Q2 2022 Universal Insurance Holdings Inc Earnings Call
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
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Good morning, ladies and gentlemen, and welcome to Universal <unk> second quarter 2020.
Let's call as.
As a reminder, this conference call is being recorded.
I would now like to turn the conference over to a rush Salomone Chief strategy Officer.
Okay.
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.
We're 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 Universal insurance Holdings Dot com and on the SEC's website.
A reconciliation.
The Asian 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 Universal insurance Holdings Dot com with that I'll turn the call over to Steve.
Good morning, everyone.
We reported a 12, 8% annualized adjusted return on common equity in the quarter, an impressive feat in the current environment.
Direct premiums written growth of 12, 4% accelerating from eight 5% in the first quarter of this year.
And significantly outpaced an eight 5% policies enforced decline.
In addition to rate increases, we continue to optimize and rebalance our portfolio.
Increasing exposure to more profitable regions, while reducing exposure to less profitable geographies.
Our capital position remains strong at both of our insurance subsidiaries and on an enterprise wide basis.
And I'm, particularly proud of the robust reinsurance program that we completed prior to the June one renewal date.
Despite the challenging reinsurance market.
Our program includes full protection for both Hurricanes and tropical storms.
No gaps in coverage and no co participation and provides coverage across multiple events.
We are well prepared for hurricane season, and expect the actions we've taken to bear fruit in future periods.
I'll turn it over to Frank to walk through our financial results.
Frank.
Thanks, Steve and good morning.
Adjusted EPS was <unk> 47.
Down from 65 in the prior year quarter with the decline mostly attributable to a higher net combined ratio, partially offset by higher Commission revenues.
Net investment income.
Core revenue of $301 6 million.
Up eight 7% year over year with growth primarily stemming from higher direct premiums earned net investment income and commission revenue.
Direct premiums written of $532 5 million were up 12, 4% from the prior year quarter, including 13, 2% growth in Florida and.
An eight 3% growth in other states.
Direct premiums earned of $428 8 million were up nine 2% year over year.
<unk> was the main driver of premium growth, particularly given the policies in force decline.
As Steve mentioned in his remarks.
The net combined ratio was 109%.
Up three six points compared to the prior year quarter.
The increase reflects the higher net loss ratio, partially offset by a lower net expense ratio.
The 72, 3% net loss ratio was up seven points year over year with the increase mostly attributable to a higher initial accident year attritional loss pick associated with the current Florida claims environment and inflationary and weather trends.
Partly offset by lower adverse prior year reserve development as a percentage of net premiums earned.
The 28, 6% net expense ratio improved by three points four points year over year, reflecting lower renewal commission rates paid to distribution partners economies of scale and.
And disciplined expense management.
During the quarter the company repurchased approximately 283000 shares at an aggregate cost of $3 5 million.
The company's current share repurchase authorization program has $10 4 million remaining as of June 32022, and runs through November 3rd 2022.
On July 19 2022.
The board of directors declared a quarterly cash dividend of <unk> 16 per share of common stock payable on August nine 2022 to shareholders of record as of the close of business on August 2nd 2022.
With that I'd like to ask the operator to open up the line for questions.
Okay.
Thank you as a reminder to ask a question you will need to press star one one on your telephone please.
Standby, while we compile the Q&A roster.
Once again star one wanted to ask a question at this time.
And I'm currently showing no questions at this time I'd like to turn the call back over to Steve Donaghy for closing remarks.
Okay.
Thanks, Shannon I'd like to thank all of our associates consumers agents and our stakeholders for their continued support of universal.
Great day.
This concludes today's conference call. Thank you for participating you may now disconnect.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
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