Universal Insurance Holdings, Inc. Reports Fourth-Quarter and Full-Year 2012 Financial Results

Full-Year 2012 Diluted EPS Grows 50 Percent Versus 2011; Fourth-Quarter 2012 Diluted EPS Increases 17 Cents Versus the Same Quarter Last Year

Marketwired

FORT LAUDERDALE, FL--(Marketwire - Mar 8, 2013) - Universal Insurance Holdings, Inc. (Company) (NYSE MKT: UVE), a vertically integrated insurance holding company, reported net income of $4.4 million, or $0.11 per diluted share, an increase of $0.17, for the fourth quarter of 2012, compared to a net loss of $2.3 million, or $0.06 per diluted share, for the same period in 2011. 

For the full year of 2012, the Company reported net income of $30.3 million and diluted earnings per share of $0.75, an increase of 50.0 percent, compared to net income of $20.1 million, or $0.50 per diluted share, for the same period of 2011.

President and CEO Sean Downes commented, "Our full-year 2012 results reflect the successful execution of our business plan leading to better underwriting margins compared to a year ago. Through successful growth initiatives and favorable rate changes, we were able to grow our top line by 8.1 percent in 2012 while maintaining underwriting discipline and managing our overall exposure to catastrophic risk. We are pleased that this 2012 profitability led to 9.0 percent growth in stockholders' equity and allowed us to declare and pay dividends totaling $0.46 per share during the year."

Fourth-Quarter 2012 Results
Net income during the fourth quarter of 2012 increased $6.7 million, or $0.17 per diluted share, primarily as a result of an increase in net earned premiums. The improvement in fourth quarter 2012 profitability was somewhat mitigated by pre-tax charges of $6.3 million related to the previously disclosed mandatory assessment by the Florida Insurance Guaranty Association (FIGA). The Company will recover the assessment from the policyholders of Universal Property & Casualty Insurance Company (UPCIC) over an estimated twelve-month period which began on February 1, 2013.

Direct premiums written collectively by UPCIC and American Platinum Property and Casualty Insurance Company, the Company's wholly-owned insurance company subsidiaries, rose 6.8 percent during the fourth quarter of 2012. Net premiums earned grew $15.5 million, or 29.8 percent, in the fourth quarter of 2012 compared to the same quarter in 2011, primarily as a result of increases in premium rates over the past 24 months, 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. 

Fourth-quarter 2012 operating costs increased by 5.9 percent compared to the same quarter last year, as general and administrative expenses increased $12.4 million, or 64.2 percent, partly attributable to the FIGA assessment mentioned above. Meanwhile, somewhat mitigating the rise in operating costs was a reduction in losses and loss adjustment expenses of $8.7 million, or 20.2 percent.

At December 31, 2012, stockholders' equity was $163.5 million compared to $166.0 million at September 30, 2012, and $150.0 million at December 31, 2011. 

Full-Year 2012 Results
For the full year of 2012, the Company's net income and diluted earnings per share grew by 50.7 percent and 50.0 percent, respectively, compared to the same period of 2011.

Net premiums earned increased 16.1 percent for the full year 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, and the reduction in the quota-share cession rate.

Cash Dividends
On November 28, 2012, the Company announced that its board of directors declared a cash dividend of $0.20 per share of common stock, which was paid on December 28, 2012 to shareholders of record on December 14, 2012. In total, $0.46 per share in cash dividends were declared and paid in 2012.

Also, on February 8, 2013, the Company announced that its board of directors declared a cash dividend of $0.08 per share of common stock to be paid on April 5, 2013 to shareholders of record on March 14, 2013. The board further indicated that it expects to declare additional quarterly dividends in the same amount to shareholders of record 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.

Premium Rate Update
On February 7, 2013, the Company announced that UPCIC received approval from the Florida Office of Insurance Regulation for premium rate increases for its homeowners and dwelling fire programs within Florida. The premium rate increases are expected to average approximately 14.1 percent statewide for its homeowners program and 14.5 percent statewide for its dwelling fire program. The effective dates for the homeowners program rate increase are January 18, 2013, for new business and March 9, 2013, for renewal business. The effective dates for the dwelling fire program rate increase are January 14, 2013, for new business and March 3, 2013, for renewal business.

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, 2012.

   
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)  
(in thousands, except per share data)  
   
    For the Three Months Ended December 31,  
    2012     2011  
PREMIUMS EARNED AND OTHER REVENUES                
  Direct premiums written   $ 174,571     $ 163,438  
  Ceded premiums written     (118,961 )     (119,306 )
    Net premiums written     55,610       44,132  
  (Increase) decrease in net unearned premium     11,664       7,691  
  Premiums earned, net     67,274       51,823  
  Net investment income     278       430  
  Net realized gains (losses) on investments     353       (10,146 )
  Net unrealized gains (losses) on investments     (2,047 )     4,627  
  Net foreign currency gains (losses) on investments     (1 )     1,916  
  Commission revenue     4,889       5,194  
  Policy Fees     3,041       3,188  
  Other revenue     1,440       1,411  
Total premiums earned and other revenues     75,227       58,443  
OPERATING COSTS AND EXPENSES                
  Losses and loss adjustment expenses     34,275       42,929  
  General and administrative expenses     31,588       19,236  
    Total operating costs and expenses     65,863       62,165  
INCOME BEFORE INCOME TAXES     9,364       (3,722 )
  Income taxes, current     7,950       (2,538 )
  Income taxes, deferred     (2,992 )     1,129  
    Income taxes, net     4,958       (1,409 )
NET INCOME   $ 4,406     $ (2,313 )
                 
Basic earnings per common share   $ 0.11     $ (0.06 )
Weighted average number of common shares outstanding - basic     39,719       39,207  
                 
Diluted earnings per common share   $ 0.11     $ (0.06 )
Weighted average number of common shares outstanding - diluted     41,091       40,165  
                 
Cash dividend declared per common share   $ 0.20     $ 0.18  
   
   
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF INCOME  
(in thousands, except per share data)  
   
    For the Years Ended December 31,  
    2012     2011  
PREMIUMS EARNED AND OTHER REVENUES                
  Direct premiums written   $ 780,128     $ 721,462  
  Ceded premiums written     (517,604 )     (512,979 )
    Net premiums written     262,524       208,483  
  (Increase) decrease in net unearned premium     (31,404 )     (9,498 )
  Premiums earned, net     231,120       198,985  
  Net investment income     441       788  
  Net realized gains (losses) on investments     (11,943 )     2,350  
  Net unrealized gains (losses) on investments     9,443       (18,410 )
  Net foreign currency gains (losses) on investments     22       1,532  
  Commission revenue     20,383       19,507  
  Policy Fees     14,475       15,298  
  Other revenue     5,998       5,811  
Total premiums earned and other revenues     269,939       225,861  
OPERATING COSTS AND EXPENSES                
  Losses and loss adjustment expenses     126,187       124,309  
  General and administrative expenses     91,193       67,834  
    Total operating costs and expenses     217,380       192,143  
INCOME BEFORE INCOME TAXES     52,559       33,718  
  Income taxes, current     18,434       23,152  
  Income taxes, deferred     3,813       (9,543 )
    Income taxes, net     22,247       13,609  
NET INCOME   $ 30,312     $ 20,109  
                 
Basic earnings per common share   $ 0.76     $ 0.51  
Weighted average number of common shares outstanding - basic     39,614       39,184  
                 
Diluted earnings per common share   $ 0.75     $ 0.50  
Weighted average number of common shares outstanding - diluted     40,616       40,442  
                 
Cash dividend declared per common share   $ 0.46     $ 0.32  
   
   
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
(in thousands, except per share data)  
   
    December 31,  
ASSETS   2012     2011  
Cash and cash equivalents   $ 347,392     $ 229,685  
Restricted cash and cash equivalents     33,009       78,312  
Fixed maturities, at fair value     4,009       3,801  
Equity securities, at fair value     85,041       95,345  
Prepaid reinsurance premiums     239,921       243,095  
Reinsurance recoverable     89,191       85,706  
Reinsurance receivable, net     24,334       55,205  
Premiums receivable, net     50,125       45,828  
Receivable from securities sold     1,096       9,737  
Other receivables     2,017       2,732  
Property and equipment, net     8,968       7,116  
Deferred policy acquisition costs, net     17,282       12,996  
Income taxes recoverable     2,594       -  
Deferred income tax asset, net     19,178       22,991  
Other assets     1,578       1,477  
    Total assets   $ 925,735     $ 894,026  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
LIABILITIES:                
Unpaid losses and loss adjustment expenses   $ 193,241     $ 187,215  
Unearned premiums     388,071       359,842  
Advance premium     15,022       19,390  
Accounts payable     4,368       4,314  
Bank overdraft     25,994       25,485  
Payable for securities purchased     1,275       1,067  
Reinsurance payable, net     85,259       87,497  
Income taxes payable     699       12,740  
Other liabilities and accrued expenses     28,071       24,780  
Long-term debt     20,221       21,691  
    Total liabilities     762,221       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     38,684       36,536  
Retained earnings     127,511       116,158  
    Total stockholders' equity     163,514       150,005  
    Total liabilities and stockholders' equity   $ 925,735     $ 894,026  
Contact:
Investor
Philip Kranz
Dresner Corporate Services
312-780-7240
Email Contact

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