Universal Insurance Holdings(US:UVE)2019-03-01 18:09Financial Data and Key Metrics Changes - The company ended Q4 2018 with direct written premium up 12.3%, primarily due to strong growth in Florida and other states [8] - GAAP EPS reported a loss of $0.18, impacted by Hurricane Irma claims, while non-GAAP adjusted EPS was $0.13 [10][21] - Full year GAAP EPS grew 9.4% to $3.27, and GAAP adjusted EPS increased 39.3% to $4.11 [12][21] - Return on average equity was 24.1%, marking the sixth consecutive year with over 20% return [12] - Book value per share grew 13.8% [12] Business Line Data and Key Metrics Changes - In-force premium grew to approximately $1.2 billion, an increase of 12.8% from the prior year [22] - Direct premiums written were up 12.3% for the quarter, with Florida growing 8.7% and other states 33.9% [22] - Total services revenue declined to $12.2 million for the quarter but increased 5.9% to $49.9 million for the full year [31] Market Data and Key Metrics Changes - The company continues to monitor assignment of benefits (AOB) legislation in Florida, which has impacted claims dynamics [11] - The average rate increase in Florida was 3.4% approved in late 2017, contributing to underlying growth [22] Company Strategy and Development Direction - The company announced a customer-facing digital transformation to improve customer experience [13] - A new digital insurance distribution channel, Clovered, was launched to provide educational resources and streamline policy purchases [16] - The strategic focus is on creating a best-in-class experience across the insurance continuum, leveraging differentiated capabilities [18] Management's Comments on Operating Environment and Future Outlook - Management noted that the adverse development in claims is correlated with increased litigation post-Hurricane Irma [53] - The company is optimistic about the performance of 2018 claims and is taking steps to improve communication with outside counsel to reduce litigation [62] - Future loss picks are expected to increase due to portfolio expansion and conservative positioning in Florida [64] Other Important Information - The effective tax rate for the full year improved to 23.4%, reflecting a decrease in the underlying effective tax rate [33] - The company repurchased approximately 346,000 shares for a total cost of $14.2 million in Q4 2018 [34] - A quarterly cash dividend of $0.16 per share was declared, payable on March 25, 2019 [35] Q&A Session Summary Question: Can you break down the reserve charge by accident year and geography? - Management indicated that the adverse development is predominantly related to areas affected by Hurricane Irma and will provide a breakdown later [52][61] Question: How is the adverse development affecting current year loss picks? - Management stated that 2018 is performing well and they are increasing the loss pick to 37 due to portfolio spread and conservative positioning in Florida [62][64] Question: What is the status of the rate filing process? - Management confirmed a pending rate filing in Florida and noted rate increases in other states [70] Question: What is the company's cat fund participation for reinsurance renewals? - The company renewed its cat fund participation at 90%, the same as the previous year [71][72] Question: How much capital is available for buybacks? - The company has $91 million in cash available at the holding company level [95]