UVE - Earnings call transcript Q2 2021 | Universal Insurance Holdings, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the UVE Second Quarter 2021 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions].

As a reminder, this conference call is being corded. to of conference Relations. Corporate like Luther, to now President Vice Strategy would turn over the Rob I and Investor go ahead. Please

Rob Luther

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

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

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

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

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

Steve Donaghy

opening, how acknowledge immeasurable. of tragedy the In The Surfside, to Rob. hear absolutely our Florida. devastated I Champlain local would remiss the that were is community event at like to in in be not Thanks, Towers an we devastation

hearts those the to collapse. affected prayers and condo go by Our out

results our quarter equity. XX.X% delivered average solid return to highlighted by Turning the an quarter, results, annualized on for we second

pleased number the we with quarter While we factors are are a second are there of relentlessly results, near-term. focused our over that industry on

mass the of preliminary years. the from Florida law restoration leaves July in bill. impacted went the That the into help the the of we cautiously optimistic, residential rest homeowners from namely, are working Florida some legislators injunction, that companies, in in which legislative one and hand plaguing to change, OIR being way curtailing of the about fee applaud abuses positive portions the the issues state's in we enforced, the to insurance the First, in to being attorney past Xst effect solicitation will that hand acknowledge gaps which new blocked couple with recent comparison bring market country said, have

We continue management significant strengthening primary to social reserves. increases, headwinds with rate address the exposure and

labor In costs on addition costs. replacement and to impact an having material are social inflation impacts,

chain utilizing expect We these that are monitoring and closely we operational pressures risks. material measures rate and are manage and a inflationary subside, pricing these these normalization backlogs some primary as factors will of costs. supply to of But see

While May the to tailwinds increased were on macro the a increased inflationary pressures headwind as return. to XXth, costs, investment more but replacement reinsurance of previously discussed in also are our reinsurance higher factors, income for in mentioned activity on costs in top moderate they expected filing rates of addition prior potential On imply economic years. from and comparison

capacity address also exposure increased capacity to management at rate the to XXXX, see offer continue were core the pleased vast longstanding primary to not renewal. new our that reinsurance our margins X-X and partners We increases we're able to through only of We program. impacts majority but attract these in reinsurer

relates Lastly, weather, County, July looking Taylor as in Elsa landfall made to Xth. QX ahead on Hurricane it Florida to

history since first event on legislative should was it reform We and monitoring as more it closely the this enacted event have the are quarter. in coming is new

and on driving strategic more be the underpinned is business future. exposure vision which price regarding into our new our hyper discipline, for more geographic exposure two on coupled footprint, across We These continue to portfolio biggest went focused by of reinsurance pillars that primary solid desired as with entire rate foreseeable to into as our a in the for the Florida, July in season, effect program continued puts XXXX market in XXXX challenges us we the footing hurricane well recent property face. insurance handle legislation comprehensive place

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

Frank Wilcox

Steve. you, Thank

and extraordinary primarily the ended realized expense. to basis ceded adjusted operating the exclude on offset and increases and in effects when operating gains a on reduced and approved on improvement on and by driven non-GAAP XXXX interest EPS commissions. premiums a $XXX.X the and from the of policies basis are weather million and reminder, a the in reinstatement year's in income the when XX.X% the quarter, prior today compared was rate investments, non-GAAP count EPS the quarter year's up adjusted basis. of related excludes impacted cost a unrealized As growth a an Total discussions trends XXXX, reinsurance These were premiums. by was years. earned an impact policies and performance. and income on and Adjusted results to prior adjusted on also in-force primarily total by partially the with by share revenue partially book when $X.XX prior costs portfolio’s commissions quarter quarter for higher in We of to increase impact current investment benefit on as revenue events compared renew, offset loss second earning through compared to GAAP $X.XX losses accident

current yields offset portfolio, by As XX.X% on the fourth primarily up the operating million reinsurance a quarters in of of The the portfolio improved our the of combined to to Florida. point on majority quarter. improvement X.X efficiencies by were impact in XX% quarter, ratio were improvement resulting the driven for improvement by ratio quarter portfolio, quarter, the was the third XXXX. in costs XX.X% premium premiums unrealized for following sale securities On investment led direct lower direct points basis point for net in partially investment in the by the an of of and the for the underwriting, direct net ratio decreased LAE net significantly written position expense and X.X increased due XX reinsurance a costs reinvested The due was growth $X.X in to income point to the to in XX.X%. ratio. from that which the ratio, basis the net decreased gain on the earned continued on weather offset premium expense by X year on The events, prior strengthening decreased and loss year’s partially focus impact development, ratio reserve higher

a As per August XXXX. XXXX, record July of X, which shareholders XXXX cash to Directors of of on on share X, to on of quarterly stock, dividend declared the of Board payable is as common business close August capital $X.XX deployment, XX, of the

assumes in As we release XX%. weather guidance our XXXX. and no return equity our events a our like flat With also now events the see open between business we increases non-GAAP weather mentioned expect GAAP are If plan, XX% average EPS. adjusted of loss operator costs. assumes between adjusting line $X.XX I'd range on and maintaining ask a succeed XXXX the earlier and both and and to The of extraordinary market equity to yesterday, expect a GAAP guidance still and in that, benefit from questions. $X claims for for to for EPS a We

Operator

[Operator Instructions].

Our of Piper first likes with from Shimp Tom Sandler. question comes the

Tom Shimp

the towards had pass bill with effective that during been insurance reform. the observers So reform I've it we XX% saying quarter seeing, industry gets there only

the As think that the to improvement how stands you for cost equates loss Florida now, do bill guys?

Steve Donaghy

internal cautiously handle it. the Tom. legislation and So it's setting And question, up of aspects optimistic. to been to going as indicated, and a of really many good we're analyzing we the work functions new We've

effects start I think, this or really anyone's net it the of would that estimating point. of at presumptive me be

file, can side, whole is of or lot first they relative on the month they plaintiff how can what The there's issues -- file. and July, can when they to in a roughly questions file in

process. So we're educate trying the best as can we to them in

So today. me I think it's as here probably optimistic early Again, get you'll is we cautiously sit from to tell. the best

Tom Shimp

understanding Is the that the same Florida reform time enough of guys at provisions this there? other citizens what fingers do potential rate and is increases? are have You reform to bill an Appreciate prevent to thoughts appetite down you've down your to regards by trying the line? your there you there, get thoughts any and In at bill would also, got further the the not for need, on pulse. further there. legislators And

Steve Donaghy

is faced the own rate I or causes that benefited Yes, your are the with that they Tom, mind, all understand, litigious behaviors average think Floridian really understand in I especially State. them don't think are my I in myself, can claim increases certainly Floridian if bad really a haven't a with filed the increases they from and faced necessary. increases the reconcile of as we

So, a challenge. it's

know, to what could going And at I them that forward can And expect to-date. the the much of reducing, the enough? else clearly, they the eliminate been they they department, attorney legislature, fees as this in I pain is took in think to cause they to don't We rate, future. did look as legislation the you they're they processed do? the them they in steps reconcile, felt point. I have see but do of think the our steps increases the And to have own, to took -- they continue like

Tom Shimp

affects you're to would But know not -- it's generally through and bill the further figure how parsing State? still I rate prevent it enough And Universal. increases the probably bill trying is to the throughout out agree you that

Steve Donaghy

my Tom, I a one effectively, we to to that was I have Xst, and with team have, be deal the say, of for to We completely that that us none, anyone we've in claims be July at else the attorney people XX-day it moved got majority there It an how the think we manage the fair understand place, there's to and a benefits also of not I the I we team mistake reinsurance in this do we departments the litigation we for notice team, don't where past. litigation. business And was claims from have legislation in-house it. close passed, own various manner second -- than to of ourselves. apple going would in a a bites only have think and handle to is more or in-house, considerable some put would

hopefully every result rates we're do that help and can flat to rate, really if legislation. going the piece State. to again, we even just can we the the a would advantage future Floridians of a the of what get as And for beneficial to of So, to in reduce take in be And occurred everything State.

Tom Shimp

like expenses. looks thinking expense of that's by should It how give other you see. color the point, and there we dropped those sustainability the to Can be operating about to move us almost expenses? to X.X good ratio Wanted more

Frank Wilcox

Yes, -- think morning, good I Frank. Tom, reflects is this it

we're pressures there. know, of are it increases increase get you think your taking and reinsurance even mean, through some few rate a I things. efficiencies as earning costs, rate those premium direct increases, we earned and I of increasing reflects with

certain As also we been identified it little beginning patterns remotely itself generated, stick. spending a so, but in relates a unveiled have our our as we since a we haven't result incurred to bit of which that efficiencies will COVID-XX lot doing XXXX, behaviors, expenses in And working different. of the of

going we're forward. continued have that think to So, efficiencies to I'd like going

Tom Shimp

just then give development, accident slight you And the more particular and on detail loss events us particular that catastrophe there, years can increase? the reserve the drove

Frank Wilcox

have an and of Michael structured, on have we on Michael original very development all program, of several gross retention net our other Irma, lot little programs including by the And because so development had in are a the we recorded storms, program, we for and Yes, on was reinsurance reduction way where losses states the development of an Sally very, and the development and then Sally. a states offset we that Matthew.

same had So X.X the years Gross on would net gross accident the about course, net prior put would be And while non-CAT. We same. up for of that. and negligible. gross, the we be the was million

Tom Shimp

Irma, can regards then left? think reinsurance us and the we about what And was to there remind should you tower how in

Frank Wilcox

believe We've of got or… north billion X.X I

Steve Donaghy

billion. X.X

Frank Wilcox

capacity billion Irma. on left …X.X

So there's plenty of capacity.

Operator

Partners. next & Dowling of the comes Iacoviello line Nick Our with from question

Nicolas Iacoviello

development my you could you So questions, severity hit and I to events, more frequency maybe some current are Tom there year most on And seeing weather but terms add color could just if great? on Thanks. anything any would of the assume you strengthening, -- side. what I the be or in of kind think year the QX current wasn't add of the on

Frank Wilcox

Yes.

equates tend about passing. of our get pick. going a just year, People, which and including on so legislation We increased runoff we in last their quarter activities, see the to million, for million current you by that an which they we there. little that's some activities saw doors first we X.X X% additional to of the the potential second legislation on So in did the bit reasons, a X.X variety chose quarter did coming close when the to to a ahead of strengthen

measure an as we added caution, put we of up So additional….

Nicolas Iacoviello

with And respect with thanks. can just Great, Thanks. more, efforts little guess where a you to I bit please? one talk direct Clovered, you're your about at

Steve Donaghy

This is Steve.

approaching amount We're just business. the markets to business of agencies resides, book Clovered of predominant not a Like place many million the XX of grow in to continue We lot there's Florida premium. of in written where business.

and began pivoted we cross-selling our customers. existing So to

auto selling growing our And one our light knowledge quote the tough They think states, penetration as actively at the flood policies, continue to to we're it. So are multiple market. you across carriers base in time. ability name we policies, see and grows, I other any book of

We revenue, And we to the in which like to the enhanced the revamped and the It's non-risk So continues increasing positive. bearing grow. technology business feel continues be quarter-to-quarter. business.

So team business we're to-date. and processing proud doing the is the well. They're of very

Operator

At to closing back over like turn to now this for remarks. I time, call will the Steve

Steve Donaghy

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

Operator

you call. conference today's and for your that Ladies participation. concludes gentlemen, Thank

wonderful day. have You a may disconnect. now Everyone,

Universal Insurance (UVE) 29 Jul 212021 Q2 Earnings call transcript