Universal Insurance Holdings, Inc. Price & Performance (UVE)

Thanks, Rash. Good morning, everyone. We continue to see signs that the 2022 Florida legislative reforms are working. Providing much needed stability to the property insurance market. Which ultimately benefits policyholders with increased certainty and choice. In the quarter, we experienced lower weather losses benefiting the loss and LAE ratio. On a separate note, I'm pleased to announce the completion our twenty twenty five-twenty twenty six reinsurance renewal for our insurance entities. Our program was fully supported and secured well before the June 1 inception date. Something we have consistently achieved over the last few renewal cycles.

We also secured $352,000,000 of additional multi year coverage taking us through the twenty twenty six twenty twenty seven hurricane season. The program cost and coverage were consistent with our expectations and we'll provide specific details at the May as we typically do. The solid execution of our reinsurance strategy is a testament to the strength and consistency of our long term reinsurance partnerships. Some of which span two decades.

I'll turn it over to Frank to walk through our financial results. Frank?

Thanks, Steve. Good morning. Adjusted diluted earnings per common share was 1.44 compared to adjusted diluted earnings per common share of 1.07 in the prior year quarter. The higher adjusted diluted earnings per common share mostly stems from higher underwriting and net investment income and higher commission revenue. Core revenue of $394,900,000 was up 8.2% year over year with growth primarily stemming from higher net premiums earned net investment income commission revenue. Direct premiums written were $467,100,000.0 up 4.7% from the prior year quarter. The increase stems from 34.7% growth in other states partially offset by a 3% decrease in Florida. Overall growth mostly reflects higher policies in force higher rates and inflation adjustments. Direct premiums earned were 513,300,000.0 up 6.5% from the prior year quarter reflecting direct premiums written growth over the last twelve months. Net premiums earned were $355,700,000 up 6.5% from the prior year quarter. The increase is primarily attributable to higher direct premiums earned. The net combined ratio was 95% down 0.5 points compared to the prior year quarter. The decrease reflects a lower net loss ratio, partially offset by a higher net expense ratio. The 70.5% net loss ratio was down 1.4 points compared to the prior year quarter with a decrease primarily reflecting lower weather losses in the current year quarter.

The net expense ratio was 24.5% up 0.9 points compared to the prior year quarter, with the increase primarily driven by higher policy acquisition costs associated with growth outside of Florida and higher other operating costs. On 04/14/2025, the Board of Directors declared a regular quarterly cash dividend of $0.16 per share of common stock payable on 05/16/2025 to shareholders of record as of the close of business on 05/09/2025. With that, I'd like to ask the operator to open the line for questions.

Thank you. At this time, we'll conduct the question and answer session. As a reminder, to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Please stand by while we compile the q and a roster. Our first question comes from the line of Paul Newsome of Research. Your line is now open.

Good morning. Thanks for the call guys. Maybe we can start with a little bit more detail on both the competitive environment as well as your thoughts on [indiscernible] prospectively Looks like you're growing a little bit, you're a little faster than I thought. And both Florida and outside Florida is your view.

Please.

Yeah, good morning Paul, this is Steve. From a growth perspective, we are laser focused on profitability and managing the overall book of business. So as we continue to work on our internal profitability model, we use that to gauge where we are open and where we want to grow our business profitably. From a competitive environment, we're very we're very interested in ensuring that there is no adverse development within our book. We want to grow where we know we will grow profitably. And we don't really let competition drive drive our pricing so to say. We have seen new entrants in Florida, we haven't seen anyone growing across the entire state. So I think a lot of companies are looking at specific areas to write and grow. And again, as we talked about earlier, it is leading to a healthier environment. Across the state of Florida which is very positive for everyone.

Maybe a little bit more detail on the reinsurance. I know you'll give us more in the future, but Aon this morning was talking about sort of June renewals that would be down [indiscernible] 20%, I think they said, if I recall correctly. That seems like step function a little bit more in the favor of buyers. Than we would have thought at the beginning of the year. Just any thoughts there and directionally are you thinking that you your deals were in same [indiscernible] Yeah. You know, Paul, we were very pleased with the capacity and the response to our offer, so to say. So, I think across the board, we were we were pleased to get out early establish our own market, and we're very happy with the way we were treated. And we see rates [indiscernible] compared to where they could have been when you contemplate two hurricanes or three hurricanes in twenty four, and the fact that in my experience for twenty years at the company, anytime that would have occurred, would have seen an increase in rates across the board. And I think even flat or a little bit of a reduction is very acceptable to us for this year's renewal.

And as you said, we'll get you all the details in May surrounding that. Again, I think with the number of hurricanes you saw, and to have no capacity issue and have favorable rates, it really speaks volumes to the legislative changes that occurred in 'twenty two and the market's perspective on those changes. Their interest to continue writing reinsurance and rewarding good carriers with favorable terms and conditions.

Do you think the reinsurers have reflected the tort reform impacts [indiscernible] really large way or just or or not? I guess that's the question. Do you think it's it's been reflected as much as folks think maybe next year it gets more reflected? I don't know about that or not. But any thoughts there?

Well, again, as I said, I think at any time you have a number of hurricanes and people are impacted, reinsurers in particular, the global nature of that business to have lots of capacity and favorable pricing. I think it is reflected in their approach to the market. And I think it's certainly reflected in our approach to the market. So the healthier the market, the better and more people that are writing business both from a P and C perspective and also a reinsurance. And I think it will continue to be demonstrated in the future. Maybe more meaningfully in the future as we continue to go.

One last question to let other folks asked.

I know you've been trying to build a conservatism in the reserves Was there any reserve development? In the quarter?

Good morning, Paul. This is Frank. No, the answer is there is no prior development We took a conservative approach to both the first quarter of 'twenty four and we continued doing that with 2025 to The difference is the non cat weather this quarter was much lighter.

Great. Thank you. Appreciate the help as always.

Thanks, Paul.

Thank you. One moment for our next question. Our next question comes from the line of Nicholas Lacaviello of Dowling and Partners. Your line is now open.

Good morning.

Was there any claims handling benefit booked in the quarter?

It was negligible.

Great. Thanks. And then I know we'll get the full details on the reinsurance place closer to 6.1, but there anything you could add maybe around the gap retention? Should we expect it to be similar to the 01/2011 pretax last year with $66,000,000 of coverage from the captive?

Yes. The company plans to use that cover in the same exact capacity. So it would be covering the first layer above $45,000,000 retention, so $66,000,000 in excess of 45 translating to $111,000,000 net for the first event.

The second event, that $66,000,000 layer is covered by third party coverage. [indiscernible] I appreciate it. That's all I had.

Sure.

Thanks, Nick.

Thank you. I'm showing no further questions at this time. I'll now turn it back to Steve Donaghy, Chief Executive Officer, for closing remarks.

Thank you. I'd like to thank all of our associates consumers, our agency force and our stakeholders for their continued support of Universal. Have a great day.

You for your participation in today's conference. This does conclude the program. You may now disconnect.