Universal Insurance Holdings Inc · NYSE:UVE
Universal Insurance — Q1 2019 Earnings Presentation
31 slides from Universal Insurance's earnings presentation, Apr 24, 2019
Slide 1: Investor Briefing FY19 Q1 Results
Investor Briefing FY19 Q1 Results Reported April 24, 2019 1
Slide 2: Forward-looking statements and Regulation G Disclosure Statement
Forward-looking statements and Regulation G Disclosure Statement Forward-looking statements This presentation may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "anticipate," and similar expressions iden
Slide 3: Universal Insurance Holdings (UVE) Overview
Universal Insurance Holdings (UVE) Overview Leading holding company of personal residential Doing business Licensed homeowners insurance and services $1B+ #1 MN Best-in-class Return on Equity FY18 Direct Premium Written NH (5-yr Average) NY MA MI IA IL IN PA NJ DE 18 >800K WV MD VA States actively d
Slide 4: Financial Overview
Financial Overview Underwriting Services Investments 900.0 60.0 25.0 22.7 ($million) 768.4 190.0% ($million) ($million) 800.0 49.9 2,000 688.8 50.0 47.1 170.0% 20.0 700.0 632.4 41.0 16.0 600.0 150.0% 40.0 36.3 1,500 504.0 34.4 15.0 500.0 130.0% Revenue 11.8 30.0 400.0 326.9 829 1,000 765 Net Net Pre
Slide 5: Organized around protection and insurance systems capabilities
Organized around protection and insurance systems capabilities … Protection solutions Assurance Systems OAK90 (Formerly Universal Risk Advisors) (Formerly known as Universal Adjusting) (Formerly known as Universal Inspection) 5
Slide 6: End-market focus across the insurance value chain
… with an end-market focus across the insurance value chain Policy administration / Products Pricing / Underwriting Distribution Claims Risk Management back office (in partnership with Blue Atlantic) (in partnership with Evolution) Independent Agents Insurance offerings Actuarial analysis / Cu
Slide 7: Improving customer experience through digital transformation
Improving customer experience through digital transformation Revitalized UVE brand and launched all new Investor website. Refreshed Universal Property brand; New online presence to get a quote, bind a policy, download policy docs, and track a claim. New online presence to get a quote, bind a policy,
Slide 8: Proven track record
Proven track record … Best-in-class Return on Average Equity (ROE) Book value growth 600.0 0.8 35.0% 80% ($million) 31.9% 70% 501.6 0.7 30.0% 500.0 0.6 60% 25.0% 400.0 0.5 50% 20.0% 0.4 40% 300.0 25.9% 0.3 30% 15.0% 199.9 CAGR 200.0 0.2 20% 10.0% 10% 0.1 100.0 5.0% 0% 0 0.0% -10% - -0.1 UVE 5-Year A
Slide 9: Backed by the strength of our employees and agents
… backed by the strength of our employees and agents Talent UVE Tenure Other Average Claims 7.0+ YRS 150 YRS 500+ YRS Talent Management Combined Reinsurance Combined Claims (Core Underwriting Specialists & Risk Experience Experience Marketing & Online Management) Distribution (Department Management)
Slide 10: Large and growing Homeowners Multi-peril insurance opportunity
Large and growing Homeowners Multi-peril (MP) insurance opportunity P&C Industry Homeowners MP Direct Premium Written Opportunistic expansion (U.S & territories & Canada Homeowners Multi-Peril) Price ($billion) CY13-CY18 ꟷ Focus on rate adequate markets and positioning for 120.0 CAGR market dislocat
Slide 11: Strategic priorities – Strengthening the foundation
Strategic priorities – Strengthening the foundation Core franchises Make customer service and 1 continuous improvement a way-of-life 2 Focus on disciplined growth Protection Solutions Distribution 3 Maintain a strong balance sheet 4 Maximize earnings stability Risk Management Claims Management 11
Slide 12: Underwriting
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Slide 13: Overview of insurance offerings
Overview of insurance offerings Homeowners coverage Products offered Form Type Carrier HO2 – Broad Form (named perils only) HO3 – Special Form (Most common) Coverage A Coverage B Homeowners HO5 – Comprehensive Form Dwelling, attached structures Other structures HO8 – Older Home Form (e.g., g
Slide 14: Underwriting overview and industry trends
Underwriting overview FY14 – FY18 Industry trends Policies-in-force CAGR (thousands) 1,200.0 828.7 70% 60% +10.5% Rate improvement in higher exposure areas and 1,000.0 764.5 800.0 556.3 624.7 682.9 50% 40% interest rate improvements provide tailwinds 600.0 19% 23% 12% 15% 30% 400.0 9% 20% Other Stat
Slide 15: UVE organically grew into #1 in FL
UVE organically grew into #1 in FL FL Direct premium written growth … … led to #1 homeowner provider in FL ($million) 2018 Homeowners MP FL segment* UVE 10% State Farm 1,400 0.8 Tower Hill Other Citizens 1,191 0.7 1,200 FedNat 1,056 0.6 Heritage 1,000 955 1,013 USAA 883 0.5 United 924 Security First
Slide 16: Leverage domain expertise in FL for geographic diversification
Leverage domain expertise in FL for geographic diversification and opportunistically offer or partner on complementary lines Geographic Expansion Commenced Commenced writing in Commenced writing in writing in DE MI, AL, VA NH, IL Commenced writing in Commenced writing in Commenced writing in SC, HI,
Slide 17: Solid performance
Solid performance Revenue Consolidated GAAP Combined Ratio (Direct and net premiums) (Related expense / Net premium earned) ($million) FY14 – FY18 CAGR 1,400.0 1 100.0% 0.95 1,190.9 0.9 +10.8% 90.0% 87.3% 84.4% 1,200.0 0.85 82.5% 1,055.9 0.8 80.0% 0.75 Combined Ratio 73.5% 73.5% 1,000.0 954.6 0.7 70
Slide 18: Strong balance sheet supported by robust reinsurance program (All States)
Strong balance sheet supported by robust reinsurance program ( All States) 1st Event coverage in excess of $3.1B First event CAT contracts $3,146M 100% of $140M xs $898M* Open $3,069M Market up for renewal $2,437M Est. Mandatory FHCF 79% 90% of 100% $2,342M of Multi-Year $218M (excludes in-year xs x
Slide 19: Strong balance sheet supported by robust reinsurance program (Other States)
Strong balance sheet supported by robust reinsurance program ( Other States) First event Open market CAT contracts Multi-Year (excludes 1st Event coverage in excess of $1B 2nd Event 3rd Event 4th Event in-year 35% renewals) + $1,038M Open FHCF $898M 100% of $140M xs $898M* Market up for renewal 100%
Slide 20: Strong balance sheet supported by robust reinsurance program
Strong balance sheet supported by robust reinsurance program ( ) CAT contracts Coverage in excess of $36M Property and liability per risk $36.8M $5.0M xs $13.2M* Open Property Catastrophe $31.8M Market up 53% FHCF Property Liability for renewal $5.0M xs $8.2M* $27.1M $24.4M Est. Mandatory FHCF $9.0M
Slide 21: Services
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Slide 22: Services overview and industry trends
Services overview Industry trends Revenue FY14 – FY18 CAGR Technology-enabled innovation improving the ($million) 60.0 1 customer experience 0.95 49.9 0.9 +9.7% 47.1 Remote surveillance increasing to improve accuracy 0.85 50.0 0.8 41.0 0.75 and speed of risk management and claims 0.7 40.0 36.3 0.65
Slide 23: Risk Management
Risk Management Catastrophe modeling In-house reinsurance brokers, underwriters and licensed actuaries with insurance and reinsurance experience Daily operations catastrophe modeling utilizing licensed AIR and RMS models Exposure management through proprietary Profitable Measure (IPM) AIR model RMS
Slide 24: Claims management
Claims management Optimized claims management structure Significant experience $3.5B+ 450K+ Claims paid over past 15 years* Claims over past 15 years Fast Track (on-site, same Catastrophe National Subrogation Subrogation Recoveries** day settlement Operations capability) ($million) 20.0 17.6 18.0 16
Slide 25: Investing in technology: Device agnostic, digitally enabled distribution
Investing in technology: Device agnostic, digitally enabled distribution Go Paperless Environmentally and Socially Conscious Insurance Content Authority Prepare, Protect, Recover, Learn Get a Quote Clovered Partners Universal Direct Partners Download policy documents Download policy docume
Slide 26: Investments
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Slide 27: Investments overview
Investments overview Investment Portfolio Net investment income and realized gains (losses) ($918.3M as of 3/31/19) Other (Preferreds, equities, and Real Estate, net municipal bonds) 2.7% Mutual 2.1% Funds 5.3% U.S. Gov ($million) 30.0 Bonds 7.2% 25.0 22.7 Mortgage-Backed and 24.8 Asset-Backed Secur
Slide 28: Returning capital to shareholders and investing for the future
Capital deployment ($million) Share Repurchases 35.0 29.7 18.6 18.1 25.3 30.0 25.0 20.0 8.5 ~100M 15.0 over 5yr 10.0 5.0 0.0 Returning capital to shareholders … ($million) Dividends ~115M over 5yr 30.0 25.0 19.3 22.3 24.2 24.1 25.6 30.0 25.0 20.0 20.0 15.0 15.0 10.0 10.0 5.0 5.0 0.0 0.0 FY14 FY15 FY
Slide 29: First Quarter 2019 Results
First Quarter 2019 Results 29
Slide 30: 1Q19: Strong progress against strategic priorities
1Q19: Strong progress against strategic priorities Direct premiums written up 7.1%. Other states (Non-Florida) direct premiums written up 31.5%. 1 Focus on disciplined growth Diluted GAAP EPS up 1.8% to $1.14, non-GAAP adjusted EPS* of $1.00. Annualized return on average equity of 30.4%; Com
Slide 31: 1Q19 financial results
1Q19 financial results Total Revenue Annualized Return on Average Equity (ROE) Premium volume, pricing, and investment portfolio driving growth, partially offset by realized losses related to underperforming equity securities ($million) 236.6 300.0% 36.0% 34.6% 250.0 250.0% 34.0% Total Revenue 191.5
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