Universal Insurance Holdings(US:UVE)2023-04-28 15:44Financial Data and Key Metrics Changes - The company reported a 23.9% annualized adjusted return on common equity and a 23.4% growth in adjusted diluted earnings per share year-on-year [3] - Adjusted diluted earnings per share increased to $0.79 from $0.64 in the prior year quarter, driven by higher net premiums earned, net investment income, and commission revenue [5] - Core revenue reached $316.3 million, up 8.8% year-over-year, primarily due to higher net premiums earned and net investment income [6] - The net combined ratio was 100%, reflecting a 2.1-point increase compared to the prior year quarter, attributed to a higher net loss ratio [6][7] Business Line Data and Key Metrics Changes - Direct premiums written were $410.1 million, up 3.4% from the prior year quarter, with 0.9% growth in Florida and 17.2% growth in other states [6] - Direct premiums earned increased to $455.4 million, up 9.8% from the prior year quarter, reflecting rate-driven growth [6] - Net premiums earned rose to $282.2 million, up 4.9% from the prior year quarter, primarily due to higher direct premiums earned [6] Market Data and Key Metrics Changes - The company noted a higher attritional initial accident year loss pick and higher prior year reserve development as a percentage of net premiums earned, contributing to the increase in the net loss ratio [7] - The net loss ratio was 73.1%, up 4.3 points compared to the prior year quarter, while the net expense ratio improved to 26.9%, down 2.2 points [7] Company Strategy and Development Direction - The company is optimistic about future stability and profitability due to recent legislative reforms in Florida, which are expected to improve rate adequacy and investment portfolio productivity [3] - The core all states property catastrophe reinsurance tower for the 2023-2024 period has been fully secured with no material changes to historical partners or terms [3] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the impact of tort reform on litigation and claims, noting a reduction in litigation and favorable signs for the future [10] - It was indicated that the benefits from legislative changes will take time to fully materialize as policies renew and new business comes onboard [11] Other Important Information - The Board of Directors declared a quarterly cash dividend of $0.16 per share, payable on May 19, 2023 [7] Q&A Session Summary Question: Changes in reinsurance terms and conditions - Management confirmed no changes in terms and conditions, with similar reinsurance costs expected as a percentage of premiums earned compared to the previous year [8] Question: Use of state's reinsurance offer - The company did not use the WRAP program in 2022 but elected to utilize it in 2023, which is below the FHCF level [9] Question: Impact of tort reform on claims - Management noted considerable reductions in litigation and expressed optimism about the future impact of tort reform on the business [10] Question: Movement in gross loss estimates for Hurricane Ian - Management confirmed that gross loss estimates for Hurricane Ian remain around $1 billion and do not expect it to increase [18]