Universal Insurance Holdings(UVE) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted diluted earnings per common share increased to $0.72 from a diluted adjusted loss of $1.53 in the prior year quarter, primarily due to lower net loss and expense ratios, as well as higher net investment income and commission revenue [4][5] - Core revenue reached $326.4 million, reflecting an 11.3% year-over-year growth, driven by higher net premiums earned, net investment income, and commission revenue [4] - Direct premiums written amounted to $416.1 million, up 4.2% from the prior year quarter, with Florida growing by 3.6% and other states by 6.8% [5] Business Line Data and Key Metrics Changes - Direct premiums earned were $463.8 million, an 11% increase year-over-year, attributed to rate-driven growth in direct premiums written [5] - Net premiums earned rose to $291.9 million, a 7.6% increase from the prior year quarter, mainly due to higher direct premiums earned, offset by higher ceded premiums [5] - The net combined ratio improved to 101.4%, down 30 points compared to the prior year quarter, reflecting lower net loss and expense ratios [5] Market Data and Key Metrics Changes - The Florida homeowners insurance market faced significant challenges, but the company remains committed to writing new and renewal business [3] - Legislative reforms in Florida, including the elimination of one-way attorney fees and assignment of benefits, are expected to positively impact the market over the long term [3] Company Strategy and Development Direction - The company is focused on leveraging its differentiated business model, solid balance sheet, and strong reinsurer relationships to succeed in the dynamic Florida insurance landscape [3] - The management is optimistic about the impact of recent legislative reforms on future results, although it acknowledges that it may take time for these reforms to manifest in financial performance [10] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the positive early signs from legislative reforms, indicating a belief in the potential for improved market conditions [10] - The company is actively working on securing reinsurance for the upcoming year, with approximately 83% of its desired first event catastrophe tower already secured [12] Other Important Information - The company repurchased approximately 186,000 shares at a cost of $1.8 million, with $6.2 million remaining in the current share repurchase authorization program [6] - A quarterly cash dividend of $0.16 per common share was declared, payable on March 16, 2023 [6] Q&A Session Summary Question: Can you provide more detail on the year-over-year improvement in the loss ratio? - Management indicated that proactive adjustments to the current accident year loss pick helped minimize year-end adjustments, with winter storms contributing approximately $30 million to reserve entries in Q4 [7][8] Question: Have there been any early impacts from the tort reform? - Management is optimistic about the tort reform's future impact, noting early signs of positive effects [10] Question: How are you approaching reinsurance costs for 2023 and 2024? - The company is continuously working on reinsurance placements and has secured a significant portion of its catastrophe coverage for 2023, aiming to leverage its financial strength in negotiations [11][12] Question: What was the gross prior year development in the quarter? - Management did not provide specific figures but expressed satisfaction with the year-over-year reduction in net reserve development [14] Question: Can you quantify the net benefit from internal claims adjusting operations this quarter? - While exact figures were not disclosed, management emphasized the operational efficiencies gained from having in-house claims adjusters and legal staff [17] Question: Was the captive fully exhausted from Ian, and will it need funding again? - The captive was fully utilized for Ian, and management intends to use it going forward, although its future capacity remains to be determined [18][19]