Universal Insurance Holdings(UVE) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Financial Highlights The company reported strong Q2 2025 results, with adjusted ROCE at 29.4%, adjusted EPS up 4.2%, and book value per share increasing 18.9% - CEO Stephen J. Donaghy highlighted a strong 29.4% adjusted return on common equity and noted favorable underwriting trends, expressing optimism for the future as the Florida market improves[3] Q2 2025 Key Performance Indicators | Metric | Value | Change (YoY) | | :--- | :--- | :--- | | Diluted GAAP EPS | $1.21 | 0.0% | | Diluted Adjusted EPS | $1.23 | +4.2% | | Annualized Adjusted ROCE | 29.4% | -1.1 pts | | Direct Premiums Written | $596.7 million | +3.2% | | Book Value Per Share | $16.39 | +18.9% | | Adjusted Book Value Per Share | $17.85 | +8.6% | | Total Capital Returned | $12.0 million | N/A | Financial Performance Analysis This section analyzes the company's Q2 2025 financial results, focusing on revenue, profitability, and capital deployment strategies Summary Financial Results For the second quarter of 2025, the company reported stable GAAP EPS at $1.21, while adjusted EPS grew 4.2% to $1.23. Total revenues increased by 5.2% year-over-year. However, underwriting profitability saw a slight decline, with the combined ratio increasing by 1.9 percentage points to 97.8% Q2 2025 vs Q2 2024 Financial Summary ($ in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | GAAP Measures | | | | | Total Revenues | $400,141 | $380,214 | +5.2% | | Net Income | $35,091 | $35,414 | -0.9% | | Diluted EPS | $1.21 | $1.21 | 0.0% | | Non-GAAP Measures | | | | | Core Revenue | $400,922 | $379,170 | +5.7% | | Adjusted Net Income | $35,680 | $34,627 | +3.0% | | Adjusted Diluted EPS | $1.23 | $1.18 | +4.2% | | Underwriting | | | | | Direct Premiums Written | $596,720 | $578,267 | +3.2% | | Combined Ratio | 97.8% | 95.9% | +1.9 pts | Revenue Analysis Core revenue grew 5.7% to $400.9 million in Q2 2025, driven by higher net premiums earned, a 17.7% increase in net investment income, and a 20.0% rise in commissions and other revenue. Growth in direct premiums written was led by a 25.4% increase in states outside of Florida, which offset a 2.5% decline within Florida. The ceded premium ratio increased, primarily due to replacing state-provided reinsurance with private market coverage - Direct premiums written increased by 3.2% overall, fueled by a significant 25.4% growth in states outside Florida, which more than compensated for a 2.5% decrease in Florida premiums[7] - The ceded premium ratio rose to 31.2% from 29.7% YoY, mainly because the company replaced the state-provided Reinsurance to Assist Policyholders (RAP) layer with private market reinsurance[8] - Net investment income grew to $17.3 million from $14.7 million in the prior year quarter, an increase attributed to higher fixed income reinvestment yields and a larger asset base[9] - Commissions and other revenue increased by 20.0% to $23.5 million, primarily due to higher reinsurance brokerage commissions from replacing the RAP layer and a catastrophe bond with traditional reinsurance[10] Profitability and Margins In Q2 2025, adjusted net income available to common stockholders increased to $35.7 million. However, profitability margins tightened, with the adjusted operating income margin decreasing to 12.2% from 12.8% YoY, primarily due to a higher ceded premium ratio. The net combined ratio deteriorated by 1.9 points to 97.8%, driven by increases in both the net loss ratio and the net expense ratio Net Income Comparison (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Income (Common) | $35.1M | $35.4M | -0.9% | | Adjusted Net Income (Common) | $35.7M | $34.6M | +3.0% | Underwriting Ratios Comparison (Q2 2025 vs Q2 2024) | Ratio | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Loss Ratio | 72.3% | 70.6% | +1.7 pts | | Net Expense Ratio | 25.5% | 25.3% | +0.2 pts | | Net Combined Ratio | 97.8% | 95.9% | +1.9 pts | - The adjusted operating income margin declined to 12.2% from 12.8% in the prior year quarter, primarily reflecting the higher ceded premium ratio, which was partly offset by increased net investment income and commission revenue[11] Capital Deployment During the second quarter of 2025, the company returned $12.0 million to shareholders. This included repurchasing approximately 287,000 shares for $7.4 million and declaring a quarterly cash dividend of $0.16 per share - The company executed share repurchases totaling $7.4 million for approximately 287,000 shares, with $15.2 million remaining under the current authorization program[14] - The Board of Directors declared a quarterly cash dividend of $0.16 per common share, payable on August 8, 2025[14] Detailed Financial Statements This section presents comprehensive financial statements, including balance sheets, income statements, per share data, and geographic performance Consolidated Balance Sheets As of June 30, 2025, the company's total assets increased to $3.28 billion from $2.84 billion at year-end 2024. This was driven by growth in invested assets and prepaid reinsurance premiums. Total liabilities also rose to $2.82 billion, while total stockholders' equity grew to $457.8 million from $373.3 million over the same period Key Balance Sheet Items ($ in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Invested Assets | $1,500,006 | $1,371,276 | | Total Assets | $3,275,818 | $2,841,861 | | Total Liabilities | $2,818,010 | $2,468,611 | | Total Stockholders' Equity | $457,808 | $373,250 | Consolidated Statements of Income For the three months ended June 30, 2025, total revenues were $400.1 million, a 5.2% increase year-over-year. Net income remained relatively flat at $35.1 million compared to $35.4 million in the prior year quarter. For the six-month period, net income grew 10.8% to $76.5 million Q2 2025 Income Statement Highlights ($ in thousands) | Account | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Premiums Earned | $360,193 | $344,958 | | Total Revenues | $400,141 | $380,214 | | Total Operating Costs and Expenses | $352,147 | $330,686 | | Income Before Income Tax | $46,386 | $47,905 | | Net Income | $35,093 | $35,416 | Share and Per Share Information Diluted earnings per common share for Q2 2025 were $1.21, unchanged from the prior year quarter. The company declared a cash dividend of $0.16 per share. Book value per share saw significant growth, increasing 18.9% year-over-year to $16.39 Q2 Per Share Data Comparison | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Diluted EPS | $1.21 | $1.21 | | Cash Dividend Declared | $0.16 | $0.16 | | Book Value Per Share | $16.39 | $13.79 | Supplementary Information The supplementary data reveals a strategic geographic shift. While direct premiums written in Florida decreased by 2.5% in Q2 2025, they grew 25.4% in other states. Similarly, policies in force declined in Florida but increased significantly in other states, reflecting diversification efforts Q2 2025 Direct Premiums Written by Geography ($ in thousands) | Region | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Florida | $449,715 | $461,018 | -2.5% | | Other States | $147,005 | $117,249 | +25.4% | | Total | $596,720 | $578,267 | +3.2% | Policies in Force by Geography (as of June 30) | Region | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Florida | 559,171 | 572,860 | -2.4% | | Other States | 313,172 | 260,573 | +20.2% | | Total | 872,343 | 833,433 | +4.7% | Reconciliation of GAAP to Non-GAAP Measures This section reconciles GAAP to non-GAAP measures, including core revenue, adjusted net income, and book value, for clearer performance evaluation Reconciliation of Revenue and Operating Income For Q2 2025, GAAP revenue of $400.1 million was adjusted for net realized and unrealized investment gains/losses to arrive at core revenue of $400.9 million. Similarly, GAAP operating income of $48.0 million was adjusted to $48.8 million on a non-GAAP basis Q2 2025 Revenue and Operating Income Reconciliation ($ in thousands) | Metric | GAAP | Adjustments | Non-GAAP (Adjusted/Core) | | :--- | :--- | :--- | :--- | | Revenue | $400,141 | $781 | $400,922 | | Operating Income | $47,994 | $781 | $48,775 | Reconciliation of Net Income and EPS GAAP net income available to common stockholders of $35.1 million for Q2 2025 is reconciled to adjusted net income of $35.7 million by excluding after-tax investment gains and losses. This results in a diluted adjusted EPS of $1.23, compared to the GAAP diluted EPS of $1.21 Q2 2025 Net Income and EPS Reconciliation ($ in thousands, except per share) | Metric | Value | | :--- | :--- | | GAAP NI available to common stockholders | $35,091 | | less: Net realized/unrealized investment gains (pre-tax) | ($781) | | add: Income tax effect | ($192) | | Adjusted NI available to common stockholders | $35,680 | | Diluted GAAP EPS | $1.21 | | Diluted Adjusted EPS | $1.23 | Reconciliation of Stockholders' Equity and Book Value As of June 30, 2025, GAAP common stockholders' equity of $457.7 million is adjusted by excluding accumulated other comprehensive loss of ($40.8 million) to arrive at adjusted common stockholders' equity of $498.5 million. This leads to an adjusted book value per share of $17.85, compared to the GAAP book value of $16.39 Equity and Book Value Reconciliation (as of June 30, 2025) | Metric | Value | | :--- | :--- | | GAAP Stockholders' Equity | $457,808 thousand | | Adjusted Common Stockholders' Equity | $498,490 thousand | | Book Value Per Common Share | $16.39 | | Adjusted Book Value Per Common Share | $17.85 | Reconciliation of ROCE The company's annualized GAAP Return on Common Equity (ROCE) for Q2 2025 was 31.9%. After adjusting both net income and average common equity for investment-related items and AOCI, the annualized adjusted ROCE was 29.4% Q2 2025 ROCE Reconciliation (Annualized) | Metric | Value | | :--- | :--- | | GAAP ROCE | 31.9% | | Adjusted ROCE | 29.4% | Company and Report Information This section provides essential company information, including business overview, conference call details, and important financial disclosures About Universal Insurance Holdings Universal Insurance Holdings, Inc. (NYSE: UVE) is a holding company that provides property and casualty insurance, focusing predominantly on personal residential homeowners lines. The company develops, markets, and writes insurance products in the United States, primarily in Florida, through independent agents and direct online channels - The company's core business is providing property and casualty insurance, with a primary focus on personal residential homeowners lines[16] - Distribution channels include both appointed independent agents and direct online sales, with a significant presence in Florida[16] Conference Call Information The company will host a conference call and webcast on Friday, July 25, 2025, at 10:00 a.m. ET to discuss the quarterly results. Interested parties can access the webcast on the company's investor relations website - A conference call to discuss Q2 2025 results is scheduled for Friday, July 25, 2025, at 10:00 a.m. ET[18] Disclosures This report contains non-GAAP financial measures, which management believes are useful for investors to evaluate underlying profitability trends. It also includes forward-looking statements that are subject to inherent risks and uncertainties, and actual results could differ materially - The company uses non-GAAP financial measures to allow investors to evaluate underlying revenue and profitability trends and enhance comparability across periods[17][19] - The press release contains forward-looking statements, which are subject to risks and uncertainties. The company disclaims any obligation to update these statements[20]