SOURCE: Universal Insurance Holdings, Inc.

Universal Insurance Holdings, Inc.

August 06, 2013 17:04 ET

UVE Reports Second-Quarter 2013 Net Income Growth of 119 Percent and Earnings per Share Growth of 132 Percent

FORT LAUDERDALE, FL--(Marketwired - Aug 6, 2013) -  Universal Insurance Holdings, Inc. (Company) (NYSE MKT: UVE) reported net income of $17.0 million, or $0.44 per diluted share, for the second quarter of 2013, compared to net income of $7.8 million, or $0.19 per diluted share, for the same period in 2012.

Second Quarter 2013 Highlights

  • Strongest quarterly net income and earnings per share (EPS) since 2007.
  • Net income and EPS growth of 119 percent and 132 percent, respectively, compared to Q2 2012.
  • Net earned premiums grew by over 20 percent versus Q2 2012.
  • Repurchased approximately 6.7 million shares of common stock during Q2 2012 at a significant discount to market price.

Chairman, President and CEO Sean Downes commented, "Second-quarter 2013 earnings were very strong and represented our best quarterly results since 2007. With underwriting margins continuing to improve and a significantly better investment portfolio performance, we were able to more than double earnings over the second quarter of last year. With first half EPS growth of nearly 66 percent, we believe Universal is well positioned to continue implementing our strategic business plan."

Second-Quarter 2013 Results
Comparing the second quarter of 2013 to the second quarter of 2012, net income improved by $9.3 million, or $0.25 per diluted share, as a result of higher net earned premiums, a reduction in losses and loss adjustment expenses, as well as the absence of unrealized gains and losses for changes in the fair value of trading investments. Additionally, second-quarter 2013 EPS benefited from lower outstanding shares related to the share repurchases made by the Company during the quarter. 

Net earned premiums grew $11.2 million, or 20.1 percent, in the second quarter of 2013 compared to the same quarter in 2012, primarily as a result of increases in premium rates over the past 24 months, a reduction in the quota-share cession rate from 50 percent for the 2011-2012 reinsurance program to 45 percent for the 2012-2013 and 2013-2014 reinsurance programs, and strategic initiatives the Company has undertaken to manage its exposure. 

Second-quarter 2013 operating costs increased 2.4 percent compared to the same quarter last year, as general and administrative expenses increased $5.4 million, or 30.7 percent, and were partially mitigated by lower losses and loss adjustment expenses, which decreased $4.2 million, or 14.4 percent.

First Six-Months 2013 Results
For the first six months of 2013, the Company's net income and diluted earnings per share grew 64.2 percent and 65.9 percent, respectively, compared to the same period of 2012.

Net premiums earned increased 26.8 percent for the first six months of 2013 compared to the same period of 2012, as a result of the factors mentioned above in the second-quarter discussion.

Share Repurchases
During the second quarter of 2013, the Company repurchased approximately 6.7 million shares of its common stock at a weighted average purchase price of $4.21, a significant discount compared to the market price of the stock.

Also, as announced on August 1, the Company repurchased an additional 350,000 shares of its common stock at $7.02 per share, a discount to the market price of its stock.

Cash Dividends
On April 18, 2013, the Company announced that its board of directors declared a cash dividend of $0.08 per share of common stock, which was paid on June 17, 2013, to shareholders of record on June 3, 2013. The dividend declaration was consistent with the Company's previously announced intention to declare a dividend of $0.08 per share in the second, third and fourth quarters of 2013. If declared and paid as intended, the annual dividend in 2013 would be $0.32 for each common share.

Repositioned Investment Portfolio
During the second quarter, Universal utilized its cash position to reposition its investment portfolio to consist of a diversified available for sale portfolio of fixed maturities and equity securities through Deutsche Bank Investment Asset Division, the Company's investment portfolio advisor. At June 30, 2013, the Company had fixed maturities of $289.4 million and equity securities of $53.5 million, which compares to $14.0 million of fixed maturities and no equity securities at March 31, 2013.

About Universal Insurance Holdings, Inc.
Universal Insurance Holdings, Inc., with its wholly-owned subsidiaries, is a vertically integrated insurance holding company performing all aspects of insurance underwriting, distribution and claims. Universal Property & Casualty Insurance Company (UPCIC), a wholly-owned subsidiary of the Company, is one of the leading writers of homeowners insurance in Florida and is now fully licensed and has commenced its operations in North Carolina, South Carolina, Hawaii, Georgia, Massachusetts and Maryland. American Platinum Property and Casualty Insurance Company (APPCIC), also a wholly-owned subsidiary, currently writes homeowners multi-peril insurance on Florida homes valued in excess of $1 million, which are limits and coverages currently not targeted through its affiliate UPCIC. 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, 2012 and the Form 10-Q for the quarter ended June 30, 2013.

 
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in thousands, except per share data)
 
    Three Months Ended June 30,  
    2013     2012  
PREMIUMS EARNED AND OTHER REVENUES                
Direct premiums written   $ 219,946     $ 222,568  
Ceded premiums written     (133,897 )     (102,433 )
Net premiums written     86,049       120,135  
Change in net unearned premium     (19,182 )     (64,441 )
  Premiums earned, net     66,867       55,694  
  Net investment income (expense)     137       (16 )
  Net realized gains (losses) on investments     (1 )     (1,705 )
  Net change in unrealized gains (losses) on investments     23       (5,788 )
  Commission revenue     5,271       6,131  
  Policy fees     3,819       4,072  
  Other revenue     1,640       1,540  
Total premiums earned and other revenues     77,756       59,928  
OPERATING COSTS AND EXPENSES                
  Losses and loss adjustment expenses     25,199       29,437  
  General and administrative expenses     22,869       17,499  
Total operating costs and expenses     48,068       46,936  
INCOME BEFORE INCOME TAXES     29,688       12,992  
  Income taxes, current     12,351       9,086  
  Income taxes, deferred     308       (3,871 )
    Income taxes, net     12,659       5,215  
NET INCOME   $ 17,029     $ 7,777  
                 
Basic earnings per common share   $ 0.47     $ 0.20  
Weighted average common shares outstanding - Basic     36,378       39,668  
                 
Fully diluted earnings per common share   $ 0.44     $ 0.19  
Weighted average common shares outstanding - Diluted     38,314       40,377  
                 
Cash dividend declared per common share   $ 0.08     $ 0.08  
                 
 
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in thousands, except per share data)
 
    Six Months Ended June 30,  
    2013     2012  
PREMIUMS EARNED AND OTHER REVENUES                
Direct premiums written   $ 424,085     $ 412,571  
Ceded premiums written     (275,214 )     (265,867 )
Net premiums written     148,871       146,704  
Change in net unearned premium     (16,595 )     (42,370 )
  Premiums earned, net     132,276       104,334  
  Net investment income (expense)     149       (52 )
  Net realized gains (losses) on investments     (16,038 )     (9,154 )
  Net change in unrealized gains (losses) on investments     7,897       3,399  
  Net foreign currency gains (losses) on investments     -       23  
  Commission revenue     10,257       10,672  
  Policy fees     7,505       7,973  
  Other revenue     3,165       2,980  
Total premiums earned and other revenues     145,211       120,175  
OPERATING COSTS AND EXPENSES                
  Losses and loss adjustment expenses     51,682       55,611  
  General and administrative expenses     44,079       35,343  
Total operating costs and expenses     95,761       90,954  
INCOME BEFORE INCOME TAXES     49,450       29,221  
  Income taxes, current     16,298       9,860  
  Income taxes, deferred     4,164       1,711  
    Income taxes, net     20,462       11,571  
NET INCOME   $ 28,988     $ 17,650  
                 
Basic earnings per common share   $ 0.76     $ 0.44  
Weighted average common shares outstanding - Basic     38,138       39,528  
                 
Fully diluted earnings per common share   $ 0.73     $ 0.44  
Weighted average common shares outstanding - Diluted     39,760       40,460  
                 
Cash dividend declared per common share   $ 0.16     $ 0.18  
                 
 
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands, except per share data)
 
    As of  
ASSETS   June 30,
2013
    December 31,
2012
 
Cash and cash equivalents   $ 180,857     $ 347,392  
Restricted cash and cash equivalents     2,653       33,009  
Fixed maturities (trading), at fair value     -       4,009  
Equity securities (trading), at fair value     -       85,041  
Fixed maturities (available for sale), at fair value     289,388       -  
Equity securities (available for sale), at fair value     53,507       -  
Prepaid reinsurance premiums     255,941       239,921  
Reinsurance recoverable     79,151       89,191  
Reinsurance receivable, net     24,542       24,334  
Premiums receivable, net     56,846       50,125  
Receivable from securities sold     -       1,096  
Other receivables     4,172       2,017  
Property and equipment, net     9,309       8,968  
Deferred policy acquisition costs, net     17,241       17,282  
Income taxes recoverable     9,078       2,594  
Deferred income tax asset, net     16,652       19,178  
Other assets     2,462       1,578  
  Total assets   $ 1,001,799     $ 925,735  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY            
LIABILITIES:                
Unpaid losses and loss adjustment expenses   $ 166,260     $ 193,241  
Unearned premiums     420,687       388,071  
Advance premium     25,671       15,022  
Accounts payable     5,010       4,368  
Bank overdraft     24,926       25,994  
Payable for securities purchased     3,104       1,275  
Reinsurance payable, net     134,699       85,259  
Income taxes payable     193       699  
Other liabilities and accrued expenses     27,745       28,071  
Long-term debt     37,476       20,221  
  Total liabilities     845,771       762,221  
                 
                 
STOCKHOLDERS' EQUITY:                
Cumulative convertible preferred stock, $.01 par value     1       1  
  Authorized shares - 1,000                
  Issued shares - 108                
  Outstanding shares - 108                
  Minimum liquidation preference, $2.66 per share                
Common stock, $.01 par value     430       419  
  Authorized shares - 55,000                
  Issued shares - 42,981 and 41,889                
  Outstanding shares - 35,297 and 40,871                
  Treasury shares, at cost - 7,684 and 1,018     (31,179 )     (3,101 )
Additional paid-in capital     38,975       38,684  
Accumulated other comprehensive income, net of taxes     (2,608 )     -  
Retained earnings     150,409       127,511  
  Total stockholders' equity     156,028       163,514  
  Total liabilities and stockholders' equity   $ 1,001,799     $ 925,735  
                   

Contact Information

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