Universal Insurance Holdings, Inc. Reports Third-Quarter 2012 Financial Results

Third Quarter 2012 Diluted EPS Increases 18 Cents Versus the Same Quarter Last Year, While First Nine-Months 2012 Diluted EPS Grows 16.4 Percent Versus the First Nine Months of 2011

Marketwired

FORT LAUDERDALE, FL--(Marketwire - Nov 9, 2012) - Universal Insurance Holdings, Inc. (UIH) (NYSE MKT: UVE) with its wholly-owned subsidiaries (the Company or Universal), a vertically integrated insurance holding company, reported net income of $8.3 million, or $0.20 per diluted share, an increase of $0.18, for the third quarter of 2012, compared to net income of $1.0 million, or $0.02 per diluted share, for the same period in 2011. 

Third-Quarter 2012 Results
Net income during the third quarter of 2012 increased $7.3 million, or $0.18 per diluted share, as a result of an increase in net earned premiums and improved performance in the Company's investment trading portfolio.

Direct premiums written collectively by Universal Property & Casualty Insurance Company (UPCIC) and American Platinum Property and Casualty Insurance Company (APPCIC), Universal's wholly-owned insurance company subsidiaries, rose 12.6 percent during the third quarter of 2012. Net premiums earned grew $9.9 million, or 19.9 percent, in the third quarter of 2012 compared to the same quarter in 2011, primarily as a result of increases in premium rates over the past 24 months, the most recent of which were in January and February of 2012, and a reduction in the quota-share cession rate from 50 percent for the 2011-2012 reinsurance program to 45 percent for the 2012-2013 reinsurance program. 

Third-quarter 2012 operating costs increased compared to the same quarter last year, as net losses and loss adjustment expenses (LAE) increased $7.0 million, or 23.7 percent, while general and administrative expenses increased $5.4 million, or 28.9 percent. Also in the third quarter, the Company decided to forego efforts to collect $5.4 million from a reinsurer because the tangible and intangible costs associated with the collection effort appeared likely to exceed the amount claimed.

At September 30, 2012, stockholders' equity was $166.0 million compared to $161.8 million at June 30, 2012, and $156.9 million at September 30, 2011. 

Cash Dividends
On September 10, 2012, UIH announced that its board of directors declared a cash dividend of $0.08 per share, which was paid on October 9, 2012, to shareholders of record on September 26, 2012. At that time, the board further indicated that it expects to declare an additional dividend of the same amount to shareholders of record in the fourth quarter, which would bring this year's aggregate declared annual dividend to $0.34 for each share of common stock. Declaration and payment of future dividends is subject to the discretion of UIH's board and will be dependent on future earnings, cash flows, financial requirements and other factors.

First Nine-Months 2012 Results
For the first nine months of 2012, the Company's net income and diluted earnings per share grew by 15.5 percent and 16.4 percent, respectively, compared to the same period of 2011.

Net premiums earned increased 11.3 percent for the first nine months of 2012 compared to the same period of 2011, primarily as a result of the previously mentioned rate increases, which have had a positive effect on premium generated by renewal policies.

Tropical Storm/Hurricane Sandy Update
The Company has received few claims from Tropical Storm/Hurricane Sandy, which recently affected the eastern United States. The insurance company subsidiaries write most of their policies in Florida, which was not severely affected.

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 three 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, 2011 and the Form 10-Q for the quarter ended September 30, 2012.

   
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)  
(in thousands, except per share data)  
                         
    Three Months Ended September 30,     Nine Months
Ended September 30,
 
    2012     2011     2012     2011  
PREMIUMS EARNED AND OTHER REVENUES                                
Direct premiums written   $ 192,986     $ 171,370     $ 605,557     $ 558,024  
Ceded premiums written     (132,776 )     (123,984 )     (398,643 )     (393,673 )
Net premiums written     60,210       47,386       206,914       164,351  
Change in net unearned premium     (698 )     2,248       (43,068 )     (17,189 )
  Premiums earned, net     59,512       49,634       163,846       147,162  
  Net investment income (expense)     215       122       163       358  
  Net realized gains (losses) on investments     (3,142 )     5,884       (12,296 )     12,496  
  Net unrealized gains (losses) on investments     8,091       (15,985 )     11,490       (23,037 )
  Net foreign currency gains (losses) on investments     -       (455 )     23       (384 )
  Commission revenue     4,822       5,192       15,494       14,313  
  Policy fees     3,461       3,535       11,434       12,110  
  Other revenue     1,578       1,486       4,558       4,400  
Total premiums earned and other revenues     74,537       49,413       194,712       167,418  
                                 
OPERATING COSTS AND EXPENSES                                
  Losses and loss adjustment expenses     36,301       29,343       91,912       81,380  
  General and administrative expenses     24,262       18,827       59,605       48,598  
Total operating costs and expenses     60,563       48,170       151,517       129,978  
                                 
INCOME BEFORE INCOME TAXES     13,974       1,243       43,195       37,440  
                                 
  Income taxes, current     624       7,331       10,484       25,690  
  Income taxes, deferred     5,094       (7,063 )     6,805       (10,672 )
    Income taxes, net     5,718       268       17,289       15,018  
NET INCOME AND COMPREHENSIVE INCOME   $ 8,256     $ 975     $ 25,906     $ 22,422  
                                 
Basic earnings per common share   $ 0.21     $ 0.02     $ 0.65     $ 0.57  
Weighted average of common shares                                
outstanding - Basic     39,679       39,190       39,579       39,177  
                                 
Fully diluted earnings per common share   $ 0.20     $ 0.02     $ 0.64     $ 0.55  
Weighted average of common shares                                
outstanding - Diluted     40,450       40,330       40,458       40,536  
                                 
Cash dividends declared per common share   $ 0.08     $ 0.08     $ 0.26     $ 0.18  
   
   
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)  
(in thousands, except per share data)  
   
    As of  
    September 30,     December 31,  
ASSETS:   2012     2011  
Cash and cash equivalents   $ 365,675     $ 229,685  
Restricted cash and cash equivalents     95,135       78,312  
Fixed maturities, at fair value     4,008       3,801  
Equity securities, at fair value     48,875       95,345  
Prepaid reinsurance premiums     248,899       243,095  
Reinsurance recoverables     80,800       85,706  
Reinsurance receivable, net     30,528       55,205  
Premiums receivable, net     56,044       45,828  
Receivable from securities sold     1,750       9,737  
Other receivables     3,197       2,732  
Property and equipment, net     8,838       7,116  
Deferred policy acquisition costs, net     18,019       12,996  
Income taxes recoverable     406       -  
Deferred income tax asset, net     16,185       22,991  
Other assets     1,553       1,477  
    Total assets   $ 979,912     $ 894,026  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
LIABILITIES:                
Unpaid losses and loss adjustment expenses   $ 172,674     $ 187,215  
Unearned premiums     408,714       359,842  
Advance premium     18,468       19,390  
Accounts payable     4,252       4,314  
Bank overdraft     29,198       25,485  
Payable for securities purchased     4,706       1,067  
Reinsurance payable     123,934       87,497  
Income taxes payable     23       12,740  
Dividends payable to shareholders     3,287       -  
Other liabilities and accrued expenses     28,054       24,780  
Long-term debt     20,588       21,691  
    Total liabilities     813,898       744,021  
                 
                 
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     419       411  
  Authorized shares - 55,000                
  Issued shares - 41,889 and 41,100                
  Outstanding shares - 40,871 and 40,082                
  Treasury shares, at cost - 1,018     (3,101 )     (3,101 )
Additional paid-in capital     37,408       36,536  
Retained earnings     131,287       116,158  
    Total stockholders' equity     166,014       150,005  
    Total liabilities and stockholders' equity   $ 979,912     $ 894,026  
Contact:
Investor
Philip Kranz
Dresner Corporate Services
312-780-7240
Email Contact

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