FORT LAUDERDALE, FL--(Marketwire - May 12, 2008) - Universal Insurance Holdings, Inc.
(
AMEX:
UVE)
-- Earnings per diluted share grew 16.7 percent in the first quarter of
2008 versus the 2007 first quarter
-- Stockholders' equity increased to $86.4 million at March 31, 2008, up
19.1 percent from $72.6 million at December 31, 2007
Universal Insurance Holdings, Inc. (the Company) (
AMEX:
UVE), a vertically
integrated insurance holding company, announced first-quarter 2008 net
income of $14.3 million, or $0.35 per diluted share, compared to $12.4
million, or $0.30 per diluted share, in the first quarter of 2007.
UPCIC, the Company's wholly-owned regulated insurance subsidiary, saw
continued growth in its policy count as the Company was servicing
approximately 399,000 homeowners' and dwelling fire insurance policies as
of March 31, 2008, up from 374,000 policies at December 31, 2007. The
increase in the number of policies in-force is the result of heightened
relationships with existing agents, an increase in new agents, a new
web-based policy administration platform, and the disruption in the
marketplace following the windstorm catastrophes in 2004 and 2005.
Notwithstanding an increase in the policies in-force, in-force premiums
were approximately $504.0 million as of March 31, 2008, versus $504.5
million at December 31, 2007, while gross premiums written decreased 3.3
percent to $126.7 million in the first quarter of 2008, as compared to
$131.0 million for the same period of 2007, both primarily a result of a
decrease in premium rates. As the Company has previously discussed, a
government mandated rate decrease by the Florida legislature resulted in
rate decreases averaging 11.1 percent statewide on homeowners' policies and
2.3 percent statewide on dwelling fire policies. These reductions were
approved by the Florida Office of Insurance Regulation (OIR) and
implemented in UPCIC's rates on June 1, 2007. The effect of these rate
decreases have been flowing through the Company's book of business as it
renews policies such that the full impact of the premium decreases on
direct premium written should be completed by May 31, 2008. In addition,
the Company believes premium discounts resulting from mitigation efforts
implemented by the Florida legislature which became effective June 1, 2007
for new business, and August 1, 2007 for renewal business, should diminish
during the third quarter of 2008 as a number of insureds have previously
qualified. Also, rate decreases of 4.1 percent statewide for homeowners'
policies and 0.2 percent statewide for dwelling fire policies were approved
by the OIR and implemented with effective dates in January 2008 for the
homeowners' program and March 2008 for the dwelling fire program. The
effect of these rate decreases have begun to flow through the Company's
book of business such that the full impact of the premium decreases on
direct premium written should be completed by January 2009 for the
homeowners' program and March 2009 for the dwelling fire program.
Importantly, UPCIC saw a reduction in operating costs, which has allowed
the Company to continue increasing its in-force policies, as described
above, in a rate adequate manner.
In the first quarter of 2008, net premiums earned decreased 11.0 percent to
$35.1 million from $39.4 million in the 2007 first quarter, mainly related
to a decrease in direct premiums written and an increase in ceded premiums
earned related to changes in the reinsurance program, as the Company
purchased additional coverage in the 2008 period as compared to the 2007
period.
Net investment income decreased 54.5 percent to $1.2 million for the
three-month period ended March 31, 2008, from $2.7 million for the same
period ended March 31, 2007. The decrease is primarily a result of a lower
interest rate environment during the 2008 period, coupled with lower
investable cash balances in the 2008 quarter versus the same period in
2007.
Comparing the first quarter of 2008 with the same period of 2007,
commission revenue increased 191.9 percent to $6.9 million from $2.4
million, mainly because of an increase in the managing general agent's
policy fee income and a greater amount of reinsurance commission sharing.
Greater reinsurance commission sharing is attributable to $3.9 million of
the increase, while $600 thousand of the increase is a result of an
increase in the managing general agent's policy fee income.
Other revenue increased to $1.1 million for the three-month period ended
March 31, 2008, from $52 thousand for the three-month period ended March
31, 2007. The increase in other revenue is primarily attributable to fees
earned on new payment plans offered to policyholders, as such payment plans
were not available during the 2007 period.
Net losses and loss adjustment expenses (LAE) increased 3.0 percent to
$12.7 million in the 2008 first quarter from $12.4 million in the same
period in 2007. The Company's net loss ratio, or net losses and LAE as a
percentage of net earned premium, for the three-month period ended March
31, 2008, was 36.3 percent compared to 31.3 percent for the three-month
period ended March 31, 2007. The increase in the net loss ratio comprises
three primary factors: (1) Greater losses and LAE on a direct basis, in the
2008 period as compared to the 2007 period; (2) Lower net earned premium,
the denominator of the ratio, because of higher reinsurance costs in the
2008 period as compared to the 2007 period which were mitigated by (3) less
prior-year adverse loss and LAE development in the 2008 period as compared
to the 2007 period. Although reinsurance rates have decreased, Universal's
total reinsurance costs are higher as the Company purchased additional
coverage in the 2008 period as compared to the 2007 period.
First-quarter 2008 general and administrative expenses decreased 18.1
percent to $8.2 million from $10.0 million in the 2007 first quarter. The
decrease in general and administrative expenses was a result of several
factors, including changes in commission expense and ceding commissions.
Commission expenses decreased 8.3 percent to $14.3 million for the
three-month period ended March 31, 2008, from $15.6 million for the
three-month period ended March 31, 2007. Ceding commissions earned
increased by approximately $1.6 million to $19.5 million for the
three-month period ended March 31, 2008, from $17.9 million for the
three-month period ended March 31, 2007. This increase in ceding
commissions was a result of an increase in the ceding commission rate to
31.0 percent for the three-month period ended March 31, 2008, as compared
to 28.0 percent for the
three-month period ended March 31, 2007. The increase in ceding commissions
decreased general and administrative expenses by an equal amount.
The Company's net income taxes were 38.7 percent of pretax income for the
three-month period ended March 31, 2008, and 44.2 percent for the
three-month period ended March 31, 2007. The decrease is primarily due to
certain expenses that were not allowed as a tax deductible expense for the
three-month period ended March 31, 2007. The disallowance had the effect of
increasing taxable income and, therefore, income taxes, during the 2007
period. There were no similar expenses disallowed for income tax purposes
for the three-month period ended March 31, 2008.
For the three-month period ended March 31, 2008, stockholders' equity
increased to $86.4 million from $72.6 million at December 31, 2007,
representing growth of 19.1 percent. As of March 31, 2008, the Company's
statutory capital and surplus was $108.5 million versus $98.7 million at
December 31, 2007.
As announced on January 23, 2008, Universal's board of directors declared a
dividend of $0.10 per share on its common stock. The dividend is payable on
August 7, 2008, to stockholders of record as of July 9, 2008. Future cash
dividend payments are necessarily subject to business conditions, the
Company's financial position, and requirements for working capital and
other corporate purposes. The Company's board of directors intends to
evaluate the possibility of paying future dividends on a quarter-by-quarter
basis.
Management Comments
Bradley I. Meier, president and chief executive officer, commented, "Our
results during the first quarter of 2008 included continued growth in
policy counts, earnings per share, and stockholders' equity. With respect
to our planned expansion to Texas, Hawaii, Georgia, South Carolina and
North Carolina, we are optimistic that we will receive our licenses for
each state by the third quarter of this year."
About Universal Insurance Holdings, Inc.
The Company is a vertically integrated insurance holding company. Through
its subsidiaries, the Company is currently engaged in insurance
underwriting, distribution and claims. UPCIC, which generates revenue from
the collection and investment of premiums, is one of the top five writers
of homeowners' insurance policies in the state of Florida and has aligned
itself with well-respected service providers in the industry.
Readers should refer generally to reports filed by the Company with the
Securities and Exchange Commission (SEC), and specifically to the Company's
Form 10-KSB for the year ended December 31, 2007, for a discussion of the
risk factors that could affect its operations. Such factors include,
without limitation, exposure to catastrophic losses; reliance on the
Company's reinsurance program; underwriting performance on catastrophe and
non-catastrophe risks; the ability to maintain relationships with
customers, employees or suppliers; and competition and its effect on
pricing, spending, third-party relationships and revenues. Additional
factors that may affect future results are contained in the Company's
filings with the SEC, which are available on the SEC's web site at
http://www.sec.gov. The Company disclaims any obligation to update and
revise statements contained in this press release based on new information
or otherwise.
Cautionary Language Concerning Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. The words
"believe," "expect," "anticipate," and "project," and similar expressions
identify forward-looking statements, which speak only as of the date the
statement was made. Such statements may include, but not be limited to,
projections of revenues, income or loss, expenses, plans, and assumptions
relating to the foregoing. Forward-looking statements are inherently
subject to risks and uncertainties, some of which cannot be predicted or
quantified. Future results could differ materially from those described in
forward-looking statements.
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three-Month
Periods Ended March 31,
2008 2007
------------- -------------
PREMIUMS EARNED AND OTHER REVENUES
Direct premiums written $ 126,667,669 $ 130,989,353
Ceded premiums written (89,770,703) (94,076,043)
------------- -------------
Net premiums written 36,896,966 36,913,310
(Increase) decrease in net unearned premium (1,803,571) 2,524,953
------------- -------------
Premiums earned, net 35,093,395 39,438,263
Net investment income 1,240,878 2,726,221
Commission revenue 6,867,187 2,352,856
Other revenue 1,083,013 51,702
------------- -------------
Total premiums earned and other revenues 44,284,473 44,569,042
------------- -------------
OPERATING COSTS AND EXPENSES
Losses and loss adjustment expenses 12,725,862 12,355,583
General and administrative expenses 8,209,374 10,025,226
------------- -------------
Total operating costs and expenses 20,935,236 22,380,809
------------- -------------
INCOME BEFORE INCOME TAXES 23,349,237 22,188,233
Income taxes, current 10,557,716 9,374,434
Income taxes, deferred (1,516,795) 438,970
------------- -------------
Income taxes, net 9,040,921 9,813,404
------------- -------------
NET INCOME $ 14,308,316 $ 12,374,829
============= =============
Basic net income per common share $ 0.39 $ 0.35
============= =============
Weighted average of common shares
outstanding - Basic 36,946,000 34,999,000
============= =============
Fully diluted net income per share $ 0.35 $ 0.30
============= =============
Weighted average of common shares
outstanding - Diluted 41,327,000 41,103,000
============= =============
Cash dividend declared per common share $ 0.10 $ 0.07
============= =============
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 2008
(Unaudited)
March 31, December 31,
2008 2007
ASSETS ------------- -------------
Cash and cash equivalents $ 263,860,785 $ 214,745,606
Investments 1,584,473 0
Real estate, net 3,473,542 3,392,827
Prepaid reinsurance premiums 172,673,955 172,672,795
Reinsurance recoverables 56,194,811 46,399,265
Premiums and other receivables, net 43,628,725 38,045,097
Property and equipment, net 1,027,184 874,430
Deferred income taxes 15,719,750 14,202,956
Other assets 792,592 860,389
------------- -------------
Total assets $ 558,955,817 $ 491,193,365
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Unpaid losses and loss adjustment expenses $ 67,281,057 $ 68,815,500
Unearned premiums 256,545,928 254,741,198
Deferred ceding commission, net 2,220,989 2,122,269
Accounts payable 3,248,280 2,972,147
Reinsurance payable, net 72,963,598 33,888,350
Federal and state income taxes payable 7,059,962 0
Dividends payable 7,028,319 3,241,145
Other accrued expenses 17,393,704 16,799,307
Other liabilities 13,791,639 11,035,444
Loans payable 0 2,820
Long-term debt 25,000,000 25,000,000
------------- -------------
Total liabilities 472,533,476 418,618,180
------------- -------------
STOCKHOLDERS' EQUITY:
Cumulative convertible preferred stock, $.01
par value 1,387 1,387
Authorized shares - 1,000,000
Issued shares - 138,640
Outstanding shares - 138,640
Minimum liquidation preference - $1,419,700
Common stock, $.01 par value 408,232 393,072
Authorized shares - 55,000,000
Issued shares - 40,823,103 and 39,307,103
Outstanding shares - 37,022,155 and
36,012,729
Treasury shares at cost - 900,948 and
394,374 shares (4,381,980) (974,746)
Common stock held in trust, at cost -
2,900,000 shares (2,349,000) (2,349,000)
Additional paid-in capital 31,510,373 24,779,798
Retained earnings 61,233,329 50,724,674
------------- -------------
Total stockholders' equity 86,422,341 72,575,185
------------- -------------
Total liabilities and stockholders'
equity $ 558,955,817 $ 491,193,365
============= =============
Contact Information: Investor Contact:
Philip Kranz
Dresner Corporate Services
312-780-7240
pkranz@dresnerco.com