Q4 2025 Universal Insurance Holdings Inc Earnings Call
Operator: Good morning. Thank you for joining us today. Welcome to our quarterly earnings call. On the call with me today are Steve Donaghue, 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 on Universal's SEC filings, all of which are available on the investor 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.
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 on Universal's SEC filings, all of which are available on the investor 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.
Speaker #1: 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.
Speaker #1: Forward-looking statements involve assumptions, risks, and uncertainties that could cause actual results to defer materially from those statements. For more information, please see the press release and Universal's SEC filings; all of which are available on the investor section of our website at universalinsuranceholdings.com and on the SEC's website.
Speaker #1: 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.
Speaker #1: With that, I'll turn the call over to Steve.
Speaker #2: Thanks, Arash. Good morning, everyone. We had an outstanding quarter with an adjusted return on common equity of over 46% and results were solid across the board.
Stephen J. Donaghy: Thanks, Arash. Good morning, everyone. We had an outstanding quarter with an adjusted return on common equity of over 46%. Results were solid across the board. I'm deeply proud of the progress we made in 2025. We're continuing to see the benefits of Florida's legislative reforms, which have visibly stabilized the market, benefiting all stakeholders. Our capital position is robust, and I believe our reserves are the strongest they've been in our history. We are already well underway in negotiating and placing our 2026 reinsurance program, with a substantial portion of our first event catastrophe tower already placed as we stand here today, along with meaningful additional multiyear capacity secured for the 2027 hurricane season. I'll turn it over to Frank to walk through our financial results. Frank?
Stephen J. Donaghy: Thanks, Arash. Good morning, everyone. We had an outstanding quarter with an adjusted return on common equity of over 46%. Results were solid across the board. I'm deeply proud of the progress we made in 2025. We're continuing to see the benefits of Florida's legislative reforms, which have visibly stabilized the market, benefiting all stakeholders. Our capital position is robust, and I believe our reserves are the strongest they've been in our history. We are already well underway in negotiating and placing our 2026 reinsurance program, with a substantial portion of our first event catastrophe tower already placed as we stand here today, along with meaningful additional multiyear capacity secured for the 2027 hurricane season. I'll turn it over to Frank to walk through our financial results. Frank?
Speaker #2: I'm deeply proud of the progress we made in 2025. We're continuing to see the benefits of Florida's legislative reforms which have visibly stabilized the market, benefiting all stakeholders.
Speaker #2: Our capital position is robust, and I believe our reserves are the strongest they've been in our history. We are already well underway in negotiating and placing our 2026 reinsurance program, with a substantial portion of our first-event catastrophe tower already placed as we stand here today.
Speaker #2: Along with meaningful additional multi-year capacity secured for the 2027 hurricane season. I'll turn it over to Frank to walk through our financial results. Frank.
Speaker #3: Thank you, Steve, and good morning. Adjusted diluted earnings per common share was $2.17, up from adjusted diluted earnings per common share of $0.25 in the prior year quarter.
Frank C. Wilcox: Thank you, Steve, and good morning. Adjusted diluted earnings per common share was $2.17, up from adjusted diluted earnings per common share of $0.25 in the prior year quarter. The increase mostly stems from a lower net loss ratio and higher net premiums earned and net investment income. Core revenue of $403.6 million was up 4.4% year-over-year, with growth primarily stemming from higher net premiums earned and net investment income. Direct premiums written were $483.7 million, up 2.7% from the prior year quarter. The increase stems from an 18.2% growth in other states, partially offset by a 3.1% decrease in Florida. Overall growth mostly reflects higher policies in force and inflation adjustments across our multi-state footprint.
Frank C. Wilcox: Thank you, Steve, and good morning. Adjusted diluted earnings per common share was $2.17, up from adjusted diluted earnings per common share of $0.25 in the prior year quarter. The increase mostly stems from a lower net loss ratio and higher net premiums earned and net investment income. Core revenue of $403.6 million was up 4.4% year-over-year, with growth primarily stemming from higher net premiums earned and net investment income. Direct premiums written were $483.7 million, up 2.7% from the prior year quarter. The increase stems from an 18.2% growth in other states, partially offset by a 3.1% decrease in Florida. Overall growth mostly reflects higher policies in force and inflation adjustments across our multi-state footprint.
Speaker #3: The increase, mostly stems from a lower net loss ratio and higher net premiums earned and net investment income. Core revenue of $403.6 million was up 4.4% year over year with growth primarily stemming from higher net premiums earned and net investment income.
Speaker #3: Direct premiums written were $483.7 million, up 2.7% from the prior year quarter. The increase stems from an 18.2% growth in other states, partially offset by a 3.1% decrease in Florida.
Speaker #3: Overall policies enforced and inflation adjustments across our multi-state footprint. Direct premiums earned of $538 million were up 3.6% year over year reflecting direct premiums written growth over the past 12 months.
Frank C. Wilcox: Direct premiums earned of $538 million were up 3.6% year-over-year, reflecting direct premiums written growth over the past 12 months. Net premiums earned were $363.4 million, up 4.3% 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 87.5%, down 20.4 points compared to the prior year quarter. The decrease reflects a lower net loss ratio, slightly offset by a higher net expense ratio. The net loss ratio was 61.3%, down 21 points compared to the prior year quarter. The decrease reflects better current accident year results and the inclusion of Hurricane Milton in the prior year quarter.
Frank C. Wilcox: Direct premiums earned of $538 million were up 3.6% year-over-year, reflecting direct premiums written growth over the past 12 months. Net premiums earned were $363.4 million, up 4.3% 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 87.5%, down 20.4 points compared to the prior year quarter. The decrease reflects a lower net loss ratio, slightly offset by a higher net expense ratio. The net loss ratio was 61.3%, down 21 points compared to the prior year quarter. The decrease reflects better current accident year results and the inclusion of Hurricane Milton in the prior year quarter.
Speaker #3: Net premiums earned were $363.4 million, up 4.3% from the prior year quarter. The increase is primarily attributable to higher direct premiums earned and a lower seated premium ratio.
Speaker #3: The net combined ratio was 87.5%, down 20.4 points compared to the prior year quarter. The decrease reflects a lower net loss ratio, slightly offset by a higher net expense ratio.
Speaker #3: The net loss ratio was 61.3%, down 21 points compared to the prior year quarter. The decrease reflects better current accident year results and the inclusion of Hurricane Milton in the prior year quarter.
Speaker #3: The net expense ratio was 26.2%, up 0.6 points from 25.6% in the prior year quarter. The increase was primarily driven by higher other operating costs.
Frank C. Wilcox: The net expense ratio was 26.2%, up 0.6 points from 25.6% in the prior year quarter. The increase was primarily driven by higher other operating costs. During Q4, the company repurchased approximately 210,000 shares at an aggregate cost of $6.9 million. On 7 January 2026, the company announced a new share repurchase program under which the company may repurchase up to $20 million of its outstanding shares of common stock through 8 January 2028. On 4 February 2026, the board of directors declared a regular quarterly cash dividend of $0.16 per common share, payable on 13 March 2026, to shareholders of record as of the close of business on 6 March 2026.
Frank C. Wilcox: The net expense ratio was 26.2%, up 0.6 points from 25.6% in the prior year quarter. The increase was primarily driven by higher other operating costs. During Q4, the company repurchased approximately 210,000 shares at an aggregate cost of $6.9 million. On 7 January 2026, the company announced a new share repurchase program under which the company may repurchase up to $20 million of its outstanding shares of common stock through 8 January 2028. On 4 February 2026, the board of directors declared a regular quarterly cash dividend of $0.16 per common share, payable on 13 March 2026, to shareholders of record as of the close of business on 6 March 2026.
Speaker #3: During the fourth quarter, the company repurchased approximately 210,000 shares at an aggregate cost of $6.9 million. On January 7, 2026, the company announced a new share repurchase program under which the company may repurchase up to $20 million of its outstanding shares of common stock through January 8, 2028.
Speaker #3: On February 4, 2026, the board of directors declared a regular quarterly cash dividend of $0.16 per common share, payable on March 13, 2026, to shareholders of record as of the close of business on March 6, 2026.
Speaker #3: With that, I'd like to ask the operator to open the line for questions.
Frank C. Wilcox: With that, I'd like to ask the operator to open the line for questions.
Frank C. Wilcox: With that, I'd like to ask the operator to open the line for questions.
Speaker #4: As a reminder to ask a question, please press star 11 on your telephone. And wait for your name to be announced. To withdraw your question, please press star 11 again.
Arash Soleimani: As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Paul Newsome from Piper Sandler.
Operator: As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Paul Newsome from Piper Sandler.
Speaker #4: Please stand by while we compile the Q&A roster. Our first question comes from the line of Paul Newsom from Piper Sandler.
Paul Newsome: Good morning. Congratulations on the quarter. Was hoping you could give us a little bit more thoughts on the competitive advantage, pardon me, competitive environment today. We hear just a ton about price declines and, you know, increased folks in the market. How do you see it from your perspective?
Paul Newsome: Good morning. Congratulations on the quarter. Was hoping you could give us a little bit more thoughts on the competitive advantage, pardon me, competitive environment today. We hear just a ton about price declines and, you know, increased folks in the market. How do you see it from your perspective?
Speaker #5: Good morning. Congratulations on the quarter. I was hoping you could give us a little bit more thoughts on the competitive advantage environment today. We hear just a ton about price declines and increased folks in the market.
Speaker #5: How do you see it from your perspective?
Speaker #2: Hey, Paul. Good morning. And thank you. This is Steve. We see the competitive environment very favorable to Universal at this point. Our relationship with our agency force the rates that we've implemented are favorable.
Stephen J. Donaghy: Hey, Paul, good morning, and thank you. This is Steve. You know, we see the competitive environment very favorable to Universal at this point. Our relationship with our agency force, you know, the rates that we've implemented, are favorable, and I think we're just seeing a whole lot of positive uptick in markets that we've opened due to analyzing our internal profitability model. We're opening more markets. We have more business coming in across those markets, and I feel good about the business. As you know, it's always a constant analyzation of markets that are favorable versus non-favorable, closing certain markets, opening certain markets. We feel good about the business in Florida in particular and have seen very positive things as a result.
Stephen J. Donaghy: Hey, Paul, good morning, and thank you. This is Steve. You know, we see the competitive environment very favorable to Universal at this point. Our relationship with our agency force, you know, the rates that we've implemented, are favorable, and I think we're just seeing a whole lot of positive uptick in markets that we've opened due to analyzing our internal profitability model. We're opening more markets. We have more business coming in across those markets, and I feel good about the business. As you know, it's always a constant analization of markets that are favorable versus non-favorable, closing certain markets, opening certain markets. We feel good about the business in Florida in particular and have seen very positive things as a result.
Speaker #2: And I think we're just seeing a whole lot of positive uptick in markets that we've opened due to analyzing our internal profitability model. So we're opening more markets.
Speaker #2: We have more business coming in across those markets. And I feel good about the business. So as you know, it's always a constant analyzation of markets that are favorable versus non-favorable, closing certain markets, opening certain markets.
Speaker #2: But we feel good about the business in Florida in particular and have seen very positive things as a result.
Speaker #5: Do you have any thoughts on, sort of, the regulatory environment? And we hear a lot about the issues with affordability and whether or not the insurance industry will be asked to essentially kind of give back profits, or something like that.
Paul Newsome: Do you have any thoughts on sort of the regulatory environment? We hear a lot about the issues with affordability and, you know, whether or not the insurance industry will be asked to essentially kind of give back profits or something like that. Any exposure or thoughts on that topic?
Paul Newsome: Do you have any thoughts on sort of the regulatory environment? We hear a lot about the issues with affordability and, you know, whether or not the insurance industry will be asked to essentially kind of give back profits or something like that. Any exposure or thoughts on that topic?
Speaker #5: Any exposure or thoughts on that topic?
Stephen J. Donaghy: You know, I would add that without the actions taken by the State of Florida and Ron DeSantis, the industry would not be in the position we're in today, not just Universal. Without action, monies would continue to be going to third parties that weren't impacted by a claim, and that wasn't good for anyone. I think as we continue, and you've seen we've had modest declines in 2024 and 2025. We kick off our actuarial study on rate for 2026 at the end of March, and we'll continue to do the right thing. A decrease in rate does not always result in a decrease in earnings.
Stephen J. Donaghy: You know, I would add that without the actions taken by the State of Florida and Ron DeSantis, the industry would not be in the position we're in today, not just Universal. Without action, monies would continue to be going to third parties that weren't impacted by a claim, and that wasn't good for anyone. I think as we continue, and you've seen we've had modest declines in 2024 and 2025. We kick off our actuarial study on rate for 2026 at the end of March, and we'll continue to do the right thing. A decrease in rate does not always result in a decrease in earnings.
Speaker #2: I would add that without the actions taken by the state of Florida and Governor DeSantis, we would not be in the position the industry would not be in the position we're in today, not just Universal.
Speaker #2: So, without action, monies would continue to go to third parties that weren't impacted by a claim. And that wasn't good for anyone.
Speaker #2: I think as we continue and you've seen we've had modest declines in '24 and '25. We kick off our actuarial study on rate for '26 at the end of March.
Speaker #2: And we'll continue to do the right thing. And a decrease in rate does not always result in a decrease in earnings. As a result of the favorable legislation and the less severity and frequency that we're seeing, and you compile that with potential reductions in reinsurance and expenses, it's a very favorable environment right now.
Stephen J. Donaghy: As a result of the favorable legislation and the less severity and frequency that we're seeing, and you compile that with potential reductions in reinsurance and expenses, it's a very favorable environment right now. We look forward to continuing to return funds to insurers as a result of that. I would also add, too, our retention, Paul, has never been better. We're in a very, very good place.
Stephen J. Donaghy: As a result of the favorable legislation and the less severity and frequency that we're seeing, and you compile that with potential reductions in reinsurance and expenses, it's a very favorable environment right now. We look forward to continuing to return funds to insurers as a result of that. I would also add, too, our retention, Paul, has never been better. We're in a very, very good place.
Speaker #2: And we look forward to continuing to return funds to insureds as a result of that. And I would also add, too, our retention, Paul, has never been better.
Speaker #2: So we're in a very good place.
Paul Newsome: Great. Appreciate the help. Thank you.
Paul Newsome: Great. Appreciate the help. Thank you.
Speaker #5: Great. Appreciate the help. Thank you.
Speaker #2: Thanks, Paul.
Stephen J. Donaghy: Thanks, Paul.
Stephen J. Donaghy: Thanks, Paul.
Speaker #4: Thank you. At this time, I would now like to turn the conference back over to Steve Donaghy, Chief Executive Officer for Closing Remarks.
Arash Soleimani: Thank you. At this time, I would now like to turn the conference back over to Steve Donoghoe, Chief Executive Officer, for closing remarks.
Operator: Thank you. At this time, I would now like to turn the conference back over to Steve Donaghy, Chief Executive Officer, for closing remarks.
Speaker #2: Thank you. I'd like to thank all of our associates, consumers, our agency force, and stakeholders for their continued support of Universal. Thank you, and have a great day.
Stephen J. Donaghy: Thank you. I'd like to thank all of our associates, consumers, our agency force, and stakeholders for their continued support of Universal. Thank you. Have a great day.
Stephen J. Donaghy: Thank you. I'd like to thank all of our associates, consumers, our agency force, and stakeholders for their continued support of Universal. Thank you. Have a great day.
Arash Soleimani: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.