UVE - Earnings call transcript Q2 2020 | Universal Insurance Holdings, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to UVE’s Second Quarter 2020 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]. to Vice conference and President like today, your Investor now Luther, Rob of would hand to the speaker Relations. I Corporate Strategy ahead go sir. Please

Rob Luther

Thank reported yesterday. our Welcome quarter you, earnings morning, our XXXX we on second to which results, and good discussion everyone.

President with Chief Springer, Financial Chief the Officer. Officer; call Donaghy, Executive and today me On Risk Steve Officer; is Chief Jon and Wilcox, Frank

statements begin, Before today's and forward-looking non-GAAP note contain financial please we may measures. discussion

actual risks and differ uncertainties Forward-looking results statements cause to from could involve statements. those assumptions, materially that

more press in measures the For on all release, earnings comparable to quarterly presentation our on information, you. the are the of to is With release. press financial and which universalinsuranceholdings.com SEC's I'll filings, GAAP measures SEC website. that, our website please see at Steve, section Investors A the and reconciliation turn over included of available non-GAAP UVE's it of

Steve Donaghy

everyone. XXXX reported underpinned us and volume, joining the Thank half resulting pricing Thank for good and top-line strong in pockets by second you, solid result of growth as attractive of annualized equity on morning in Rob XX.X%. average of you first return a we of quarter an Yesterday, today. results

continue of growing successful time enhancing shift growth agents. enter XX,XXX consumers to add acquisition bearing agency premium for home Casualty’s from and its start to quarter the nearly addition, XXX% to we solid Universal and growth a period. online to over off first to completion total an digital independent desirable Clovered? digital agent ago partners due measured continues guidance serving party overall we same to an business non-risk offerings we the states In on with continue and its us historically half while second are in to quarter. the market. carriers experience. agency, Clovered We of while and to new time across and XX% approximately approach are the on a launched fastest The ago Though events more a by over of be renewal part year book opportunity a weather grow as business in to year attractive result its Clovered? third a expand new insurance our growing with average independent reinsurance our announced very the Clovered? to in including previously as of the continues above Represents the policy refinance Property year budget, to overall, taking Just

consumers strong execute ability we and remain drive to liquidity to for continue and growth Our our and stakeholders.

let to So with walk to turn Frank? over me results. through that, now our financial it Frank

Frank Wilcox

and Steve, you, everyone. Thank good morning,

up $X.XX growth EPS XX.X% direct and reminder XX.X% extraordinary the quarter, and adjusted As and basis GAAP by also in operating adjusted $X.XX of discussions gains XXXX were Direct excludes income interest exclude premiums first states Florida, in basis of on premiums reinstatement effects a and realized today a basis operating investments EPS non-GAAP from quarter $X.XX are was on unrealized for related the on losses and and income Adjusted expense. commissions. non-GAAP of Florida. a respectively. half a for and and strong, EPS and on on and XX.X% for outside premium written adjusted $X.XX the led

slightly along outside For growth both led Florida digits premiums effective increases led first In by a in XX.X% states, volume, to premium rate contributing cases, XX.X% up direct retention, by the of with of double Florida. growth. half becoming also series were was in written improved XXXX increased and states in

re-insurance higher core events loss second of for by impact the costs XXXX on partially the XX.X%, primarily a increased The in reduction ratio, the weather higher and by half On X.X ratio. the a previously the for expense quarter, the ratio first in driven and increases to combined side, the expense points XX.X%. XX.X increased the to announced points of were ratio combined offset the quarter

million a Turning quarter the a half had dividend yields to XXXX, cost result of an of In and term taking posture, million. included as to impacts premiums. million and felt to primarily aggregate to one-time in $XX earned to of COVID-XX at to first benefits the XX.X% first half of our services, $XX.X during quarter total our decreased the half company when economy. to equivalents the end and of XX.X% increase quarter, due the services deployment, during $X.X by second position for reduction one-time investment continue $XX investment as short also On and a XXXX income revenue expenses. cash for compared across primarily increased revenue capital for driven the portfolio, to special XX.X% global for Also by compared cash million commission to shares of million in repurchased year on investments income approximately be net of XXXX prior to XX.X% received XX.X% $XX.X ceded The we cash half investment to XXX,XXX the XXXX, first lower first from XXXX. an note, defensive regards the when the the on and

as the XX, Board dividend authorization first XXXX. an approximately million quarterly million. program on half payable declared XXXX, cost on of On repurchase Directors of to share, at of repurchased cash $XX.X the business June X, XXXX, shareholders XXX,XXX XXXX through July of XXXX company's of XXXX. $XX.X record shares as current a August X, July per The close $X.XX XX, share aggregate the of and December of runs remaining has XX, For of company the

range our And range mentioned announced guidance on gains release from GAAP historically events. full for to the year average EPS quarter the second year. average $X.XX reflect unrealized in the GAAP a return or weather XXXX, XX.X% in $X.XX, now and would assuming This derived no between XXXX. adjusted from full the previously realized to yesterday half of weather and half equity of extraordinary non-GAAP XX.X% $X.XX to are our measures As for $X.XX. we of a updating above yield a latter EPS expect second We no

Let turn Jon additional now it walk me to to specifics. through some over

Jon Springer

Thank we on comments morning, claims the remaining some year significant start I few resolving events, then newly program and additional everyone. to On as events, on events, experience with with X. to XXXX touch and reported open as make of in and will and prior prior course, our catastrophe a quickly the claims with our effective June on possible. second reinsurance year progress I’ll continue handling you, catastrophe weather I’ll good color conclude quarter Frank, date the

and open does $X.X single-digit in the near the and the net little claims Irma, Hurricanes approach to This of were as as reduced As X,XXX reported new start still to impact fact change not million Matthew each Michael increase claim this Florence, position. book ultimate loss open like we second XXX claims the to continue On quarter, Hurricane we during the claims of Hurricane in X/XX. were successfully end on growth over we modest and a our despite the that a count. remaining X/XX end. did had open very be storm,

over XXX. As open stood at the of X/XX, count just Irma

early claims are to in for Irma limitation We preparing filing three-year the new September. pass statute for

beyond the final quarter as our regards of press led carriers, XXXX weather to change So most which make different ultimate of in this XXXX. X/XX. to as release to X/XX. us we July noted second frequency second events, additional event. we a on There million original quarter weather events our We plan closing high an second impacted similar other by can push a experienced In loss the to insurance XX quarter losses of $XX as was PCS pretax no XX weather in loss of were net directly of book

date update, you one The normal UPCIC’s this last our with period. practice, guidance our mentioning. estimated XX.X% secured of year, worth of final X-K in at premium point XX increase our to Universal’s coverage approximately original a results the XX.X% reflecting with tower open at following estimated reinsurance any compares history. than May catastrophe at press reinsurance an a release our June As if X, was in year-over-year. market We coverage line disseminated on director level other X.X% we XXX-year highlights treaty XX-month level. the in top provides to cost more The for time and a program of This in effective in of

to state of as loss levels market industry’s the recent reasonable for the back With that, Given reinsurance period. Rob. the the viewed to and it experience, turn pricing treaty I’d like this we

Rob Luther

operator Jon. questions. like the the ask for line to to now Thanks, I��d open

Operator

question line from Instructions] come Sandler. Shimp you. Tom will our Thank from [Operator of And Piper first the

You may begin.

Tom Shimp

would levels. process the start you I guys. the What’s Hi, see about cash? behind to increase thought and need the that what you cash your environment was good increase guys hoping could morning, guys to investing in talk in

Frank Wilcox

there performance. obviously caution their our are number Yes, premium. ability at X/XX. lot with, a Frank. for of of were And pay of premium, that we Tom. as as question. we being Appreciate sheet line when the We the look very XX, wherewithal and were abundance top premium. of were then their said, we is people. markets pandemic, in one, number the as policy that reported recovered evidenced going lot knowing pleased and back unknowns how see in good with we’re the an then, the of growth, two, morning, with This not behave turmoil reduction the of to an collecting and ultimately in fair awful very the value into But demand to Heading holders this strong and you March which balance That

And our But we are obviously now They the upon investment have don’t fixed early amounts down or early that of a of we They amounts now they here accumulated Florida. paid did So accumulated amount. end I May. X down advisors mean, abundance and we in pay now, caution, down or income taking the I until cash have right in maturity reinvesting. as either securities They that. our those and that between an liquidity mentioned hold directed of resurgence to mature a by issue.

and on eyes remain be but that, open. ears to optimistic, eyes We our we keeping want careful. cautiously We’re

Tom Shimp

you Is to guys Okay, expectations? your regards then than in than guys that provide you Hurricane you some said first in in coming in in to, IBNR that there Could quarter. how the you coming versus I for in just it booked worse quarter. you new believe expected guys X,XXX And especially Irma better great. was regards that’s the the expected? And color claims

Frank Wilcox

of in Yes. Thanks, X,XXX quarter comparison X,XXX I in to, it of guess, just about the first roughly quarter fourth was the XXXX, X,XXX and by XXXX. Tom. The compares –

seen consistent any as that type of heading what any very So seen stayed yet statute off up not in. not toward new tail has we’ve ramp limitations. Unfortunately, We’ve steady. start with it’s fairly been of also coming it report we

Tom Shimp

going And the guys a thought increases could then rate been hoping you behind pieces generally, the it The it that with coming is moving was growth. just have given great. actually taking, you what’s Okay, would on I we in talk rate than about retention, increases? that better bit guys with

Steve Donaghy

Tom, is Hey, Steve. good morning. This

We bit Florida, different by and increases would as have aware rate not quite is I Minnesota, in is is say, North the state. And In Florida there Carolina little QX, of. where response the three market hard. you’re a

than across should we very of much is focus is the And rate goal rate on say. previously the it’s growth I the more growth States, adequacy levels, our maintained retention business to retention good. the light And were as portfolio, in the at or increase. really as of the Our the our other

So but results QX’s with balance, the that and it’s pleased going table a quite sets we’re forward. delicate how

Tom Shimp

last outside increases, my weather whether might to are question. in thinking that that, – is What be Are I of hurricanes. need given just just further you Florida, reinsurance take states? that next mean rate years seem Florida your increases. plaguing the thoughts The rate that the to the And further be price you other guys loss on that few increases?

Jon Springer

increases, be our states evaluating meaning This that typically need of Tom. the other we of it in for do not we of the is terms off-cycle rate will constantly need or any inside rate, rate at outside basis. annual Florida Florida, an whether on we're or do Jon. look Thanks Yes,

started So in charging on as homeowners our quarter. during second to, the book Steve just we increase rate just our Florida alluded

rolls this increase upon as an will not into be off-cycle reinsurance will what calendar evaluating there, we So buying transpired we it based the seeking rating with year. But again XXXX. the be

Tom Shimp

is business have And you I we you guys I the past All just that right. weather your price then that could something your in or you're think has are you plan new – Great. plan. is that XXXX XQ states losses entering losses that just talk and – and making weather weather you writing about for events, lastly, hoping geographies think since loss reported changed beyond adding weather view for beyond how few is weather was new it you on change the there for patterns that? the in quarters, Is guys the guys plan

Jon Springer

Yes, we we're we towards to the losses definitely internally in. more day-to-day geography that changed other we've as amount outside storms type Florida tend our year, weekend changing the your various have did increase increased each that of We pick sort that states impact this allocate and weather in it of plan does up the of year. we

traded second the just terms largest publicly industry remarks, billion. believe you've opening However, in event. every for at and as I us PCS a Tom, a in mentioned over quarter difficult from seen much pretty it PCS of carrier, was the quarter in rather frequency think property PCS I the significant I a that X.X driver was of events, little has XXXX my

is we losses. – will that's addition need we'll So we advise type to that to beyond of aside the in that's set the and plan more frequency when that event

Tom Shimp

That's all congrats had quarter. I great. on the Alright,

Steve Donaghy

Tom. Thanks

Tom Shimp

you. Thank

Operator

line of Dowling Partners. And our next from question will Broomall come Bill from &

begin. may You

Bill Broomall

was of retention? just Jon, reinsurance in how thank your program structured for Florida playing just is on I with with of are would question the I than could start for prior Great, to that years retention similar you. If terms a work they that non-sort wondering

Jon Springer

same a exactly It's is the states the our manner to program. Yes. refer other core as often to supplemental we program where state's in it addition program, structured all

Bill Broomall

Perfect.

comments has then seen have based and some Okay. we've might was what you on was helpful severity and any gave of just QX And versus from wondering I just COVID quarter, changed then on on I you – if your last wondering COVID frequency in on thoughts view claims.

home, – frequently. water people more working from have You so they you some damage, have might the using recognize also maybe conditioner home more people but maybe some on air

was just you versus I the of how So claims. wondering severity think about

Steve Donaghy

Hey is This Bill. Steve.

could change we at to and There's side environment seen certainly the people COVID well, a relative As things question lot so pandemic. as our conjecture to impact adjusted there's are the lot the pandemic business our Frank of frequency to our we We any coverage frequency One live no from and severity, currently, alluded more the to about. and seen, there have organization to not to we've some from the the happening. about house, unique relative bad in we a all and again, environment. which look would the situation. that and lot a that perspective we've times certainly you cash live talked when to the weather, expect questions and we've as claims to they need payment, earlier, tracking insureds we fortunate be et But flow, of assistance very for various in recognize have a would things, call Relative the and ask in in that more seen our cetera. delaying may your we or say, as a in and the be

as a overall not side more spike great or it. people the an say, and we've the so seen people it would claims respond perspective, into From bad Another we sooner there's of today. happens, to house, if a well, frequency metric at see something downside sit

home. haven't at watch any at we point So people this you could effect as but imagine, constantly, it from we being seen

Bill Broomall

of also even here you when process inspection And stay to think do And post virtual is you process. – then Great. wondering, we quarter, that about talked was kind the last I pre-COVID. difference of claims based And returned the wondering, the those versus virtually outcome were on experience, you any normal? has your that to outcomes? done in was maybe Have I seen

Steve Donaghy

like don't been computer We've last the have imagine, experimenting adjusters room And you quite inspections claims full Yes, look Bill. X.X very can who savvy. as of anything for are young remote we and with and a me years.

an with trying change the in So I interactions avoid would interest fortunate that things. and we insured/homeowner different the to say cooperate that have experience. inspection obvious to all more the conduct has is of to remotely, the are staff our more biggest in

a claim. assessment then see would but not have developed reduction internal to foreseeable in how of we market pay amount do not it the We feel if yes, to do we to reduce you We overall money to see So sticking as again the stays, grow, that'll that support And around about We're we the say, remote doing the the I continue like good know, of technology we're positioned. effort. claims really we to insured. for the future.

get doing are the more wellbeing adjusters, And in at count event inspection Over event. perform some it and also try the putting you time. insureds remotely, that would we manner. a of health number kind our some an I the many positioned work and a did same – in out we a to insured. to facilitate traditional having that which really of the would head impact than We be of do the in well and We can vehicle the see and by we of – the can and as Irma to to somebody could get staff time, because remotely kind of them clearly think of

learn we we're think about it. something I to to market, and focus with So move manage good we pretty it's but how on, the continue it's – feel positioned

Bill Broomall

for you that. Thank Great.

prior year me wondering, that Just million? underwriting you and I the prior just development difference that help million you growth the of the of night, $XX.X $X.X the going year the can under slide development on slide to net last – was put reconcile between out the

Steve Donaghy

approximately gross a be and on that the and Hurricane $X.X biggest recoverable is prior of re-insurance. development seeded Well, to I year basis $X.X Michael, the difference there million think was related that million entire would from

the zero has So it impact net. on

Bill Broomall

it. Got

storm the of storm And just water wondering, at in your in the now? Just point do there's what my Florida perfect. writings new is in the where a right slow kind Okay, you for reference. I was And when water?

Steve Donaghy

track past with teams. we Head along have where right our determine Polaski, to approaching, we and the close as Mike have been and that we fortunate it And a have – our in process markets. Bill, storms the very Underwriting, we done with see catastrophe have at John And Yes. time. various of we internally myself to when the we

yesterday were determine talking it. And you we the So on appropriate we wind of about various we're the phones it when X:XX off the about to markets. at we feel when fluid call, is, as imagine. can to close It's the as again business a of to time about going and get at talk situation this close

Bill Broomall

Sure. Yes.

And last Okay. be one, then and I'll then done.

and On of that billion much loss change. loss, didn't IBNR? gross the QX in How Irma the recent of $X.XX is

Steve Donaghy

that the of As us of X:XX. number we us to as right let get can so Bill, you – give let X:XX back number, you offline with

Bill Broomall

That's for perfect. Thank me. much. Okay, very you all

Operator

further Thank any on you. end. see questions I my don’t And

Steve Donaghy

would this with closing, an associates, of to continued on as Great. Universal. wellbeing agents wish times. support and I call thank their everyone safe and stakeholders like company unique associate that’s In during and organization all these very we for our our of our consumers, And

your call time. much So thanks with very conclude for that, and we'll the

Operator

call. gentlemen, participating. for concludes Thank conference you today's and Ladies this

You may disconnect. now

Universal Insurance (UVE) 30 Jul 202020 Q2 Earnings call transcript