UVE - Earnings call transcript Q3 2020 | Universal Insurance Holdings, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the UVE Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Rob Luther, Vice President of Corporate Strategy and Investor Relations.

Rob Luther

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

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

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

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

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

Steve Donaghy

good Thank us Rob, everyone. you, for you Thank today. and joining morning,

to see in year-to-date, events we the industry-wide third in particularly elevated with headwinds quarter dealt We as weather coastal states. continued

our the Our engaged directly ensure with catastrophe to deserve. receive teams response they insureds they have attention

affected events we year-to-date. previously full addition other PCS from Sally and by in As Hurricanes events Isaias to announced, were retention

unprecedented to is We and As prior these approach to for claims window us This in strengthen of their good we experienced companion Limitations proud as for Hurricane closed. Hurricane to increase reserves of have times. behind years in Irma prior XXXX. during contributions appropriately the us, feel Irma the our increase the reserves ability to our led claims, increased Statute employees year ending,

vertically differentiate in Our us our home capabilities of state. integrated suite to continues

quarter. growth continue strong by of increases in through evident the our Our book, premiums to our flow primary written as XX.X% direct rate

quickly the force, premiums about are We our prospects continue and are future. approaching billion $X.X in selectively in to new write optimistic in business,

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

Frank Wilcox

morning, good Steve, you, and Thank everyone.

premiums $X.XX adjusted year-to-date, EPS quarter basis. discussions a a investments basis, $X.XX realized non-GAAP and a remained return since reminder, reinstatement Despite non-GAAP of Year-to-date, from adjusted elevated losses $X.XX EPS a and per and today loss gains of GAAP and on are produced was value loss exclude interest income and and of also expense. operating at GAAP XXXX Adjusted operating basis. was $X.XX on that negative on an and on annualized flat on income of share XX% non-GAAP for activity EPS a and a EPS equity we average extraordinary with a relatively the excludes adjusted end the year-to-date related basis book $XX.XX. adjusted effects commissions. a As on unrealized EPS on

written As outside the of direct Florida growth primary in growth to were benefited growth states quarter, strong of led underwriting, through to increases continuing book. the premiums rate direct new flow in Florida. XX.X% The for and quarter’s XX.X% up from organic and premium business XX.X% by

cost. On the occurring to The ratio the was points development year incremental reserve previously side, addition and increase years the current events expense increased to loss XXX.X%. primarily accident combined for XX.X for announced prior in continuation the by weather increased reserves of quarter driven

a affected the offset ratio. our cost ratio. expense reduction and the reinsurance base higher the increases were in partially addition, a benefit In by of These business adjusting claims from

for quarter gains due for quarter, to on the XX.X% XXXX. fixed to investment by portfolio, prices in primarily were when Realized for and cash end UPCIC. policy as investments available-for-sale total increase monetize million in a our increased the decreased portfolio resulted from $XX.X and value for $XXX.X and market million advantage when to million Cash increased our reserves. $XX.X XXXX during taking increase enhance fair the actions higher On an XX.X% market compared investment to revenue CD strategy yields facilitates the a net flows. income of compared as to cash gains realize investment strengthening lower investment on a services to XXX.X% million the opportunity XXXX the This of earned to surplus taken growth debt rate income driven services, to cash result of leading portfolio. increased to investment on Turning our and while $X.X hardening to quarter, means investment equivalents revenue We in premiums of fees. commission took the primary to our

In X, reinvestment, of XXXX. million of result company repurchased during $X.X cost capital dividend at third deployment, portfolio as declared will shares an aggregate of X.X a and a aggregate company investment paid sales Year-to-date, was to the of an XXX,XXX the rates. $X.XX cost million. X, reflect of shareholders Directors which record stock, of of current share XX, XXXX, approximately $XX.X shares per cash repurchased August July the Board future million. of July quarter, of income common the close regards on XXXX, business On the on the quarterly As market to at

fourth XXXX loss XX.X% in mentioned the gains increased updating revenue, assuming equity of to from return a quarter yesterday, our now release of $X.XX a $X.XX to range in and This and to events measures extraordinary range reflect full for are derived loss adjusted year We line yield no full expense. a year. $X.XX and third of between expect the $X.XX, EPS As elevated unrealized fourth non-GAAP adjustment and EPS our weather guidance for top by realized quarter. offset of we GAAP average would GAAP no on XX.X% quarter or the

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

Jon Springer

everyone. morning, Frank, you, Thank and good

X,XXX Statute open in milestone And disappointed noted, for but third the Steve quarter development. claims. a events. billion. quite progress The un-gross expired at non-cat continue to run-up the September over number week of as remaining claims $X.XX claims that resolving expected, in Irma Irma of in the quarter to catastrophe This claims the We Statute our new modest advance book to simultaneously. ultimate filed of did new and of Hurricane Irma reached during X-year prior-year elected see see in we We and filed Limitations second significant prior-year to the of we claims adverse of reported phenomenon on make contributed was filing a Irma surprised were companion the for claims third portion Limitation we

reported staff. to pleased continue effects these Irma-related But diligence will of the of extremely Irma claims the monitor We are adjusting with and late going our forward. claims we

XX third storm. we to book at net elect As open, of over $XXX X-XX, and our the in from did on night, loss change start million. booked to third respective last our not reinsurance to was little did Each September these events noted release, events expecting XXXX press our weather loss full events, Hurricanes program. Isaias In under we position. Michael We its two as claims hurricane gross again Hurricane Michael and at X-XX, quarter, of does Sally. the the in specific This XXX had a impact retention approach during this end release as quarter losses ultimate experience a regards

to resulted With impact million that million for Sally, states pre-tax, events total states our approximately million pretax Isaias, program, after-tax. that, two that all of Together, other $XX Hurricane was under Hurricane and pretax back program. approximately Rob. these a For was $XX million turn net in it under I’ll $XX $XX our

Rob Luther

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

Operator

line Shimp Certainly. comes [Operator from Instructions] Our Sandler. of the Thomas first Piper from question

Thomas Shimp

appreciated. on you claims. on color me Just of companion caught those get non-cat claims an give you the of greatly just what to more claims, Can Just would are, why be hoping guys that by color the and surprise? example that type anymore

Jon Springer

we’re it, as claim, that’s companion A a describing with a is filed simultaneous catastrophe claim. claim

opportunity that a adjuster for the what all. the policyholder see the to of has in, non-cat of public at at wasn’t, new with the the and/or same see And on is we’ll to Irma the make attorney, of claims. client or both public same again time, effort one every is the typically, claim other come attorney get concept property. or the adjuster claim help a paid try is, Hurricane an we’ll those a It not really, their goal So or catastrophe and the or

unexpected, these of significant first had again quarter X,XXX third that we landfall of filed the cat was XX,XXX as over in. that claims XXXX, claims we’ve little since fact, come rather was we disappointing, filed of number see maybe little saw three over over What in a and did In made years a ago. late type of Irma a push

So come older obviously, claims an fall in, when these they’re they into non-cat, accident typically year.

reserves So those it us to would bolster require years. particular our for

Thomas Shimp

Okay.

further? from understand not correctly. passed issue this I to like year sounds three really perspective claim the It to Limitations really potential make that And shouldn’t classification has Statute So go of had that a com up. for of now, the sure develop that want it’s a I just

Jon Springer

correct. you’re Yes, right. that’s No,

try a from goal of cat here we’ve cat what here quarter, put is what Our we’re behind Tom, to we’ve really Irma Irma us. year bolster to With in we’ve companion as everything done as the hoping gross mirror. claims claims Irma-related with non-cat some well the and these really in get older to related reserves booked the done third to rearview claims, to perspective,

Thomas Shimp

more And then still some if we reporting strong buying strategies, cash, you shares, the just back are holding and growth. you’re guys is capital company could onto talk about

to themselves, organic support CapEx? the to around of how’s growth could some you capital. low on possibility? if the I rates, guys investment but turning the growth, envision gains continue taking So other of raising a the management that comfort Is know present avenues some took level portfolio, advantage opportunities

Frank Wilcox

Wilcox, Tom. I morning, appreciate This question. is Good Frank the

a about our Just we how and and model business deploy capital. accumulate reminder

levels, in buybacks, at capital is opportunity share capital now, to UPCIC. capacity would capital, have the the and of Right that shareholders form to growth certainly, addition That integrated time, to the look value If with okay elsewhere, of time support support return used capital. to to structure, In needed, accumulate vertically with capital also entity course, growth. the at to need dividends, outside. be to our insurance to to we’re we accumulate be from raise if the

Thomas Shimp

lower was And discuss run then we yields we and than but income, decelerating coming rate bit good assume expected. if a investment this is understand the down income cash it are just I and more onto so, forward? I investment net can a going holding should

Frank Wilcox

fixed income, lower had our equivalents cash fixed as income, before down and Yes, the first securities repricing paid rate matured, as maturity, rates of a in were interest on or book long-term impact market. The were short-term our as interest regularly. those they reprice well, they into an the investments, decrease

are So factors. contributing those

to we keep Going need collection I gains, gains future represented unrealized and of unrealized the basically you fact that interest forward, income. in think mind the those monetize

very conservative is of investment of composition on. we the we the points And replaced. So portfolio the that and portfolio, in in accelerated in expecting And very adviser the past, as the had of deploy the majority of continue we’re which that to replace our as on income, interest is between the what we working now, somewhere we past. has been depending similar served us cash, course, But XXX to yield nature. available XXX that we’re the basis a to collection

Thomas Shimp

high-level just a potential, in insurers right take seeing to peers? the the the increases you enough the general stabilize Okay. further to operating to would just to thoughts And what Can Florida on rate discuss what regulator question are general, opportunity on in to then any here. now. And respond for the wanted the how that? you’re Obviously, struggling and I touch are ability your Florida just in margins just rate get environment,

Steve Donaghy

we’ve the question. of commented state. a areas for Steve. Florida are of The Hey, as pulling briefly, specific it’s out that Thanks see lot hardened. the market, around Tom, competitors We it’s

to Our rate to competition, philosophical has to approach the been to adequacy. never rate but rating

areas knew traditionally, not, find as the that our premium were now double traditionally, in ours, friends of of we where of well, we as around could write of some in did much because ourselves that or we agents competitors. not So the writing ours areas we triple state

is So own and as our ability considerable, growth. write we our changed, has underwrite the and to that organically policies like

is field that can if Tricounty. insured’s -- to than insurers our regularly but for that comply to like we balance because claims, of products having the all And to we that’s in use tested and we our our considerable is so we’ve as continue claim us remotely, the we of send portfolio, please the years. have more to adjust them not to third-parties, and our ability to as claim the think us growth Many it reinsurance state, of aggressively I we welcoming we’ve continue Many let for are prevent unique in adjudicate in. outside our the spread. a used partners our demonstrated had handle adjusters, to a exposure, they’ve rather feel as staff for that Mechanics be ability we experimenting opportunity going forward. X any our And Again, an are continue X and though or to that or do requirements. remotely. coming best notified know state have we will that to virus done Universal our adjudicate to will somewhat

we’ve that of answer good it. your execute didn’t to built let So I’ll in know and specific past now. what happy about to area If we question, feel address any just me be the

Thomas Shimp

brings No, I another up think it that answered them, question. but

been trending too? try been your are throughout Tricounty away hearing been from seeing state. you that move As some in have has to the to thoughts? counties the some issues you other that I’ve guys’ that guys of How that Tricounty, Is guys discussion something in moving

Steve Donaghy

that regular effectively experience are the you built with Tricounty, and comes adequacy basis, track as to to key strategically operate deal being the markets. Again, imagine, positioned any the is infrastructure a around we we we’ve feel us that Yes, should efficiently. to said, we state in can ourability rate other we our that combatwhatever And to on that Tom. that, at

So, decide But PAs, have markets there, premium ready, state. the are our combat that know result increase the pursue we compete,should litigationor to our to in frivolous they etcetera, the other seen ready. and lawyers in know around have know are like far, are, we who think in claims. specialists inclaims I’d increase they’re thus they to They’re in there, and not we tools we theyare, who right and we

Thomas Shimp

I from And revisit Okay, was lastly, the COVID. can just then great. we hoping impacts

guys be from it We’re as seeing work less a lot farther beneficial or into any the distribution impacts, possibly non-attritional home? you direct pandemic Are homeowners now. losses,

Steve Donaghy

interesting or requests. not an it claim question, in any claim peaks valleys that’s We’ve regularly. get Tom, we development, seen

to had that. cover relief people for but policies our ask We have pandemic, due not do the specifically

paid maybe X we due language the and received fortunately the the amount. review not in a we board it’s at point, not last this out, claims huge so have -- to any So, we X across months, that the and digits on yes. we’ve that policy it’s But

Thomas Shimp

any homeowners seeing just from Are [indiscernible]? beneficial impact just is a home, you at -- it from being early too to or impact

Steve Donaghy

don’t tremendous our office in in the that really and these homes the able the that Well, from a but I claim, that we’ve I to been that’s get will it their and of though we’ve We on you, get and and to Department affecting to prevent their possible tell attend pictures The that, to times. Tom, see that further are us I work submitted does as take repaired. efficiently impact damage seem get to the are for consumer construction business. as respond, people consumers embraced a to recruited phone as help find the the normal, and back beneficial from operate well, to been ability to Universal desire my beneficial. and them and and ability technology claims what associates pleased years Claims within has with take us they participate have for served in past, the they

ability really I to board, construction continue our for, are I use to good, and were. has back some assist And proprietary. So a where Clearly, think within the think of doing that great people across our claims get associates our to they third-party insureds job. is technology been firms and

claims that their they’d well. claims in-house We people us on serves have track phone, if and our we like, that own app and can developed their quite

Operator

& from Partners. of from comes next Dowling the Broomall line Bill Our

Bill Broomall

and in just your been about any how the talked view there loss you direct that pick Has I If on change could that. front? past, you’ve start,

Frank Wilcox

No…

Jon Springer

Go Frank, sorry. I’m you we, No, go ahead, first.

Frank Wilcox

simply going previously I was that to from changed what we announced. say it hasn’t

Bill Broomall

to just trying you the Can to development? direct help me Just adverse reconcile net understand.

get down think the Michael trying just it, XXX else? would of a will sorry. there to the the or but I’m be XX, piece, piece anything is to I XX, a Irma be from

Steve Donaghy

No, be the and largest to would that. you’re Irma right. contributors Michael

Bill Broomall

of the is wondering the balance your cash I cash sheet, holding much On at component how that just was on company?

Frank Wilcox

at disclosure It’s that’s are end. do amount $XX publish was our annually in that year, number the through a and Well, the XX-K. the statements not we Bill, but million interim, $XX between financial There that last we million.

Bill Broomall

that’s would, XXXX? That it. year-end Got

Frank Wilcox

That’s correct.

Bill Broomall

up of following leverage just one on about the And Okay. sub there comments, Tom’s think a is that you writing ratio at level?

Frank Wilcox

talking about we Are debt?

Bill Broomall

there how Sorry, writing premiums can that you you’re what underwriting think you at. I to [indiscernible] leverage, have? surplus Is and apologize, some about

Frank Wilcox

Yes, We and do order standards, premiums our ratios. to written there’s also we RBC to regulatory that course, support to net ratings. premiums monitor surplus, but gross that several maintain And measures to surplus, written of we in monitor.

measures. yes, do we So constantly monitor those

Bill Broomall

right you say at about do in you from you terms And leverage write you are think stand a right like think you if you now now where would where in advance, is the, ratio? what to of

Frank Wilcox

are looking the the those figures, annual for rest at forecast with so our Well, that in year. of conjunction we’re

growth recognize tremendous support the down company Florida, in necessary. We And entities, the we to have, we we from ready State growth. order in stand that opportunities if past, have insurance we same in to holding the surplus from and had do to the infused of the capital and need that

William Broomall

you QX? anything in Now downstream did

Frank Wilcox

question? sorry, was the I’m what

Bill Broomall

did support the Frank, remarks, your In yourself prepared growth? you mentioned any [indiscernible] And I you capital the to believe, about downstream surplus. to

Frank Wilcox

million company. from We did. holding $XX We the infused

Steve Donaghy

this parent. And still have We is the at Bill, Steve. funds

end perspective. QX our better were comfortable the sit we generally. with as And they ratios, we sit very at and a so are where from than capital ‘XX We’re of today, here

always manner enter on and has And can the focus what fortunately, had feel assistance. continue and we company need where do. capital a that to talked markets in been as we’re necessary thus good doing, where constant. about the we and we’re is we in and capital need sharing at for he’s far, have additional what built And to and So Frank things, running about, we’re the do no to at,

Bill Broomall

I Irma QX, new I ones, but were what And Jon, open know claims? number might’ve I and the on at X,XXX the open had are just what wondering was XXX the this, I of you had claims about you Irma. but of think missed end

Jon Springer

claims progress claim we was it Irma it like X-XX just But quarter. in count that the on came as new open sounds number, during little. the made of XXX, went down Yes, a so obviously, that

Bill Broomall

special wondering when you’ve process I review Board the or the And paid the when about, review does a was in just the to dividend. that, past, what’s you meet dividend? think

Steve Donaghy

Yes, part and our of the Investment management we Bill, that’s ongoing Committee meet. strategy capital will that employ

Board meeting Committee matters, last have a this it. The have met We week. on Investment discussed some week and

any We So get regular the currently, us deploy there we’re is generally barring and circumstance. discussion. a season capital we through to in as in where possible, unforeseen sit like the position hurricane to

our few So as it’s capital again, We be position part weeks, we announce. the ongoing it. next about is of feel should we there through And good in maturate the strategy. to and a today

Operator

session Thank question-and-answer today’s you. the hand I’d program any Stephen further the to like of Donaghy does remarks. program. conclude This for to back

Steve Donaghy

those we year. to of of Have look you Jonathan. you like to would I the and line, end Thank stakeholders In a best wish continued great their all times the on support day. forward at speaking associates, and our consumers, unprecedented Yes. Universal. agents to for these the closing, in the And you, thank

Operator

conference. in the your participation for you, conclude This and program. ladies does Thank today’s gentlemen,

You may Good now disconnect. day.

Universal Insurance (UVE) 28 Oct 202020 Q3 Earnings call transcript