PR Newswire
FORT LAUDERDALE, Fla., July 31, 2017
FORT LAUDERDALE, Fla., July 31, 2017 /PRNewswire/ -- Universal Insurance Holdings, Inc. (NYSE: UVE) today reported net income and diluted earnings per share (EPS) of $29.4 million and $0.82, respectively for the second quarter of 2017. For the first six months of 2017, net income was $60.6 million while diluted EPS was $1.68.
Universal Insurance Holdings, Inc. Chairman and Chief Executive Officer Sean P. Downes commented: "Universal reported excellent top line growth during the second quarter, as well as substantial underwriting profit despite an increased volume of severe weather events during the period. Although our bottom line results for the quarter were modestly impacted by these events, we still delivered a 27.9% return on average equity for the second quarter, which is a testament to the fundamental strength of our business model. Universal remains well positioned on all fronts to deliver outstanding value to our shareholders going forward, with a focus on producing profitable and rate-adequate organic growth within Florida and through our Other State expansion efforts, further enhancing our unique direct-to-consumer platform, Universal DirectSM, and continuing to leverage our vertically integrated structure to deliver better service to our policyholders."
Second Quarter 2017 Highlights
Second Quarter 2017 Results
Direct premiums written grew 8.9% from the prior year's quarter to $296.2 million, with 5.6% growth in our Florida book and 42.2% growth in our Other States book. Our organic growth strategy within our home state of Florida remains on track, and our organic geographic expansion efforts within our Other States book continue to produce results. For the quarter, net premiums earned grew 8.0% to $169.0 million. Commission revenue and policy fees each produced double-digit growth, up 10.3% and 10.5% versus the prior year's quarter, respectively, driven by increased premium volume and continued geographic footprint expansion, while other revenue was flat with the prior year's quarter.
The net combined ratio was 81.3% in the second quarter of 2017 compared to 73.4% in the prior year's quarter. The reduction in underwriting profitability was driven by an increase in the loss and loss adjustment expense ratio, partially offset by a reduction in the general and administrative expense ratio.
Net investment income grew by 50.5% from the prior year's quarter to $3.2 million, driven by the increasing size of our investment portfolio, a shift in asset mix, and a reduction in our investment expenses. Net realized investment gains were $1.7 million in the second quarter of 2017, compared to net realized gains of $576 thousand in the prior year's quarter. Total unrestricted cash and invested assets grew to $880.4 million at June 30, 2017 from $826.4 million at March 31, 2017 and $841.7 million at June 30, 2016.
Interest expense was $86 thousand for the second quarter of 2017, down from $106 thousand in the prior year's quarter, as we continue to reduce our level of outstanding debt. Long term debt was $13.6 million as of June 30, 2017 (debt-to-equity of 3.2%), down from $14.0 million at March 31, 2017 (debt-to-equity of 3.5%) and $15.8 million as of June 30, 2016 (debt-to-equity of 4.5%).
The effective tax rate for the second quarter of 2017 was 38.7%, in-line with 38.7% in the prior year's quarter.
During the second quarter, the Company repurchased 254,214 shares for $6.4 million, or an average cost of $25.06 per share. $9.0 million remains on our current repurchase authorization.
Stockholders' equity was $421.1 million at June 30, 2017, growth of 5.6% from March 31, 2017 and 19.8% from June 30, 2016. Book value per common was $12.09 at June 30, 2017, growth of 6.4% from $11.37 at March 31, 2017 or 20.7% from $10.02 at June 30, 2016. Return on Average Common Equity (ROE) was 27.9% for the second quarter of 2017.
On April 12, 2017, the Company announced that its Board of Directors declared a cash dividend of $0.14 per share of common stock paid on July 3, 2017 to shareholders of record on June 14, 2017.
Conference Call
Members of the Universal management team will host a conference call on Tuesday, August 1, 2017 at 10:00 AM ET to discuss second quarter 2017 financial results. Following prepared remarks, management will conduct a question and answer session. The call will be accessible by dialing toll free at (888) 887-7180 or internationally (toll) at (270) 823-1518 using the Conference ID: 57183559. A live audio webcast of the call will also be accessible on the Universal Insurance website at www.universalinsuranceholdings.com. A replay of the call can be accessed toll free at (855) 859-2056 or internationally (toll) at (404) 537-3406 using the Conference ID: 57183559, and will be available through August 16, 2017.
About Universal Insurance Holdings, Inc.
Universal Insurance Holdings, Inc., with its wholly-owned subsidiaries, is a vertically integrated insurance holding company performing all aspects of insurance underwriting, distribution and claims. Universal Property & Casualty Insurance Company (UPCIC), a wholly-owned subsidiary of the Company, is one of the leading writers of homeowners insurance in Florida and is now fully licensed and has commenced its operations in North Carolina, South Carolina, Hawaii, Georgia, Massachusetts, Maryland, Delaware, Indiana, Pennsylvania, Minnesota, Michigan, Alabama, Virginia, and New Jersey. American Platinum Property and Casualty Insurance Company (APPCIC), also a wholly-owned subsidiary, currently writes homeowners multi-peril insurance on Florida homes valued in excess of $1 million, which are limits and coverages currently not targeted through its affiliate UPCIC. APPCIC is additionally licensed and has commenced writing Fire, Commercial Multi-Peril, and Other Liability lines of business in Florida. For additional information on the Company, please visit our investor relations website at www.universalinsuranceholdings.com.
Forward-Looking Statements and Risk Factors
This press release may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "anticipate," and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Such statements may include commentary on plans, products and lines of business, marketing arrangements, reinsurance programs and other business developments and assumptions relating to the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future results could differ materially from those described, and the Company undertakes no obligation to correct or update any forward-looking statements. For further information regarding risk factors that could affect the Company's operations and future results, refer to the Company's reports filed with the Securities and Exchange Commission, including Form 10-K for the year ended December 31, 2016 and Form 10-Q for the quarter ended March 31, 2017.
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES | ||||
CONSOLIDATED BALANCE SHEETS (UNAUDITED) | ||||
(in thousands, except per share data) | ||||
June 30, |
December 31, | |||
2017 |
2016 | |||
ASSETS |
||||
Invested Assets |
||||
Fixed maturities, at fair value |
$ 609,909 |
$ 584,361 | ||
Equity securities, at fair value |
9,927 |
50,803 | ||
Short-term investments, at fair value |
— |
5,002 | ||
Investment real estate, net |
15,104 |
11,435 | ||
Total invested assets |
634,940 |
651,601 | ||
Cash and cash equivalents |
245,495 |
105,730 | ||
Restricted cash and cash equivalents |
2,635 |
2,635 | ||
Prepaid reinsurance premiums |
285,480 |
124,385 | ||
Reinsurance recoverable |
2,711 |
106 | ||
Premiums receivable, net |
64,004 |
53,833 | ||
Property and equipment, net |
33,066 |
32,162 | ||
Deferred policy acquisition costs |
73,591 |
64,912 | ||
Goodwill |
2,319 |
2,319 | ||
Other assets |
25,818 |
22,324 | ||
TOTAL ASSETS |
$ 1,370,059 |
$ 1,060,007 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||
LIABILITIES: |
||||
Unpaid losses and loss adjustment expenses |
$ 22,645 |
$ 58,494 | ||
Unearned premiums |
536,363 |
475,756 | ||
Advance premium |
24,808 |
17,796 | ||
Reinsurance payable, net |
311,897 |
80,891 | ||
Long-term debt |
13,603 |
15,028 | ||
Other liabilities |
39,675 |
40,852 | ||
Total liabilities |
948,991 |
688,817 | ||
STOCKHOLDERS' EQUITY: |
||||
Cumulative convertible preferred stock ($0.01 par value) 1 |
— |
— | ||
Common stock ($0.01 par value) 2 |
454 |
453 | ||
Treasury shares, at cost - 10,626 and 10,272 |
(95,901) |
(86,982) | ||
Additional paid-in capital |
86,358 |
82,263 | ||
Accumulated other comprehensive income (loss), net of taxes |
(2,458) |
(6,408) | ||
Retained earnings |
432,615 |
381,864 | ||
Total stockholders' equity |
421,068 |
371,190 | ||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ 1,370,059 |
$ 1,060,007 | ||
Notes: |
||||
1 - 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. | ||||
2 - Common stock ($0.01 par value): Authorized - 55,000 shares; Issued - 45,447 and 45,324 shares; Outstanding 34,821 and 35,052 shares. |
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES | |||||||||
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | |||||||||
(in thousands) | |||||||||
Three Months Ended |
Six Months Ended | ||||||||
June 30, |
June 30, | ||||||||
2017 |
2016 |
2017 |
2016 | ||||||
REVENUES |
|||||||||
Net premiums earned |
$ 169,009 |
$ 156,461 |
$ 330,568 |
$ 308,909 | |||||
Net investment income |
3,223 |
2,142 |
5,927 |
3,747 | |||||
Net realized gains/(losses) on investments |
1,710 |
576 |
1,647 |
1,243 | |||||
Commission revenue |
4,644 |
4,210 |
9,242 |
8,323 | |||||
Policy fees |
5,250 |
4,753 |
9,733 |
8,867 | |||||
Other revenue |
1,651 |
1,660 |
3,244 |
3,159 | |||||
Total revenues |
$ 185,487 |
$ 169,802 |
$ 360,361 |
$ 334,248 | |||||
EXPENSES |
|||||||||
Losses and loss adjustment expenses |
$ 80,184 |
$ 60,083 |
$ 150,754 |
$ 126,200 | |||||
Policy acquisition costs |
33,022 |
30,643 |
65,450 |
60,239 | |||||
Other operating expenses |
24,272 |
24,075 |
48,674 |
51,513 | |||||
Interest expense |
86 |
107 |
189 |
303 | |||||
Total expenses |
$ 137,564 |
$ 114,908 |
$ 265,067 |
$ 238,255 | |||||
Income before income tax expense |
47,923 |
$ 54,894 |
95,294 |
$ 95,993 | |||||
Income tax expense |
18,547 |
21,247 |
34,719 |
37,120 | |||||
NET INCOME |
$ 29,376 |
$ 33,647 |
$ 60,575 |
$ 58,873 |
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES | |||||||||
SHARE AND PER SHARE INFORMATION | |||||||||
(in thousands, except per share data) | |||||||||
Three Months Ended |
Six Months Ended | ||||||||
June 30, |
June 30, | ||||||||
2017 |
2016 |
2017 |
2016 | ||||||
Weighted average common shares outstanding - basic |
34,959 |
35,062 |
35,049 |
34,795 | |||||
Weighted average common shares outstanding - diluted |
35,958 |
35,649 |
36,061 |
35,575 | |||||
Shares outstanding, end of period |
34,821 |
35,064 |
34,821 |
35,064 | |||||
Basic earnings per common share |
$ 0.84 |
$ 0.96 |
$ 1.73 |
$ 1.69 | |||||
Diluted earnings per common share |
$ 0.82 |
$ 0.94 |
$ 1.68 |
$ 1.65 | |||||
Cash dividend declared per common share |
$ 0.14 |
$ 0.14 |
$ 0.28 |
$ 0.28 | |||||
Book value per share |
$ 12.09 |
$ 10.02 |
$ 12.09 |
$ 10.02 | |||||
Return on average equity (ROE) |
27.9% |
39.6% |
29.6% |
36.0% |
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES | |||||||||
SUPPLEMENTARY INFORMATION | |||||||||
(in thousands, except Policies In-Force) | |||||||||
Three Months Ended |
Six Months Ended | ||||||||
June 30, |
June 30, | ||||||||
2017 |
2016 |
2017 |
2016 | ||||||
Premiums |
|||||||||
Direct premiums written - Florida |
$ 261,430 |
$ 247,483 |
$ 479,868 |
$ 456,843 | |||||
Direct premiums written - Other States |
34,761 |
24,438 |
61,738 |
43,051 | |||||
Direct premiums written - Total |
$ 296,191 |
$ 271,921 |
$ 541,606 |
$ 499,894 | |||||
Direct premiums earned |
$ 244,623 |
$ 226,819 |
$ 480,998 |
$ 448,071 | |||||
Net premiums earned |
$ 169,009 |
$ 156,461 |
$ 330,568 |
$ 308,909 | |||||
Policies In-Force |
|||||||||
Florida |
596,044 |
565,010 |
596,044 |
565,010 | |||||
Other States |
125,729 |
89,708 |
125,729 |
89,708 | |||||
Total |
721,773 |
654,718 |
721,773 |
654,718 | |||||
In-Force Premium |
|||||||||
Florida |
$ 888,206 |
$ 847,415 |
$ 888,206 |
$ 847,415 | |||||
Other States |
112,815 |
79,091 |
112,815 |
79,091 | |||||
Total |
$ 1,001,021 |
$ 926,506 |
$ 1,001,021 |
$ 926,506 | |||||
Total Insured Value |
|||||||||
Florida |
$139,758,417 |
$131,543,360 |
$139,758,417 |
$131,543,360 | |||||
Other States |
43,473,191 |
29,753,795 |
43,473,191 |
29,753,795 | |||||
Total |
$183,231,608 |
$161,297,155 |
$183,231,608 |
$161,297,155 | |||||
Underwriting Ratios - Net |
|||||||||
Loss and loss adjustment expense ratio |
47.4% |
38.4% |
45.6% |
40.9% | |||||
Policy acquisition cost ratio |
19.5% |
19.6% |
19.8% |
19.5% | |||||
Other operating expense ratio |
14.4% |
15.4% |
14.7% |
16.7% | |||||
General and administrative expense ratio |
33.9% |
35.0% |
34.5% |
36.2% | |||||
Combined ratio |
81.3% |
73.4% |
80.1% |
77.0% | |||||
Other Items |
|||||||||
(Favorable)/Unfavorable prior year reserve development |
1,109 |
(1) |
1,205 |
15 | |||||
Points on the loss and loss adjustment expense ratio |
0.7% |
0.0% |
0.4% |
0.0% |
Contacts: |
||
Investors |
Media | |
Dean Evans |
Andy Brimmer / Mahmoud Siddig | |
VP Investor Relations |
Joele Frank, Wilkinson Brimmer Katcher | |
954-958-1306 |
212-355-4449 | |
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SOURCE Universal Insurance Holdings, Inc.
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