UVE - Earnings call transcript Q3 2018 | Universal Insurance Holdings, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to UVE Q3, 2018 Earnings Call. At this time, all participants are in a listen-only-mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Dean Evans. sir. ahead, go Please

Dean Evans

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

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

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

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

Sean Downes

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

in I'd weekend. by Before condolences my anyone begin, Pittsburg last to like express heartfelt for occurred affected I that tragedy the

As many also Pennsylvania personal where only rights Universal who family. connections us there and where not have State is business, of

is Hurricane natural Storm helping Hurricane on Tropical who Gordon by including Michael. focused disasters Universal all have been Florence, recent and affected Additionally, intently policyholders

have the in since Our catastrophe teams ground landfall. affected the areas on been the made events

for claims processing assistance need are that as Universal you We time fast require to a with should need. and any hesitate during policyholders available possible Please do are representative we as of not this follow-up assistance. other

then some earnings questions. results and Now topics from the .We conclude discussion. moving the highlights quarter several cover providing quarter will for discussing by up and will Frank by I'll John and growth on our call initiatives current to begin important open third strategy. will review will then financial our

net of quarter the an of annualized report hurricane of and and Gordon our third our result with growth in We third XX.X% in with $XX.X report of we catastrophic pleased light XX.X%. are for during a an EPS experienced diluted million We is income ROE as impressive activity results in particularly of the increased quarter, This $X.XX states. growth storm in quarter Florence. and written XX.X% occurred Each premiums which geographic top-line other X.X% excellent tropical within notably of footprint. Florida within including growth growth most the direct

of profitability includes $X.X this XX% underwriting losses or the an weather Our strong quarter, points. was for ratio four combined with million expectations above

third respectively to Adjusting subsidiaries results Blue to line continued and $X.X as quarter contributed Corporation contribute million Reinsurance bottom to Corporation company our results. $XX.X million and service Atlantic Our Universal

outlook growth prior resulted when had in believe forward. well late diversified the on have federal XXXX organic the for was to tax which the net the We effective in our for our impact avenues, the Lastly, a during balanced benefited as heading was to second discuss meaningful also income stable that passed positive both the various by tax a rate which we now growth quarter future compared year. first our case pursuing position and quarter, more I'd Universal have reform and like from business.

Florida continues to strong book approved direct growth that premium rate This with as quarter. the X.X% growth written in of of core was the includes average Our produce XXXX. statewide December in organic increase our policy count and third X.X% as growth well

a currently develop. Florida to remains we rate an provide in as filing process, XXXX Our and situation will update continues

direct. strongXX.X% another and strategy to in Universal basis Florida, states and continue profitably can of grew through other third premiums we within independent book expansion direct-to-consumer that writing believe in our network element written grow is quarter. direct key organic We on our agency growth Geographic platform business both our our

now with Illinois in XX are states, licenses active in additional We West and Virginia. states Iowa three

all $XX.X to expect continues a Universal going is our forward. solid of growth premium. homeowners states active continue and expand We approximately trajectory. policies is million to online to geographic Direct, footprint direct-to force in of approximately in demonstrate our force in Universal insurance platform in and manner our conservative prudent -consumer for Direct a available unique XX,XXX

is contribute to We growth continue to going to continue believe our efforts to that well-positioned Universal forward. Direct

will We continue profitable business premium enable organic us our that to and multi-part grow growth remain our we of growth. to book confident strategy deliver

solid portfolio, loss a position. goodwill and appropriately minimal balance reserve a set sheet investment have debt conservative with We or

by We comprehensive are program. reinsurance a protected

evidenced integrated of Atlantic Corporation Adjusting in Blue vertically income generated positions event disruptive Universal and wake us as event unique by the a well to of Irma. capitalize Reinsurance Corporation structure by the industry the Hurricane Our in

substantial continue of and With that for and the beyond. excited over to we remainder Jon are to to holds the I shareholders call will turn for We Springer. XXXX about what our Universal deliver value to future expect

Jon Springer

reinsurance like and weather Hurricane events, in hurricane our of first would a and also to Michael, with in provide a event recent fourth another I quarter catastrophic Sean. you, we've months. light on program discuss on storm update Florence, of Thank I'll quarterly the seen the touch events Gordon hurricane lastly tropical recap quarter third start Irma.

in of million. gross in we months of new our claim a claims. hurricane from in attorneys negligible and the X,XXX for Irma down million loss of count losses on under during which first Irma gross in remains claims at almost to claims, XX,XXX the had comes of the our claims estimate aggressive losses We X/XX third X,XXX new as change XX,XXX due for three gross our of new over net change another reported total to increase the quarter. Bringing just actively This plaintiff quarter relating hurricane claims approximately on retention This event. quarter, reported increased $XX settling the to and continued in second Irma hurricane continuation to reports reports have Florida. the Following nature $XXX over had new

these severity with service XX,XXX with an claims quarter benefit would of in approximately revenues included severity subsidiaries Switching Corporation. revenue Atlantic and and within and quarters than now Blue Corporation of a higher third of case normal XX% X,XXX Adjusting to Irma, of roughly be on XX,XXX, our of each Universal almost closed loss quarter. four of profitability average the across provider the closed all have level payment. claims approximately LAE Hurricane average have a otherwise additional LAE claims have loss the additional Reinsurance a XXXX. led of to The past result and We as an the

weather XX.X results tropical current and a quarter's losses Gordon storm third a relate $X to loss, four points total The of loss in million, million to compared million to of booked $XX plan $XX resulting events plan loss quarter weather of of $XX million million $Xmillion, all points gross events the of beyond net net. include in quarter third Hurricane XXXX. Our Florence, of retained gross $X.X beyond

Moving fourth the on XXth a Florida landfall impacting Panhandle Category on quarter several Georgia southeastern of initially event hurricane strong states. made along to X Michael, Florida, the and as other which Hurricane October

of loss non adjustment program. Florida to While claims resulting could additional days of it from its is pretax expenses recoveries net event Michael, to To very the adjustment reinsurance any million recoveries the Those $XXX and storm $XXX extent, of losses partially $XX the cycle million gross its losses loss retention. early to expected million million. reinsurance supplemental company and in in produce $XX experiences reduce like the an is still expense reporting serve

reported general less the made support of relating catastrophe structure our planned, and to has program. received originally reinsurance extremely overall in have received exactly landfall be months. we comments program worked The nearly our Lastly, of appreciative as Hurricane to we September claims design reinsurance Irma a and XXX,XXX Since XX few than XXXX, from have we continue partners. in

closure. With our to attention over of to that reinsurance of type I'll daily hard to the these team deserve turn faces trading the pleased highlights. Wilcox are the our We for to work with understand financial them bring successful the Frank they and in giving each be challenges claims discussion that partners

Frank Wilcox

Jon. you, Thank

of For % while earned premiums while other the earn premiums total for $XXX.X revenue Irma. revenues. fees paid the quarter as ceded grew quarter of direct quarter, Hurricane EPS related during commission XXXX. policy the in grew $XX.X premiums, the was was and driven third for growth earned investment million by revenue, of to XXXX compared to The premiums third the X.X% reinstatement quarter We premium diluted Direct million income in X.X% $XX.X net to growth a includes net $X.XX. net XXXX third reported was income, ratio XX.X% XX.X% $XXX.X earned percent of XX.X% of to of strong million. premiums Ceded premiums million quarter

third other declined --in the to the quarter quarter XXXX. year's the XX.X% XXXX. LAE revenue middle million XXXX. and to item, fees quarter. of and quarter. The Included Commission combined $X.X in commission to in within in XX.X% year's XX.X% prior received quarter the was revenue revenue, ratio improved fee XXXX by mid from single would related third the Atlantic of income the XX% XX.X% of have each grew digits commissions of policy this We third versus Blue net reinstatement of in the ratio loss the Excluding third prior the net of the ratio a in compared for quarter generated to

Irma. of four year's to $X.X or million million weather pointed out, the points and included hurricane Hurricane As above quarter of million weather relating plan with to $X.X plan Florence of or $XX quarter The storm to above $X Jon points third Gordon. million events XX.X losses prior tropical included entirely relating relating XXXX

XXXX quarter prior third of the and of negligible third XXXX year reserve of quarter movements. a the include While amount

from adjustment include a mentioned of by million Sean XXXX earlier, the of third expenses points earned Adjusting As $XX.X Corporation. or quarter loss profits X.X additional service benefit Universal

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

in XX.X% Our net expansion XX.X% in XXXX third in of policy the acquisition than higher quarter the ratio XX.X% quarter third of by of in expense has was XXXX compared ratio commission driven net a to other third the of typically third from the book geographic increased XX.X% cost our states The quarter Florida. as quarter expense XXXX, XXXX.

was cash improving maturity XX% XXXX. the in September approach third investment are not quarter optimize X, realized XXXX of XXXX the XXX,XXX conservative Jobs gains gains to total XXXX corporate January cash losses value fixed XX% hurricane X.X% average within The XX% take ratio and investment of XXXX. lowered XXth, We XXX.X% enactment investment were third this yields XXX,XXX third result XXXX, of steps declining which to of duration and XXXX Act shares item. investment assets securities our sale tax continue was growth is in September tax grade. quarter other third $X.XX at compared of unrealized income quarter share XX.X% versus capital the the are securities from composed Our compensation rate in We conditions We resulted reported effective to The We fixed which of maintain a Net driven that XXXX growth during impact in the maturity our XXth, ratio a quarter the during is management. to in of year's treasury of primarily the weighted managing and was Tax of rate We $X.X prior expense managing federal our of portfolio XXXX equity the reported that in to quarter. and the Irma committed of investments, Total September for due quarter. investment decrease quarter realized line effective million of X.X quarter the high in of was the purchase portfolio. the did unrestricted million, to ratio remain our third actively We third included effective in third XXXX in XXth, to losses with as prior of at operating to Cuts and which but expense year's a $X.X taken from know driven XX.X% of by year's the is years. billion rate quality investments market of the The in and by quarter expectations position. in our was and investment had in portfolio that prior for available growth the reduction primarily compared XXXX. invested the line consider during to future XX.X% expect year's dictate. tax XX.X% XXXX current any investments from a of repurchases the

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

Operator

comes from Campbell [Operator Instructions] Please ahead. And with your KBW. first question Christopher go

open. is Your line

Christopher Campbell

Yes, morning, first good my the gentlemen. I questions on hi, loss. guess core

this the calculate just So breaking I quarter. out loss core Irma higher bps claims income benefit of year-over-year. for XXX ratio about

So thinking I assignment how of of that to much expansion? versus guess be benefits geographic an attributable just would Delta about that

Frank Wilcox

got premium reinstatement of which that Well, the you've increase affected take first in out of to all, consideration the calculation. that denominator into

the X%. elevating by about down that pushed that loss So ratio

So about mentioned. the you the underlying to the core increase just ratio is X.X% that in loss closer X% versus

be that I As even the far the would it the an say as expansion the between benefits, AOB between and two. breakout state would split

Christopher Campbell

out the would XXX reinstatement, out of you so be of like about would to the --out that? think be then Is X% that way higher half the the and back that of about if right were-- AOB you the so geographic once X% Okay, other expansion. bps

Frank Wilcox

I fair. fair. I think that's that's Yes, think

Christopher Campbell

this change great. the like know or helpful. just filed looked -- a for June. And it was looking increase the --for in about you year, I you progress year rate thinking Okay, guys last then any X.X% at I that's back like, like very but

opportunity a some maybe You which there's kind would XQ. did adverse of rate taking development in have indicate

just that rates, change what's rate in moratorium kind terms of the year? to this kind --and of but now driving a of just I am I of latest right So storm there's know because

Jon Springer

place moratorium There's another right in now.

making the fourth rate we the done for and quarter. have sometime the will We indication, work be filing a during

Christopher Campbell

renewal? the Okay, Irma's significant And then and how year's gross you pricing just that next helpful. that's I next might reinsurance think do given like guess like for deterioration losses, impact

Jon Springer

the majority early cycle. South business renewed too terms think not obviously January now right are to the by renewals until their include the Irma Well, of X business, June. which of obviously of I be on some but will Hurricane was impacted really tell vast that it's Eastern focused Reinsurers amount in next reinsurance

early think the Michael Hurricane may change losses. due the rates we're to in on to due loss Irma too start how I way process or So changes speculating to and

Christopher Campbell

the own. independent up putting already Got it. two in Then are loss I bps? estimates? are are I how Or I reliant mean guess they you just going reinsurers new to set panel separate like to guys out, your their on they're set companies, the putting loss going your are reinsurers reserves, guess growth

Jon Springer

I a reinsurance the in losses our months be in It's the proverbial the of but reported. XX% as with better question are to that claims. are last with that Yes. that recent out possible trying associated them, terms you we as of tell to of the type being ask would And transparent partners challenges closing

Christopher Campbell

Okay just was expecting income, we were more a quarter. little the than and it be this switching bit then to claims

persistence this as after how So on driving guess well? impact of your income ratios Irma, then be thinking positive adjustment the I likely Michael the what in we stream so And claims now about incremental modeling just core benefit the the plus far event? should income loss ongoing

Sean Downes

Irma push as many I Obviously, comes and hurricane basically to to going we down into timing a this to Yes, a of try could. think we Chris, settled as process. season large claims made our get

do that the it So to in with timing. increase I just QX think at it's, when you're has looking

revenue going and pretty mentioned think as to obviously Universal you forward. participate as I now adjusting Florence see Irma think going as see to you're well going here off you're I level to good Michael

Christopher Campbell

question mean buybacks script think and on in I buybacks. this no you Frank mentioned of his I Okay a then the quarter. kind just

attractiveness repurchases share are dividends, how a like cetera? thinking relative guess I et about just of So you

Sean Downes

Yes.

As and we conserved constantly event tried the support management of to we've a are been are always period to always the But evaluating said, the on and blackout needs. environment. of to catastrophic doing our in we're in this in QX, board so hurricane. cash We team Michaels. because going and historically obviously we We've planned a prior stock

us making prohibited it more any purchases. So from

Operator

go question with Your Khare Samir ahead. Please Returns Capital next Management. from is

Your line is open.

Samir Khare

have in loss questions moving guess I dovetailing of couple the of of on morning. parts a kind question the on Chris's the and quarter I Good ratio.

from the the, million that guess removed then remove ceded expense, correct? I understand effect UAC of million you that removed $X.X basis of of Is additional expected your XX%. of $XX.X I premium Cat So ratio the of we and $XX.X of if just effects gross puts effect the on revenues, a loss million at,

Frank Wilcox

That currently on fair. we booking That's direct to basis. what were a

Samir Khare

guess thought in AOB said like already I had sounds that Okay. are guys you you before I but I there. misunderstood. additional for

if reinstatement loss premium the then the additional and you continues to additional could premiums? have Okay, Irma what's develop from ceded maximum

Frank Wilcox

maximum would approximately The be number million. $X.X

Samir Khare

million $X.X Another

Frank Wilcox

Remaining quarter. beyond the booked this really million $XX.X that we

Samir Khare

would additional how represent? Okay that have realize and much that to losses million? $X.X agree gross How to Irma much

Jon Springer

a some million answer roughly at it of difficult losses cat market ceded $XXX --it's which point the to into that a reinsurance tell play open --that's fund comes our you reinstatement to terms would in hurricane because program a more. Well, I cost, be but Florida question would has no can additional

Samir Khare

attorney them? can Great, And reopens? that Are loss? Irma of representative, upon additional complexion Anything personal you had like the quarter, claims are then X,XXX in coming can Are they that you you represented the okay. the guys the that. claims describe from

Sean Downes

represented big. then Lot assessment loss is your a and it attorney it's claims. It's of claims

Samir Khare

far that have how guys can idea Michael? fourth then for revenue in of And accrued you've you And thus claims you Irma? quarter for any accrued right. All an much the us give just from

Sean Downes

you back right now, but Samir, We get can don't information that we on have that. to

Samir Khare

going metrics? Can just hurricane and bit. total Okay have claims about How Michael then are claim close many percent give us you How you et a many talking little cetera? losses, some severity?

Sean Downes

but no more states. Florida not than other in much other a through XX% above I than now are right filing to now claims the of pay a in that places think greater lot the to and claims just going states people X,XXX that approximately closed back with process Obviously, deductible, are more claims. in still another obviously think other right the the getting roughly because we're been have if and There right their we've Florida they're states. of severity Yes, now process, we in receive in lot X,XXX getting in homes, The is seen Florida. the are

the of Florida. loss So right with is as now, like most of associated it

Samir Khare

for under event the I $Xmillion and So drops Michael for Okay considered right? that Is of second for it your other retention. state? this for is purposes the, guess

Sean Downes

That's correct.

Samir Khare

$XXX that of in is And for you can have that is how million for it Michael, and Okay. ex that delineate how of you pegged guys loss much Florida? gross Florida much

Jon Springer

very point, at estimate how may and And be would the think this inappropriate much of on outside this we're is cycle claims gross now. to not in our hurricane right Florida come from going It Michael. share we early it point. try That's to guess to very, at reporting

Samir Khare

written from direct, and outside new how much Florida premium was On new Florida? in the quarter inside direct Okay.

Sean Downes

Could that repeat more time one you please?

Samir Khare

Yes.

how much written was quarter outside and from inside in the Direct Florida Florida? Universal premium Just

Sean Downes

was Florida; other written states. XX% in basically XX% in

Samir Khare

what's total Sorry Universal written Direct? was premium that in the base

Sean Downes

over million. in Thus $XX $XX entirely million far it's just

Samir Khare

enforced that's all right? Okay,

Sean Downes

correct. Correct,

Samir Khare

the ones Direct the Universal to Okay. Any partnerships in or new any pipeline? updates

Frank Wilcox

continue we in driven anything organic concrete to Universal, to monetize about continue without but how premature We can announce to place. talk entertain people be the to et and leads it'd cetera to agreements

Samir Khare

how that year approximately renews the FHCF? tower, it how dollars? Okay is guess of much and reinsurance and reinsurance, premium And the your of in I next much

Jon Springer

Just roughly a Florida premium cat XX% hurricane high-level our is XX% roughly negotiated. ceded pre fund; breakdown, is already of

XXXX. of So renewal June the remaining up is XX% at for X, spend our

Samir Khare

the invested we I income higher Are bills for same Hurricane of to a QX experience resulted in the reinsurance money that they line. year net fronted last because and cover Michael? Frank recalled reinsurers the and were, going Great, in --

Jon Springer

income that advance that mean associated There's I a with reinsures that's will benefit small get a investment marginal we very that. money.

Operator

for this call at the Sean further I remarks. Downes time. questions back no closing any over will are to there turn And

Sean Downes

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

Operator

Ladies this wonderful a day. conference. your today's concludes Thank for participation. And and gentlemen, you have

disconnect. now may You

Universal Insurance (UVE) 30 Oct 182018 Q3 Earnings call transcript