Universal Insurance (UVE) Misses Q2 EPS by $1.21, Revenues Beat; Lowers FY20 EPS Guidance Below Consensus

Universal Insurance (NYSE: UVE) reported Q2 EPS of ($1.43), $1.21 worse than the analyst estimate of ($0.22). Revenue for the quarter came in at $311.7 million versus the consensus estimate of $253.58 million.

• 3Q20 total revenue up 35.7% to $311.7 million
• 3Q20 direct premiums written up 19.4%
• 3Q20 diluted GAAP earnings per share (“EPS”) of $(0.10), non-GAAP adjusted EPS1 of $(1.43)
• Book value per share increased 0.1% since the end of 2019 to $15.15 despite elevated industry-wide weather activity
• YTD annualized return on average equity of 10.0%

“We continued to see headwinds in the third quarter as we dealt with elevated industry-wide weather events year-to-date. As previously announced, we were affected by full retention events from Hurricanes Isaias and Sally, in addition to other PCS events year-to-date. Furthermore, we saw an increase in prior year’s companion claims in the run up to the expiration of the statute of limitations for Hurricane Irma, which contributed to prior year’s reserve development,” said Stephen J. Donaghy, Chief Executive Officer.

“Our primary rate increases continue to flow through our book as evidenced by our strong direct premiums written growth of 19.4% in the quarter. We continue to selectively write new business in our existing states, including Florida. Specifically in Florida, we have seen a 9.5% year-over-year policy count growth, with 97% of this growth coming from outside of the tri-county area.”

GUIDANCE:

Universal Insurance sees FY2020 EPS of $0.55-$0.85, versus the consensus of $1.59.

The Company is updating its guidance for 2020 to reflect increased top line revenue, offset by elevated third quarter loss and LAE (assuming no further extraordinary weather events and no realized or unrealized gains in 4Q20):

• GAAP EPS in a range of $1.80 - $2.10 (reduced from previous range of $2.31 - $2.61)
• Non-GAAP Adjusted EPS in a range of $0.55 - $0.85 (reduced from previous range of $2.40 - $2.70)
• Annualized return on average equity (derived from GAAP measures) in a range of 11.1% - 14.1% (reduced from previous range of 13.5% - 16.5%)

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

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