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Universal Insurance Holdings, Inc. (NYSE:UVE) Q1 2024 Earnings Call Transcript

Universal Insurance Holdings, Inc. (NYSE:UVE) Q1 2024 Earnings Call Transcript April 26, 2024

Universal Insurance Holdings, Inc. isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good morning, ladies and gentlemen, and welcome to Universal First Quarter 2024 Earnings Conference Call. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Arash Soleimani, Chief Strategy Officer.

Arash Soleimani: Good morning. Thank you for joining us today. Welcome to our quarterly earnings call. On the call with me today are Steve Donaghy, Chief Executive Officer; and Frank Wilcox, Chief Financial Officer. Before we begin, please note today's discussion may contain forward-looking statements and non-GAAP financial measures. Forward-looking statements involve assumptions, risks and uncertainties that could cause actual results to differ materially from those statements. For more information, please see the press release and Universal's SEC filings, all of which are available on the Investors section of our website at universalinsuranceholdings.com and on the SEC's website. A reconciliation of non-GAAP financial measures to comparable GAAP measures is included in the quarterly press release and can also be found on Universal's website at universalinsuranceholdings.com. With that, I'll turn the call over to Steve.

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Steve Donaghy: Thanks, Arash. Good morning, everyone. It was a strong quarter, including a 29.4% annualized adjusted return on common equity and 35.4% adjusted diluted earnings per share growth year-over-year. Results were solid across the board, including profitable underwriting that was complemented by our non-underwriting operations, which is a testament to our differentiated business model. Direct premiums written growth accelerated sequentially, as policies-in-force are stabilizing following our previous underwriting initiatives. I'm pleased to announce the completion of our 2024-2025 reinsurance renewal for our insurance entities, as our program is now fully supported and secured. We've also secured additional multi-year coverage, taking us through the 2025-2026 hurricane season and have added new, financially strong reinsurers to our existing panel of long-term partners.

An experienced property and casualty insurance agent at a client's home, explaining the benefits of the company's homeowners' insurance policies.
An experienced property and casualty insurance agent at a client's home, explaining the benefits of the company's homeowners' insurance policies.

This achievement reflects the diligence and planning of our reinsurance team throughout the year. Program cost and coverage were consistent with our expectations, and we'll provide specific details at the end of May, as we typically do. I'll turn it over to Frank to walk through our financial results. Frank?

Frank Wilcox: Thanks, Steve. Good morning. Adjusted diluted earnings per common share was $1.07, up from $0.79 in the prior-year quarter. The increase mostly stems from higher underwriting and net investment income, partially offset by lower commission revenue. Core revenue of $364.9 million was up 15.4% year-over-year, with growth primarily stemming from higher net premiums earned and net investment income, partially offset by lower commission revenue. Direct premiums written were $446.2 million, up 8.8% from the prior-year quarter, including 5.2% growth in Florida and 25.6% growth in other states. Overall growth mostly reflects higher rates, inflation adjustments and stabilizing policies-in-force. Direct premiums earned were $482.1 million, up 5.9% from the prior-year quarter, reflecting rate-driven direct premiums written growth over the last 12 months.

Net premiums earned were $334 million, up 18.4% from the prior-year quarter. The increase is primarily attributable to higher direct premiums earned and a lower ceded premium ratio. The net combined ratio was 95.5%, down 4.5 points compared to the prior-year quarter. The decrease reflects lower net loss and expense ratios. 71.9% net loss ratio was down 1.2 points compared to the prior-year quarter with the decrease primarily attributable to higher net premiums earned associated with lower reinsurance costs in the current quarter. The 23.6% net expense ratio improved by 3.3 points compared to the prior-year quarter, primarily reflecting higher net premiums earned associated with lower reinsurance costs in the current year and economies of scale.

During the first quarter, the company repurchased approximately 208,000 shares at an aggregate cost of $4.1 million. The company's current share repurchase authorization program has approximately $20 million remaining. On April 10, 2024, the Board of Directors declared a quarterly cash dividend of $0.16 per share of common stock payable on May 17, 2024, to shareholders of record as of the close of business on May 10, 2024. With that said, I'd like to ask the operator to open the line for questions.

See also

10 Best Consumer Discretionary Dividend Stocks To Buy According to Analysts and

20 Fastest Growing Health Tech Companies in the World.

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