SOURCE: Universal Insurance Holdings, Inc.

Universal Insurance Holdings, Inc.

November 09, 2010 17:07 ET

Universal Insurance Holdings, Inc. Reports Third-Quarter 2010 Financial Results

Policy Count Increased by Approximately 10,000 During the Third Quarter; Diluted Earnings per Share Improved by 28.6 Percent Compared to the Same Quarter of 2009; Stockholders' Equity Increased 12.2 Percent During the Third Quarter

FORT LAUDERDALE, FL--(Marketwire - November 9, 2010) - Universal Insurance Holdings, Inc. (the Company or Universal) (NYSE Amex: UVE), a vertically integrated insurance holding company, announced third-quarter 2010 net income of $14.4 million, or $0.36 per diluted share, compared to $11.5 million, or $0.28 per diluted share, during the same period of 2009.

Net income and diluted earnings per share increased 25.4 and 28.6 percent, respectively, for the 2010 third quarter compared to the same period last year. The improvement in operating results is primarily attributable to an increase in net premiums earned. Realized and unrealized gains on investments also positively impacted overall financial results. The improved profitability was moderated by state-mandated wind mitigation credits, lower foreign currency transaction gains, and increased operating costs and expenses.

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 third quarter of 2010 compared to the same period of 2009. Recent rate increases in Florida, 14.6 percent statewide for its homeowners' program and 14.8 percent statewide for its dwelling fire policies, increased premiums and improved profitability. UPCIC also continued to recoup a portion of the $4.1 million Florida Insurance Guaranty Association (FIGA) assessment incurred in 2009.

During the 2010 third quarter, UPCIC's policy count continued to grow. At September 30, 2010, UPCIC serviced approximately 576,000 homeowners' and dwelling fire insurance policies, up from 566,000 policies at June 30, 2010, and 536,000 policies at September 30, 2009. The increase in the number of policies in-force is the result of heightened 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 nearly 8,300 policies totaling approximately $11.6 million of in-force premiums at September 30, 2010.

Net premiums earned increased 49.1 percent in the third quarter of 2010 compared to the same quarter in 2009, primarily as a result of greater net premiums written. Meanwhile, third-quarter 2010 operating costs and expenses were higher compared to the third quarter of last year, as losses and loss adjustment expenses increased 23.6 percent and general and administrative expenses increased 8.4 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 primarily attributable to increases in commissions on direct premiums and insurance premium taxes, which are a result of an increase in direct written premiums from growth in the number of policies in-force and increases in the average in-force premium per policy. These increased expenses were partially offset by an increase in ceding commissions.

At September 30, 2010, stockholders' equity increased to $138.6 million from $123.6 million at June 30, 2010, representing growth of 12.2 percent.

Investment Portfolio Update

Realized gains on investments were $6.2 million for the third quarter of 2010 and unrealized gains on investments for the third quarter of 2010 were $8.6 million. During the third quarter of 2010, the Company evaluated the trading activity in its investment portfolio and its overall investment program. As a result of this evaluation, the Company reclassified its available-for-sale portfolio as a trading portfolio effective July 1, 2010. Accordingly, unrealized gains on investments were recognized as income during the third quarter of 2010, relating to the reclassification of the Company's investments to a trading portfolio from an available-for-sale portfolio. The Company will continue to record future changes in the market value of its trading portfolio directly to revenues as unrealized gains on investments. The reclassification of the Company's available-for-sale investment portfolio to a trading securities portfolio increased net income and diluted earnings per share by $5.3 million and $0.13, respectively, during the third quarter of 2010.

As of September 30, 2010, the Company's investments in trading securities totaled $104.4 million, compared to fixed maturities and equity securities available for sale of $137.9 million at June 30, 2010. At September 30, 2010, approximately 90.8 percent of the investments in trading securities were in equity securities and 9.2 percent were in fixed maturities.

Cash Dividend

On October 6, 2010, Universal's board of directors declared a cash dividend of $0.10 per share, which was paid on November 5, 2010, to shareholders of record as of October 22, 2010.

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, 2009 and the Form 10-Q for the quarter ended September 30, 2010.

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

                           For the Nine               For the Three
                    Months Ended September 30,  Months Ended September 30,
                    --------------------------  --------------------------
                        2010          2009          2010          2009
                    ------------  ------------  ------------  ------------
PREMIUMS EARNED AND
 OTHER REVENUES
  Direct premiums
   written          $520,781,570  $436,610,689  $152,662,238  $134,626,400
  Ceded premiums
   written          (357,411,323) (328,518,186) (108,539,124) (104,152,022)
                    ------------  ------------  ------------  ------------
   Net premiums
    written          163,370,247   108,092,503    44,123,114    30,474,378
  (Increase)
   decrease in net
   unearned premium  (39,864,743)     (200,377)    4,708,040     2,283,358
                    ------------  ------------  ------------  ------------
  Premiums earned,
   net               123,505,504   107,892,126    48,831,154    32,757,736
  Net investment
   income                376,575     1,385,007        66,004       586,525
  Realized gains on
   investments        11,993,359    13,588,681     6,249,015    12,136,072
  Unrealized gains
   on investments      8,597,233             -     8,597,233             -
  Foreign currency
   transaction
   gains                 800,990     6,156,945        (8,060)    6,084,629
  Commission
   revenue            25,469,318    23,413,086     7,948,019     8,105,468
  Other revenue        3,488,748     4,214,347     1,468,416     1,312,617
                    ------------  ------------  ------------  ------------
Total premiums earned
 and other revenues  174,231,727   156,650,192    73,151,781    60,983,047
                    ------------  ------------  ------------  ------------

OPERATING COSTS AND
 EXPENSES
  Losses and loss
   adjustment
   expenses           77,856,730    68,695,552    29,370,125    23,768,729
  General and
   administrative
   expenses           43,820,836    36,789,168    20,242,856    18,674,744
                    ------------  ------------  ------------  ------------
   Total operating
    costs and
    expenses         121,677,566   105,484,720    49,612,981    42,443,473
                    ------------  ------------  ------------  ------------

INCOME BEFORE
 INCOME TAXES         52,554,161    51,165,472    23,538,800    18,539,574

  Income taxes,
   current            18,980,805    16,127,712     7,324,661     7,178,058
  Income taxes,
   deferred            1,417,694     3,446,852     1,769,454      (153,004)
                    ------------  ------------  ------------  ------------
   Income taxes, net  20,398,499    19,574,564     9,094,115     7,025,054
                    ------------  ------------  ------------  ------------

NET INCOME          $ 32,155,662  $ 31,590,908  $ 14,444,685  $ 11,514,520
                    ============  ============  ============  ============

Basic net income
 per common share   $       0.82  $       0.84  $       0.37  $       0.31
                    ============  ============  ============  ============
Weighted average of
 common shares
 outstanding - Basic  39,075,571    37,601,409    39,167,241    37,625,013
                    ============  ============  ============  ============

Fully diluted net
 income per share   $       0.80  $       0.78  $       0.36  $       0.28
                    ============  ============  ============  ============
Weighted average of
 common shares
 outstanding -
 Diluted              40,386,445    40,374,409    40,276,276    40,671,509
                    ============  ============  ============  ============

Cash dividend
 declared per
 common share       $       0.22  $       0.34  $          -  $          -
                    ============  ============  ============  ============


                           For the Nine               For the Three
                    Months Ended September 30,  Months Ended September 30,
                    --------------------------  --------------------------
                        2010          2009          2010          2009
                    ------------  ------------  ------------  ------------
Comprehensive
 Income:
Net income          $ 32,155,662  $ 31,590,908  $ 14,444,685  $ 11,514,520
 Change in net
  unrealized (losses)
  gains on
  investments, net
  of tax                (558,217)    4,590,905       408,684    (3,638,071)
                    ------------  ------------  ------------  ------------
Comprehensive
 Income             $ 31,597,445  $ 36,181,813  $ 14,853,369  $  7,876,449
                    ============  ============  ============  ============





            UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEETS

                                               (Unaudited)
                                              September 30,  December 31,
                    ASSETS                         2010          2009
                                              -------------  -------------
Cash and cash equivalents                     $ 294,972,027  $ 192,924,291
Investments:
  Trading securities, at fair value             104,356,012              -
  Available-for-sale securities, at fair
   value                                                  -    114,797,010
Real estate, net                                  4,100,539      3,289,893
Prepaid reinsurance premiums                    228,363,400    200,294,241
Reinsurance recoverables                         67,336,233     91,816,433
Premiums receivable, net                         48,516,258     37,363,110
Receivable from securities                       13,061,387      6,259,973
Other receivables                                 2,805,825      5,068,367
Income taxes recoverable                                  -      3,211,874
Property and equipment, net                       1,280,798      1,245,858
Deferred policy acquisition costs, net           12,852,849      9,464,624
Deferred income taxes                            10,466,570     11,894,289
Other assets                                        900,239        617,337
                                              -------------  -------------
          Total assets                        $ 789,012,137  $ 678,247,300
                                              =============  =============

    LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Unpaid losses and loss adjustment expenses    $ 136,857,850  $ 127,197,753
Unearned premiums                               346,304,445    278,370,544
Advance premium                                  20,957,517     17,078,558
Accounts payable                                  3,496,095      3,172,626
Bank overdraft                                   24,778,730     20,297,061
Reinsurance payable, net                         67,932,331     73,104,595
Income taxes payable                              3,464,260        368,968
Payable for securities                              379,473              -
Other accrued expenses                           22,671,787     20,750,385
Long-term debt                                   23,529,412     24,632,353
                                              -------------  -------------
          Total liabilities                     650,371,900    564,972,843
                                              -------------  -------------

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                        408,771        402,146
     Authorized shares - 55,000,000
     Issued shares - 40,877,088 and
      40,214,884
     Outstanding shares - 39,166,033 and
      37,774,765
     Treasury shares, at cost - 1,711,054 and
      1,809,119 shares                           (7,389,414)    (7,948,606)
Common stock held in trust, at cost - 0 and
 631,000 shares                                           -       (511,110)
Additional paid-in capital                       37,568,052     36,666,914
Accumulated other comprehensive income, net
 of taxes                                             5,437        563,654
Retained earnings                               108,046,314     84,100,372
                                              -------------  -------------
          Total stockholders' equity            138,640,237    113,274,457
                                              -------------  -------------
          Total liabilities and stockholders'
           equity                             $ 789,012,137  $ 678,247,300
                                              =============  =============

Contact Information

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