Universal Insurance Holdings, Inc. (NYSE: UVE) today reported net income of $13.5 million, or $0.38 per diluted share, an increase of $0.09, for the first quarter of 2014, compared to net income of $12.0 million, or $0.29 per diluted share, for the same period in 2013.
“Our strong top- and bottom-line performance in the first quarter reflects actions that we have taken over the past several quarters,” said Sean P. Downes, the Company’s Chairman, President and Chief Executive Officer. “We believe that our focused initiatives, including a controlled exposure reduction in Florida and prudent expansion in other states, should lead to significant savings in reinsurance costs while enhancing our competitive position. We also believe that our disciplined pricing analytics and underwriting practices have provided us with a book of business that will continue to strengthen and grow organically. We remain committed to increasing shareholder returns by executing our strategy and maintaining the long-term financial strength of our company.”
First-Quarter 2014 & Recent Highlights
Net income and diluted EPS grew by $1.6 million and $0.09, respectively, compared to Q1 2013.
Continued growth in states outside of Florida, resulting in a 47.8% year-over-year increase in policy count.
Received a Certificate of Authority authorizing UPCIC to do business in Delaware, and submitted applications to expand into Indiana, Minnesota and Pennsylvania.
Paid dividends of $0.10 per share compared to $0.08 per share in Q1 2013.
First-Quarter 2014 Results
Net income for the first quarter of 2014 increased $1.6 million, or $0.09 per diluted share, compared to the first quarter of 2013, reflecting an increase in net investment income and the absence of net trading losses that occurred during the first quarter of 2013. Additionally, first quarter 2014 EPS benefitted from lower outstanding shares as a result of the cumulative share repurchases made by the Company since April 2013.
Net income increased notwithstanding decreases in net earned premiums, policy fees and other revenues due in part to a reduction in the number of policies in force in Florida. The Company has taken a disciplined approach to its underwriting standards in Florida and has in certain cases decided not to renew policies that it believes had inadequate premiums relative to projected risks and expenses. However, the Company has recently taken action to reduce or reverse attrition in Florida including reducing overall rates for homeowners’ insurance by 2.4% effective in January 2014 for new business and March 2014 for renewals. These actions have resulted in an increase in policy count for new business in the first quarter of 2014 compared to 2013. The Company has also taken steps it believes will result in an improvement in retention and new business by investing in personnel to expedite the payment of claims and streamline the underwriting process. The Company believes these efforts have resulted in a more robust, rate adequate and profitable book of business.
At March 31, 2014, stockholders’ equity was $171.0 million compared to $175.6 million at December 31, 2013 reflecting share repurchases of $14.7 million and an increase in retained earnings of $10.1 million.
Share Repurchases
During the first quarter of 2014, the Company repurchased approximately 1.2 million shares of its common stock at a weighted average purchase price of $12.03 per share. Each repurchase was at a discount to the then-current market price of the Company’s common stock.
Cash Dividends
On January 30, 2014, the Company announced that its board of directors declared a cash dividend of $0.10 per share of common stock which was paid on March 3, 2014, to shareholders of record on February 19, 2014 consistent with the Company’s previously announced intention to increase its regular quarterly dividend to $0.10 per share from $0.08 per share beginning with the first quarter of 2014.
Also, on April 16, 2014, the Company announced that its board of directors declared a cash dividend of $0.10 per share of common stock, payable on July 3, 2014 to shareholders of record on June 19, 2014.
If declared and paid as intended, the annual aggregate dividend in 2014 would be $0.40 for each common share.
Financial Results Presentation
The Company will make available an audio recording of a presentation discussing its first quarter 2014 financial results on May 8, 2014, at approximately 5:00 p.m. Eastern. The presentation will be pre-recorded and there will be no opportunity for live questions. The audio recording will be available at www.universalinsuranceholdings.com until June 8, 2014.
