Universal Reports Third Quarter 2022 Results

  • 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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