SOURCE: Universal Insurance Holdings, Inc.

Universal Insurance Holdings, Inc.

April 01, 2011 08:00 ET

Universal Insurance Holdings, Inc. Reports Fourth-Quarter and Full-Year 2010 Financial Results

Fourth-Quarter Diluted Earnings per Share Improved to $0.15 in 2010 From Loss of $0.07 Last Year; Full-Year Diluted Earnings per Share Increased 29.6 Percent to $0.92 in 2010 as Compared to $0.71 in 2009

FORT LAUDERDALE, FL--(Marketwire - April 1, 2011) - Universal Insurance Holdings, Inc. (the Company or Universal) (NYSE Amex: UVE), a vertically integrated insurance holding company, reported net income of $6.2 million, or $0.15 per diluted share, in the fourth quarter of 2010, compared to a net loss of $2.8 million, or $0.07 per diluted share, for the same period in 2009. For the full year of 2010, the Company reported net income of $37.0 million, or $0.92 per diluted share, compared to $28.8 million, or $0.71 per diluted share, for the full year of 2009.

Fourth-Quarter 2010 Results

Net income and diluted earnings increased $9.0 million and $0.22 per share, respectively, for the 2010 fourth quarter compared to the same period last year. The improvement in operating results is primarily attributable to an increase in net premiums earned, and to a lesser degree, lower operating costs and expenses. Net realized gains on investments, which were partially offset by net unrealized losses on investments, also positively contributed to overall financial results. The improved profitability was moderated by state-mandated wind mitigation credits within the state of Florida, and lower foreign currency transaction gains.

Homeowners' and dwelling fire insurance policies serviced by Universal Property & Casualty Insurance Company (UPCIC), the Company's wholly-owned subsidiary, and the related direct premiums written, increased during the fourth quarter of 2010 compared to the same period of 2009. Fourth-quarter 2009 premium rate increases in Florida, which were 14.6 percent statewide for UPCIC's homeowners' program and 14.8 percent statewide for its dwelling fire policies, increased premiums and improved profitability in 2010. During the fourth quarter, UPCIC also continued to recoup a portion of the $4.1 million Florida Insurance Guaranty Association (FIGA) assessment incurred in 2009.

During the 2010 fourth quarter, UPCIC's policy count continued to grow. At December 31, 2010, UPCIC serviced approximately 584,000 homeowners' and dwelling fire insurance policies, up from 576,000 policies at September 30, 2010, and 541,000 policies at December 31, 2009. The increase in the number of policies in-force is the result of strengthened relationships with existing agents, an increase in the number of new agents, as well as continued expansion within Florida, South Carolina, North Carolina, and Hawaii. Within South Carolina, North Carolina, and Hawaii, UPCIC had approximately 9,500 policies totaling approximately $13.0 million of in-force premiums at December 31, 2010.

Net premiums earned increased 39.0 percent in the fourth quarter of 2010 compared to the same quarter in 2009, primarily as a result of greater net premiums written, which were positively affected by policy count growth and the fourth-quarter 2009 premium rate increases in Florida.

Fourth-quarter 2010 operating costs and expenses were lower compared to the fourth quarter of last year, as losses and loss adjustment expenses (LAE) decreased 5.2 percent, and general and administrative expenses decreased 4.2 percent. The decrease in losses and LAE is related to lower adverse loss and LAE development in the 2010 fourth quarter as compared to the same quarter in 2009. The decrease was mitigated by the servicing of additional policies due to the growth in policy count on a year-over-year basis. The decrease in general and administrative expenses was primarily attributable to the FIGA assessment expense of $4.1 million in the fourth quarter of 2009, which did not recur in the fourth quarter of 2010, and a decrease in the Company's own insurance expenses. The decreased expenses were partially offset by increased compensation expense as a result of business growth. Additionally, the Company had higher policy acquisition costs.

At December 31, 2010, stockholders' equity increased to $139.8 million from $137.3 million at September 30, 2010, and $113.3 million at December 31, 2009, representing growth of 1.8 percent and 23.4 percent, respectively.

Investment Portfolio Update

For the fourth quarter of 2010, net realized gains on investments were $15.8 million while net unrealized losses on investments were $4.5 million. As of December 31, 2010, the Company's investments in trading securities totaled $224.5 million, compared to trading securities of $101.9 million at September 30, 2010. At December 31, 2010, approximately 58.0 percent of the investments in trading securities were in debt securities and 42.0 percent were in equity securities.

Full-Year 2010 Results

For the full year of 2010, the Company's net income and diluted earnings per share increased 28.5 percent and 29.6 percent, respectively, as compared to the full year of 2009. The improvement in operating results is primarily attributable to an increase in net premiums earned. Net realized and net unrealized gains on investments also positively contributed to overall financial results. The improved profitability was moderated by state-mandated wind mitigation credits within the state of Florida, lower foreign currency transaction gains, and increased operating costs and expenses.

Net premiums earned increased 20.3 percent for the full year of 2010 compared to the same period of 2009, primarily as a result of greater net premiums written as previously discussed. Meanwhile, full-year 2010 operating costs and expenses were higher compared to the full year of 2009, as losses and LAE increased 6.8 percent and general and administrative expenses increased 10.2 percent. The increase in losses and loss adjustment expenses is related to the servicing of additional policies due to the growth in policy count on a year-over-year basis. The increase in general and administrative expenses was due to several factors including an increase in direct commissions in correlation with the increase in direct premiums written, partially offset by an increase in ceded commissions paid. Also, there was an increase in state taxes on premiums which was directly related to the increase in written premiums. Additionally, compensation expense increased as a result of business growth.

Cash Dividend

On January 6, 2011, Universal's board of directors declared a cash dividend of $0.10 per share payable on April 7, 2011, to shareholders of record as of March 11, 2011.

Premium Rate Update

On February 3, 2011, UPCIC received approval of a rate increase for its homeowners' insurance program within the state of Florida. The rate increase will result in an average premium increase of approximately 14.9 percent statewide. The effective dates for the rate increase are February 7, 2011, for new business and March 28, 2011, for renewal business. UPCIC expects the approved premium rate increases to have a favorable effect on premiums written and earned in future months as new and renewal policies are written at the higher rates.

About Universal Insurance Holdings, Inc.

Universal Insurance Holdings, Inc. is a vertically integrated insurance holding company, which through its subsidiaries, covers substantially all aspects of insurance underwriting, distribution, claims processing and exposure management. Universal Property & Casualty Insurance Company (UPCIC), a wholly owned subsidiary of the Company, is one of the five leading writers of homeowners' insurance in Florida and is now fully licensed and has commenced its operations in Hawaii, North Carolina and South Carolina. 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 the Form 10-K for the year ended December 31, 2010.



           UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF INCOME
                              (Unaudited)


                                                     For the Three
                                                Months Ended December 31,
                                                  2010           2009
                                              -------------  -------------
PREMIUMS EARNED AND OTHER REVENUES
     Direct premiums written                  $ 145,527,692  $ 126,060,931
     Ceded premiums written                    (109,282,730)   (99,866,092)
                                              -------------  -------------
        Net premiums written                     36,244,962     26,194,839
     Decrease in net unearned premium            10,692,431      7,566,760
                                              -------------  -------------
     Premiums earned, net                        46,937,393     33,761,599
     Net investment income                          615,660         68,592
     Net realized gains on investments           15,798,303     10,586,364
     Net unrealized losses on investments        (4,527,273)             -
     Net foreign currency gains on
      investments                                   321,613        651,474
     Commission revenue                           4,425,897      4,804,261
     Policy Fees                                  3,149,121      2,941,100
     Other revenue                                1,386,871      1,178,547
                                              -------------  -------------

Total premiums earned and other revenues         68,107,585     53,991,937
                                              -------------  -------------

OPERATING COSTS AND EXPENSES
     Losses and loss adjustment expenses         35,498,745     37,437,583
     General and administrative expenses         20,658,946     21,557,002
                                              -------------  -------------
        Total operating costs and expenses       56,157,691     58,994,585
                                              -------------  -------------

INCOME BEFORE INCOME TAXES                       11,949,894     (5,002,648)

     Income taxes, current                        7,838,881       (632,980)
     Income taxes, deferred                      (2,084,562)    (1,566,058)
                                              -------------  -------------
        Income taxes, net                         5,754,319     (2,199,038)

                                              -------------  -------------
NET INCOME                                    $   6,195,575  $  (2,803,610)
                                              =============  =============

Basic net income per common share             $        0.17  $       (0.08)
                                              =============  =============
Weighted average of common shares
     outstanding - Basic                         39,229,452     37,667,023
                                              =============  =============

Fully diluted net income per share            $        0.15  $       (0.07)
                                              =============  =============
Weighted average of common shares
     outstanding - Diluted                       40,232,650     40,762,734
                                              =============  =============

Cash dividend declared per common share       $        0.10  $        0.20
                                              =============  =============


                                               For the Three Months Ended
                                                      December 31,
                                              ----------------------------
                                                  2010           2009
                                              -------------  -------------
Comprehensive Income:
     Net income                               $   6,195,575  $  (2,803,610)
     Change in net unrealized gains on
      investments, net of tax                        (5,437)    (4,052,085)
                                              -------------  -------------
Comprehensive Income                          $   6,190,138  $  (6,855,695)
                                              -------------  -------------





           UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF INCOME


                                          For the Years Ended December 31,
                                          ---------------  ---------------
                                                2010             2009
                                          ---------------  ---------------
PREMIUMS EARNED AND OTHER REVENUES
     Direct premiums written              $   666,309,262  $   562,671,620
     Ceded premiums written                  (466,694,053)    (428,384,278)
                                          ---------------  ---------------
        Net premiums written                  199,615,209      134,287,342
     (Increase) decrease in net unearned
      premium                                 (29,172,312)       7,366,383
                                          ---------------  ---------------
     Premiums earned, net                     170,442,897      141,653,725
     Net investment income                        992,235        1,453,599
     Net realized gains on investments         27,691,623       24,175,045
     Net unrealized gains on investments        1,753,919                -
     Net foreign currency gains on
      investments                               1,122,603        6,808,419
     Commission revenue                        17,894,967       16,984,447
     Policy Fees                               15,149,369       14,174,000
     Other revenue                              4,875,619        5,392,894
                                          ---------------  ---------------
Total premiums earned and other revenues      239,923,232      210,642,129
                                          ---------------  ---------------

OPERATING COSTS AND EXPENSES
     Losses and loss adjustment expenses      113,355,475      106,133,135
     General and administrative expenses       64,289,954       58,346,170
                                          ---------------  ---------------
        Total operating costs and
         expenses                             177,645,429      164,479,305
                                          ---------------  ---------------

INCOME BEFORE INCOME TAXES                     62,277,803       46,162,824

     Income taxes, current                     26,854,322       15,494,732
     Income taxes, deferred                    (1,560,281)       1,880,794
                                          ---------------  ---------------
        Income taxes, net                      25,294,041       17,375,526
                                          ---------------  ---------------

NET INCOME                                $    36,983,762  $    28,787,298
                                          ===============  ===============

Basic net income per common share         $          0.95  $          0.76
                                          ===============  ===============
Weighted average of common shares
 outstanding - Basic                           39,113,302       37,617,885
                                          ===============  ===============

Fully diluted net income per share        $          0.92  $          0.71
                                          ===============  ===============
Weighted average of common shares
 outstanding - Diluted                         40,249,677       40,471,524
                                          ===============  ===============

Cash dividend declared per common share   $          0.32  $          0.54
                                          ===============  ===============


                                          For the Years Ended December 31,
                                          --------------------------------
                                               2010             2009
                                          ---------------  ---------------
Comprehensive Income:
     Net income                           $    36,983,762  $    28,787,298
     Change in net unrealized gains on
      investments, net of tax                    (563,654)         538,820
                                          ---------------  ---------------
Comprehensive Income                      $    36,420,108  $    29,326,118
                                          ===============  ===============





           UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEETS


                                              December 31,   December 31,
                   ASSETS                         2010           2009
                                              -------------  -------------
Cash and cash equivalents                     $ 147,585,464  $ 192,924,291
Investment securities:
  Trading securities, at fair value (amortized
   cost - $222,519,390 in 2010 and $0 in 2009)  224,532,404              -
  Available-for-sale securities, at fair value
   (amortized cost - $0 in 2010 and
   $113,832,760 in 2009)                                  -    114,797,010
Prepaid reinsurance premiums                    221,085,933    200,294,241
Reinsurance recoverables                         79,551,875     91,816,433
Premiums receivable, net                         43,622,606     37,363,110
Receivable from securities                       17,555,961      6,259,973
Other receivables                                 2,863,757      5,068,367
Income taxes recoverable                                  -      3,211,874
Property and equipment, net                       5,406,766      4,535,751
Deferred policy acquisition costs, net            9,445,679      9,464,624
Deferred income taxes                            13,447,953     11,894,289
Other assets                                      1,131,842        617,337
                                              -------------  ------------- 
          Total assets                        $ 766,230,240  $ 678,247,300
                                              =============  =============

     LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Unpaid losses and loss adjustment expenses    $ 158,928,837  $ 127,197,753
Unearned premiums                               328,334,547    278,370,544
Advance premium                                  19,839,740     17,078,558
Accounts payable                                  3,767,293      3,172,626
Bank overdraft                                   23,030,315     20,297,061
Reinsurance payable, net                         37,946,484     73,104,595
Income taxes payable                              8,282,030        368,968
Other accrued expenses                           23,149,602     20,750,385
Long-term debt                                   23,161,764     24,632,353
                                              -------------  -------------
          Total liabilities                     626,440,612    564,972,843
                                              -------------  -------------

Commitments and Contigencies (Note 16)
STOCKHOLDERS' EQUITY:
Cumulative convertible preferred stock, $.01
 par value                                            1,077          1,087
     Authorized shares - 1,000,000
     Issued shares - 107,690 and 108,640
     Outstanding shares - 107,690 and 108,640
     Minimum liquidation preference -
      $287,240 and $288,190
Common stock, $.01 par value                        404,069        402,146
     Authorized shares - 55,000,000
     Issued shares - 40,406,751 and
      40,214,884
     Outstanding shares - 39,387,998 and
      37,774,765
     Treasury shares, at cost - 1,018,753 and
      1,809,119 shares                           (3,109,255)    (7,948,606)
Common stock held in trust, at cost - 0 and
 631,000 shares                                           -       (511,110)
Additional paid-in capital                       33,674,697     36,666,914
Accumulated other comprehensive income, net
 of taxes                                                 -        563,654
Retained earnings                               108,819,040     84,100,372
                                              -------------  -------------
          Total stockholders' equity            139,789,628    113,274,457
                                              -------------  -------------
          Total liabilities and stockholders'
           equity                             $ 766,230,240  $ 678,247,300
                                              =============  =============

Contact Information

  • Investor Contact:
    Philip Kranz
    Dresner Corporate Services
    312-780-7240
    Email Contact