UVE - Earnings call transcript Q4 2020 | Universal Insurance Holdings, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the UVE Fourth Quarter 2020 Earnings Conference Call. At this time, all participants' lines are in a listen-only mode. After the speaker 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 fourth XXXX our which to we our results, reported quarter on yesterday.

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

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

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

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

Steve Donaghy

of Hurricanes more $X.X premium and full Unfortunately, industry in Eta quarter weather We of Rob, the lesser than events were impacted our force. a to morning, Delta. now during fourth you, of extent, by Isaias, we wind record-setting which ended frequency much Hurricane the year good results. season a XXXX and, Sally, record serve the had and markets We billion Zeta Thank XXXX a everyone. impacted in year with and

Louisiana, other we we over exposure to exposure addition, to series PCS in fourth the All recent a claims minimal XX,XXX In quarter events the weather exposure had any did Laura and Hurricane from to Texas of Derecho. had including Midwest any bit the XXXX told, named XXXX have or a or storms weather and We other PCS winter not events. other storms. in

we close full quarter XX% States. business the for fourth in write some West as our had increases on as well no costs, do in wildfires, reinsurance the X% weather continued our in year, to not as Florida underwriting, focus markets. of also in rates to increasing those the Other the Despite primary XXXX our for including Coast We exposure in XXXX, we

address guidelines emerging loss to implement to binding new continue We trends.

sheet balance risk-bearing a in maintain enhancing capital to requirements to continued that resilient addition entities' our has have We self-funded reserves. our

our by June reinsurance our with XXXX, first-event to We close XX% for secured capacity great already. partners, and program X, continue backed to of be reinsurance

We XXXX of claims. during technology and rapid which in COVID-XX teams accelerated catastrophe digital response the continued use pandemic, for expansion our implemented our geographic efforts our adjusting

to consumers adjusting We adaptive and also to to focus cost as to continued continue forward claims We and develop to for address uncertainty look taking loss approaches reduce shareholders. steps reliability the we to resiliency provide on necessary trends. XXXX

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

Frank Wilcox

good everyone. and Thank you, morning, Steve,

and gains basis adjusted As on discussions and ended on driven We losses operating investment a billion, investments non-GAAP to total a gains unrealized extraordinary costs. on and related operating offset increased a today a realized of XX.X%, of a quarter adjusted expense. also earned, primarily reinstatement was net and by $X.X basis. for premiums the Adjusted GAAP income commissions. and EPS premiums in loss excludes and income and on partially reinsurance interest by investments income service in reminder, and and decreases net with revenue from effects on revenue, growth $X.XX in non-GAAP $X.XX realized a adjusted up basis on XXXX EPS exclude are loss increases

predominantly XXXX in a adjusted were $X.XX For and basis. by on loss events impacted weather and These of dynamics related increased social reinsurance we results a basis non-GAAP the year, EPS of costs. generated $X.XX GAAP and on a

direct well QX, Florida. year's to compared growth Other by the Our by direct States premium impact rate premiums QX XX.X% states XX.X%, as as of taking outside in prior of led the in and in written increases in quarter, of grew strong Florida effect

strong as increases retention. rate written full improved Other For as direct growth slightly direct XX.X% premium of were and policy written up XX.X%, by year, led increased premiums States well the in volume and

decreased the were increased side, increased driven X.X an XXX%, quarter, increase of primarily the weather points year, by for points but increases combined for XX The to ratio XX.X to in points the for year XXX.X%. On XXXX. full expense the full

cash addition, lesser available-for-sale million. attributable core equity ratio gains partially a investments by by a when in and, debt prior resulted to full at during of for by which from were fluctuations due and XX-basis costs. aggregate portfolio XX.X% XX.X% prior deployment, the the a year fourth the increases and were development the quarter compared reserves, XXX,XXX fixed to the business; outcome the from year. resulting quarter prior loss investment investment yields repurchased a lower on and benefit securities, our for income and prices the favorable for pick during to sale on loss reserve In to and ratio. when increases year's increase taking claims equity increased for an the full in full approximately market to Net capital reinsurance for company securities. accounted to losses adjusting level quarter compared year's also improvement the Realized of extent, of Unrealized advantage lower gains full the of shares, a driven cost XXXX The in our expense In market an offset points; effect on $X.X ratio year regards increased quarter the income in our for primarily and on LAE XXXX. were decreased the aided from point primarily X.X in year, the

an X.X For million $XX.X at the cost million. aggregate of full company year, the approximately repurchased shares,

Operator and and guidance average XXXX and XX%. in EPS. between a open and XXXX expect of increased assuming XXXX, EPS range adjusted $X, equity With the no events return business questions. weather extraordinary GAAP events exceed a like the adjusting and we loss both assumes $X.XX XX% that, between extraordinary for to from on plan, GAAP market now a our events assumes to to equity weather non-GAAP we for see in no weather line costs. For I'd also of claims guidance, The flat If to ask benefit a expect

Operator

will Instructions] come first line Sandler. of from Piper Tom [Operator Shimp, question the Our from

Tom Shimp

to first of fourth was is loss at quarter, was well which from imagine relates pick. year. some when core full had quarter I Sally, My have I it And in In price income know start the in me It adjusting adjusting Hurricane offset know by through the decline the you income. XX.X% XX.X%. I of towards believe third increased it question claim can the that to walk the core as seems loss the costs, compared But pick earning XX.X%, the that? you're thinking core reinsurance year XX%. loss decent-size like we in, increases but how a pick. the I have direct to rising was also, would about

So end 'XX? we about compared thinking how the to year where did you started? are you what And

Frank Wilcox

is this Tom, Frank.

full did reserves is XX% for the that a loss XXXX, on or consideration year. to It correct. build from your was So to trends. was take tick into additional observation up the year two previous which We the

of that in The adjusting in claims other only absolutely weather be that would with right, not adjustments adjusting in and very that flow for occurred events was the through the for came dealing the but events lot fourth the busy quarter, the company, any that quarter, through a company X/XX. there you're billings

Steve Donaghy

et we the that a book, due flowing that that and got things good side, the well. along on litigation, from say through And input would go-forward our actuaries rate parties. I all Steve. will as we from analyzed is third the we've XX% on very in basis, claims, come in with our a cetera, with this to XXXX increases stick Bill,

Tom Shimp

I question with was to weather a and next we've the events had regarding extraordinary guidance The XX model, quarters had Okay. But beyond according plan. row excludes events. I guidance know weather just in weather. my

regarding been So environment, storms considering Florida seems above that more seem and would your to below coming plan would event threshold it losses past the been years. of the weather like headwinds be have that threshold in significantly moderate-size previously the couple have litigation

is those relate And guidance the context just that about the how management guidance viewing of losses severity pricing how and frequency? the question in you're is to thinking how my of does weather adequacy? that the and with worsening So

Steve Donaghy

have at the we does we Bill, that I nor don't ball crystal weather. we look on think and a market again, --

the and to insureds built to company, to be our within with relative along to litigation shareholders. Florida provide of team, the our have our market we our unique infrastructure the We strength that

possible. it us of be challenge would to even think for our So as preparing happen, could estimates for a begin are what though best that within we estimating all we

if that So how announce will the the past. we impact. in if done as we And weather handle announce there is it, we've weather as we'll comes, comes, an

Frank Wilcox

earnings look core actual you'll the to to to is that were with and with offered guidance, weather that report just the deal Tom, to weather we to on point what earnings and the XXXX were back separately, last year, you provided. as guidance that's guidance guidance follow-on, at just at you do, out, our we we our comes, it which are results we And if results look core and the for is provide in find line intend that adjust that the right for to if

going into with. to and we the incur extent to future baseline we the we layer And best progress that, guidance. deal forward, that's that years So through weather, we the believe that as

Tom Shimp

Okay.

question. Next

significant of litigation lot is growth price but Just capital, the A regarding also given decent versus them A Citizens seeing to insurers that increases, a sending in growth policies, off shedding environment. Florida. growth are amount you're of we've lot Florida got coming of in. the

and fit Florida in thinking get So about I thoughts to you're on want just to on you requirements there what's how how relative right growth now? going capital your in

Steve Donaghy

XXXX, additional is XXXX, additional for demonstrated on throughout of in a reserves, we end both Steve. when focus At with put capital we which deployment. this up the put Tom, along controls, reserves we

sit XXXX, very and in And handle We wide in So a we've our in of disperse to being a is Tri-County. the became we our continue felt capital, lot Florida like business today many way too selection. hardened, those for wrote the deployment the that. got with being not feel whole we adverse of where see, a those of market spots. did have been business in rates but taken them We high. in contender late a agents were steps our the here 'XX underwriting host not there. as one We've reasons, do our nicely now, quite across as on also we market we of controls, enhance to we'll many open right in writing relative Florida good of But of viable XXXX markets

in to game be town, only within it's very not insurance the business. the a you're good If place

somewhat XXXX. So to conservative more in we're be going

Tom Shimp

they think just month the to how earlier I release that? some you're offerings can then press selection. off color offer on was a there Verisk. thinking help data the give any And there I some about of in Is there think policy using building And deploying Okay. you by of that, about hopefully, us

Steve Donaghy

on Tom. I appreciate following up your that,

We data-driven. are

talk spectrum, what when we look about comes And We've informed our so the run talk we about models all better So the say. as it into point-of-sale across we underwriting and underwriting year reinsurance, got are underwriting by look better becomes we so all we our staff. data at that more control spectrum, own in-house, to our constantly for long. to

cetera. about of roof of et get and policies many feel that home write we enhanced to have better that et own good we policies built, data are associates, geometries, and year our underwritten but cetera, better course So by all written, have data the the the

So Verisk excited seems us, be about partner quite and a relationship. to the great for we're

Tom Shimp

And reform And in journals to last guys. you sure was for Tri-County me I'm an just big the same environment then various was issues update throughout question. operating worsening the just to same hoping in and get help that or is environment, just All that I then litigation as see alluding Florida some even for AOB around the are wasn't right. everyone that are the people spreading the articles possibly and general. Great. either hoping state. the some on

in Florida can your are give what's you now? going update an on in just, right general, down on what on us So thoughts

Steve Donaghy

that we've all the that we of are much as a to as our do, look where Track And we back, we built ourselves Fast possible. benefit company all XXXX trying started Tom, very if filed case to by to content when for a adjusting. us, case our a reason, in where in whatever is defend has That do own that better against today got are thoughts have fortunate we things you do court. of

in an So inclined, they we make ability our and and paid in favor to QX case were or fees that decision out while to take defend and the to successful We own appellate a file other on case. the our successful side. them litigators open whether force adjusters QX even the in to are provide additional to, is the courts more relative complete sure were photos, an

they in above are to have can represent adjusters, a or unit do we open. in environment same the tremendous as everything that the doing ours. two, an a unit trained or team had be when shareholders, it condominium neighboring not stories our wherever, you where that we're could in those to of get that, a unpredictable. job best six court to is So know, systems year subrogation And have in a light to was whether our diagnose leak in claim on we our may year last associates, started, a policy how three, And being the our

think without structure, manage an deal market is business rumors, the lot self-fund and had with because into with our generating market I which to to and I specifics, tremendous subsidiaries they're try unfortunately, of to hard. a have I as operations. our is forced And would profit There's again, normally to say of many to, things to listening possible. we do unruly being hard. So able trying deal my that best not the can we of worth Florida not to getting peers but everything And due own our avoid we're kind are

of are to and and a hopefully, the that a needs But point. they And out know few in all So litigation everything Florida, but the that's in there I kind symptom and continue this that come the of we are Floridians, state the fees doing really I think help of there one-way are points to department at apologize, long-winded because are answer, it's the the cured relevant. going legislature form can only rate. to

Tom Shimp

What government down to down to to reforms, to are last at help the be do in to there point, your to Florida? up. policyholders hearing on to you look what you Just one question, pressure just brought putting regards politicians, the the needs what meaningful done in

Steve Donaghy

the grow had you to systems the the of -- across thwarting what AOBs, and think grow. the sink for always was that And I and I whether ability has other state. diminished be back, areas, look unsavory rate you a lot the shouldn't closed the things a the has case they for And deal think I somewhat with, great holes, think department court And contemplated. AOB the continue even were. we've to you're referred. it first-party if as players I the you some to been give can't legislation. They litigation Tom, It points at in legislature being dismiss CaseGlide that of seeing with in effective

a side, And reopen. to true We good closed the were So XXXX. about they're courts is same that. quite the beginning on subrogation feel thing bit The too. in

about specific, we bills right But well. a So has do be to going defend as more think, pressuring case, the that, to of to lot legislature good contemplating I feel we can that back they're people our get now. as forward,

them They've got have to Some they stronger satisfy. of lot are or of a weaker. constituents

that insurance carrier, we the have best on we're represented As case doing as that make an as pass. business, their contemplate sure that possible. and complex reform know But lot they our they our it they I to minds is a best a is hope

Operator

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

begin. may You

Bill Broomall

question first My rates. the on is

frequency maybe getting your I was rate mentioned in system you through rate terms lay your rate of and wondering QX. you strategy think going maybe just would filings forward got the how be out just you'll you do reinsurance helpful. about you think in the that if X% could strategy I

Steve Donaghy

Bill. Steve. Thanks, is This

as do process from the -- then We diligently team now are we that of filing secondly, year, the We did indicators And offset April/May way traditional will rate, somewhat through probably which in the spring we same business, reinsurance are review. the is if traditionally have in I last frame. do year, that rate that for point, get look but of to we time to substantial. this increases potentially the at early fall don't ability on expense will that due necessary feel to we is the that preparing the thing the season have And reinsurance, the it's a to the any experienced. at and my benefit we and use we incur. increases a the take this the to we good

Bill Broomall

Perfect.

your us in you the next but think just how you the comment, a reinsurance and is over multiyear that remind FHCF that multiyear. Can on us XX% remind unfold the the the big completed. just release talked staying I two? multiyear being you piece about Can press -- Just year layer, or of the should

Steve Donaghy

the look with -- they've We to desire into not focus throughout the have been season. if I we tower Bill, we to June were where our in back, such the first a secure one the and enter agreements we traditionally you of think as that years to of multiyear very a are supportive necessary on into we position so reinsurance our large partners, enter

So our in above below the actually number are here areas we And is tower sit right that a FHCF as little we've all, and that now, got low today. all we XX% it. in securing

decisions for for gets So good all feel for preparing work just about than that year own XX even actuaries us, June we've our where prior we waiting team smarts feel our that the more are multiyear and tremendous is got to to in an for we're it all-year-round And becoming day, to reinsurance. for over some to And get X.So with a we people structure, worked that advantage our expertise a lost is good know, at. we working reinsurance about our of years so reinsurance you associates our on rather broker when we've to how our we have but fact renewal, work on about translation, of again, all good make it ability we're the with about and year you event, agreements. with all the as

Bill Broomall

Great. That's helpful.

in On there talked claims. was your claims year us think helping Or was for was changed development understand else quarter, portion mind anything the maybe companion might and of companion adverse full you And came QX. that you in the QX a QX, last some Do what you just bigger large about in I it assumptions? the of that QX? have the -- saw still development

Steve Donaghy

we very Irma ourselves. again, are were years hopefully, beyond somewhat and of in Well, the hopefully both putting that reinsurance the and with those in for fortunate, claims. that date that behind along that of the in run-up -- Bill, AOB industry putting is XXXX both our worked, partners a of we us, legislation September three arrived That, had

players Florida they at the on opportunities into were out a single looking a have homes other or to of claim. And claim and claims multiple figure some what in might people's incorporate trying to

see did we some run up. of So that

think have in some of take an called development say, or in claim might to system year we've because an the of that some were been the prior in, represented to our well. in in that the I as medicine, AOB see claims addition somebody got you that Irma for so to

We seen QX dissipate it well. in have as

and is definitely claims the so So barring the to the but basis about of weather, forward, the book going in we environment it feel say. good soup,

Bill Broomall

how about strong special on the was capital it's help had how the frame question I and the or about versus just using growth resources balance given in one did capital you rate more kind management. environment buybacks dividends, it, Could next you you you in I management, us The for saw think buybacks Florida? quarter. And whether Perfect. of Okay.

Frank Wilcox

the this question. Frank Bill, Thanks is Wilcox. for

priority Our for entities opportunities number insurance capitalized. system. holding that the is to entire are the company one adequately ensure fuel They

So we, first and foremost, ensure that.

do the in additional ready past. We made the future. that some and stand there we have in been contributions, to currently We

value so. look returning we shareholders to prudent to at when that, Beyond it's do

very And our going dividends wrapped up be then, would There's repurchase that's we quite to on around That program have haven't looked million we're discussions make authorized. at of any carefully with there. that. before board. course, decisions $XX the been We

Bill Broomall

more maybe just ratio question. then the maybe And question. I have Okay. numbers your my capital? I'll year? downstream the RBC What of at more numbers was last, And any you And did actually stop and end a there of one

Frank Wilcox

XXX%. the got We after needed downstream did. analysis we complete that Both We was discovered to additional at UPCIC. we are entities capital approval and above capital reserve just

Bill Broomall

last there can I'm is one, then of for up your guidance, And have kind plan. on a Tom's much think you're about any thinking so size within core Okay. way what following us that all as guidance? you you weather assumption think what help an plan the could I how Is done. And you and question of weather about

Frank Wilcox

guidance, digits. Within it's single the the high in core

Steve Donaghy

on That's obviously, for think at Tom. no that look And we there's weather, as, weather. ball I crystal

-- So discussed to ways different guidance it relative a are provide we could weather. there is we whole lot about

on tough hopefully, say. one, where good get it's to we favorable track a at. we So we're back so a but weather, feel about of And

Bill Broomall

Perfect. points, correct? single digit, high And that's that

Frank Wilcox

Correct, yes.

Operator

Thank the the closing further call I'm questions I'd remarks. queue. over speakers showing any any you. turn to not for And like to the back in

Steve Donaghy

our of you. Universal. I like continued great In consumers, Thank for to with closing, all wish associates, support agents that, day. our And I'd stakeholders you and their thank a

Operator

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

now may disconnect. You

Universal Insurance (UVE) 26 Feb 212020 Q4 Earnings call transcript