Monday 3 March 2014

Universal Insurance Holdings, Inc. Reports Fourth-Quarter and Full-Year 2013 Financial Results

FORT LAUDERDALE, Fla., March 3, 2014 /PRNewswire/ -- Universal Insurance Holdings, Inc. (UVE) today reported net income of $15.6 million, or $0.44 per diluted share, an increase of $0.33, for the fourth quarter of 2013, compared to a net income of $4.4 million, or $0.11 per diluted share, for the same period in 2012.

For the full year of 2013, the Company reported net income of $59.0 million and diluted earnings per share (EPS) of $1.56, an increase of 108 percent, compared to net income of $30.3 million, or $0.75 per diluted share, for the same period of 2012.

Sean P. Downes, the Company's Chairman, President and Chief Executive Officer, stated, "Our 2013 results demonstrate the meaningful progress made against our strategic and operational initiatives to improve rate adequacy, streamline claims handling and reduce reinsurance costs.  We are proud of the milestones achieved during the course of the year, including the Company's listing on the NYSE, and believe we enter 2014 well positioned to drive additional long-term growth.  Our performance during the year bolstered our healthy financial position and allowed us to deliver significant shareholder value, supporting an increase in our quarterly dividend and the completion of additional share repurchases."

Mr. Downes continued, "Looking ahead, we remain focused on continuing to execute our proven strategic plan and are confident in the long-term prospects of our Company."

Fourth-Quarter 2013 Highlights

  • Best fourth quarter net income and EPS in Company history.
  • Net income and EPS grew $11.2 million and $0.33, respectively, compared to Q4 2012.
  • Net investment income grew by over 400 percent versus Q4 2012.
  • Losses and loss adjustment expenses declined by nearly 17 percent versus Q4 2012.

Fourth-Quarter 2013 Results

Net income for the fourth quarter of 2013 increased $11.2 million, or $0.33 per diluted share, compared to the fourth quarter of 2012, reflecting an improvement in underwriting income, an increase in net investment income and net realized gains, the absence of net trading portfolio losses that occurred during the fourth quarter of 2012, and a non-recurring Florida Insurance Guaranty Association (FIGA) assessment charged to earnings in the fourth quarter of 2012, combined with a partial recovery of the same in the fourth quarter of 2013.  Additionally, fourth quarter 2013 EPS benefitted from lower outstanding shares related to the share repurchases made by the Company during the first nine months of 2013. 

Fourth quarter 2013 losses and loss adjustment expenses decreased $5.7 million, or 16.6%, compared to the fourth quarter of 2012, primarily attributable to an improvement in the adjustments made in the current years related to prior accident years and favorable development.

At December 31, 2013, stockholders' equity was $175.6 million compared to $163.5 million at December 31, 2012.

Full-Year 2013 Results

For the full year of 2013, the Company's net income and diluted earnings per share grew by 94.6 percent and 108 percent, respectively, compared to the full year of 2012.

Net premiums earned increased $36.5 million, or 15.8 percent, for the full year of 2013 compared to the same period of 2012, primarily as a result of increases in premium rates over the past 24 months.  Losses and loss adjustment expenses decreased $17.6 million, or 13.9 percent, from the prior year, primarily due to a reduction in charges for the current accident year combined with favorable development.

Share Repurchases

For the full year 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.  Each repurchase was at a significant discount to the then-current market price of the Company's common stock.

Cash Dividends

On November 25, 2013, the Company announced that its board of directors declared a cash dividend of $0.23 per share of common stock which was paid on December 23, 2013, to shareholders of record on December 13, 2013. The $0.23 per share dividend included the expected $0.08 per share fourth quarter dividend and an additional special dividend of $0.15 per share. In total, $0.49 per share in cash dividends were declared and paid in 2013.

Also, on January 30, 2014, the Company announced that its board of directors declared a cash dividend of $0.10 per share of common stock, payable on March 3, 2014 to shareholders of record on February 19, 2014, consistent with the Company's previously announced intention to increase its regular quarterly dividend to $0.10 per share from $0.08 per share beginning with the first quarter of 2014. If declared and paid as intended, the annual aggregate dividend in 2014 would be $0.40 for each common share.

Financial Results Presentation

The Company will make available an audio recording of a presentation discussing its fourth quarter and full year 2013 financial results on March 3, 2014, at approximately 5:00 p.m. 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 April 3, 2014.

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, 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, 2013.

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands, except per share data)



Three Months Ended December 31,





2013


2012

PREMIUMS EARNED AND OTHER REVENUES





Direct premiums written


$      173,730


$      174,571

Ceded premiums written


(121,941)


(118,961)

Net premiums written


51,789


55,610

Change in net unearned premium


14,663


11,664

     Premiums earned, net


66,452


67,274

     Net investment income (expense)


1,397


278

     Net realized gains (losses) on investments


1,242


353

     Net change in unrealized gains (losses) on investments


(62)


(2,047)

     Net foreign currency gains (losses) on investments


-


(1)

     Commission revenue


4,178


4,889

     Policy fees


2,924


3,041

     Other revenue


1,449


1,440

Total premiums earned and other revenues


77,580


75,227

OPERATING COSTS AND EXPENSES





     Losses and loss adjustment expenses


28,598


34,275

     General and administrative expenses


22,989


31,588

Total operating costs and expenses


51,587


65,863

INCOME BEFORE INCOME TAXES


25,993


9,364

     Income taxes, current


8,776


7,950

     Income taxes, deferred


1,635


(2,992)

        Income taxes, net


10,411


4,958

NET INCOME


$        15,582


$          4,406






Basic earnings per common share


$            0.46


$            0.11

Weighted average number of common shares outstanding - basic


33,602


39,719






Diluted earnings per common share


$            0.44


$            0.11

Weighted average number of common shares outstanding - diluted


35,685


41,091






Cash dividend declared per common share


$            0.23


$            0.20






UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)




For the Years Ended
December 31,



2013


2012

PREMIUMS EARNED AND OTHER REVENUES





Direct premiums written


$      783,894


$      780,128

Ceded premiums written


(522,116)


(517,604)

Net premiums written


261,778


262,524

Change in net unearned premium


5,877


(31,404)

     Premiums earned, net


267,655


231,120

     Net investment income (expense)


1,928


441

     Net realized gains (losses) on investments


(14,740)


(11,943)

     Net change in unrealized gains (losses) on investments


7,850


9,443

     Net foreign currency gains (losses) on investments


-


22

     Commission revenue


18,615


20,383

     Policy fees


13,661


14,475

     Other revenue


6,190


5,998

Total premiums earned and other revenues


301,159


269,939

OPERATING COSTS AND EXPENSES





     Losses and loss adjustment expenses


108,615


126,187

     General and administrative expenses


91,988


91,193

Total operating costs and expenses


200,603


217,380

INCOME BEFORE INCOME TAXES


100,556


52,559

     Income taxes, current


34,216


18,434

     Income taxes, deferred


7,363


3,813

        Income taxes, net


41,579


22,247

NET INCOME


$        58,977


$        30,312






Basic earnings per common share


$            1.64


$            0.76

Weighted average common shares outstanding - Basic


35,866


39,614






Fully diluted earnings per common share


$            1.56


$            0.75

Weighted average common shares outstanding - Diluted


37,776


40,616






Cash dividend declared per common share


$            0.49


$            0.46






 

 

 

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)








December 31,

ASSETS


2013


2012

Cash and cash equivalents


$          117,275


$       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


289,418


-

Equity securities (available for sale), at fair value


65,022


-

Prepaid reinsurance premiums


241,214


239,921

Reinsurance recoverable


107,847


89,191

Reinsurance receivable, net


203


24,334

Premiums receivable, net


46,461


50,125

Receivable from securities sold


-


1,096

Other receivables


2,587


2,017

Property and equipment, net


9,289


8,968

Deferred policy acquisition costs, net


15,899


17,282

Income taxes recoverable


8,152


2,594

Deferred income tax asset, net


12,051


19,178

Other assets


2,072


1,578

          Total assets


$          920,090


$       925,735






LIABILITIES AND STOCKHOLDERS' EQUITY





LIABILITIES:





Unpaid losses and loss adjustment expenses


$          159,222


$       193,241

Unearned premiums


383,488


388,071

Advance premium


22,959


15,022

Accounts payable


3,441


4,368

Bank overdraft


14,947


25,994

Payable for securities purchased


-


1,275

Reinsurance payable, net


86,232


85,259

Income taxes payable


2,566


699

Other liabilities and accrued expenses


34,386


28,071

Long-term debt


37,240


20,221

          Total liabilities


744,481


762,221






STOCKHOLDERS' EQUITY:





Cumulative convertible preferred stock, $.01 par value


-


1

     Authorized shares - 1,000





     Issued shares - 30 and 108





     Outstanding shares - 30 and 108





     Minimum liquidation preference - $6.98 and $2.66 per share



Common stock, $.01 par value


436


419

     Authorized shares - 55,000





     Issued shares - 43,641 and 41,889





     Outstanding shares - 35,366 and 40,871





     Treasury shares, at cost - 8,275 and 1,018


(35,467)


(3,101)

Additional paid-in capital


42,282


38,684

Accumulated other comprehensive income (loss), net of taxes

(376)


-

Retained earnings


168,734


127,511

          Total stockholders' equity


175,609


163,514

          Total liabilities and stockholders' equity


$          920,090


$       925,735

Investor Contact: 
Andy Brimmer / Steve Frankel / Mahmoud Siddig
Joele Frank, Wilkinson Brimmer Katcher
212-355-4449

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