Universal Insurance Holdings Inc (UVE) Reports Q4 and Full Year 2023 Results
Net Income: $19.997 million for Q4, down 20.4% from the prior year quarter.
Diluted EPS: GAAP EPS at $0.68, adjusted EPS at $0.43 for Q4.
Direct Premiums Written: Increased by 4.0% to $432.6 million in Q4.
Book Value Per Share: Increased by 24.4% to $11.78 year-over-year.
Capital Return: $12.3 million returned to shareholders in Q4.
Revenues: Total revenues rose by 13.7% to $375.456 million in Q4.
Combined Ratio: Increased to 103.7% in Q4 from 101.4% in the prior year quarter.
On February 22, 2024, Universal Insurance Holdings Inc (NYSE:UVE) released its 8-K filing, detailing the financial results for the fourth quarter and full year of 2023. As a leading provider of personal residential homeowner insurance, UVE manages all aspects of insurance underwriting, policy issuance, general administration, and claims processing internally. The company primarily generates revenue through premium collections and operates across the United States, with a strong presence in Florida.
Financial Performance Overview
UVE reported a diluted GAAP earnings per common share (EPS) of $0.68 for the fourth quarter, with an adjusted EPS of $0.43. The company's annualized return on average common equity (ROCE) stood at 24.9%, with an adjusted ROCE of 12.4%. Direct premiums written saw an increase to $432.6 million, marking a 4.0% rise from the prior year quarter. The book value per share grew significantly by 24.4% year-over-year to $11.78, and the adjusted book value per share increased by 11.2% to $14.34.
Despite these achievements, UVE faced challenges, including a decrease in net income available to common stockholders, which fell to $19.997 million, a 20.4% decline from the previous year's quarter. Adjusted net income also saw a reduction to $12.645 million, a 42.7% decrease. These declines were primarily attributed to a higher net loss ratio and lower commission revenue, partially offset by a lower net expense ratio and higher net investment income.
Income Statement and Balance Sheet Highlights
The company's total revenues increased by 13.7% to $375.456 million in the fourth quarter, driven by higher net premiums earned and net investment income. The ceded premium ratio improved, dropping to 30.4% from 37.1% in the prior year quarter, reflecting efficiencies in the 2023-2024 reinsurance program and growth in direct premiums earned.
However, the net loss ratio worsened, increasing by 5.6 points to 81.9%, primarily due to a higher calendar year loss pick. The net expense ratio improved, decreasing by 3.3 points to 21.8%, mainly because of lower renewal commission rates paid to distribution partners. Consequently, the net combined ratio rose to 103.7%, up 2.3 points from the prior year quarter.
Regarding capital deployment, UVE repurchased approximately 223 thousand shares at an aggregate cost of $3.6 million. The Board of Directors also declared a regular quarterly cash dividend of $0.16 per share and a special dividend of $0.13 per share.
Analysis and Outlook
CEO Stephen J. Donaghy expressed confidence in the company's positioning for future success, citing the transformative changes made in 2023 and the positive impact of legislative reforms. The company has secured 90% of its first event 2024-2025 reinsurance tower and negotiated additional multi-year capacity for the future.
"We closed out both the fourth quarter and full year with double-digit adjusted returns on common equity and I believe that even stronger results are firmly in our future," said Stephen J. Donaghy, Chief Executive Officer.
Universal Insurance Holdings Inc's strategic moves, including the commutation of Hurricane Irma with the Florida Hurricane Catastrophe Fund, have set the stage for improved claims trends and operational efficiency. The company's focus on rate increases and growth in other states, alongside a robust reinsurance program, positions it well to navigate the evolving insurance landscape.
For detailed financial tables and further information, investors and interested parties are encouraged to review the full 8-K filing.
Explore the complete 8-K earnings release (here) from Universal Insurance Holdings Inc for further details.
This article first appeared on GuruFocus.
