- Earnings call transcript Q3 2022

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Operator

Good morning, ladies and gentlemen, and welcome to Universal’s Third Quarter 2022 Earnings Conference Call.

As a reminder, this conference call is being recorded. I would now like to turn the conference over to Arash Soleimani, Chief Strategy Officer.

Arash Soleimani

Good morning. Thank you for joining us today. earnings quarterly our to call. Welcome

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

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

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

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

Steve Donaghy

morning, everyone. Good Thanks, Arash.

all policy holders their continue by had be impacted we’ve landfall, need. thoughts Hurricane in our on Since to the helping boots with those time of ground, Ian. Our

Atlantic is of in be state breadth strength and condo close by the Ian, disclosed, We coverage. and consolidated retention of with Hurricane a we $XXX Fund’s and Florida our resources recently in Ian-related Assist reinsurance approximately for providing billion open highlighting million free Coupled in almost we and point. projected $XXX hurricane estimated capacity Atlantic our meaningfully our most of Catastrophe volume underweight To efficiently subsequent reinsurance catastrophe gross we Florida, billion coverage renters be Frank lower, the hurricane started already a our through date, from the loss from and XXXX participation vast largest point, volume unit pre-negotiated underway, program from as to estimate for XXXX first program have approximately tower insulated us high capacity the have and team claims. reinsurance XXXX in it the Hurricane $X Florida and to the place pricing turn regions bond. impacted million interior with claims of majority our would reinsurance million attachment will our event the Ian Irma’s and to Fund, significant season $X estimated and Hurricane at the planning Despite which of dynamics. claims are catastrophe event received policies, walk our Catastrophe in $XXX and we well over We our As XX% Reinsurance season reflects program. appreciate from multi-year that Hurricane catastrophe support. maintain XX% provide this relationships contents financial our the market We process below cost Policyholders cushioned further proportion the portfolio our partner their to from results. legal value I’ll is of of the Frank? a rate

Frank Wilcox

in prior XXX.X% with written million, year was quarter, up higher partly in mostly direct Thanks, by Ian prior year points ratio. growth higher common by commission net other growth net lower ratio common down prior loss was a XX.X% $X.XX, points investment year XX.X and the commission months. by higher up with commission quarter. XX.X% in year year-over-year ratio a The pick, the development. was over improved Florida from initial income The with lower reflects to revenue. attritional million, increase Steve, reserve by policies decline from reflecting states. diluted quarter the expense earned, net XX.X million, year-over-year to last distribution lower investment and year-over-year the from of premiums XX.X% stemming accident partially earned offset of loss $XXX.X in with by XX.X% combined year XXX.X%, force. with income Ian, a XX.X% Direct offset associated premiums were retained a primarily Overall per and higher the up up morning. revenue Adjusted expense partially higher in net XX primarily increases partially good revenue. attributable associated earnings offset XX.X% and paid were of increase primarily rate Hurricane ratio premiums written ratio of net share net net premiums loss up better rates $X.XX The diluted the to prior year-over-year, share attributable including reflecting offset The $XXX.X combined a growth loss X.X losses Hurricane net adjusted ratio to renewal partners. was Direct Core rate-driven points per reflects net growth growth $XXX.X compared

business During remaining of dividend On the stock, $X.XX cash repurchased the July the share company at quarterly payable XXXX, the the repurchased third million. of ask XXXX. XX, approximately XXXX. a XX, November an program share of of record declared on shareholders common of $X aggregate X, August the operator to open Board that, million as shares of $X.X of With current to questions. to XXXX has on through The XXXX like X, close August and Directors as per line of cost quarter, for I’d runs X, XXX,XXX authorization company’s September

Operator

comes Sandler. Thank Instructions] from first Newsome you. Paul question with [Operator Piper Our

proceed. may You

Paul Newsome

for trend that to wanted some sustainable us on how and the It good-sized maybe ratio about of sense drop ask if pretty June? a overall call. looks could to And expense Thanks your producers. Good give that is? will the in thoughts comp maybe morning. how and lower you like the I just paid

Frank Wilcox

is the Paul. question. appreciate Frank. good This I Yes, morning,

because down the commission rate, receiving primarily reduce increase the Our partners distribution has primary are trending that the although been dollars we of decision expense as ratio same to rates.

But the accruals. for reason that quarter, principal were in the performance we trend down. for also bonuses the other discretionary and some the that’s So on back building third we coming for dialed overall accruals up year

would what is XX.X indicative not be. rate the So the run of

months, the better I think a XX%, look going that first nine just forward. under is be to would of what that if expect you barometer which at

Paul Newsome

to terms Do you’re frankly, of to are paid that why how being same that commission comp we normal the you given – you home out standing you Or think in? do – are lower going think you peers – comp what seen new the of wondered for comp in the But to levels? is I’ve a are hadn’t [ph] the we producers always do of from the terms difficulty you your market? think markets about market’s react that that? in sort of hit and

Steve Donaghy

Good Steve. is This Paul. Hey morning.

see And as we in rising so the dramatically. the we the the rates think agent’s gauge in I as we of market, Florida they amount reduce receive to commission, dollars. say, particular, same

on that So within as it’s one of forward. as with control agency the an would basis we we move of And forward. to But our assess annual continue we competitive is that are that as of capital levers key and we we the move force the capital, marketplace. kind management work we

on So how keep our our very paramount agents close are the with the eye it’s we relationships and something company. and we a to built success

we’re careful So about very it.

Paul Newsome

been the profitability higher of than claims have business. issues sort It question of doesn’t like general, specifically in the do ton general we’ve inflation. other trying Universal the made Where in is aside, Ian been big But essentially going enough claim on I underlying maybe apart. guess rates perspectively get a I rate progress is, the up Hurricane getting inflation seem guess to possible about underlying And that? some up that of to at cover fears as are the we the think that’s actually as it’s over change. are go. to And high you some fast market maybe have without regulatorily – not

thoughts So that your maybe be would on great.

Steve Donaghy

analyze also taken of reinsurance assess constantly payouts annual cost rate the ability to the we adjusted rates an that due Yes, to on And basis. increasing. our and we’ve advantage are our

think event model us our adequacy dramatic benefit as results. factors, will you the look though those I on feel rate and to forward, our as of a with QX has and team in approaching our own the are legal ability we assess the staff aggressively effect future. our we we when course own claims hurricanes But we as and combine though feel

I some we built So rate has know, you all justification think past is are for a economy. a all, as from in rates. rates it inflation continue a to the as assess to increase of been the byproduct year in the because But think the always And I the in extent of stems the months. lot arrears XX

affect though the will So payouts. appears claims that continue the all rate to our facilitate to and order future things the in as assessed be

Paul Newsome

help Great. as Appreciate the all Thanks always. folks.

Steve Donaghy

Yes. Thanks, Paul. day. Have good a

Frank Wilcox

you. Thank

Operator

Thank for moment questions. you. One

Nick Our Dowling. with next question Iacoviello from comes

You may proceed.

Nick Iacoviello

guys. Good morning,

Steve Donaghy

Good morning, Nick.

Nick Iacoviello

you’re what point. talk from Could we claims start Ian you’ve relative a to – so Could with seeing Irma? at side than being on the Irma discussed just you this bit volume little the severity about about XX% less just

Steve Donaghy

originally a respond, the at markets as due the Because have the than I Again, get had in think or things in to can as we’ve to seen affected are to the as slower claims trying well this that bad the tremendous less is resources to all assess severity claim. as as point to of know, happen and Ian fast really you The what And Irma. possible. resources the you amount of deployed to positioned more we of we’re the volume well damage. we due

Nick Iacoviello

would’ve a about million, like on million? a from been talk it. between number, was net captive. loss, it insurance just million about $XXX Got implied looked And difference bit and than both the $XXX cat and the just the lower you net Can it the that what $XXX.X was retention which

Steve Donaghy

at pickup, Nick. policy a that’s great had Yes, Platinum. an loss American excess coverage We

insureds. retention. been for time overall in the to delivering have in the our reduced our good time that capital need – our of So us about And partners of very

it. So that driver the was of

Nick Iacoviello

premiums just reinsurance layer the to Do I’m see RPPs do the have if [ph] fund or you for And where coverage incremental Thanks. about beginning sliver second reinstatement attaches? on we cat thinking events. begin

Steve Donaghy

hit see definitely the end very Again, September. at storm the of tail effect. that You’ll

to expenses impact there offset a for results. dramatic have that adjusting deliver. our we So through an expenses But we QX those wasn’t will

all wouldn’t fashion. expect kind in the of an through flow anything that’ll in think I quarters P&L So orderly dramatic. future I

Nick Iacoviello

premiums? of offset Got reinstatement my internal net to can specific that incremental benefit was any the the from the – there just to the adjusting timing was guys the operations. you the relating internal anything and us it. follow-on anything to adjusting And help or quantify Is

Steve Donaghy

XXX to don’t although, with possible much for to adjusting certain keep have claims again, as of organization, do lists. to specifics are you. we on out we in that our and parties trying end internally I third as the people But them

So our own not say we offset only our will And expenses various resources. also the incurred And need of reinsurance But in going lot think from again, tailwinds adjusting the I benefits the in manage and we and headwinds see an anyone and as a work. that out, because event those will our legal overall effects. to insureds, you’ll forward think in say, it expense than I own organization I be we doing partners the benefits would the our industry. work the monitor tighter claims and

all So that. for around there’s benefits

Nick Iacoviello

you so the got know Got this of monthly the before reform way the well. seen – that. that could the were more basis press year anything then prior litigation And seeing a we’ve they’re I there past session recent claims are a that of it. that I we’ve like quarter? specifically but with specific what And in hurricanes. after had post right, legislation? trends discuss most special is But year occurred guess recent I Or get presumably trends, also, from I things And – addressing year, opened claims as reports your end. sort on, And then the could litigation maybe just events a you’re years on you’re interested from any impacted if years accident calendar

Steve Donaghy

I’ll complex address my Yes, it’s to a do best question, it. Nick.

work process, benefits many file NOI two because of The seen in that AOB to and NOI cases have working. reform do plaintiff’s have to to The somewhat, file possible. aggressive very bar be ago, them years We order we’ve the as as seen recent they case. some seen a the We’ve also impacts trying legislation. in

fees. issue. should legislative clearly CFO future. But it. educated an And litigious So to Governor to cannot cases as when again, I the one the And politicians think they And I from adjust I’m issue a on we today, from I very of expenses so And or door. respond far do not state to And in that positive and would few educating Patronis around files represented – our think elimination bar. forward, as far are which do would way in like supportive litigation see very won’t Florida they to density think, compared attorney the the and the consumers the a we politicians come the think thus the messaging has which ability to of see seen say of from we perspective to plaintiff’s Florida, the saying the been of going leads very regularly, in to that like basis, Hurricane our I industry. win Ian such from we how in would others. as was or is benefits in very messaging the we’ve and mitigation I it we the We recoup of in high and state state DeSantis our approaching of see we behave. ongoing was

there, but long a in Nick. it’s sorry, there lot was a So answer,

Sorry that. about

Nick Iacoviello

just I of perfect. QX at liquidity number holding test final the it. That’s one guess end? I one, No. as And company appreciate

Steve Donaghy

number a XX-K the not interim the company we an basis. will that only XX-K. the in That on holding we in when out It’s come produce disclose back of financial number statements Form

Nick Iacoviello

all. That’s Thank you Okay. guys.

Steve Donaghy

Great. Nick. Have good Thanks, day. a

Frank Wilcox

you. Thank

Operator

like any not remarks. would Thank questions this I to over Steve the now call showing Donaghy for back at turn further further to you. And any I’m time.

Steve Donaghy

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

Operator

participating. concludes conference This you. Thank Thank today’s you call. for

You now may disconnect.

Universal Insurance (UVE) 28 Oct 222022 Q3 Earnings call transcript