UVE Reports Third-Quarter 2013 Net Income Growth of 75 Percent and Earnings per Share Growth of 100 Percent

Marketwired

FORT LAUDERDALE, FL--(Marketwired - Nov 4, 2013) -  Universal Insurance Holdings, Inc. (Company) (NYSE MKT: UVE) reported net income of $14.4 million, or $0.40 per diluted share, for the third quarter of 2013, compared to net income of $8.3 million, or $0.20 per diluted share, for the same period in 2012.

Third-Quarter 2013 Highlights

  • Best third-quarter net income and earnings per share (EPS) in Company history.
  • Net income and EPS grew 75 percent and 100 percent, respectively, compared to Q3 2012.
  • Net earned premiums grew nearly 16 percent versus Q3 2012.
  • Losses and loss adjustment expenses declined by nearly 22 percent versus Q3 2012.
  • Repurchased 591,333 shares of common stock during Q3 2013 at a discount to then-current market price. 

Chairman, President and CEO Sean Downes commented, "Our efforts to improve rate adequacy, streamline claims handling, and reduce reinsurance costs, while also managing our risks, collectively contributed to substantially improved underwriting margins during the quarter. In turn, this improvement contributed to our best third-quarter net income in Company history. In addition, third-quarter EPS, partially reflecting our share repurchases, was the best in Company history for the quarter. We are proud of these results, as they reflect the continued execution of our business plan, and our commitment to achieving our strategic objectives."

Third-Quarter 2013 Results
Comparing the third quarter of 2013 to the third quarter of 2012, net income improved $6.2 million, or $0.20 per diluted share, reflecting an improvement in underwriting income, partially offset by the absence of net trading portfolio gains that were generated during the third quarter of 2012. Additionally, third-quarter 2013 EPS benefited from lower outstanding shares related to the share repurchases made by the Company during the first nine months of 2013. 

Net earned premiums grew $9.4 million, or 15.8 percent, in the third quarter of 2013 compared to the same quarter in 2012, primarily as a result of increases in premium rates over the past 24 months, and partly attributable to lower reinsurance costs effective with the 2013-2014 reinsurance program. 

Third-quarter 2013 operating costs decreased 12.1 percent compared to the same quarter last year, as losses and loss adjustment expenses decreased $8.0 million, or 21.9 percent, primarily attributable to an improvement in the adjustments made in the current years related to prior accident years. The decrease in operating costs was partially mitigated by nominally higher general and administrative expenses, which increased $0.7 million, or 2.7 percent.

First Nine-Month 2013 Results
For the first nine months of 2013, the Company's net income and diluted earnings per share grew 67.5 percent and 76.6 percent, respectively, compared to the same period of 2012.

Net premiums earned increased 22.8 percent for the first nine months of 2013 compared to the same period of 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 lower reinsurance costs effective with the 2013-2014 reinsurance program. 

Share Repurchases
During the third quarter of 2013, the Company repurchased 591,333 shares of its common stock at a weighted average purchase price of $7.24, a discount compared to the then-current market price of the stock.

Collectively, through the first nine months of 2013, the Company repurchased approximately 7.3 million shares of its common stock at a weighted average purchase price of $4.46 per share, a significant discount to the then-current market price of its stock.

Cash Dividends
On August 27, 2013, the Company announced that its board of directors declared a cash dividend of $0.10 per share of common stock, which was paid on September 30, 2013, to shareholders of record on September 23, 2013. The $0.10 per share dividend included the expected $0.08 per share third-quarter dividend and an additional dividend of $0.02 per share. As previously announced, the board expects to declare a dividend of $0.08 per share in the fourth quarter of 2013. If declared and paid as intended, the annual dividend in 2013 would be $0.34 for each common share.

Financial Results Presentation
The Company will make available an audio recording of a presentation discussing its third quarter 2013 financial results on November 4, 2013, at approximately 5:00 pm Eastern. The presentation will be pre-recorded and there will be no opportunity for live questions. The audio recording will be available at www.universalinsuranceholdings.com until December 4, 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 September 30, 2013.

   
   
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)  
(in thousands, except per share data)  
   
    Three Months Ended September 30,  
    2013     2012  
PREMIUMS EARNED AND OTHER REVENUES                
Direct premiums written   $ 186,079     $ 192,986  
Ceded premiums written     (124,961 )     (132,776 )
Net premiums written     61,118       60,210  
Change in net unearned premium     7,809       (698 )
  Premiums earned, net     68,927       59,512  
  Net investment income (expense)     382       215  
  Net realized gains (losses) on investments     56       (3,142 )
  Net change in unrealized gains (losses) on investments     15       8,091  
  Commission revenue     4,180       4,822  
  Policy fees     3,231       3,461  
  Other revenue     1,577       1,578  
Total premiums earned and other revenues     78,368       74,537  
OPERATING COSTS AND EXPENSES                
  Losses and loss adjustment expenses     28,335       36,301  
  General and administrative expenses     24,920       24,262  
Total operating costs and expenses     53,255       60,563  
INCOME BEFORE INCOME TAXES     25,113       13,974  
  Income taxes, current     9,142       624  
  Income taxes, deferred     1,564       5,094  
    Income taxes, net     10,706       5,718  
NET INCOME   $ 14,407     $ 8,256  
                 
Basic earnings per common share   $ 0.43     $ 0.21  
Weighted average common shares outstanding - Basic     33,658       39,679  
                 
Fully diluted earnings per common share   $ 0.40     $ 0.20  
Weighted average common shares outstanding - Diluted     35,611       40,450  
                 
Cash dividend declared per common share   $ 0.10     $ 0.08  
   
   
   
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)  
(in thousands, except per share data)  
             
    Nine Months Ended September 30,  
    2013     2012  
PREMIUMS EARNED AND OTHER REVENUES                
Direct premiums written   $ 610,164     $ 605,557  
Ceded premiums written     (400,175 )     (398,643 )
Net premiums written     209,989       206,914  
Change in net unearned premium     (8,787 )     (43,068 )
  Premiums earned, net     201,202       163,846  
  Net investment income (expense)     530       163  
  Net realized gains (losses) on investments     (15,982 )     (12,296 )
  Net change in unrealized gains (losses) on investments     7,912       11,490  
  Net foreign currency gains (losses) on investments     -       23  
  Commission revenue     14,437       15,494  
  Policy fees     10,737       11,434  
  Other revenue     4,743       4,558  
Total premiums earned and other revenues     223,579       194,712  
OPERATING COSTS AND EXPENSES                
  Losses and loss adjustment expenses     80,018       91,912  
  General and administrative expenses     68,998       59,605  
Total operating costs and expenses     149,016       151,517  
INCOME BEFORE INCOME TAXES     74,563       43,195  
  Income taxes, current     25,440       10,484  
  Income taxes, deferred     5,728       6,805  
    Income taxes, net     31,168       17,289  
NET INCOME   $ 43,395     $ 25,906  
                 
Basic earnings per common share   $ 1.18     $ 0.65  
Weighted average common shares outstanding - Basic     36,628       39,579  
                 
Fully diluted earnings per common share   $ 1.13     $ 0.64  
Weighted average common shares outstanding - Diluted     38,352       40,458  
                 
Cash dividend declared per common share   $ 0.26     $ 0.26  
   
   
   
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)  
(in thousands, except per share data)  
             
    As of  
ASSETS   September 30, 2013     December 31, 2012  
Cash and cash equivalents   $ 137,286     $ 347,392  
Restricted cash and cash equivalents     2,600       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     298,504       -  
Equity securities (available for sale), at fair value     70,862       -  
Prepaid reinsurance premiums     250,506       239,921  
Reinsurance recoverable     74,900       89,191  
Reinsurance receivable, net     24,268       24,334  
Premiums receivable, net     52,399       50,125  
Receivable from securities sold     -       1,096  
Other receivables     3,446       2,017  
Property and equipment, net     9,300       8,968  
Deferred policy acquisition costs, net     16,953       17,282  
Income taxes recoverable     14,498       2,594  
Deferred income tax asset, net     13,756       19,178  
Other assets     3,066       1,578  
    Total assets   $ 972,344     $ 925,735  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
LIABILITIES:                
Unpaid losses and loss adjustment expenses   $ 157,374     $ 193,241  
Unearned premiums     407,443       388,071  
Advance premium     23,692       15,022  
Accounts payable     3,863       4,368  
Bank overdraft     22,209       25,994  
Payable for securities purchased     -       1,275  
Reinsurance payable, net     118,573       85,259  
Income taxes payable     1,450       699  
Other liabilities and accrued expenses     33,982       28,071  
Long-term debt     37,356       20,221  
    Total liabilities     805,942       762,221  
                 
                 
STOCKHOLDERS' EQUITY:                
Cumulative convertible preferred stock, $.01 par value     1       1  
  Authorized shares - 1,000                
  Issued shares - 64                
  Outstanding shares - 64                
  Minimum liquidation preference, $2.66 per share                
Common stock, $.01 par value     434       419  
  Authorized shares - 55,000                
  Issued shares - 43,387 and 41,889                
  Outstanding shares - 35,111 and 40,871                
  Treasury shares, at cost - 8,276 and 1,018     (35,467 )     (3,101 )
Additional paid-in capital     40,631       38,684  
Accumulated other comprehensive income, net of taxes     (488 )     -  
Retained earnings     161,291       127,511  
    Total stockholders' equity     166,402       163,514  
    Total liabilities and stockholders' equity   $ 972,344     $ 925,735  
                 
Contact:
Investor
Philip Kranz
Dresner Corporate Services
312-780-7240
Email Contact
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