Universal Insurance (UVE) Misses Q4 EPS by 53c, Revenues Beat; Introduces FY20 EPS Guidance Above Consensus

Universal Insurance (NYSE: UVE) reported Q4 EPS of ($1.57), $0.53 worse than the analyst estimate of ($1.04). Revenue for the quarter came in at $239.4 million versus the consensus estimate of $235.3 million.

• 4Q19 total revenue up 10.6% to $239.4 million; FY19 up 14.0% to $939.4 million
• 4Q19 other states direct premiums written up 23.3%; FY19 other states up 27.6%
• 4Q19 diluted GAAP earnings per share (EPS) of $(1.55), non-GAAP adjusted EPS1 of $(1.57)
• FY19 diluted GAAP EPS of $1.36, non-GAAP adjusted EPS1 of $1.18
• FY19 return on average equity of 9.2%; Debt-to-equity ratio of 2.0%
• Full year EPS driven by 4Q19 pre-tax charges, $43.7 million in prior years adverse development, $40.7 million reduction in prior years anticipated subrogation recoveries, $24.7 million in current year strengthening, and $16.7 million in strengthening for current year weather events above plan
• FY19 returned a record $92.3 million to shareholders through share repurchases and dividends
• UPCIC filed for a 12.4% overall primary rate increase in Florida
• Over 75% of reinsurance capacity for June 1st, 2020 renewals already secured
• Initiating FY20 guidance: GAAP and non-GAAP adjusted EPS1 of $2.80 - $3.10 (assuming no extraordinary weather events in 2020); ROAE 17% - 20%

“We ended the year with strong top line growth thanks to our effective marketing strategy, agent relations and customer service,” said Stephen J. Donaghy, Chief Executive Officer. “Since taking over as CEO in July of 2019, we have continued to respond to the well-documented current Florida dynamics that have affected all industry participants. In spite of these challenges, we produced an annualized return on average equity of 9.2%. This annual result includes enhanced conservatism across many different fronts, including the run up of claims prior to the effective date of new AOB legislation, the impact of a hardening reinsurance market, and the overall influence of social inflation. We focused on prior and current years along with our subrogation expectation even though 2019 was our highest subrogation receivable in company history. Our financial strength, along with filing for double digit primary rate increases in Florida and our direct to consumer platform, CloveredSM, have positioned us for long-term, sustainable bottom line growth going forward into 2020 and beyond. We believe the diligent work we have put forth, puts us in position to provide FY20 guidance of a GAAP and non-GAAP adjusted EPS range of $2.80 - $3.10 assuming no extraordinary weather events in 2020, and a Return on Average Equity of 17% - 20%.”

GUIDANCE:

Universal Insurance sees FY2020 EPS of $2.80-$3.10, versus the consensus of $3.20.

Universal initiated the following guidance for fiscal 2020:

• GAAP and Non-GAAP Adjusted EPS in a range of $2.80 - $3.10 (assuming no extraordinary weather events in 2020)
• Annualized return on average equity in a range of 17% - 20%

For earnings history and earnings-related data on Universal Insurance (UVE) click here.

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