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Form 8-K UNIVERSAL INSURANCE HOLD For: Apr 28

April 28, 2022 4:57 PM EDT

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Exhibit 99.1
Universal Reports First Quarter 2022 Results

Diluted GAAP earnings per share (“EPS”) of $0.56, non-GAAP adjusted EPS1 of $0.64
Annualized return on average equity (“ROE”) of 16.9%
Direct premiums written of $396.5 million, up 8.5% from the prior year quarter
Direct premiums earned up 10.4% from the prior year quarter
Net combined ratio of 97.9%, up 4.8 points from the prior year quarter
Repurchased 320,528 shares for $3.9 million. Total capital returned to shareholders of $8.9 million, including $0.16 per share regular quarterly dividend.
1 Reconciliations of GAAP to non-GAAP financial measures are provided in the attached tables.

Fort Lauderdale, Fla., April 28, 2022 – Universal Insurance Holdings (NYSE: UVE) (“Universal” or the “Company”) reported 2022 first quarter diluted EPS of $0.56 on a GAAP basis and $0.64 on a non-GAAP1 adjusted basis.

“We reported a 16.9% annualized ROE despite the challenging external environment, which is a testament to the strength and resilience of our business,” said Stephen J. Donaghy, Chief Executive Officer. “Direct premiums written were up 8.5% from the prior year quarter, significantly outpacing a 6.1% policies in force decline, as meaningful rate increases benefited premium volumes. We are laser focused on improving underwriting profitability, as we prioritize combined ratio improvement over top line growth. In addition to raising rates across Florida and our broader footprint, we’ve reduced exposure to less profitable geographies, tightened underwriting criteria, renegotiated commission rates with our agency partners and exercised prudent expense management. Lastly, rising yields are benefiting our investment income results, and should continue to serve as a tailwind moving forward. Given our strong capital position, the profitability of our business and the steps we continue to take to improve results, we believe we stand out favorably as reinsurers increasingly differentiate amongst cedants in the current market.”


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Quarterly Financial Results

Summary Financial Results
($thousands, except per share data)Three Months Ended March 31,
20222021Change
GAAP comparison
Total revenue$287,482 $262,757 9.4 %
Income before income taxes$22,471 $36,351 (38.2)%
Income before income taxes margin7.8 %13.8 %(6.0)pts
Net income$17,537 $26,408 (33.6)%
Diluted EPS$0.56 $0.84 (33.3)%
Annualized ROE16.9 %23.2 %(6.3) pts
Non-GAAP comparison2
Adjusted operating income$27,417 $36,323 (24.5)%
Adjusted net income$20,052 $26,371 (24.0)%
Adjusted EPS$0.64 $0.84 (23.8)%
Underwriting Summary
Premiums:
Premiums in force$1,703,151 $1,548,657 10.0 %
Policies in force916,745 976,250 (6.1)%
Direct premiums written$396,481 $365,314 8.5 %
Direct premiums earned$414,603 $375,606 10.4 %
Ceded premiums earned$(145,539)$(132,301)10.0 %
Ceded premium ratio35.1 %35.2 %(0.1) pts
Net premiums earned$269,064 $243,305 10.6 %
Net ratios:
Loss ratio68.8 %59.2 %9.6  pts
Expense ratio3
29.1 %33.9 %(4.8)pts
Combined ratio97.9 %93.1 %4.8  pts
2 Reconciliation of GAAP to non-GAAP financial measures are provided in the attached tables. Non-GAAP adjusted EPS excludes net realized and unrealized gains and losses on investments, as well as extraordinary reinstatement premiums and associated commissions. Adjusted operating income excludes net realized and unrealized gains and losses on investments, interest expense, and any extraordinary reinstatement premiums and associated commissions.
3 Expense ratio excludes interest expense.

Net Income and Adjusted Net Income
Net income was $17.5 million, down from $26.4 million in the prior year quarter, and adjusted net income was $20.1 million, down from $26.4 million in the prior year quarter. The decline in adjusted net income primarily stems from a higher net combined ratio, partly offset by higher net premiums earned, commission revenue, net investment income and a lower effective tax rate.

Revenues
Overall revenue was $287.5 million, up 9.4% from the prior year quarter. The increase in revenue primarily stems from higher direct premiums earned associated with rate increases in the Florida homeowners book of business, partly offset by unrealized losses on equity securities.

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Direct premiums written were $396.5 million, up 8.5% from the prior year quarter. The increase stems from 8.9% growth in Florida and 6.4% growth in other states. Overall growth primarily reflects rate increases, partly offset by lower policies in force.

Direct premiums earned were $414.6 million, up 10.4% from the prior year quarter. The increase stems from direct premiums written growth over the past twelve months.

The ceded premium ratio was 35.1%, basically in line with 35.2% in the prior year quarter.

Net premiums earned were $269.1 million, up 10.6% from the prior year quarter. The increase is primarily attributable to higher direct premiums earned, as described above.

Net investment income was $4.0 million, up from $3.0 million in the prior year quarter. The increase stems from higher fixed income reinvestment yields.

Commissions, policy fees and other revenue were $17.7 million, up 7.9% from the prior year quarter. The increase primarily reflects higher commission revenue, which benefited from higher ceded premiums, partly offset by policy fee and other revenue declines associated with lower policies in force.

Margins
The income before income taxes margin was 7.8%, down 6.0 points from the prior year quarter, with the decrease stemming from a higher net combined ratio and unrealized losses on equity securities, partly offset by higher commission revenues.

The net loss ratio was 68.8%, up 9.6 points compared to the prior year quarter. The increase primarily reflects a higher initial accident year attritional loss pick associated with the challenging Florida claims environment, higher weather above plan and a smaller benefit from our claims adjusting affiliate.

The net expense ratio (excludes interest expense) was 29.1%, down 4.8 points compared to the prior year quarter. The reduction primarily reflects lower renewal commission rates paid to our agents, lower employee compensation and benefits expense and economies of scale.

The net combined ratio was 97.9%, up 4.8 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 first quarter, the Company repurchased approximately 321 thousand shares at an aggregate cost of $3.9 million. The Company’s current share repurchase authorization program has $13.9 million remaining as of March 31, 2022 and runs through November 3, 2022.

On April 20, 2022, the Board of Directors declared a quarterly cash dividend of 16 cents per share of common stock, payable on May 20, 2022, to shareholders of record as of the close of business on May 13, 2022.





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Guidance
The Company is maintaining its guidance for 2022 (assuming no further extraordinary weather events and no realized or unrealized gains in 2022):

GAAP and Non-GAAP Adjusted EPS in a range of $1.80 - $2.20
Annualized return on average equity in a range of 12.5% - 15.0%


Conference Call and Webcast
Friday, April 29, 2022 at 10:00 a.m. ET
U.S. Dial-in Number: (855) 752-6647
International: (503) 343-6667
Participant code: 9789558
Listen to live webcast: UniversalInsuranceHoldings.com/investors
Replay of the call will be available on the UVE website and by phone at (855) 859-2056 or internationally at (404) 537-3406 using the participant code: 3793583 through May 13, 2022


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 adjusted net income and adjusted earnings per share, which exclude the impact of the net realized and unrealized gains and losses on investments as well as extraordinary reinstatement premiums and associated commissions. Extraordinary reinstatement premiums are not covered by reinstatement premium protection and attach just below the Florida Hurricane Catastrophe Fund (“FHCF”) reinsurance layer. Adjusted operating income excludes the impact of the net realized and unrealized gains and losses on investments, extraordinary reinstatement premiums and associated commissions and interest expense. 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, when considered together with the GAAP financial measures, 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 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
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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 year ended March 31, 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.



Investor Contact:
Arash Soleimani, CFA, CPA
Chief Strategy Officer
954-804-8874
asoleimani@universalproperty.com
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UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except per share data)
March 31,December 31,
20222021
ASSETS:
Invested Assets
  Fixed maturities, at fair value$1,014,677 $1,040,455 
  Equity securities, at fair value65,126 47,334 
  Investment real estate, net5,845 5,891 
  Total invested assets1,085,648 1,093,680 
Cash and cash equivalents165,398 250,508 
Restricted cash and cash equivalents2,635 2,635 
Prepaid reinsurance premiums109,401 240,993 
Reinsurance recoverable104,660 185,589 
Premiums receivable, net61,670 64,923 
Property and equipment, net54,170 53,682 
Deferred policy acquisition costs103,622 108,822 
Goodwill2,319 2,319 
Other assets59,432 52,990 
TOTAL ASSETS$1,748,955 $2,056,141 
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Unpaid losses and loss adjustment expenses$244,482 $346,216 
Unearned premiums839,647 857,769 
Advance premium85,120 53,694 
Reinsurance payable, net12,723 188,662 
Long-term debt, net103,384 103,676 
Other liabilities67,258 76,422 
     Total liabilities1,352,614 1,626,439 
STOCKHOLDERS' EQUITY:
Cumulative convertible preferred stock ($0.01 par value)4
— — 
Common stock ($0.01 par value)5
471 470 
Treasury shares, at cost - 16,117 and 15,797(230,994)(227,115)
Additional paid-in capital109,099 108,202 
Accumulated other comprehensive income (loss), net of taxes(58,478)(15,568)
Retained earnings576,243 563,713 
     Total stockholders' equity396,341 429,702 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$1,748,955 $2,056,141 
Notes:
4 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.
5 Common stock ($0.01 par value): Authorized - 55,000 shares; Issued - 47,063 and 47,018 shares; Outstanding 30,946 and 31,221 shares.


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UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands)
Three Months Ended
March 31,
20222021
REVENUES
Net premiums earned$269,064 $243,305 
Net investment income4,042 2,986 
Net realized gains on investments58 542 
Net change in unrealized (losses) of equity securities(3,396)(494)
Commission revenue11,161 9,126 
Policy fees4,779 5,387 
Other revenue1,774 1,905 
     Total revenues287,482 262,757 
EXPENSES
Losses and loss adjustment expenses185,106 143,963 
Policy acquisition costs54,723 56,458 
Other operating expenses23,574 25,965 
     Total operating costs and expenses263,403 226,386 
Interest expense1,608 20 
Income before income taxes22,471 36,351 
     Income tax expense4,934 9,943 
NET INCOME$17,537 $26,408 


UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
SHARE AND PER SHARE INFORMATION
(in thousands, except per share data)
Three Months Ended
March 31,
20222021
Weighted average common shares outstanding - basic31,147 31,208 
Weighted average common shares outstanding - diluted31,227 31,277 
Shares outstanding, end of period30,946 31,216 
Basic earnings per common share$0.56 $0.85 
Diluted earnings per common share$0.56 $0.84 
Cash dividend declared per common share$0.16 $0.16 
Book value per share, end of period$12.80 $14.56 
Annualized return on average equity (ROE)16.9 %23.2 %





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UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
SUPPLEMENTARY INFORMATION
(in thousands, except for Policies In Force data)
Three Months Ended
March 31,
20222021
Premiums
     Direct premiums written - Florida$334,437 $307,011 
     Direct premiums written - Other States62,044 58,303 
Direct premiums written - Total$396,481 $365,314 
Direct premiums earned$414,603 $375,606 
Net premiums earned$269,064 $243,305 
Underwriting Ratios - Net
Loss and loss adjustment expense ratio68.8 %59.2 %
  Policy acquisition cost ratio20.3 %23.2 %
  Other operating expense ratio6
8.8 %10.7 %
Expense ratio6
29.1 %33.9 %
Combined ratio97.9 %93.1 %
Other Items
(Favorable)/Unfavorable prior year's reserve development$655 $(1,237)
Points on the loss and loss adjustment expense ratio0.2 pts(0.5)pts
6 Expense ratio excludes interest expense.
As of
March 31,
20222021
Policies in force
Florida672,029 721,321 
Other States244,716 254,929 
Total916,745 976,250 
Premiums in force
Florida$1,416,185 $1,279,464 
Other States286,966 269,193 
Total$1,703,151 $1,548,657 
Total Insured Value
Florida$201,091,861 $194,421,426 
Other States118,041,945 110,930,255 
Total$319,133,806 $305,351,681 

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 Three Months Ended March 31, 2022
 DirectLoss RatioCededLoss RatioNetLoss Ratio
Premiums earned$414,603  $145,539  $269,064  
Loss and loss adjustment expenses:      
Core losses$179,950 43.4 %$44 — %$179,906 66.9 %
Weather events7
4,545 1.1 %— — %4,545 1.7 %
Prior year’s reserve development10,660 2.6 %10,005 6.9 %655 0.2 %
Total losses and loss adjustment expenses$195,155 47.1 %$10,049 6.9 %$185,106 68.8 %
7 Includes only current year weather events beyond those expected.

 Three Months Ended March 31, 2021
 DirectLoss RatioCededLoss RatioNetLoss Ratio
Premiums earned$375,606  132,301  $243,305  
Loss and loss adjustment expenses:      
Core losses$145,228 38.7 %$28 — %$145,200 59.7 %
Weather events7
— — %— — %— — %
Prior year’s reserve development92,070 24.5 %93,307 70.5 %(1,237)(0.5)%
Total losses and loss adjustment expenses$237,298 63.2 %$93,335 70.5 %$143,963 59.2 %
7 Includes only current year weather events beyond those expected.




















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UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in thousands, except for per share data)
Three Months EndedGuidance
March 31,Full Year 2022E
20222021
GAAP Operating Income to Adjusted Operating Income
Income Before Income Taxes$22,471 $36,351 
    less: Net realized gains on investments58 542 
    less: Net change in unrealized (losses) of equity securities(3,396)(494)
    less: Interest (expense)(1,608)(20)
Adjusted Operating Income$27,417 $36,323 
GAAP Net Income to Adjusted Net Income
GAAP Net Income$17,537 $26,408 
    less: Net realized gains on investments58 542 
    less: Net change in unrealized (losses) of equity securities(3,396)(494)
            Total pre-tax adjustments(3,338)48 
    less: Income tax (expense) benefit on above adjustments823 (11)
            Total adjustments(2,515)37 
Adjusted Net Income$20,052 $26,371 
GAAP Diluted EPS to Adjusted EPS
GAAP Diluted EPS$0.56 $0.84 $ 1.80 - 2.20
    less: Net realized gains on investments— 0.02 — 
    less: Net change in unrealized (losses) of equity securities(0.11)(0.02)— 
            Total pre-tax adjustments(0.11)— — 
    less: Income (tax) benefit on above adjustments0.03 — — 
            Total adjustments(0.08)— — 
Adjusted EPS$0.64 $0.84 $ 1.80 - 2.20
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