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Universal Insurance Holdings, Inc. Reports Fourth Quarter and Full Year 2016 Financial Results

FORT LAUDERDALE, Fla., Feb. 21, 2017 /PRNewswire/ -- Universal Insurance Holdings, Inc. (UVE) today reported net income and diluted earnings per share (EPS) of $13.7 million and $0.38, respectively for the fourth quarter of 2016. For the full year 2016, net income was $99.4 million while diluted EPS was $2.79. 

Universal Insurance Holdings, Inc. Chairman and Chief Executive Officer Sean P. Downes commented: "During the fourth quarter, Universal reported strong top line growth and meaningful underwriting profit despite the impact of Hurricane Matthew.  This result is a testament to the fundamental strength of our business model, including the benefits which our vertically integrated structure afford us, our focus on maintaining high underwriting standards, our superior claims handling abilities, and our exceptional catastrophe response team. Our efforts to produce profitable and rate-adequate organic growth continue to produce results both within Florida and in our thirteen other states.  Our unique direct-to-consumer platform, Universal DirectSM, is now online in all of our active states and will contribute incrementally to this growth going forward, as will our Commercial Residential product, which saw its first policy written during the fourth quarter.  Universal enters 2017 extremely well positioned on all fronts, and we remain confident in our ability to deliver outstanding value to our shareholders." 

Fourth Quarter 2016 Highlights

  • Strong Growth Continues – Net premiums earned grew by $13.4 million, or 8.9%, to $164.0 million, while total revenues increased by $16.5 million, or 10.2%, to $178.6 million. Net premiums earned and total revenues were each higher than any other quarter in our history.
  • Expansion Plan Gaining Steam – Our growth efforts both within Florida and in our other states continue to bear fruit, with our non-Florida states demonstrating impressive 43.0% growth in direct written premium for the full year 2016.  Universal DirectSM is now offered in all of our active states, and we wrote our first Commercial Residential policy through our subsidiary, American Platinum Property and Casualty Insurance Company, during the fourth quarter.
  • Profitable Despite Severe Weather – Fourth quarter results included Hurricane Matthew losses of $26.6 million or $0.46 per share. Net income decreased by $15.5 million, or 53.2%, to $13.7 million, while diluted EPS declined by $0.44 or 53.2%, to $0.38 per share. 
  • Balance Sheet Remains Solid – Book value per share grew by 26.9% from year-end 2015 to $10.59.  Our balance sheet remains solid, and is protected by a robust reinsurance program. 
  • Focused on Shareholder Returns – Return on Average Common Equity (ROE) was 14.4% for the fourth quarter and 29.4% for the full year 2016.  We paid dividends of $0.27 per share in the fourth quarter and $0.69 for the full year 2016 (comprised of a $0.14 per share regular quarterly cash dividend and an additional fourth quarter special dividend of $0.13 per share), equating to a 2.6% dividend yield at current share price levels.

Fourth Quarter 2016 Results

Direct premiums written grew 6.8% to $212.8 million from the prior year's quarter, and net premiums earned grew 8.9% to $164.0 million.  Premium growth was due to organic growth in policies in force, both within our Florida book and in our expansion states, and the continued rollout of Universal DirectSM. Commission revenue, policy fees, and other revenue each delivered strong double-digit growth, up 16.8%, 10.2%, and 13.8% respectively versus the prior year's quarter, driven by increased premium volume and continued geographic footprint expansion. 

The combined ratio was 95.1% in the fourth quarter of 2016 compared to 75.8% in the prior year's quarter.  The net loss and LAE ratio increased to 61.9% for the fourth quarter of 2016, compared to 40.2% for the same period last year, with the primary driver of this increase being severe weather during 2016.  The current year's quarter included $26.6 million of pre-tax net losses and loss adjustment expenses, or 16.2 points on the loss and LAE ratio, attributable to Hurricane Matthew. Fourth quarter 2016 results also included $16.8 million of increases to current accident year reserves as well as $4.7 million of favorable prior year reserve development.  General and administrative expenses as a percentage of net earned premiums declined to 33.2% in the fourth quarter of 2016 compared to 35.6% in the prior year's quarter, with the improvement coming predominantly from a decrease in executive compensation and economies of scale. 

Net investment income grew by 96.1% from the prior year's quarter to $3.5 million, with the growth driven by the increasing size of our investment portfolio and a shift in asset mix throughout the year.  Realized investment gains were $1.0 million in the fourth quarter of 2016, a modest increase versus $0.8 million in the prior year's quarter.  Total invested assets were $651.6 million at year-end 2016, up from $489.4 million at year-end 2015.

The effective tax rate for the fourth quarter was 39.9%, up modestly from 39.1% in the prior year's quarter, while the full year 2016 tax rate of 39.0% declined slightly from 39.2% in 2015. 

During the fourth quarter, the Company repurchased 3,929 shares for $0.1 million, or an average cost of $24.07 per share, and during the full year 2016 repurchases were 0.4 million shares for $8.5 million, or an average cost of $19.30 per share.  $17.9 million remains on our current repurchase authorization. 

Stockholders' equity was $371.2 million as of December 31, 2016, or 26.6% growth from $293.1 million as of December 31, 2015.  Book value per common share grew 26.9% to $10.59 at December 31, 2016 compared to $8.34 at December 31, 2015. Return on Average Common Equity (ROE) was 14.4% for the fourth quarter and 29.4% for the full year 2016. 

On November 15, 2016, the Company announced that its Board of Directors had declared a cash dividend of $0.27 per share of common stock, comprised of a $0.14 per share regular quarterly dividend and an additional fourth quarter special dividend of $0.13 per share, which was paid on December 12, 2016 to shareholders of record on December 1, 2016. On January 23, 2017, the Company announced that its Board of Directors had declared a cash dividend of $0.14 per share of common stock payable on March 2, 2017 to shareholders of record on February 17, 2017.

Conference Call

Members of the Universal management team will host a conference call on Wednesday, February 22, 2017 at 10:00 AM ET to discuss fourth quarter 2016 financial results.   Following prepared remarks, management will conduct a question and answer session.  The call will be accessible by dialing toll free at (888) 887-7180 or internationally (toll) at (270) 823-1518 using the Conference I.D.: 70825474.  A live audio webcast of the call will also be accessible on the Universal Insurance website at www.universalinsuranceholdings.com. A replay of the call can be accessed toll free at (855) 859-2056 or internationally (toll) at (404) 537-3406 using the Conference I.D.: 70825474, and will be available through March 9, 2017.

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, Maryland, Delaware, Indiana, Pennsylvania, Minnesota, Michigan, Alabama and Virginia. 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. APPCIC is additionally licensed to write Fire, Commercial Multi-Peril, and Other Liability lines of business in Florida. 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 Form 10-K for the year ended December 31, 2015. 


 


UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands, except per share data)













Three Months Ended



December 31,



2016


2015

PREMIUMS EARNED AND OTHER REVENUES





Direct premiums written


$      212,835


$      199,262

Change in unearned premium


25,821


21,286

Direct premium earned


238,656


220,548

Ceded premium earned


(74,683)


(69,950)

     Premiums earned, net


163,973


150,598

     Net investment income (expense)


3,489


1,779

     Net realized gains (losses) on investments


950


768

     Commission revenue


4,806


4,113

     Policy fees


3,787


3,436

     Other revenue


1,600


1,406

Total premiums earned and other revenues


178,605


162,100

OPERATING COSTS AND EXPENSES





     Losses and loss adjustment expenses


101,480


60,591

     General and administrative expenses


54,398


53,629

Total operating costs and expenses


155,878


114,220

INCOME BEFORE INCOME TAXES


22,727


47,880

Income tax expense


9,072


18,728

NET INCOME


$        13,655


$        29,152






Basic earnings per common share


$            0.39


$            0.84

Weighted average common shares outstanding - Basic


35,042


34,567

Diluted earnings per common share


$            0.38


$            0.82

Weighted average common shares outstanding - Diluted


35,802


35,747

Cash dividend declared per common share


$            0.27


$            0.27

 


 

 

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands, except per share data)













Year Ended



December 31,



2016


2015

PREMIUMS EARNED AND OTHER REVENUES





Direct premiums written


$      954,617


$      883,409

Change in unearned premium


(33,390)


(46,617)

Direct premium earned


921,227


836,792

Ceded premium earned


(288,811)


(332,793)

     Premiums earned, net


632,416


503,999

     Net investment income (expense)


9,540


5,155

     Net realized gains (losses) on investments


2,294


1,060

     Commission revenue


17,733


14,870

     Policy fees


16,880


15,440

     Other revenue


6,426


6,020

Total premiums earned and other revenues


685,289


546,544

OPERATING COSTS AND EXPENSES





     Losses and loss adjustment expenses


301,229


187,739

     General and administrative expenses


221,177


183,782

Total operating costs and expenses


522,406


371,521

INCOME BEFORE INCOME TAXES


162,883


175,023

Income tax expense


63,473


68,539

NET INCOME


$        99,410


$      106,484






Basic earnings per common share


$            2.85


$            3.06

Weighted average common shares outstanding - Basic


34,919


34,799

Diluted earnings per common share


$            2.79


$            2.97

Weighted average common shares outstanding - Diluted


35,650


35,884

Cash dividend declared per common share


$            0.69


$            0.63

 


 

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands, except per share data)

ASSETS


December 31, 2016


December 31, 2015

Cash and cash equivalents


$          105,730


$       197,014

Restricted cash and cash equivalents


2,635


2,635

Fixed maturities, at fair value


584,361


416,083

Equity securities, at fair value


50,803


42,214

Short-term investments, at fair value


5,002


25,021

Investment real estate, net


11,435


6,117

Prepaid reinsurance premiums


124,385


114,673

Reinsurance recoverable


106


22,853

Premiums receivable, net


53,833


50,980

Other receivables


5,824


4,979

Property and equipment, net


32,162


27,065

Deferred policy acquisition costs, net


64,912


60,019

Income taxes recoverable


3,262


5,420

Deferred income tax asset, net


10,674


13,912

Other assets


4,883


4,563

          Total assets


$       1,060,007


$       993,548






LIABILITIES AND STOCKHOLDERS' EQUITY





LIABILITIES:





Unpaid losses and loss adjustment expenses


$            58,494


$         98,840

Unearned premiums


475,756


442,366

Advance premium


17,796


24,813

Accounts payable


3,187


378

Reinsurance payable, net


80,891


73,585

Other liabilities and accrued expenses


37,665


36,424

Long-term debt


15,028


24,050

          Total liabilities


688,817


700,456






STOCKHOLDERS' EQUITY:





Cumulative convertible preferred stock, $.01 par value



          Authorized shares - 1,000;   Issued shares - 10 and 10





  Outstanding shares - 10 and 10;  Minimum liquidation





  preference, $9.99 and $9.99 per share





Common stock, $.01 par value


453


455

          Authorized shares - 55,000;  Issued shares - 45,324 and         





  45,525; Outstanding shares - 35,052 and 35,110 





Treasury shares,  at cost - 10,272 and 10,415  


(86,982)


(80,802)

Additional paid-in capital


82,263


70,789

Accumulated other comprehensive income (loss), net of taxes


(6,408)


(4,006)

Retained earnings


381,864


306,656

          Total stockholders' equity


371,190


293,092

          Total liabilities and stockholders' equity


$       1,060,007


$       993,548

 

Contacts: 

Investors
Dean Evans
VP Investor Relations
954-958-1306
de0130@universalproperty.com

Media
Andy Brimmer / Mahmoud Siddig
Joele Frank, Wilkinson Brimmer Katcher
212-355-4449

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