7.4 points for the quarter driven primarily by strengthening reserves for the full accident year 2021 as a result of inflationary pressures and increased reinsurance costs impact on the ratio. For the full year, the combined ratio improved 8.1 points as a result of decreased weather events in 2021, lower prior years’ adverse reserve development, and continued business expense management. The expense ratio increased 50 basis points on a direct premiums earned basis for the quarter. For the year, the expense ratio improved 1.2 points on a direct premiums earned basis due to business expense management, including a reduction in agent commissions, advertising, and lower executive compensation, as well as primary rate increases impact on the ratio. The net loss and loss adjustment expense ratio increased 6.6 points for the quarter, but improved 6.9 points for the year. Quarterly and full year drivers for 2021 include: Core losses of $216.0 million for the quarter ($134.5 million in 4Q20) and $696.8 million for the year ($538.5 million in 2020) resulted in a 15.8 point increase on a direct premiums earned basis for the quarter and a 5.0 point increase for the year, primarily driven by accruing incremental reserves as a result of materials, labor, and social inflation. On a net basis, core losses increased 24.0 points for the quarter and 9.0 points for the year. A 21.1 point net improvement for the quarter and a 14.9 point net improvement for the year related to weather events being more in line with plan. Net prior years’ adverse reserve development of $36.5 million for the quarter ($23.4 million in 4Q20) and $54.5 million for the year ($58.3 million in 2020) resulted in a 3.7 point net increase for the quarter and a 1.0 point net improvement for the year. The net prior years’ adverse reserve development for the year was primarily driven by Non-CAT claims, and to a lesser extent Hurricane Irma related claims. Services ($thousands) Three Months Ended December 31, Twelve Months Ended December 31, 2021 2020 Change 2021 2020 Change Commission revenue $ 11,245 $ 9,393 19.7 % $ 41,649 $ 33,163 25.6 % Policy fees 4,892 5,520 (11.4 ) % 22,713 23,773 (4.5 ) % Other revenue 1,769 1,972 (10.3 ) % 7,631 8,501 (10.2 ) % Total $ 17,906 $ 16,885 6.0 % $ 71,993 $ 65,437 10.0 % Total services revenue increased 6.0% for the quarter and 10.0% for the full year. The increases were driven by commission revenue earned on ceded premiums, partially offset by a decrease in policies fees due to a decrease in volume and other revenue. Investments ($thousands) Three Months Ended December 31, Twelve Months Ended December 31, 2021 2020 Change 2021 2020 Change Net investment income $ 3,894 $ 2,823 37.9 % $ 12,535 $ 20,393 (38.5 ) % Realized gains (losses) 535 9,058 (94.1 ) % 5,892 63,352 (90.7 ) % Unrealized gains (losses) (1,008 ) 2,187 NM (4,032 ) 25 NM NM = Not Meaningful Net investment income increased 37.9% for the quarter, primarily due to higher levels of invested assets. For the full year, net investment income decreased 38.5% as well as a significant decline in realized gains for the quarter and full year. The declines are the result of the sale, and subsequent reinvestment at lower yields, of a majority of securities in the portfolio that were in an unrealized gain position in the third and fourth quarters of 2020 to recognize the fair value benefits in surplus. Unrealized losses for the quarter and for the full year were driven by market fluctuations in invested assets resulting in an unfavorable outcome for the quarter and the full year. Capital Deployment For the full year, the Company repurchased approximately 117 thousand shares at an aggregate cost of $1.6 million. The Company’s current share repurchase authorization program has $17.8 million remaining as of December 31, 2021 and runs through November 3, 2022. During the fourth quarter the Board of Directors declared a quarterly regular and special cash dividend, together totaling 29 cents per share of common stock, which was paid on December 17, 2021, to shareholders of record as of the close of business on December 10, 2021. This marked more than 10 consecutive years declaring a fourth quarter special dividend. The 29 cents per share dividend consists of a regular quarterly cash dividend of 16 cents per share and a special cash dividend of 13 cents per share, bringing the total regular and special dividends declared in 2021 to 77 cents per share. Guidance Universal initiated the following guidance for fiscal 2022: GAAP and Non-GAAP Adjusted EPS in a range of $1.80 - $2.20 (assuming no extraordinary weather events in 2022) Annualized return on average equity in a range of 12.5% - 15.0% Conference Call and Webcast Friday, February 25, 2022 at 9:00 a.m. ET U.S. Dial-in Number: (855) 752-6647 International: (503) 343-6667 Participant code: 7899332 Listen to live webcast: UniversalInsuranceHoldings.com Replay of the call will be available on the UVE website and by phone at (855) 859-2056 or internationally at (404) 537-3406 using the participant code: 7899332 through March 12, 2022 About Universal Insurance Holdings, Inc. Universal Insurance Holdings (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 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 adjusted earnings per diluted share, which excludes the impact of the net realized and unrealized gains and losses on investments as well as extraordinary reinstatement premiums and associated commissions. Extraordinary reinstatement premiums are not covered by reinstatement premium protection and attach just below the Florida Hurricane Catastrophe Fund (“FHCF”) reinsurance layer. Adjusted operating income excludes the impact of the net realized and unrealized gains and losses on investments, as well as interest expense and extraordinary reinstatement premiums and associated commissions. 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, when considered together with the GAAP financial measures, 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 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 Annual Report on Form 10-K for the year ended December 31, 2021. 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) December 31, December 31, 2021 2020 ASSETS Invested Assets Fixed maturities, at fair value $ 1,040,455 $ 819,861 Equity securities, at fair value 47,334 84,887 Investment real estate, net 5,891 15,176 Total invested assets 1,093,680 919,924 Cash and cash equivalents 250,508 167,156 Restricted cash and cash equivalents 2,635 12,715 Prepaid reinsurance premiums 240,993 215,723 Reinsurance recoverable 185,589 160,417 Premiums receivable, net 64,923 66,883 Property and equipment, net 53,682 53,572 Deferred policy acquisition costs 108,822 110,614 Goodwill 2,319 2,319 Other assets 52,990 49,418 TOTAL ASSETS $ 2,056,141 $ 1,758,741 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: Unpaid losses and loss adjustment expenses $ 346,216 $ 322,465 Unearned premiums 857,769 783,135 Advance premium 53,694 49,562 Reinsurance payable, net 188,662 10,312 Long-term debt, net 103,676 8,456 Other liabilities 76,422 135,549 Total liabilities 1,626,439 1,309,479 STOCKHOLDERS' EQUITY: Cumulative convertible preferred stock ($0.01 par value)4 — — Common stock ($0.01 par value)5 470 468 Treasury shares, at cost - 15,797 and 15,680 (227,115 ) (225,506 ) Additional paid-in capital 108,202 103,445 Accumulated other comprehensive income (loss), net of taxes (15,568 ) 3,343 Retained earnings 563,713 567,512 Total stockholders' equity 429,702 449,262 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,056,141 $ 1,758,741 Notes: 4 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. 5 Common stock ($0.01 par value): Authorized - 55,000 shares; Issued - 47,018 and 46,817 shares; Outstanding - 31,221 and 31,137 shares. UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED) (in thousands) Three Months Ended Twelve Months Ended December 31, December 31, 2021 2020 2021 2020 REVENUES Net premiums earned $ 271,332 $ 242,173 $ 1,035,463 $ 923,563 Net investment income 3,894 2,823 12,535 20,393 Net realized gains (losses) on sale of investments 535 9,058 5,892 63,352 Net change in unrealized gains (losses) of equity securities (1,008 ) 2,187 (4,032 ) 25 Commission revenue 11,245 9,393 41,649 33,163 Policy fees 4,892 5,520 22,713 23,773 Other revenue 1,769 1,972 7,631 8,501 Total revenues 292,659 273,126 1,121,851 1,072,770 EXPENSES Losses and loss adjustment expenses 280,440 233,940 779,205 758,810 Policy acquisition costs 55,880 52,120 226,167 199,102 Other operating expenses 20,245 14,048 87,414 90,525 Interest expense 555 17 652 102 Total expenses 357,120 300,125 1,093,438 1,048,539 Income (loss) before income tax expense (64,461 ) (26,999 ) 28,413 24,231 Income tax expense (benefit) (16,336 ) (9,324 ) 8,006 5,126 NET INCOME (LOSS) $ (48,125 ) $ (17,675 ) $ 20,407 $ 19,105 UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES SHARE AND PER SHARE INFORMATION (in thousands, except per share data) Three Months Ended Twelve Months Ended December 31, December 31, 2021 2020 2021 2020 Weighted average common shares outstanding - basic 31,177 31,193 31,218 31,884 Weighted average common shares outstanding - diluted 31,177 31,295 31,307 31,972 Shares outstanding, end of period 31,221 31,137 31,221 31,137 Basic earnings (loss) per common share $ (1.54 ) $ (0.57 ) $ 0.65 $ 0.60 Diluted earnings (loss) per common share $ (1.54 ) $ (0.57 ) $ 0.65 $ 0.60 Cash dividend declared per common share $ 0.29 $ 0.29 $ 0.77 $ 0.77 Book value per share, end of period $ 13.76 $ 14.43 $ 13.76 $ 14.43 Annualized return on average equity (ROE) (41.6 ) % (15.4 ) % 4.6 % 4.1 % UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES SUPPLEMENTARY INFORMATION (in thousands, except for Policies In-Force data) Three Months Ended Twelve Months Ended December 31, December 31, 2021 2020 2021 2020 Premiums Direct premiums written - Florida $ 326,138 $ 302,552 $ 1,388,318 $ 1,250,748 Direct premiums written - Other States 73,189 66,271 282,934 266,731 Direct premiums written - Total $ 399,327 $ 368,823 $ 1,671,252 $ 1,517,479 Direct premiums earned $ 417,817 $ 374,825 $ 1,596,618 $ 1,395,623 Net premiums earned $ 271,332 $ 242,173 $ 1,035,463 $ 923,563 Underwriting Ratios - Net Loss and loss adjustment expense ratio 103.3 % 96.7 % 75.3 % 82.2 % General and administrative expense ratio6 28.1 % 27.3 % 30.2 % 31.4 % Policy acquisition cost ratio 20.6 % 21.5 % 21.8 % 21.6 % Other operating expense ratio6 7.5 % 5.8 % 8.4 % 9.8 % Combined ratio 131.4 % 124.0 % 105.5 % 113.6 % Other Items (Favorable)/Unfavorable prior year reserve development $ 36,467 $ 23,433 $ 54,450 $ 58,337 Points on the loss and loss adjustment expense ratio 13.4 pts 9.7 pts 5.3 pts 6.3 pts 6 Expense ratio excludes interest expense. As of December 31, 2021 2020 Policies in force Florida 695,533 728,211 Other States 248,060 256,619 Total 943,593 984,830 Premiums in force Florida $ 1,395,476 $ 1,252,916 Other States 284,346 267,033 Total 1,679,822 1,519,949 Total Insured Value Florida $ 203,062,948 $ 192,504,430 Other States 117,835,486 109,976,625 Total 320,898,434 302,481,055 Three Months Ended December 31, 2021 Direct Loss Ratio Ceded Loss Ratio Net Loss Ratio Premiums earned $ 417,817 $ 146,485 $ 271,332 Loss and loss adjustment expenses: Core losses $ 215,974 51.7 % $ 1 — % $ 215,973 79.6 % Weather events7 28,000 6.7 % — — % 28,000 10.3 % Prior years’ reserve development 167,802 40.2 % 131,335 89.7 % 36,467 13.4 % Total losses and loss adjustment expenses $ 411,776 98.6 % $ 131,336 89.7 % $ 280,440 103.3 % 7 Includes only current year weather events beyond those expected. Twelve Months Ended December 31, 2021 Direct Loss Ratio Ceded Loss Ratio Net Loss Ratio Premiums earned $ 1,596,618 $ 561,155 $ 1,035,463 Loss and loss adjustment expenses: Core losses $ 696,775 43.6 % $ 20 — % $ 696,755 67.3 % Weather events7 28,000 1.8 % — — % 28,000 2.7 % Prior years’ reserve development 464,669 29.1 % 410,219 73.1 % 54,450 5.3 % Total losses and loss adjustment expenses $ 1,189,444 74.5 % $ 410,239 73.1 % $ 779,205 75.3 % 7 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) Three Months Ended Twelve Months Ended Guidance December 31, December 31, Full Year 2022E 2021 2020 2021 2020 Income (Loss) Before Income Taxes $ (64,461 ) $ (26,999 ) $ 28,413 $ 24,231 Adjustments: Net unrealized (gains)/losses on equity securities 1,008 (2,187 ) 4,032 (25 ) Net realized (gains)/losses on investments (535 ) (9,058 ) (5,892 ) (63,352 ) Interest Expense 555 17 652 102 Total Adjustments 1,028 (11,228 ) (1,208 ) (63,275 ) Non-GAAP Adjusted Operating Income (Loss) $ (63,433 ) $ (38,227 ) $ 27,205 $ (39,044 ) GAAP Diluted EPS $ (1.54 ) $ (0.57 ) $ 0.65 $ 0.60 $1.80 - $2.20 Adjustments: Net unrealized (gains)/losses on equity securities 0.03 (0.07 ) 0.13 — Net realized (gains)/losses on investments (0.02 ) (0.29 ) (0.19 ) (1.98 ) Total Pre-Tax Adjustments 0.01 (0.36 ) (0.06 ) (1.98 ) Income Tax on Above Adjustments — 0.09 0.02 0.48 Total Adjustments 0.01 (0.27 ) (0.04 ) (1.50 ) Non-GAAP Adjusted EPS $ (1.53 ) $ (0.84 ) $ 0.61 $ (0.90 ) $1.80 - $2.20 8 Includes reinstatement premiums not covered by reinstatement premium protection and related commissions. 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We continue to sharpen our pencils on our 2022 Florida primary rate filing in the coming months and are hitting the ground running on our reinsurance renewal, with over 77% of capacity on our first event All States tower already secured.
Investor Relations Contact: Rob Luther, 954-892-6487 VP, Corporate Development, Strategy & IR rluther@universalproperty.com