Q1 2025 Universal Insurance Holdings Inc Earnings Call

Speaker Change: Good morning ladies and gentlemen and welcome to Universal's first quarter 2025 earnings conference call. As a reminder, this conference call is being recorded. I'm not like to turn the conference over to Arash Soleimani, Chief Strategy Officer.

Speaker Change: On a separate note I am pleased to announce the completion of our 2025 2026 reinsurance renewal for our insurance entities.

Speaker Change: Our program was fully supported unsecured well before June 1st inception date.

Speaker Change: Something we have consistently achieved over the last few renewal cycles.

Speaker Change: We also secured $352 million of additional multiyear coverage, taking us through the 2026 2027 hurricane season.

Speaker Change: The program cost and coverage were consistent with our expectations.

Speaker Change: And we will provide specific details at the end of 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.

Speaker Change: Some of which span two decades.

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

Frank: Thanks, Steve Good morning.

Frank: Adjusted diluted earnings per common share was $1 44 compared to adjusted diluted earnings per common share of $1 seven in the prior year quarter.

Frank: The higher adjusted diluted earnings per common share, mostly stems from higher underwriting and net investment income.

Frank: And higher Commission revenue.

Frank: Core revenue of $394 9 million was up eight 2% year over year with growth primarily stemming from higher net premiums earned net investment income and commission revenue.

Frank: Direct premiums written were $467 1 million up four 7% from the prior year quarter.

Frank: The increase stems from 34, 7% growth in other states.

Frank: We offset by a 3% decrease in Florida.

Frank: Overall growth, mostly reflects higher policies in force higher rates and inflation adjustments.

Frank: Direct premiums earned were $513 3 million up six 5% from the prior year quarter, reflecting direct premiums written growth over the last 12 months.

Frank: Net premiums earned were $355 7 million up six 5% from the prior year quarter. The increase is primarily attributable to higher direct premiums earned.

Frank: The net combined ratio was 95% down <unk> five points compared to the prior year quarter.

The decrease reflects a lower net loss ratio, partially offset by higher net expense ratio.

Frank: The 75% net loss ratio was down one four points compared to the prior year quarter with the decrease primarily reflecting lower weather losses in the current year quarter.

Frank: The net expense ratio was 24, 5% up <unk> nine 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.

Frank: On April 14th 2025, the board of directors declared a regular quarterly cash dividend of <unk> 16 per share of common stock payable on May 16, 2025 to shareholders of record as of the close of business on May nine 2025.

Frank: With that I'd like to ask the operator to open the line for questions.

Frank: Thank you at this time, we will conduct a question and answer session.

Frank: Minor to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Frank: These standby, while we compile the Q&A roster.

Speaker Change: And our first question comes from the line of Paul Newsome of Research. Your line is now open.

Frank: Okay.

Paul Newsome: Good morning, Thanks for the call guys.

Frank: Maybe we can start with a little bit more detail.

Paul Newsome: Both the competitive environment as well as your thoughts on.

Paul Newsome: You have growth prospectively, it looks like you're growing a little bit.

Sue: Sue and I thought.

Paul Newsome: And both Florida and have some juniors.

Sue: As you view it please.

Paul Newsome: Yes, good morning, Paul This is Steve.

Speaker Change: From a growth perspective, we are laser focused on profitability and managing the overall book of business. So.

Speaker Change: We continue to work on our internal profitability model, we use that to gauge where we are open.

Speaker Change: Where we want to grow our business profitably.

Speaker Change: From a competitive environment, we're very we're very interested in ensuring that there is no adverse development within our book. So we want to grow where we know we will grow profitably.

We don't really let competition drive.

Speaker Change: Drive our pricing so to say, we have seen new entrants in Florida, we havent 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.

Speaker Change: It is leading to a healthier environment.

Speaker Change: The state of Florida, which is very positive forever.

Speaker Change: Maybe a little bit more detail on the reinsurance I know, you'll give us more in the future.

Speaker Change: This morning was talking about.

Speaker Change: June renewals that would be down.

Speaker Change: Slide 12.

Speaker Change: We presented.

Speaker Change: We call them correctly.

Speaker Change: Like.

Speaker Change: GAAP.

Speaker Change: Function I'm, a little bit more.

Speaker Change: In the favor of buyers than we would've thought at the beginning of the year.

Speaker Change: Just any thoughts there in new directions.

Speaker Change: New deals.

Speaker Change: Jim.

Speaker Change: Interaction, whether you're almost talking about as well.

Paul Newsome: Yes, Paul we were very pleased with the capacity and the response to our offer so to say.

Speaker Change: I think across the board.

Speaker Change: We were we were pleased to get out early.

Speaker Change: Our own market and we're very happy with the way we were treated and we see we see rates.

Speaker Change: Favorable.

Speaker Change: Compared to where they could have been when you contemplate.

Speaker Change: Hurricanes, our three hurricanes in 'twenty before and the fact that in my experience for 20 years at the company anytime that would've occurred you would have seen an increase in rates across the board and I think even flat or a little bit of a reduction.

Speaker Change: We're very acceptable to us for this year's renewal.

Speaker Change: As you said, we'll get you all the details it may surrounding that but again I think with.

Speaker Change: The number of Hurricanes, you saw and to have a.

Speaker Change: We 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 in their interest to continue writing reinsurance and rewarding good carriers with favorable terms and conditions.

Speaker Change: Do you think the reinsurers.

Speaker Change: Reflected.

Speaker Change: <unk> impacts yet.

Speaker Change: When we launch way or just.

Speaker Change:

Speaker Change: We're not because that's the question do you think it's been reflecting as much as both.

Speaker Change: Both scopes things maybe next year. It gets more reflected I don't know about that or not but.

Speaker Change: Any thoughts there.

Speaker Change: Well again as I said I think anytime you have a number of hurricanes and people are impacted reinsurance in particular in the.

Speaker Change: Global nature of that business to have.

Speaker Change: 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.

Speaker Change: Better and more people that are writing business, both from a P&C perspective, and also our reinsurance so and I think that will continue to be demonstrated in the future.

Speaker Change: Maybe more meaningfully in the future as we continue to go.

Speaker Change: And then one last question in the loan books, yes.

Speaker Change: Yes.

Speaker Change: I know you've been trying to build conservatism in the reserves was there any reserve development in the quarter.

Frank: Good morning, Paul This is Frank no. The answer is there is no.

Speaker Change: Higher development.

Speaker Change: We took a conservative approach to both the first quarter 'twenty four and we continue doing that with 25 to the differences the non cat weather. This quarter was much later.

Speaker Change: Great. Thank you I appreciate the help as always.

Speaker Change: Thanks, Paul.

Speaker Change: Thank you next question.

Speaker Change: Yes.

Speaker Change: Our next question comes from the line of Nicholas lack of yellow of gallium partners. Your line is now open.

Nicholas Lack: Good morning was there any claims handling benefit booked in the quarter.

Speaker Change: I was negligible.

Speaker Change: Great. Thanks, and then I know well.

Speaker Change: We'll get the full details on the reinsurance placement costs and a 61.

Speaker Change: Is there anything you could add maybe around the GAAP retention should we expect it to be similar to the 111 pre tax last year with $66 million of coverage from the captive.

Speaker Change: The company plans to use that cover the same exact.

Speaker Change: <unk> so it would be covering the first layer above the $45 million retention, so 66 in excess of 45% translating to $111 million net.

Speaker Change: For the first event.

Speaker Change: The second event that $66 million layers covered by third party coverage.

Speaker Change: Okay I appreciate it that's all I had.

Nicholas Lack: Sure. Thanks, Nick.

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

Nicholas Lack: Thank you I'd like to thank all of our associates consumers, Our agency force and our stakeholders for their continued support of Universal.

Nicholas Lack: Great day.

Nicholas Lack: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

Nicholas Lack: Yeah.

Nicholas Lack: Okay.

Nicholas Lack: [music].

Nicholas Lack: Okay.

Nicholas Lack: Okay.