Universal Insurance Q1 2025 Earnings Report

Universal Insurance EPS Results

• Actual EPS: $1.44
• Consensus EPS: $1.12
• Beat/Miss: Beat by +$0.32
• One Year Ago EPS: N/A

Universal Insurance Revenue Results

• Actual Revenue: $394.87 million
• Expected Revenue: $354.97 million
• Beat/Miss: Beat by +$39.90 million
• YoY Revenue Growth: N/A

Universal Insurance Announcement Details

• Quarter: Q1 2025
• Date: 4/24/2025
• Time: After Market Closes
• Conference Call Date: Friday, April 25, 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 Q1 2025 Earnings Call Transcript

Key Takeaways

• Florida legislative reforms are providing stability to the property insurance market, and lower weather losses in Q1 improved our loss and LAE ratio.
• We completed the 2025–2026 reinsurance renewal well ahead of the June 1 start, securing $352 million of additional multiyear coverage at costs and terms consistent with expectations.
• Adjusted diluted earnings per common share were $1.44, compared to $1.70 a year ago, as core revenue rose 8.2% year-over-year from higher premiums earned, investment income, and commission revenue.
• Direct premiums written increased 4.7% to $467.1 million, driven by 34.7% growth in other states, partially offset by a 3% decline in Florida, reflecting higher policies in force and rate adjustments.
• The net combined ratio improved to 95.0% from 95.5%, with the net loss ratio down 1.4 points to 70.5% due to lighter weather losses and the net expense ratio up 0.9 points to 24.5% from higher acquisition and operating costs.

Presentation

[Operator]

Good morning, ladies and gentlemen, and welcome to Universal's First Quarter twenty twenty five Earnings Conference Call. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Arash Salamani, Chief Strategy Officer.

[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.

[Stephen Donaghy, CEO at Universal Insurance]

Thanks, Rash. Good morning, everyone. We continue to see signs that the 2022 Florida legislative reforms are working, providing much needed stability to the property insurance market, which ultimately benefits policyholders with increased certainty and choice. In the quarter, we experienced lower weather losses benefiting the loss and LAE ratio. On a separate note, I'm pleased to announce the completion of our twenty twenty five-twenty twenty six reinsurance renewal for our insurance entities.

[Stephen Donaghy, CEO at Universal Insurance]

Our program was fully supported and secured well before the June 1 inception date, something we have consistently achieved over the last few renewal cycles. We also secured $352,000,000 of additional multiyear coverage taking us through the twenty twenty six-twenty twenty seven hurricane season. The program costs and coverage were consistent with our expectations and we'll provide specific details at the May as we typically do. The solid execution of our reinsurance strategy is a testament to the strength and consistency of our long term reinsurance partnerships, some of which span two decades. I'll turn it over to Frank to walk through our financial results.

[Stephen Donaghy, CEO at Universal Insurance]

Frank?

[Frank Wilcox, Chief Financial Officer at Universal Insurance]

Thanks, Steve. Good morning. Adjusted diluted earnings per common share was $1.44 compared to adjusted diluted earnings per common share of 1.7 in the prior year quarter. The higher adjusted diluted earnings per common share mostly stems from higher underwriting and net investment income and higher commission revenue. Core revenue of $394,900,000 was up 8.2% year over year with growth primarily stemming from higher net premiums earned, net investment income and commission revenue.

[Frank Wilcox, Chief Financial Officer at Universal Insurance]

Direct premiums written were $467,100,000 up 4.7% from the prior year quarter. The increase stems from 34.7% growth in other states, partially offset by a 3% decrease in Florida. Overall growth mostly reflects higher policies in force, higher rates and inflation adjustments. Direct premiums earned were $513,300,000 up 6.5% from the prior year quarter, reflecting direct premiums written growth over the last twelve months. Net premiums earned were $355,700,000 up 6.5% from the prior year quarter.

[Frank Wilcox, Chief Financial Officer at Universal Insurance]

The increase is primarily attributable to higher direct premiums earned. The net combined ratio was 95%, down 0.5 points compared to the prior year quarter. The decrease reflects a lower net loss ratio, partially offset by a higher net expense ratio. The 70.5% net loss ratio was down 1.4 points compared to the prior year quarter with a decrease primarily reflecting lower weather losses in the current year quarter. The net expense ratio was 24.5%, up 0.9 points compared to the prior year quarter with the increase primarily driven by higher policy acquisition costs associated with growth outside of Florida and higher other operating costs.

[Frank Wilcox, Chief Financial Officer at Universal Insurance]

On 04/14/2025, the Board of Directors declared a regular quarterly cash dividend of $0.16 per share of common stock payable on 05/16/2025 to shareholders of record as of the close of business on 05/09/2025. With that, I'd like to ask the operator to open the line for questions.

[Operator]

Thank you. At this time, we'll conduct the question and answer session. As a reminder, to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Please stand by while we compile the Q and A roster.

[Operator]

And our first question comes from the line of Paul Newsome of Research. Your line is now open.

[Paul Newsome, MD & Senior Research Analyst at Piper Sandler Companies]

Good morning. Thanks for the call, guys. Maybe we can start with a little bit more detail on both the competitive environment as well as your thoughts on your growth prospectively. Looks like you're growing a little bit, a little faster than I thought. Both Florida and outside of Florida is your view, please.

[Stephen Donaghy, CEO at Universal Insurance]

Yeah, good morning Paul, this is Steve. From a growth perspective, we are laser focused on profitability and managing the overall book of business. As we continue to work on our internal profitability model, we use that to gauge where we are open and where we want to grow our business profitably. From a competitive environment, we're very interested in ensuring that there is no adverse development within our book, so we want to grow where we know we will grow profitably. We don't really let competition drive our pricing, so to say.

[Stephen Donaghy, CEO at Universal Insurance]

We have seen new entrants in Florida, we haven't seen anyone growing across the entire state, so I think a lot of companies are looking at specific areas to write and grow. Again, as we talked about earlier, it is leading to a healthier environment across the state of Florida, which is very positive for everyone.

[Paul Newsome, MD & Senior Research Analyst at Piper Sandler Companies]

Maybe a little bit more detail on the reinsurance, I know you'll give us more in the future, but Aon this morning was talking about sort of June renewals that would be down 5% to 20%, I think, if they said, if I recall correctly. That seems like a step function a little bit more in the favor of buyers than you would have thought at the beginning of the year. Just any thoughts there and directionally are you thinking that your deals were in the same direction of what I was talking about this one.

[Stephen Donaghy, CEO at Universal Insurance]

Yeah, you know Paul, we very pleased with the capacity and the response to our offer, so to say. So I think across the board, we were pleased to get out early, establish our own market, and we were very happy with the way we were treated. And we see rates favorable compared to where they could have been when you contemplate two hurricanes or three hurricanes in '24, and the fact that in my experience for twenty years at the company, any time that would have occurred, you would have seen an increase in rates across the board. I think even flat or a little bit of a reduction is very acceptable to us for this year's renewal. As you said, we'll get you all the details in May surrounding that.

[Stephen Donaghy, CEO at Universal Insurance]

But again, I think with the number of hurricanes you saw and to have no capacity issue and have favorable rates, it really speaks volumes to the legislative changes that occurred in 'twenty two and the market's perspective on those changes and their interest to continue writing reinsurance and rewarding good carriers with favorable terms and conditions.

[Paul Newsome, MD & Senior Research Analyst at Piper Sandler Companies]

Do you think the reinsurers have reflected the tort reform impacts yet in any really large way or just or not? I guess that's the question. Do you think it's been reflected as much as folks think maybe next year it gets more reflected, I don't know about that or not, but any thoughts there?

[Stephen Donaghy, CEO at Universal Insurance]

Well, again, as I said, I think at any time you have a number of hurricanes and people are impacted, reinsurers in particular, and the global nature of that business to have lots of capacity and favorable pricing, I think it is reflected in their approach to the market, and I think it's certainly reflected in our approach to the market. So the healthier the market, the better and more people that are writing business both from a P and C perspective and also reinsurance. And I think it will continue to be demonstrated in the future, maybe more meaningfully in the future as we continue to go.

[Paul Newsome, MD & Senior Research Analyst at Piper Sandler Companies]

One last question to let other folks ask. I know you've been trying to build conservatism in the reserves. Was there any reserve development in the quarter?

[Frank Wilcox, Chief Financial Officer at Universal Insurance]

Good morning, Paul. This is Frank. No. The answer is there is no, prior year development. You know, we we took a conservative approach to both the first quarter of twenty four, and we continue doing that with '25.

[Frank Wilcox, Chief Financial Officer at Universal Insurance]

The difference is the non cat weather this quarter was much lighter.

[Paul Newsome, MD & Senior Research Analyst at Piper Sandler Companies]

Great. Thank you. Appreciate the help as always.

[Stephen Donaghy, CEO at Universal Insurance]

Thanks, Paul.

[Operator]

Thank you. One moment for our next question. Our next question comes from the line of Nicholas Lacaviello of Dowling and Partners. Your line is now open.

[Nicolas Iacoviello, Equity Research Analyst at Dowling & Partners]

Good morning. Was there any claims handling benefit booked in the quarter?

[Frank Wilcox, Chief Financial Officer at Universal Insurance]

It was negligible.

[Nicolas Iacoviello, Equity Research Analyst at Dowling & Partners]

Great. Thanks. And then I know we'll get the full details on the reinsurance placement cost of the 61. But is there anything you could add maybe around the GAAP retention? Should we expect it to be similar to the 111,000,000 pretax last year with $66,000,000 of coverage from the captive?

[Frank Wilcox, Chief Financial Officer at Universal Insurance]

Yes. The company plans to use that cover in the same exact capacity. So it would be covering the first layer above the $45,000,000 retention, so $66 in excess of 45,000,000 translating to $111,000,000 net for the first event. And the second event, that $66,000,000 layer is covered by third party coverage.

[Nicolas Iacoviello, Equity Research Analyst at Dowling & Partners]

Okay. I appreciate it. That's all I had.

[Frank Wilcox, Chief Financial Officer at Universal Insurance]

Sure. Thanks Nick.

[Operator]

Thank you. I'm showing no further questions at this time. I'll now turn it back to Steve Donaghy, Chief Executive Officer for closing remarks.

[Stephen Donaghy, CEO at Universal Insurance]

Thank you. I'd like to thank all of our associates, consumers, our agency force, and our stakeholders for their continued support of Universal. Have a great day.

[Operator]

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Participants

Executives

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

Analysts

• Paul Newsome, MD & Senior Research Analyst at Piper Sandler Companies
• Nicolas Iacoviello, Equity Research Analyst at Dowling & Partners