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Universal Insurance Holdings Inc . (NYSE:UVE) delivered an impressive earnings performance for the fourth quarter of 2024, surpassing analysts’ expectations with an earnings per share (EPS) of $0.25, compared to the forecasted $0.09. Despite a revenue shortfall, the company’s stock price saw a 4.8% increase, reflecting investor optimism. The results were released on February 25, 2025, and followed by a positive market reaction. According to InvestingPro analysis, UVE maintains a GREAT financial health score of 3.05, with particularly strong marks in profitability and relative value metrics.
Key Takeaways
- Universal Insurance’s EPS of $0.25 exceeded the forecast by $0.16.
- Revenue fell short of expectations, marking $384.8 million against a forecast of $449.9 million.
- The company’s stock rose by 4.8% in after-hours trading, closing at $21.50.
- Strategic market expansion and innovation remain key focuses.
- The company repurchased approximately 370,000 shares, signaling confidence in its stock.
Company Performance
Universal Insurance demonstrated resilience in the face of challenging market conditions, with significant growth in direct premiums written, particularly in markets outside Florida. With a market capitalization of $606.46 million and a P/E ratio of 8.48, the company’s strategic expansion into new markets over the past year has contributed to a robust performance, despite the impact of three hurricanes during 2024. InvestingPro subscribers can access additional insights through the comprehensive Pro Research Report, which provides deep-dive analysis of UVE’s market position and growth potential.
Financial Highlights
- Revenue: $384.8 million, representing a 5.7% year-over-year increase.
- Adjusted diluted EPS: $0.25, down from $0.43 in the prior year quarter.
- Direct premiums written: $470.9 million, up 8.8% year-over-year.
- Net premiums earned: $348.4 million, marking a 3.9% increase from the previous year.
Earnings vs. Forecast
Universal Insurance’s EPS of $0.25 significantly surpassed the forecast of $0.09, resulting in a surprise of approximately 178%. This performance indicates a strong quarter, despite the revenue shortfall of $65.1 million compared to expectations.
Market Reaction
Following the earnings announcement, Universal Insurance’s stock price experienced a 4.8% increase, closing at $21.50. This rise places the stock closer to its 52-week high of $23.39, reflecting positive investor sentiment despite the revenue miss. InvestingPro analysis indicates the stock is currently undervalued, presenting a potential opportunity for investors. The company boasts an impressive 20-year track record of consistent dividend payments, with a current yield of 3.75%.
Outlook & Guidance
The company remains focused on profitability and is expanding selectively into markets with adequate rate structures. Universal Insurance has secured multi-year reinsurance capacity for 2026, with full details to be disclosed in a May press release. InvestingPro identifies several key strengths for UVE, including a strong free cash flow yield and consistent profitability over the last twelve months, though it notes the company is trading at a high P/E ratio relative to near-term earnings growth. Discover more exclusive insights and analysis with an InvestingPro subscription.
Executive Commentary
CEO Steve Donaghy emphasized the company’s commitment to profitability and strategic market entry, stating, "We continue to be laser focused on profitability and writing business where it makes the most sense." He also highlighted the market’s receptiveness to the company’s strategies, aiding in their expansion efforts.
Risks and Challenges
- Natural disasters, such as hurricanes, continue to pose a risk to the company’s financial stability.
- The competitive insurance market requires ongoing innovation and strategic positioning.
- Regulatory changes in key markets could impact future profitability.
Q&A
During the earnings call, analysts inquired about the impact of Hurricane Milton, which resulted in a $45 million net retention event. The company also addressed questions regarding its proactive approach to reinsurance negotiations and expansion into new markets with rate adequacy.
Full transcript - Universal Insurance Holdings Inc (UVE) Q4 2024:
Conference Operator: Good morning, ladies and gentlemen, and welcome to the Universal’s Fourth Quarter twenty twenty four Earnings Conference Call. As a reminder, this conference is being recorded. I would now like to turn the conference over to Arash Soleimani, Chief Strategy Officer. Please go ahead.
Arash Soleimani, Chief Strategy Officer, Universal Insurance Holdings: Good morning. Thank you for joining us today. Welcome to our quarterly earnings call. On the call with me today are Steve Donaghy, Chief Executive Officer and Frank Wilcox, Chief Financial Officer. Before we begin, please note today’s discussion may contain forward looking statements and non GAAP financial measures.
Forward looking statements involve assumptions, risks and uncertainties that could cause actual results to differ materially from those statements. For more information, please see the press release and Universal’s SEC filings, all of which are available on the Investors section of our website at universalinsuranceholdings.com and on the SEC’s website. A reconciliation of non GAAP financial measures to comparable GAAP measures is included in the quarterly press release and can also be found on Universal’s website at universalinsuranceholdings.com. With that, I’ll turn the call over to Steve. Thanks, Arash.
Steve Donaghy, Chief Executive Officer, Universal Insurance Holdings: Good morning, everyone. In 2024, we experienced three hurricanes, including Debbie, Helene and Milton, and we’re working hard as we always do to help our customers restore their lives. We continue to see progress relative to the claims trends in our Florida book and recently filed a modest rate decrease in the state that’s directly correlated with the legislative changes made in December 2022. We’re already well underway negotiating and placing our 2025 reinsurance program with 92% of our first event catastrophe tower already placed as we stand here today, along with significant additional multi year capacity secured for the twenty twenty six hurricane season. I’ll turn it over to Frank to walk through our financial results.
Frank?
Frank Wilcox, Chief Financial Officer, Universal Insurance Holdings: Thanks, Steve. Good morning. Adjusted diluted earnings per common share was $0.25 down from adjusted diluted earnings per common share of $0.43 in the prior year quarter. The decrease mostly stems from lower underwriting income, partially offset by higher net investment income and commission revenue. Core revenue of $386,400,000 was up 5.7% year over year with growth primarily stemming from higher net premiums earned, net investment income and commission revenue.
Direct premiums written were $470,900,000 up 8.8% from the prior year quarter, including 0.8% growth in Florida and 38.4% growth in other states. Overall growth mostly reflects higher policies in force, higher rates and inflation adjustments. Direct premiums earned of $519,300,000 were up 7.7% year over year, reflecting direct premiums written growth over the last twelve months. Net premiums earned were $348,400,000 up 3.9% from the prior year quarter. The increase is primarily attributable to higher direct premiums earned partially offset by a higher ceded premium ratio.
The net combined ratio was 107.9%, up 4.2 points compared to the prior year quarter. The increase reflects higher net loss and expense ratios. The loss ratio was 82.3%, up 0.4 points compared to the prior year quarter. The increase primarily reflects higher weather losses, primarily from Hurricane Milton, partially offset by more favorable prior year reserve development. The net expense ratio was 25.6%, up 3.8 points from 21.8% in the prior year quarter.
The increase was primarily driven by higher policy acquisition costs associated with growth outside Florida and higher other operating costs. During the fourth quarter, the company repurchased approximately 370,000 shares at an aggregate cost of $7,700,000 The company’s current share repurchase authorization program has $2,600,000 remaining. On 02/06/2025, the Board of Directors declared a regular quarterly cash dividend of $0.16 per common share payable 03/14/2025 to shareholders of record as of the close of business on 03/07/2025. With that, I’d like to ask the operator to open the line for questions.
Conference Operator: And our first question will be coming from Adam McMahan of UVE. Your line is open. Our next question will be coming from Paul Newsome of Piper Sandler. Your line is open.
Paul Newsome, Analyst, Piper Sandler: Good morning. Thanks for the call. Maybe just a couple of start with sort of modeling questions. Could you talk about the size of the reserve development in the quarter? And and maybe talk about the level of cap losses including Milton with a little bit more detail?
Frank Wilcox, Chief Financial Officer, Universal Insurance Holdings: Yes. Good morning, Paul. This is Frank. So Milton, I’ll start with Milton. Milton was a $45,000,000 net retention event.
As you know with our second event that $66,000,000 in excess of $45,000,000 is covered by third party. So the captive did not was not a factor this quarter. Prior year development was down significantly, $45,000,000 down from last year, which was $76,000,000.
Paul Newsome, Analyst, Piper Sandler: Great. And then could you maybe a little bit more color on the growth efforts and where you’re expanding and where you think you’re seeing the most opportunity? And then I’ll just ask the next question. Any thoughts on reinsurance renewals as they come forward later this year?
Steve Donaghy, Chief Executive Officer, Universal Insurance Holdings: Yes. Thanks, Paul. I would say from a growth perspective, with our agency relationships and marketing ability that we’ve demonstrated over the years, we continue to be laser focused on profitability and writing business where it makes the most sense. We continue to be closed in markets that are not we don’t feel as though we’re rate adequate and open in others. The growth in the other states probably was the benefit of our entry into some new markets over the last twelve months.
And I think as people hear our story and understand how we differentiate ourselves, it results in an opportunity to grow business. And again, it’s all focused on profitability and rate adequacy across all markets. And I have the great help of our folks in our Minnesota office doing that on a quarterly basis. So works out quite well. What was the second question, Paul?
Paul Newsome, Analyst, Piper Sandler: Reinsurance, what you have what are your thoughts on prospectively for as we get into the important reinsurance renewals?
Steve Donaghy, Chief Executive Officer, Universal Insurance Holdings: Yes. We were very pleased to announce that we were 92% already accomplished in our first tower, Paul. And we found the market quite receptive. And we always try and go out as early as possible to secure the reinsurance that we need and then leave the market really to kind of dictate what’s available to others. So we find that reinsurers like our story, like the presentation and are interested in getting on board with us as early as possible.
We’re also similarly pleased on interest in renewing multi year capability that takes pressure off us. So we renewed some of that in 2026. And we’ll release all the details from a cost and other perspective in our May press release as we normally do. We’re still in the market for some, so we don’t want to let too much out at this point, but we’ll give the full update in May as normal.
Paul Newsome, Analyst, Piper Sandler: Great. Thank you.
Steve Donaghy, Chief Executive Officer, Universal Insurance Holdings: Thanks, Paul. Have a good day.
Conference Operator: And I’m showing no further questions. I would now like to turn the conference back to Steve Dunnege, Chief Executive Officer for closing remarks.
Steve Donaghy, Chief Executive Officer, Universal Insurance Holdings: Yes. Thank you. I’d like to thank all our associates, our consumers, agents and our stakeholders for their continued support at Universal and I wish you all a great day. Thank you.
Conference Operator: And this concludes today’s conference. Thank you for participating. You may now disconnect.
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