Universal Insurance Q4 2024 Earnings Report

Universal Insurance EPS Results

• Actual EPS: $0.25
• Consensus EPS: $0.09
• Beat/Miss: Beat by +$0.16
• One Year Ago EPS: N/A

Universal Insurance Revenue Results

• Actual Revenue: $384.81 million
• Expected Revenue: $349.91 million
• Beat/Miss: Beat by +$34.90 million
• YoY Revenue Growth: N/A

Universal Insurance Announcement Details

• Quarter: Q4 2024
• Date: 2/25/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, February 26, 2025
• Conference Call Time: 10:00AM ET

Universal Insurance (NYSE:UVE), together with its subsidiaries, operates as an integrated insurance holding company in the United States. It develops, markets, and underwrites insurance products for personal residential insurance, such as homeowners, renters/tenants, condo unit owners, and dwelling/fire; and offers allied lines, coverage for other structures, and personal property, liability, and personal articles coverages. The company also advises on actuarial issues, oversees distribution, administers claims payments, performs policy administration and underwriting, and assists with reinsurance negotiations; places and manages reinsurance programs for the insurance entities; and operates Clovered.com, a digital agency for various carrier partners and utilization of digital applications for adjusting claims. It offers its products through a network of independent agents, as well as direct-to-consumer online solutions, including digital insurance agency. The company was formerly known as Universal Heights, Inc. and changed its name to Universal Insurance Holdings, Inc. in January 2001. Universal Insurance Holdings, Inc. was incorporated in 1990 and is headquartered in Fort Lauderdale, Florida.

Universal Insurance Q4 2024 Earnings Call Transcript

Key Takeaways

• In 2024 Universal faced three major hurricanes—Debbie, Helene and Milton—with Hurricane Milton resulting in a $45 million net retention event, and management has already filed a modest rate decrease in Florida tied to December 2022 legislative reforms.
• The company reported adjusted diluted EPS of $0.25 for Q4, down from $0.43 a year ago, driven by lower underwriting income partially offset by increases in net investment income and commission revenue.
• Core revenue rose 5.7% to $386.4 million, fueled by higher net premiums earned, net investment income and commission revenue, while direct premiums written grew 8.8% to $470.9 million—led by 38.4% growth outside Florida.
• The net combined ratio deteriorated to 107.9%, up 4.2 points year-over-year, due to an 82.3% loss ratio (up 0.4 points from higher weather losses) and a 25.6% expense ratio (up 3.8 points from higher acquisition and operating costs).
• Universal has already placed 92% of its first-event catastrophe reinsurance tower for 2025 and secured significant multi-year capacity for the 2026 hurricane season, positioning the company well ahead of renewals.

Presentation

[Operator]

Good morning, ladies and gentlemen, and welcome to the Universal's Fourth Quarter twenty twenty four Earnings Conference Call. As a reminder, this conference is being recorded. I would now like to turn the conference over to Arash Soleimani, Chief Strategy Officer. Please go ahead.

[Arash Soleimani, Chief Strategy Officer at Universal Insurance]

Good morning. Thank you for joining us today. Welcome to our quarterly earnings call. On the call with me today are Steve Donaghy, Chief Executive Officer and Frank Wilcox, Chief Financial Officer. Before we begin, please note today's discussion may contain forward looking statements and non GAAP financial measures.

[Arash Soleimani, Chief Strategy Officer at Universal Insurance]

Forward looking statements involve assumptions, risks and uncertainties that could cause actual results to differ materially from those statements. For more information, please see the press release and Universal's SEC filings, all of which are available on the Investors section of our website at universalinsuranceholdings.com and on the SEC's website. A reconciliation of non GAAP financial measures to comparable GAAP measures is included in the quarterly press release and can also be found on Universal's website at universalinsuranceholdings.com. With that, I'll turn the call over to Steve. Thanks, Arash.

[Stephen Donaghy, CEO at Universal Insurance]

Good morning, everyone. In 2024, we experienced three hurricanes, including Debbie, Helene and Milton, and we're working hard as we always do to help our customers restore their lives. We continue to see progress relative to the claims trends in our Florida book and recently filed a modest rate decrease in the state that's directly correlated with the legislative changes made in December 2022. We're already well underway negotiating and placing our 2025 reinsurance program with 92% of our first event catastrophe tower already placed as we stand here today, along with significant additional multi year capacity secured for the twenty twenty six hurricane season. I'll turn it over to Frank to walk through our financial results.

[Stephen Donaghy, CEO at Universal Insurance]

Frank?

[Frank Wilcox, CFO at Universal Insurance]

Thanks, Steve. Good morning. Adjusted diluted earnings per common share was $0.25 down from adjusted diluted earnings per common share of $0.43 in the prior year quarter. The decrease mostly stems from lower underwriting income, partially offset by higher net investment income and commission revenue. Core revenue of $386,400,000 was up 5.7% year over year with growth primarily stemming from higher net premiums earned, net investment income and commission revenue.

[Frank Wilcox, CFO at Universal Insurance]

Direct premiums written were $470,900,000 up 8.8% from the prior year quarter, including 0.8% growth in Florida and 38.4% growth in other states. Overall growth mostly reflects higher policies in force, higher rates and inflation adjustments. Direct premiums earned of $519,300,000 were up 7.7% year over year, reflecting direct premiums written growth over the last twelve months. Net premiums earned were $348,400,000 up 3.9% from the prior year quarter. The increase is primarily attributable to higher direct premiums earned partially offset by a higher ceded premium ratio.

[Frank Wilcox, CFO at Universal Insurance]

The net combined ratio was 107.9%, up 4.2 points compared to the prior year quarter. The increase reflects higher net loss and expense ratios. The loss ratio was 82.3%, up 0.4 points compared to the prior year quarter. The increase primarily reflects higher weather losses, primarily from Hurricane Milton, partially offset by more favorable prior year reserve development. The net expense ratio was 25.6%, up 3.8 points from 21.8% in the prior year quarter.

[Frank Wilcox, CFO at Universal Insurance]

The increase was primarily driven by higher policy acquisition costs associated with growth outside Florida and higher other operating costs. During the fourth quarter, the company repurchased approximately 370,000 shares at an aggregate cost of $7,700,000 The company's current share repurchase authorization program has $2,600,000 remaining. On 02/06/2025, the Board of Directors declared a regular quarterly cash dividend of $0.16 per common share payable 03/14/2025 to shareholders of record as of the close of business on 03/07/2025. With that, I'd like to ask the operator to open the line for questions.

[Operator]

And our first question will be coming from Adam McMahan of UVE. Your line is open. Our next question will be coming from Paul Newsome of Piper Sandler. Your line is open.

[Jon Paul Newsome, Managing Director at Piper Sandler Companies]

Good morning. Thanks for the call. Maybe just a couple of start with sort of modeling questions. Could you talk about the size of the reserve development in the quarter? And and maybe talk about the level of cap losses including Milton with a little bit more detail?

[Frank Wilcox, CFO at Universal Insurance]

Yes. Good morning, Paul. This is Frank. So Milton, I'll start with Milton. Milton was a $45,000,000 net retention event.

[Frank Wilcox, CFO at Universal Insurance]

As you know with our second event that $66,000,000 in excess of $45,000,000 is covered by third party. So the captive did not was not a factor this quarter. Prior year development was down significantly, $45,000,000 down from last year, which was $76,000,000.

[Jon Paul Newsome, Managing Director at Piper Sandler Companies]

Great. And then could you maybe a little bit more color on the growth efforts and where you're expanding and where you think you're seeing the most opportunity? And then I'll just ask the next question. Any thoughts on reinsurance renewals as they come forward later this year?

[Stephen Donaghy, CEO at Universal Insurance]

Yes. Thanks, Paul. I would say from a growth perspective, with our agency relationships and marketing ability that we've demonstrated over the years, we continue to be laser focused on profitability and writing business where it makes the most sense. We continue to be closed in markets that are not we don't feel as though we're rate adequate and open in others. The growth in the other states probably was the benefit of our entry into some new markets over the last twelve months.

[Stephen Donaghy, CEO at Universal Insurance]

And I think as people hear our story and understand how we differentiate ourselves, it results in an opportunity to grow business. And again, it's all focused on profitability and rate adequacy across all markets. And I have the great help of our folks in our Minnesota office doing that on a quarterly basis. So works out quite well. What was the second question, Paul?

[Jon Paul Newsome, Managing Director at Piper Sandler Companies]

Reinsurance, what you have what are your thoughts on prospectively for as we get into the important reinsurance renewals?

[Stephen Donaghy, CEO at Universal Insurance]

Yes. We were very pleased to announce that we were 92% already accomplished in our first tower, Paul. And we found the market quite receptive. And we always try and go out as early as possible to secure the reinsurance that we need and then leave the market really to kind of dictate what's available to others. So we find that reinsurers like our story, like the presentation and are interested in getting on board with us as early as possible.

[Stephen Donaghy, CEO at Universal Insurance]

We're also similarly pleased on interest in renewing multi year capability that takes pressure off us. So we renewed some of that in 2026. And we'll release all the details from a cost and other perspective in our May press release as we normally do. We're still in the market for some, so we don't want to let too much out at this point, but we'll give the full update in May as normal.

[Jon Paul Newsome, Managing Director at Piper Sandler Companies]

Great. Thank you.

[Stephen Donaghy, CEO at Universal Insurance]

Thanks, Paul. Have a good day.

[Operator]

And I'm showing no further questions. I would now like to turn the conference back to Steve Dunnege, Chief Executive Officer for closing remarks.

[Stephen Donaghy, CEO at Universal Insurance]

Yes. Thank you. I'd like to thank all our associates, our consumers, agents and our stakeholders for their continued support at Universal and I wish you all a great day. Thank you.

[Operator]

And this concludes today's conference. Thank you for participating. You may now disconnect.

Participants

Executives

• Arash Soleimani, Chief Strategy Officer
• Stephen Donaghy, CEO
• Frank Wilcox, CFO

Analysts

• Jon Paul Newsome, Managing Director at Piper Sandler Companies