UVE - Earnings call transcript Q1 2018 | Universal Insurance Holdings, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to UVE First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only-mode. Later, we will conduct a question-and-answer session and instruction will follow at that time. [Operator Instructions] As a reminder, today’s conference is being recorded. I would now like to introduce your host for today’s conference Mr. Investor of VP Evans, Relations. Dean ahead. Sir, please go

Dean Evans

With at Sean I’m are Welcome Chief Thank quarter first Officer, Holdings, in My Evans the everyone. of for President you, and Financial Springer; and and Chief good Officer, Inc. Investor and Dean is Michael, Chairman Universal. to room Chief Wilcox. and Relations me here Jon name Vice XXXX Frank Executive Insurance Downes; today President the Universal morning Risk the earnings Officer, call conference

Following at Sean’s will earnings will our Yesterday Jon on www.universalinsurancehodlings.com. results. will remarks, be several questions. replay presentation important which will homepage provide XXXX. issued call on opening May review this the an current then The A available Frank press for we press update be release, release’s reopened website topics is of and available our the afternoon, X, under website of financial until section our of

forward-looking presentation Before we begin, contain financial please our this note may and results. business statements that about

would filings turn and to Executive do any consider over with our We reflect to solely section they you statements Commission, uncertainties, be or listening, Securities associated our future any expect of events our Sean Downes. filing described website believe, are as similar our materially that, statements. undertake view Chairman We our statements forward-looking or With obligation to anticipate predicted of and the and the presentation typically or from of to carefully such expectations. not words SEC's not available SEC rely investors, Chief I We can Officer, and forward-looking correct quantified or caution like differ with the in including expressions. imply risks and those the to cannot risks results on as are current which some Forward-looking and which Exchange future encourage update on website.

Sean Downes

you everyone today. for and joining us Dean, you thank Thank

begin will providing growth the conclude quarter will Jon we review topics by I will several results. discussing by some and will from cover current and As usual, strategy. our then important and financing highlights initiatives Frank

of results the reported net XX.X which of annualized EPS for reported we XX.X% We’re X.X% quarter. for of direct in premiums XX% We including the income equates in the top first for excellent quarter. quarter states. quarter first ROE $X.XX the growth with growth XX.X% diluted and to XXXX, and line pleased our million within growth an first of Florida in other written growth Overall, with

pick strong, no the was year's combined we quarter. beyond change, because quarter underlying impact coupled for just recent current and Florida, a assignment veterans in plan conditions negligible current with XX.X% approach Our claim. a of ratio the loss taken notably in a most activity reserve increased underwriting market of conservative highlight with light level have The includes catastrophic years, in profitability weather of we to losses to our the related of [indiscernible] at the

Corporation benefits company Hurricane both contributed Adjusting Blue positively the Universal and of service to Reinsurance as the Irma, continue results. Corporation produce Atlantic subsidiaries Our quarter to first in aftermath

positioned balanced net growth in XXXX, federal diversified the which the in heading more a the tax have passed tax and meaningful Frank for on reform quarter outlook was detail as discuss in rate growth income benefited we for We had for well Lastly, various our organic will to the stable, late the from call, impact positive future I like our resulted Universal more business. by a have forward. quarter. that effective later believe avenues, in pursuing briefly discuss which

direct-to-consumer our and believe robust on an platform Florida, grow continues our strong organic in organic Universal to that we we Direct. produce both growth, and basis book profitably continue Our can using to core agency network Florida

first Xth X.X% these statewide for ratio new increase renewals [Technical new the on by OIR early and Universal rates December and have the Florida for average business retention were and consumer December growth X,XXX effective states to insurance on our write was Our owners our continued $XX after now Geographic continues business Currently, and rate licensed force home approved of unique in available active in of our approximately Direct, a million we and states XX.X% on for run first early is our expansion over as direct grew the direct we key a states written in solid We XX% in trajectory. Iowa, have element the New platform than actively quarter. impacted during in additional force remained all premium. and in policy April, demonstrate policies premiums quarter. West in first XX Virginia. other book to states and writing in growth online policies the Hampshire three to in our of within our strong strategy more Difficulty] Illinois,

and enable both start to well We deliver will states be other profitable is confident that XX XXXX off Florida to are organic strong and multipart growth us forward. strategy continue a extremely growth believe premium going will to our We right Universal remain positioned business. in that in

set us our solid reserve we’re positions protected in reinsurance integrated the have by comprehensive capitalize unique a Irma. event to our a highlighted of a as was disruptive We well and vertically minimal program structure during portfolio conservative debt with position, industry Hurricane sheet catastrophe in performance appropriately by a investment loss balance an and

I the the With these Jon Springer. and what to will Given our future excited substantial continue over Universal, about expect we holds for we to strengths, call shareholders. deliver to turn to are that, value

Jon Springer

Irma. discuss Hurricane from By an roughly Sean. approaching landfall, to would a soon public XXX with current of gross reinsurance one million as on environment renewals. in XXth like we on after we're of estimate Hurricane then XXX update the first released [Technical month you, start Irma our Difficulty] I to background and October Thank way million losses

removed to evolve basis. X.X continues event daily on the a landfall our months on now are made information from Florida first the storm and when We in

More event. is importantly, tower UPCIC extends we given billion our advised Hurricane for a to as retention previously reinsurance X.X Irma

our quarter, to manner the reinsurance responded, million in retention which UPCIC is last advised this reduced changed. XX.X has we As that none event of for program

this past weeks, time, comprehensive loss on no Hurricane to of by gross million. a at prospectively the we have advising confirm, XX UPCIC. financials of the estimate will to following over few change losses we absolutely that are impact this are gross relating However, event review the estimates our in of increasing Irma Again

and total for below APPCIC, our recoveries as comprehensive Hurricane for first and of retention both the to for of X which LEA performed Our loss XX Irma additional received from XX.X million the it combined million was subsidiaries is due reinsurance UPCIC total to claims had and an our program loss the limit This to UPCIC will net of reported continue program. in during claims. insurance claim first XX,XXX designed million the other due additional of in to from weeks reported XXXX gross comes XX,XXX. estimate reinsurance of count to and to-date new change April, X,XXX the bringing We states our quarter primarily continuation three the

number in severity can by closed approximately average these X,XXX XX% loss compares I claims is and average to LAE percentage just previously plus closed claims loss believe. report XX,XXX severity LAE on with running in that incurred loss We an roughly with This X,XXX all of of payment. over in across the reopening just XX% We of claims with an the announced a of change XX.X%. claims citizens. also resulting have

since All the hours have storm the is hard employees, in been whom landfall working many long of a of early September. testament this to our work of made

partners to XXXX produced be Corporation of result higher than of Adjusting quarter. received quarter quarter of and a fourth in led XXXX the Blue revenues the a upcoming of Universal service June course past case As Irma to Irma. the Hurricane we've the and to the Hurricane Switching the subsidiaries, XXXX which of both level was the of in quarter majority as majority provider due would pretax XXX,XXX over revenues The face-to-face the now of commissions workload discuss and a within Reinsurance otherwise increased which benefit the during vast included XX.X Irma, our experiences additional our million result a normal reinsurance, months, of renewal. X created the the to profitability of during met profit of with quarter reinsurance additional of Hurricane two of first of related reinstatement Corporation XXXX. first vast Atlantic continued first our to

think I desire operate differentiate most the to reinsurers the the companies important truly insurance Florida. in takeaway that is

in lack to higher it claims very reopened It their in post-event who so a evolve, made to difficult more continue that continues of and and quality of a Irma will has manifest become reinsurers is the greater up percentage to itself not. any had had those claims. evident Hurricane preparation companies severity catch operation numbers to investment As

program that times accordingly many and the we the devastating since perspective, for occur. exactly a stated it to are priced modeled of from doubt made our very have a without but of was is Irma professional pleased event reinsurance was landfall, designed we partners our reinsurance Irma reinsurer As a many, and professional Hurricane response with for type event expected

year week on the and into lead For premium discussed when up and just change the mentioned, levels, previously specific coverage premium variables, receiving in do of process, multiyear firm level where renewal a over the that XXXX is XX% Frank we run June percent core financial state the reinsurance Wilcox not account all be I the renewal tower level we our our the you or to all a UPCIC. states to pricing but purchased catastrophe reinsurers, we'll I'll After entered higher at when market for evaluating I'm for X. highlights. of our up retention of renewal rate the the budget point Sean spending as comment be including a FHCF, quotes At same perspective, the buying, our with shaping capacity last we to With that, earned will buying catastrophe from terms going for say to less factor total our take in this reinsurance so. that keeping the same you catastrophe the discussion order have this turn and a on coverage from to

Frank Wilcox

Jon. you, Thank

Atlantic XXXX. The combined first the the reinstatement increase in percent income, to leading premiums of to as of in XX.X to premium XX% growth first ceded the and each XX% premiums rate quarter improved fees Direct prior the grew of earned policy $X.XX, 'XX. income Diluted was XX.X% of was to Blue posted in and a million earned during for by of to first of commissions up LAE revenue. policy solid XXXX, growth XX.X% earned a revenue of the quarter, the from quarter growth quarter. reported strong first increase XX.X during the compared For net received versus growth first We commission first was in fee total compared related the quarter of X.X% it premiums of XXXX. prior in of million, an for 'XX. income year's totaled first in compared of revenue XX.X% Commission quarter a 'XX. XX.X% quarter ratio XX.X%, to the generated from first by the driven quarter XXXX, $X.XX Florida, XX.X% of of revenue XXX,XXX of of XX.X% fees premiums net volume, to offset net was of earned Ceded direct premiums EPS investment net to earned 'XX loss within XXX.X XXX.X included the ratio net by We the statewide million quarter, year's X.X% the in revenue, quarter revenue, in other other commission quarter million.

the prior plan, plan to XXXX quarter of impact compared reserve above X.X were losses year's percentage accident quarter quarters. year weather Prior above includes movements and or in the million negligible both points First weather first no X of events XXXX. from in current

Hurricane first adjustment revenues XX benefit Corporation from of XX.X expenses points related included X.X loss quarter earned The Irma. million additional to percentage by or the Adjusting Universal

than of book of weather states to loss impact prior level home of the losses expansion the projected compared continued generally marketplace and ratio underlying Florida higher reflecting loss geographic increased related our the and in ratios non-catastrophe state and LAE and as dynamics are AOB claims. within year, other Florida, increase Our including

quarter XX.X% net the quarter XX.X% ratio to first expense first Our 'XX. was in the compared 'XX, of of in

as XX.X% net Our to year's acquisition driven compared within states with in higher book XX.X% commission largely to expansion, cost quarter increase expense Florida. geographic prior the policy than has a the increased other ratio by our typically

of XXXX, the guidance million which the securities. in which expense X.X high credit growth first corporate managing year's the XXXX, of number quarter, investment resulted was in stock scale. reflects generally Total effective of included to our returns a XX the Jobs the were federal The of quarter income from XX reduction first The of result of of portfolio, primarily a million of of Net Our unrestricted X.X higher pretax in a to first million ratio the to a The quarter income was other Tax from was was Notably, XX.X% this that portfolio. tax 'XX. market available operating our driven March Act gains, of yield to X.X growth of year's of which during year's taken as 'XX of the X.X rate XX, million treasury the March quality an quarter portfolio the quarter income is interest effective first after-tax to in during to of exercised investment for assets maturity approach the a XX.X% benefit reported expense adoption our included losses for item tax high benefits effective Cut accounting quarter, in in increase We invested driven tax well committed X.X XX X.X our losses from awards sale XX.X% quarter's losses investment first benefiting is the to in and X, are maintain line first returns not of a net the were optimize year's securities XX, XX from million, our of for investment our rate The -- items rate and/or points. position. equity enactment average economies XX% in versus equity the of that included We trends January by invested tax quarter for increase the fixed realized XX,XXX basis. XX% realized quarter. while credits equity million cash prior XXX.X in related take effective rate XX.X% based from of March of of unrealized prior, XX, of with result growth We quarters portfolio decrease compared tax XXXX. to for and million was benefiting cash XXXX actions to of capital tax by XX% in total current duration first quarter equivalents the from of the vested credit maintaining due remain quarter comparable The prior as in first of included quarter's favorable 'XX. was excess securities current on of tax actions cash percentage debt XX% reported conservative from rates. during which the resulting by assets, the coupled X.X by managing points. available to but prior securities, as an management, and expense X.X investments the cells actively was 'XX. grade. result percentage income our higher rate discrete increase fixed quarter compared of in weighted to to quarter tax and comprised effective comprehensive as other investment The years. maturity We as the The investments X.X income of in decline was added in of in investment taken the for primarily XX.X% the quality quarter

X.X share. repurchased cost average we quarter of first the for per XX,XXX of million, $XX.XX an During shares XXXX,

XXXX subsidiaries the excellent level to to to authorization an while end the of of of price as was compared XXX common first XX.X% share this in March XX, result. We December or XX. March XX XXXX year of X.X% $XX.XX prior At at repurchase the of of the equity at per share was of surplus equity levels. million We in through XXX has per was March is XXXX. end XX, yield current to XXXX. dividend the Stockholders' X.X% year's quarterly December XX.X% dedicated insurance XXXX, operator. a million XX, from and back of and return Annualized quarter common million 'XX at Combined believe for current from runs on was growth remaining remain XX, on equates December quarter this quarter. equity paid to Our the million XXXX from to based XXXX, annualized XX.X% the value share, XXX.X book regular share $X.XX program for growth on compared our shareholders value XXXX. XX, in first of an X.X% turn the point, call to quarter first average our I'd XXXX, like providing return which

Operator

comes [Operator question KBW. Arash first from Soleimani Instructions] Our with

Please ahead. Your line is now open. go

Arash Soleimani

Just first question was.

of terms growth. sustainable growth XX% mid of as level digits? upper, of Is should this the mid like it strong we premium it's or kind the kind pretty been In single think more

Sean Downes

basically geographic Sean. definitely that I is that attainable. and XX% as loyal expand this Direct, is between Because to Arash, forward bracket think should expansion and our at a going our agency Universal X% look of you and continues force

Arash Soleimani

but because of residential kind the of there? the environment -- of keeping eye focusing some rate in with is not on commercial the growing on, Okay your really an near-term

Sean Downes

for think the there I ready the in putting environment our and this a environment of to mean is we’re time, in this definitely don't at are the we to be but but some is don’t go But marketplace. and is enough I adequate time, business chasing just disruption us premium business. putting adequate we’re set on, we just business current rate case Exactly, the believe in not at

Arash Soleimani

this, are has but are seeing, certain layers multiyear environment I only but coming basis, what losses? the layers have hit renewal the know for were you I for what's are actually know mentioned but are don’t others that you up if I there by on Jon the pricing guess that

Jon Springer

a of specific in literally where remarks, spent to general sort we’re year, but reinsurance for layers to I specific mentioned, made in on not talk up my thing. relative that end our appropriate opening I are the about I as right the to Arash going us process. that will comment pricing comment Yes, relative it's think to last we overall layers. of given don't middle

Arash Soleimani

in say that you've what I Okay run operation? point the sort rate that’s in of as improvement we fair. what guess fair where reached subrogation, do of you your subrogation in forward then subrogation terms you're And of like with going had you there's think kind a

Jon Springer

continues the in because unit material space. three Subrogation to the our of the that and of four or improve made work last we employees years over hard investments

we I to think far math out determine it's be little would too critical with basically level bottoming a is where percentage. the and as as picking early

will to going to over believe We are two. I the specifically continuing and next improve forward that year continue we

Operator

the Capital next question Samir from of line with comes our Returns. And Khare

line line your Samir, could be ahead. muted. is please Your go open

Samir Khare

well? quick question of Direct. what Universal amount as quarter? about was guys And you Just this wrote booked a QX premium guys premium What in you was actually the volume the

Sean Downes

QX that and million I Samir. head QX a believe top my it's approximately off little bit the in X in under

Samir Khare

tax you tax forward? then rate, use what’s on that good recognizing in was quarter the going rate benefit the this And there a

Frank Wilcox

is morning. this Frank. Samir, Good

effective -- discrete Excluding tax rate XX% to underlying between the range a the XX%. effective items, on put I

Samir Khare

then more adjusting Irma of coming income claims QX? And in any from anticipation

Sean Downes

a the QX. as currently we're right There some not great now. receiving in claims but were will seeing that as be reduction Obviously,

anything QX. will expect in up as put would I So such be

Samir Khare

--claims I’m if is And say, involvement there claims in attorney understand, that think coming these higher if reason trying different the is more that there's any if notice QX with much claims came a later? in there to just better are of severity higher or loss? complexion you complex QX, to the them and

Sean Downes

Florida obviously et two different have cetera. you foremost folks have and transient dwellings about that first little in Well, north

delay. to situation an get it that do that, come a where of realize et these individual claims and had you it sometimes of then insured had causes So where some up would the I the with AOB have have adjusters deductible. below would Also marketing with has turn handled their claim some the it situation people folks And or down. folks public been because situations and certain cetera attorneys reopen. the loss that sign

lower approximately right Our everybody reopen is around than running rate significantly XX%. else

a I definite those So, but is blending you give could I it a answer, really of think two situations.

Samir Khare

number that because payments XX% reopen more claims traditional of of -- that for you kind whatnot? and that Okay of is claims reopen excluded, adjusters the or supplemental local include just that does

Sean Downes

you what hear and heard say I didn’t I said. reopen you you… then

Samir Khare

XX% for does wondering Sorry, about are reopened that include that metric. -- claims Is payment? that I’m supplemental

Sean Downes

Yes.

Samir Khare

Okay

Sean Downes

could a application all of supplement -- couple goes same into It be that that’s at bracket. that of bit anything all

Samir Khare

on AOB And you you losses. number? Any the XX% quarter expect was update then gave the from claims in last any to that number of result to update

Sean Downes

it's No, about same one rate. the

Samir Khare

of And losses that, million? by that, range million? from by increasing range think that the to Jon the Or Should of XXX top said whole gross then to on is think XXX XX of it I Irma the XX million you million. I expect increase

Jon Springer

top You a on of number of is going million forward. should XXX it think the XXX so million, new is

Samir Khare

losses versus their paid for HOX the me of What Irma gross give the reserve the you HOX? split can And each? for

Sean Downes

call are of is XX% now, around is and running bit running that you it HOX X,XXX and X,XXX. severity Right can little right right other the of a under let's tell the HOX just H, around is I losses all the

Operator

for like and this further time. Downes questions further And I’m Sean conference you remark. would to Thank over the any showing turn no at back to I

Sean Downes

you. Thank

my team their and Thank to of call. employees, As always of This loyalty directors, Universal. thank management for like closing, concludes work the and shareholders, in hard would I personally to board all our you. policyholders

Operator

in conference. great program disconnect. for thank a you the you Everyone This may gentleman, have participation and and concludes today’s Ladies your day. all

Universal Insurance (UVE) 25 Apr 182018 Q1 Earnings call transcript