Financial Data and Key Metrics Changes - Total revenue increased by 17.2% to $470.3 million for the first half of 2019, with a quarterly growth of 11.4% [8][14] - EPS was $2.22 on a GAAP basis and $2.05 on a non-GAAP adjusted basis for the first half of 2019 [9][15] - Annualized return on average equity was 28.7% for the first half of 2019, and book value per share grew by 17.4% year-over-year [9][16] - Pretax income margin was 22.3% for the first half of 2019, supported by premium volume and investment portfolio performance [10][15] Business Line Data and Key Metrics Changes - Direct premiums written increased by 5.6%, primarily due to strong growth outside of Florida [8] - Premiums in force grew to approximately $1.2 billion, a 9.2% increase from the prior year [17] - Direct premiums earned were up 10.6% for the quarter, led by a 33.2% growth in other states and 7.1% in Florida [17] - The combined ratio increased by 9.7 points for the quarter to 86.9%, driven by increased losses and a higher core booked loss ratio [18][19] Market Data and Key Metrics Changes - The effective tax rate for the second quarter was 26.8%, an increase of 2 points over the prior year's quarter [28] - Net investment income increased by 28.1% to $7.4 million for the quarter, driven by higher interest rates and asset mix [26] - Total services revenue increased by 5.3% to $13.8 million for the quarter, driven by commission revenue from ceded premiums [25] Company Strategy and Development Direction - The company finalized its 2019 and 2020 reinsurance programs, securing more catastrophe coverage than ever before [11] - Universal Property became licensed in Wisconsin, and Universal Direct had a good start in Illinois [11] - The digital insurance distribution channel Clovered expanded into more than 15 states [12] - The company is focused on taking rate, adjusting underwriting guidelines, and increasing loss reserves to solidify its future position [40][42] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the AOB legislation and its potential positive impact on operations and costs [58] - The company is positioned well to handle increases in claims due to its established claims organization [58] - Management plans to maintain a disciplined approach in Florida while continuing to pursue growth opportunities [80] Other Important Information - The company repurchased approximately 486,000 shares at a cost of $14.1 million during the second quarter [29] - A quarterly cash dividend of $0.16 per share was declared and paid to shareholders [30] Q&A Session Summary Question: Reinsurance and Cat Fund Coverage - Management confirmed sufficient open market capacity for losses and discussed strategies for handling Irma claims [51][54] Question: Rate Increases and Reinsurance Pricing - Management indicated that the reinsurance pricing is reasonable given recent loss experiences and discussed the percentage of gross earned premium spent on reinsurance [56] Question: AOB Litigation Activity - Management acknowledged an increase in AOB claims but expressed confidence in their claims handling capabilities [58] Question: Florida Rate Filing Plans - Management stated that they will not accelerate their Florida rate filing and will wait for more data before making future filings [59] Question: Balance Sheet and Reserves - Management clarified that the reinsurance recoverable includes both paid and unpaid losses, and details can be found in the 10-Q filing [60][61] Question: Changes in Reserve Review Process - Management confirmed that the reserve analysis will proceed as in previous years, with reviews at the end of Q3 and Q4 [64] Question: Growth Runway in Florida - Management expressed confidence in continued growth opportunities in Florida despite a more disciplined approach [80]
Universal Insurance Holdings(UVE) - 2019 Q2 - Earnings Call Transcript