Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ________________________________________________________ FORM 10-Q ________________________________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number ...

Investor Briefing FY25 Q1 Results Reported April 24th, 2025 1 Forward-looking statements and Regulation G Disclosure Statement Forward-looking statements This presentation may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "anticipate," "will," "plan," and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Such statements may include commentary on pla ...

Universal Insurance Holdings, Inc. (NYSE:UVE) Q1 2025 Earnings Conference Call April 25, 2025 10:00 AM ET Company Participants Arash Soleimani - CSO Steve Donaghy - CEO Frank Wilcox - CFO Conference Call Participants Paul Newsome - Piper Sandler Nicolas Iacoviello - Dowling & Partners Securities Arash Soleimani Ladies and gentlemen, and welcome to Universal Insurance Holdings, Inc.'s First Quarter 2025 Earnings Conference Call. As a reminder, this conference call is being recorded. I would now like to turn ...

Universal Insurance Holdings (UVE) came out with quarterly earnings of $1.44 per share, beating the Zacks Consensus Estimate of $1.12 per share. This compares to earnings of $1.07 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 28.57%. A quarter ago, it was expected that this property and casualty insurance company would post earnings of $0.09 per share when it actually produced earnings of $0.25, delivering a surprise of 177 ...

Insurance Market Dynamics - The Florida residential property insurance market has been characterized by increasing losses and loss adjustment expenses due to various regulatory and judicial factors[46]. - The December 2022 reforms aimed to address key drivers of the insurance market's deterioration, including eliminating policyholders' statutory one-way right to attorneys' fees[47]. - The current Florida homeowners' insurance market is impacted by claimant behaviors, resulting in losses and LAE exceeding historical trends[74]. - Changes in Florida's insurance laws can have a pronounced effect on the Company, with annual amendments impacting operations and profitability[72]. - Legislative changes and their interpretations may impact claims handling and resolution practices, affecting financial results[81]. - The competitive nature of the insurance industry may lead to reduced underwriting margins and declining sales if competitors lower rates[99]. Reinsurance and Risk Management - The Insurance Entities' reinsurance programs for 2024-2025 meet the Florida Office of Insurance Regulation's (FLOIR) requirements, demonstrating cohesive and comprehensive reinsurance strategies[41]. - The Insurance Entities utilize excess of loss reinsurance to limit potential exposures to catastrophic events, which is a key strategic priority[41]. - The availability and cost of reinsurance may limit the company's ability to write new business or mitigate exposure to loss[89]. - The Insurance Entities may face increased claims-related costs due to climate change and the frequency of catastrophic events[69]. Financial Performance and Capital Management - As of December 31, 2024, the Insurance Entities' Risk-Based Capital (RBC) ratios exceed applicable statutory requirements[53]. - The maximum dividend that can be paid by the Insurance Entities without prior approval is limited to the lesser of statutory net income from operations of the preceding year or statutory unassigned surplus[55]. - The company is required to maintain minimum capital and surplus levels, with potential regulatory actions if these requirements are not met, which could impact its ability to operate[120][123]. - The company is dependent on dividends and permissible payments from its subsidiaries for cash flow, which may be affected by changes in premium volumes or regulatory conditions[116]. Claims and Underwriting Risks - Actual claims incurred have exceeded reserves established for claims, adversely affecting operating results and financial condition[74]. - Paid losses have exceeded prior reserve estimates due to inflationary pressures on building materials and labor[75]. - The effectiveness of subrogation efforts has decreased due to changes in Florida's claims environment and legal climate[76]. - The company faces risks of underpricing or overpricing risks, which could lead to significant underwriting losses or reduced market share[79]. - The company relies on claims professionals to manage claims effectively; failures in this area could lead to litigation and negatively affect financial results[96]. Employee and Operational Considerations - The Company had 1,068 full-time employees as of December 31, 2024, with 80% based in Florida and 66% working in claims management operations[61]. - The ability to attract and retain talented employees is crucial for the company's success, and losing key personnel could adversely impact operations[94]. - The company utilizes third-party adjusters and call center support during high claim volumes to maintain service standards[61]. Regulatory and Compliance Issues - The company relies on comprehensive regulatory oversight, including periodic reporting and examinations to maintain compliance with statutory requirements[57]. - Regulatory compliance costs may increase due to complex and changing insurance laws, potentially limiting growth and profitability[111][115]. - Regulatory authorities have broad discretion to deny or revoke licenses, which could adversely affect the company's ability to operate and its reputation[114]. Investment and Market Risks - The company's financial performance is significantly influenced by the returns on its investment portfolio, which is subject to market volatility[110]. - Market risks related to equity prices and interest rates could negatively impact the company's investment income, with fluctuations in interest rates posing increased financial risks[109][110]. - Interest rate risk is significant, as rising rates could lead to a decline in the fair market value of fixed-rate financial instruments[356]. - The company faces risks related to its indebtedness, which could adversely affect financial results and obligations under the Notes[127]. Technology and Cybersecurity - Cybersecurity threats pose significant risks to the company's operations and reputation, with potential for data breaches and operational disruptions[104]. - The company faces operational risks due to increased reliance on cloud technologies and online transactions, which may lead to potential cyberattacks and data breaches[105][106]. - The company is investing in AI technologies for applications such as risk assessment, claims processing, and fraud detection, but there are concerns about the ability to effectively implement these technologies[107].

Financial Data and Key Metrics Changes - Adjusted diluted earnings per common share decreased to $0.25 from $0.43 in the prior year quarter [8] - Core revenue increased to $386.4 million, up 5.7% year-over-year, driven by higher net premiums earned, net investment income, and commission revenue [9] - Direct premiums written rose to $470.9 million, an increase of 8.8% from the prior year quarter [9] - Net combined ratio increased to 107.9%, up 4.2 percentage points compared to the prior year quarter [11] - The loss ratio was 82.3%, up 0.4 percentage points compared to the prior year quarter [12] Business Line Data and Key Metrics Changes - Direct premiums earned were $519.3 million, up 7.7% year-over-year [10] - Net premiums earned increased to $348.4 million, up 3.9% from the prior year quarter [10] - Growth in Florida was 0.8%, while other states saw a significant growth of 38.4% [9] Market Data and Key Metrics Changes - The company experienced three hurricanes in 2024, impacting claims trends [5] - The company filed a modest rate decrease in Florida, correlated with legislative changes made in December 2022 [6] Company Strategy and Development Direction - The company is focused on profitability and writing business where it makes the most sense, with a strong emphasis on rate adequacy across all markets [19] - Growth in other states is attributed to entry into new markets over the last 12 months [20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the reinsurance market, noting that 92% of the first event catastrophe tower has already been placed for 2025 [22] - The company is pleased with the interest from reinsurers and the renewal of multiyear capabilities, which alleviates pressure [23] Other Important Information - The company repurchased approximately 370,000 shares at an aggregate cost of $7.7 million [13] - A quarterly cash dividend of $0.16 per common share was declared, payable on March 14, 2025 [14] Q&A Session Summary Question: Can you discuss the size of the reserve development in the quarter and the level of cat losses? - The net retention event from Hurricane Milton was $45 million, with prior year development down significantly to $45 million from $76 million [17] Question: Can you provide more details on growth efforts and reinsurance renewals? - The company is focused on profitability and has seen growth in new markets, with a positive outlook on reinsurance renewals [19][22]

Core Viewpoint - Universal Insurance Holdings (UVE) reported quarterly earnings of $0.25 per share, significantly exceeding the Zacks Consensus Estimate of $0.09 per share, but down from $0.43 per share a year ago, indicating a 177.78% earnings surprise [1] Financial Performance - The company achieved revenues of $384.81 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 9.97% and showing an increase from $375.46 million year-over-year [2] - Over the last four quarters, Universal Insurance has consistently exceeded consensus EPS estimates and revenue estimates [2] Stock Performance and Outlook - Universal Insurance shares have declined approximately 5.9% since the beginning of the year, contrasting with the S&P 500's gain of 1.7% [3] - The company's future stock performance will largely depend on management's commentary during the earnings call and the trends in earnings estimate revisions [3][4] Earnings Estimates - The current consensus EPS estimate for the upcoming quarter is $1.16 on revenues of $352.57 million, and for the current fiscal year, it is $2.65 on revenues of $1.43 billion [7] - The estimate revisions trend for Universal Insurance is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Insurance - Property and Casualty industry is currently ranked in the top 22% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Financial Performance - Diluted GAAP earnings per share (EPS) were $0.21, down 69.1% from $0.68 in the prior year quarter[4] - Adjusted net income available to common stockholders was $7.2 million, down 42.9% from $12.6 million in the prior year quarter[7] - The company reported a net income of $6,018 thousand for Q4 2024, a decrease of 69.9% compared to $19,999 thousand in Q4 2023[25] - GAAP net income available to common stockholders for Q4 2024 was $6,016 million, a decrease from $19,997 million in Q4 2023, leading to diluted earnings per common share of $0.21 compared to $0.68 in the prior year[34] - Adjusted net income available to common stockholders for the twelve months ended December 31, 2024, was $52,418 million, down from $58,657 million in 2023, with diluted adjusted earnings per common share of $1.79 compared to $1.95 in 2023[34] Revenue and Growth - Total revenues for Q4 2024 were $384.8 million, a 2.5% increase from $375.5 million in Q4 2023[5] - The company reported core revenue of $386,414 million for Q4 2024, an increase from $365,705 million in Q4 2023, indicating growth in core operations[33] - The total revenue for the twelve months ended December 31, 2024, was $1,520,536 million, up from $1,391,582 million in 2023, reflecting a year-over-year growth of approximately 9.3%[33] Premiums and Underwriting - Direct premiums written reached $470.9 million, up 8.8% from the prior year quarter, with a 38.4% growth in states outside Florida[9] - Direct premiums written in Florida increased to $342,565 thousand in Q4 2024 from $339,902 thousand in Q4 2023, showing a growth of 0.5%[29] - Net premiums earned rose to $348,354 thousand for Q4 2024, up from $335,398 thousand in Q4 2023, reflecting a growth of 5.8%[25] - The combined ratio for Q4 2024 was 107.9%, compared to 103.7% in Q4 2023, indicating a deterioration in underwriting performance[29] - The net combined ratio was 107.9%, up 4.2 percentage points compared to the prior year quarter[14] Equity and Book Value - Book value per share increased to $13.28, up 12.7% year-over-year[4] - GAAP stockholders' equity increased to $373,250 million as of December 31, 2024, from $341,297 million in 2023, while adjusted common stockholders' equity rose to $436,316 million from $415,369 million[35] - Book value per common share increased to $13.28 in 2024 from $11.78 in 2023, while adjusted book value per common share rose to $15.53 from $14.34[35] Returns and Ratios - The annualized return on average common equity (ROCE) was 6.2%, a decrease of 18.7 percentage points from 24.9% in the prior year quarter[5] - The annualized return on average common equity (ROCE) decreased to 6.2% in Q4 2024 from 24.9% in Q4 2023, indicating a significant decline in profitability[27] - Return on common equity (ROCE) for Q4 2024 was 6.2%, down from 24.9% in Q4 2023, while adjusted ROCE was 6.5% compared to 12.4% in the previous year[36] Investment and Assets - Net investment income rose to $15.6 million, an increase from $13.7 million in the prior year quarter[11] - Total assets increased to $2,841,861 thousand in 2024 from $2,316,561 thousand in 2023, representing a growth of approximately 22.6%[23] - The company’s total liabilities increased to $2,468,611 thousand in 2024 from $1,975,264 thousand in 2023, an increase of 25%[23] Shareholder Returns - The company returned a total of $16.2 million to shareholders, including $7.7 million in share repurchases and dividends[4] Cash and Cash Equivalents - Cash and cash equivalents decreased to $259,441 thousand in 2024 from $397,306 thousand in 2023, a decline of 34.8%[23] Operating Income - GAAP operating income for Q4 2024 was $8,957 million, down from $27,531 million in Q4 2023, resulting in a GAAP operating income margin of 2.3% compared to 7.3% in the previous year[33] - Adjusted operating income for the twelve months ended December 31, 2024, was $82,466 million, slightly down from $84,063 million in 2023, with an adjusted operating income margin of 5.5% compared to 6.1% in 2023[33] Unrealized Gains and Losses - The company experienced a net change in unrealized gains (losses) on investments of $9,936 million for the twelve months ended December 31, 2024, compared to $12,046 million in 2023[33] Policies in Force - Policies in force increased to 855,526 in 2024 from 809,932 in 2023, representing a growth of 5.6%[29]

Group 1 - Universal Insurance Holdings (UVE) is currently rated 2 (Buy) by Zacks and has a Value grade of A [1] - UVE has a P/CF ratio of 6.67, which is lower than the industry average of 8, indicating potential undervaluation [3][6] - Over the past 52 weeks, UVE's P/CF has fluctuated between 5.33 and 7.64, with a median of 6.28 [3] Group 2 - UVE's P/B ratio is 1.46, which is also lower than the industry average of 1.53, suggesting it may be undervalued [7] - The P/B ratio for UVE has ranged from 1.19 to 1.80 in the past year, with a median of 1.50 [7] - The strength of UVE's earnings outlook further supports its position as a strong value stock [6]

Premiums and Revenue - Universal Insurance Holdings, Inc. reported that Florida represented 76.6% of direct premiums written for the three months ended September 30, 2024[143]. - The company experienced significant increases in personal residential insurance premiums due to rising costs from losses, loss adjustment expenses, and reinsurance[146]. - Direct premiums written increased by $42.4 million, or 8.0%, for the three months ended September 30, 2024, driven by premium growth in Florida of $9.1 million, or 2.1%, and in other states of $33.3 million, or 32.9%[210]. - Direct premium earned increased by 7.0% to $507.7 million for the three months ended September 30, 2024, compared to $474.3 million in the same period in 2023[209]. - Premiums earned, net, rose to $1,024.7 million for the nine months ended September 30, 2024, an increase of 11.8% compared to the same period in 2023[240]. - Direct premiums written increased by $109.6 million, or 7.4%, for the nine months ended September 30, 2024, driven by growth in Florida and other states[241]. Rate Changes and Regulatory Environment - In April 2023, UPCIC received approval for a rate decrease of 1.4% for Homeowners' and 1.6% for Dwelling Fire in Florida, effective July 15, 2023[154]. - The Florida Legislature enacted substantial law changes in December 2022 aimed at mitigating rising claims costs and enhancing service standards for policyholders[147]. - The reforms have led many insurers, including the company, to submit rate filings in 2024 reflecting overall average rates equal to or slightly lower than the previous year's rates[149]. - UPCIC filed a 7.5% rate increase for Florida personal residential homeowners effective July 17, 2023, and a 4.1% increase for dwelling-fire lines effective January 15, 2024[155]. - Rate changes approved for 2024 include a 14.8% increase in Georgia, 7.8% in South Carolina, and 14.3% in Alabama, among others[156]. Claims and Losses - The estimated retained losses from Hurricane Milton, which made landfall on October 9, 2023, are expected to be $45.0 million for the quarter ended December 31, 2024[204]. - The company incurred estimated net losses from Hurricane Helene of $111.0 million, with reinsurance recoveries of $66.0 million[220]. - Net losses and LAE were $317.0 million with a 91.7% net loss ratio for the three months ended September 30, 2024, up from $288.0 million and 87.0% in the prior year[219]. - Net losses and loss adjustment expenses (LAE) were $800.7 million with a 78.1% net loss ratio for the nine months ended September 30, 2024, compared to $717.9 million and a 78.3% net loss ratio for the same period in 2023[247]. Financial Performance - The combined ratio is a key performance indicator, with a ratio below 100% indicating underwriting profit[169]. - The net combined ratio for the three months ended September 30, 2024, was 116.9%, an increase of 6.2 points compared to the same period in 2023[202]. - The combined ratio improved to 102.8% for the nine months ended September 30, 2024, from 103.5% for the same period in 2023[255]. - Adjusted net income attributable to common stockholders is calculated by excluding net realized and unrealized gains and losses on investments[163]. - Adjusted operating loss for Q3 2024 was $22.7 million, compared to a loss of $4.5 million in Q3 2023, indicating a deterioration in operating performance[233]. - Adjusted net loss attributable to common stockholders was $20.8 million for Q3 2024, compared to a loss of $4.6 million in Q3 2023[235]. Investment and Capital Management - Net investment income rose to $15.4 million, a 20.8% increase compared to $12.8 million for the same period in 2023[201]. - Total invested assets increased to $1.37 billion as of September 30, 2024, from $1.16 billion as of December 31, 2023, primarily due to investment of excess cash and unrealized gains[265]. - The investment portfolio as of September 30, 2024, included available-for-sale debt securities and equity securities, with a total fair market value of $1,276,732[318]. - The company’s investment strategy does not include trading in risk-sensitive financial instruments[316]. - The company has a total material cash requirement of $1,252.471 million as of September 30, 2024, with $723.474 million due in the next 12 months[301]. Shareholder and Equity Information - The company repurchased 226,498 shares at an average price of $19.39, totaling $4.4 million, with $10.3 million remaining under the repurchase program[203]. - Stockholders' equity increased to $400.245 million as of September 30, 2024, from $341.297 million as of December 31, 2023, reflecting a net increase of $58.4 million[286]. - The adjusted book value per common share as of September 30, 2024, was $15.76, up from $14.00 as of September 30, 2023, reflecting an increase of 12.6%[311]. - Cash dividends declared for the first three quarters of 2024 were consistently $0.16 per common share[300]. Operational Efficiency and Initiatives - The company has adopted initiatives to expedite the claims process and improve efficiency, including the use of technology for property damage reviews[152]. - The company has cautiously increased its appetite for new business following the reforms and operational initiatives taken in recent years[153]. - General and administrative expenses increased by $8.8 million, or 11.2%, for the three months ended September 30, 2024, driven by higher policy acquisition costs and other operating costs[225]. - The company relies on independent insurance agents, and the loss of these relationships could adversely impact its business[132].