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| 8-K - FORM 8-K - UNIVERSAL INSURANCE HOLDINGS, INC. | d278854d8k.htm |
Exhibit 99.1
Universal Insurance Holdings, Inc. Reports Third Quarter 2016 Financial Results
Generates strong profits amid severe weather
Fort Lauderdale, FL, November 2, 2016 - Universal Insurance Holdings, Inc. (NYSE: UVE) today reported third quarter net income of $26.9 million, a decrease of 11.3%, or $3.4 million, from the same quarter in 2015. Diluted earnings per share (EPS) were $0.75 for the third quarter of 2016, a decrease of 10.7%, or $0.09 per share, from the same quarter in 2015.
“During the third quarter, Universal reported record top line results with record premiums earned, net and total revenues and strong profitability even as we experienced severe weather in our coverage areas,” said Sean P. Downes, Universal’s Chairman and Chief Executive Officer. “Our strong performance is a testament to the fundamental strength of our business model, including our focus on maintaining high underwriting standards, and more importantly this quarter, our claims handling abilities. The rigorous planning we conduct on an ongoing basis to prepare for severe weather events served us well in the quarter, and allowed us to respond quickly and effectively following Hurricane Hermine.
“Looking ahead, we remain focused on writing high quality, rate adequate organic business, both in Florida and across our expanding geographic footprint. We will also continue to pursue new business through our unique direct-to-consumer platform, Universal DirectSM, both organically and by seeking partnerships and joint ventures to deliver an even broader scope of products and services to our customers. Universal enters the fourth quarter well positioned to drive profitable growth, and we remain confident in our ability to deliver increasing shareholder value.”
Third-Quarter 2016 & Recent Highlights
| • | Net earned premiums grew by $13.4 million, or 9.2%, to $159.5 million. |
| • | Total revenues increased by $15.4 million, or 9.8%, to $172.4 million. |
| • | Net income decreased by $3.4 million, or 11.3%, to $26.9 million. |
| • | Diluted EPS decreased by $0.09, or 10.7%, to $0.75 per share. |
| • | Paid dividends of $0.14 per share. |
| • | Wrote our first policy in Virginia. |
| • | Announced the launch of a Commercial Residential Program. |
| • | Universal DirectSM is now offered in 11 states. |
Third-Quarter 2016 Results
Net income for the third quarter of 2016 of $26.9 million reflects an improvement across all revenue measures. Net earned premiums and total revenues were higher than any other quarter in the Company’s history. The increase in net earned premiums is due entirely from organic growth in policies in force.
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Net income was offset by $11 million of pre-tax net losses and loss adjustment expenses attributable to severe weather in 2016 including Hurricane Hermine. These losses and loss adjustment expenses were incremental to amounts provided for in the underlying loss ratio based on historical experience for such events.
Net losses and loss adjustment expenses as a percentage of net earned premiums increased 9.3 percentage points resulting in a net loss ratio of 46.1% for the third quarter, compared to 36.8% for the same period last year. The primary driver of this increase was the severe weather during 2016.
Stockholders’ equity reached an all-time high of $373.3 million as of September 30, 2016 compared to $293.1 million as of December 31, 2015. Book value per common share also reached an all-time high of $10.66 as September 30, 2016 compared to $8.34 as of December 31, 2015.
Cash Dividends
On August 31, 2016, the Company announced that its Board of Directors had declared a cash dividend of $0.14 per share of common stock that was paid on October 24, 2016 to shareholders of record on September 12, 2016.
Conference Call
Members of the Universal management team will host a conference call on Wednesday, November 2, 2016 at 4:45 PM ET to discuss the third quarter 2016 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 toll at (270) 823-1518 (using the Conference I.D.: 97544219). 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 toll at (404) 537-3406 (using the Conference I.D.: 97544219), and will be available through November 17, 2016.
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 and Virginia.
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American Platinum Property and Casualty Insurance Company, 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. 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, 2015.
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UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in thousands, except per share data)
| Three Months Ended September 30, |
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| 2016 | 2015 | |||||||
| PREMIUMS EARNED AND OTHER REVENUES |
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| Direct premiums written |
$ | 241,888 | $ | 222,572 | ||||
| Change in unearned premium |
(7,388 | ) | (7,769 | ) | ||||
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| Direct premium earned |
234,500 | 214,803 | ||||||
| Ceded premium earned |
(74,966 | ) | (68,650 | ) | ||||
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| Premiums earned, net |
159,534 | 146,153 | ||||||
| Net investment income (expense) |
2,304 | 1,307 | ||||||
| Net realized gains (losses) on investments |
101 | 11 | ||||||
| Commission revenue |
4,603 | 4,115 | ||||||
| Policy fees |
4,226 | 3,820 | ||||||
| Other revenue |
1,668 | 1,637 | ||||||
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| Total premiums earned and other revenues |
172,436 | 157,043 | ||||||
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| OPERATING COSTS AND EXPENSES |
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| Losses and loss adjustment expenses |
73,548 | 53,854 | ||||||
| General and administrative expenses |
54,725 | 55,289 | ||||||
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| Total operating costs and expenses |
128,273 | 109,143 | ||||||
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| INCOME BEFORE INCOME TAXES |
44,163 | 47,900 | ||||||
| Income tax expense |
17,281 | 17,602 | ||||||
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| NET INCOME |
$ | 26,882 | $ | 30,298 | ||||
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| Basic earnings per common share |
$ | 0.77 | $ | 0.87 | ||||
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| Weighted average common shares outstanding - Basic |
35,042 | 34,911 | ||||||
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| Fully diluted earnings per common share |
$ | 0.75 | $ | 0.84 | ||||
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| Weighted average common shares outstanding - Diluted |
35,723 | 35,999 | ||||||
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| Cash dividend declared per common share |
$ | 0.14 | $ | 0.12 | ||||
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UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in thousands, except per share data)
| Nine Months Ended September 30, |
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| 2016 | 2015 | |||||||
| PREMIUMS EARNED AND OTHER REVENUES |
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| Direct premiums written |
$ | 741,782 | $ | 684,147 | ||||
| Ceded premiums written |
(59,211 | ) | (67,903 | ) | ||||
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| Net premiums written |
682,571 | 616,244 | ||||||
| Change in net unearned premiums |
(214,128 | ) | (262,843 | ) | ||||
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| Premiums earned, net |
468,443 | 353,401 | ||||||
| Net investment income (expense) |
6,051 | 3,376 | ||||||
| Net realized gains (losses) on investments |
1,344 | 292 | ||||||
| Commission revenue |
12,927 | 10,757 | ||||||
| Policy fees |
13,093 | 12,003 | ||||||
| Other revenue |
4,827 | 4,614 | ||||||
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| Total premiums earned and other revenues |
506,685 | 384,443 | ||||||
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| OPERATING COSTS AND EXPENSES |
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| Losses and loss adjustment expenses |
199,749 | 127,148 | ||||||
| General and administrative expenses |
166,780 | 130,152 | ||||||
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| Total operating costs and expenses |
366,529 | 257,300 | ||||||
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| INCOME BEFORE INCOME TAXES |
140,156 | 127,143 | ||||||
| Income tax expense |
54,400 | 49,811 | ||||||
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| NET INCOME |
$ | 85,756 | $ | 77,332 | ||||
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| Basic earnings per common share |
$ | 2.46 | $ | 2.22 | ||||
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| Weighted average common shares outstanding - Basic |
34,878 | 34,837 | ||||||
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| Fully diluted earnings per common share |
$ | 2.41 | $ | 2.15 | ||||
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| Weighted average common shares outstanding - Diluted |
35,594 | 35,918 | ||||||
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| Cash dividend declared per common share |
$ | 0.42 | $ | 0.36 | ||||
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UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands, except per share data)
| September 30, 2016 |
December 31, 2015 |
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| ASSETS | ||||||||
| Cash and cash equivalents |
$ | 205,241 | $ | 197,014 | ||||
| Restricted cash and cash equivalents |
2,635 | 2,635 | ||||||
| Fixed maturities, at fair value |
584,274 | 416,083 | ||||||
| Equity securities, at fair value |
44,240 | 42,214 | ||||||
| Short-term investments, at fair value |
5,003 | 25,021 | ||||||
| Investment real estate, net |
10,384 | 6,117 | ||||||
| Prepaid reinsurance premiums |
198,910 | 114,673 | ||||||
| Reinsurance recoverable |
— | 22,853 | ||||||
| Premiums receivable, net |
60,570 | 50,980 | ||||||
| Other receivables |
5,863 | 4,979 | ||||||
| Property and equipment, net |
30,845 | 27,065 | ||||||
| Deferred policy acquisition costs, net |
68,300 | 60,019 | ||||||
| Income taxes recoverable |
10,643 | 5,420 | ||||||
| Deferred income tax asset, net |
1,877 | 13,912 | ||||||
| Other assets |
5,437 | 4,563 | ||||||
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| Total assets |
$ | 1,234,222 | $ | 993,548 | ||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| LIABILITIES: |
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| Unpaid losses and loss adjustment expenses |
$ | 54,209 | $ | 98,840 | ||||
| Unearned premiums |
501,577 | 442,366 | ||||||
| Advance premium |
28,721 | 24,813 | ||||||
| Accounts payable |
2,294 | 378 | ||||||
| Reinsurance payable, net |
211,863 | 73,585 | ||||||
| Dividends payable |
4,903 | — | ||||||
| Other liabilities and accrued expenses |
41,995 | 36,424 | ||||||
| Long-term debt |
15,396 | 24,050 | ||||||
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| Total liabilities |
860,958 | 700,456 | ||||||
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| STOCKHOLDERS’ EQUITY: |
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| Cumulative convertible preferred stock, $.01 par value |
— | — | ||||||
| Authorized shares - 1,000 |
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| Issued shares - 10 and 10 |
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| Outstanding shares - 10 and 10 |
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| Minimum liquidation preference, $9.99 and $9.99 per share |
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| Common stock, $.01 par value |
453 | 455 | ||||||
| Authorized shares - 55,000 |
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| Issued shares - 45,292 and 45,525 |
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| Outstanding shares - 35,024 and 35,110 |
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| Treasury shares, at cost - 10,268 and 10,415 |
(86,887 | ) | (80,802 | ) | ||||
| Additional paid-in capital |
80,399 | 70,789 | ||||||
| Accumulated other comprehensive income (loss), net of taxes |
1,625 | (4,006 | ) | |||||
| Retained earnings |
377,674 | 306,656 | ||||||
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| Total stockholders’ equity |
373,264 | 293,092 | ||||||
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| Total liabilities and stockholders’ equity |
$ | 1,234,222 | $ | 993,548 | ||||
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Investor Contact:
Andy Brimmer / Mahmoud Siddig
Joele Frank, Wilkinson Brimmer Katcher
212-355-4449
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