Universal Insurance Holdings Inc · NYSE:UVE
Universal Insurance — Q4 2020 Earnings Presentation
29 slides from Universal Insurance's earnings presentation, Feb 25, 2021
Slide 1: Investor Briefing FY20 Q4 Results
Investor Briefing FY20 Q4 Results Reported February 25th, 2021 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,” “will,” “plan,” and similar
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 >$1.5B ~19% MN FY20 Direct Premiums Written 5 year average Return on Equity NH WI NY MA MI IA IL IN PA NJ DE 19 >950K MD VA States actively doing busi
Slide 4: Financial Overview
Financial Overview Underwriting Services Investments 1,000.0 923.6 70.0 65.4 35.0 ($million) 190.0% ($million) ($million) 30.7 900.0 842.5 2,000 768.4 60.0 55.6 30.0 800.0 170.0% 688.8 49.9 24.8 47.1 25.0 700.0 632.4 150.0% 50.0 1,500 41.0 20.4 600.0 504.0 40.0 36.3 20.0 Revenue 130.0% 985 500.0 113
Slide 5: Organized around protection and insurance systems capabilities
Organized around protection and insurance systems capabilities … Protection solutions Assurance Systems OAK90 5
Slide 6: With an 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: Proven track record
Proven track record … 5 year average Return on Equity (ROE) Book value growth** 500.0 0.8 20.0% 80% ($million) 18.5% 449.2 450.0 18.0% 0.7 70% 400.0 16.0% 0.6 60% 350.0 14.0% 0.5 50% 300.0 293.0 12.0% 0.4 40% 250.0 10.0% 8.9% 0.3 30% 200.0 8.0% 5-YR CAGR 0.2 20% 150.0 6.0% 10% 0.1 4.0% 100.0 0% 0 2.
Slide 8: Backed by the strength of our employees and agents
… backed by the strength of our employees and agents Talent (as of 12/31/2020) Other Marketing & Online Distribution Risk Management Service Claims ▪ In-house reinsurance and ▪ Strong partner relationships actuary experience ▪ Quality customer advocates ▪ In-house claims and underwriting teams Under
Slide 9: Large and growing Homeowners Multi-peril insurance opportunity
Large and growing Homeowners Multi-peril (MP) insurance opportunity P&C Industry Homeowners MP Direct Premiums Written Opportunistic expansion (U.S. & territories Homeowners Multi-Peril) ($billion) CY15-CY20 Price 120.0 CAGR 107.3 3.8% ꟷ Focus on rate adequate markets and positioning for 104.1 marke
Slide 10: Multi-year strategic priorities – Strengthening the foundation
Multi-year strategic priorities – Strengthening the foundation Core franchises 1 Selectively grow other states and Florida 2 Maintain a resilient balance sheet Protection Solutions Distribution 3 Focus on disciplined growth and maximize earnings stability 4 Make customer service and continuous impro
Slide 11: Underwriting
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Slide 12: 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 13: Underwriting overview and industry trends
Underwriting overview FY15 – FY20 Industry trends Policies in force CAGR (thousands) 1,200.0 984.8 70% 9.5% 828.7 888.4 60% 1,000.0 682.9 764.5 800.0 624.7 50% 23% 25% 26% 40% Primary rate increases improving rate adequacy 600.0 15% 19% 30% 400.0 12% 20% Other States 200.0 10% % of Total - 0% Constr
Slide 14: UVE organically grew into #1 in FL
UVE organically grew into #1 in FL FL Direct premiums written growth … … led to #1 homeowner provider in FL ($million) 2020 Homeowners MP FL segment* UVE 11% Citizens 1,600 0.8 1,517 State Farm Other 0.7 Tower Hill 1,400 1,293 Progressive 1,191 0.6 USAA 1,200 1,251 1,056 United 0.5 Heritage 955 1,06
Slide 15: Leverage domain expertise in FL for geographic diversification
Leverage domain expertise in FL for geographic diversification and opportunistically grow commission base Geographic Expansion Complementary lines expansion (partners) Doing business Licensed Homeowners (# = Year commenced) 15 Auto 18 19 17 12 16 20 15 17 19 15 14 12 16 09 Flood E&S homeowners 20 08
Slide 16: Performance
Performance Revenue Consolidated GAAP Combined Ratio (Direct and net premiums) (Related expense / Net premiums earned) ($million) FY15 – FY20 CAGR 1,600.0 1,517.5 1 120.0% 113.6% 0.95 11.4% 0.9 103.9% 1,400.0 1,292.7 0.85 100.0% 31.4% 1,190.9 0.8 1,200.0 0.75 Combined Ratio 87.3% 82.5% 84.4% 32.3% 1
Slide 17: Resilient balance sheet supported by robust reinsurance program (All States)
Resilient balance sheet supported by robust reinsurance program ( All States) 1st Event coverage of $3.36B First event CAT contracts $3,361M Capacity placed through 5/31/21 Open Market $3,118M subject to pricing changes 27% @ 6/1/21 Est. Mandatory FHCF 73% 90% of $2,231M Multi-Year (beyond xs 2020)
Slide 18: Resilient balance sheet supported by robust reinsurance program (Other States)
Resilient balance sheet supported by robust reinsurance program ( Other States) First event Open market CAT contracts Multi-Year (beyond 2020) 1st Event coverage in excess of $1.3B 2nd Event 3rd Event 4th Event 32% $1,343M Capacity placed Open Market 68% subject to Multi-Year capacity placed through
Slide 19: Resilient balance sheet supported by robust reinsurance program
Resilient balance sheet supported by robust reinsurance program ( ) Property Catastrophe Property and liability per risk CAT contracts More than $40M in Coverage Open Market $43.6M Capacity placed through 5/31/21 subject to pricing 46% changes @ 54% 6/1/21 FHCF Property Liability $34.9M Est. Mandato
Slide 20: Services
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Slide 21: Services overview and industry trends
Services overview Industry trends Revenue FY15 – FY20 CAGR ($million) 65.4 70.0 1 12.5% 0.95 0.9 Services based business riding the cyclical 60.0 55.6 0.85 hardening of primary rate increases 0.8 49.9 0.75 50.0 47.1 0.7 41.0 0.65 0.6 40.0 36.3 0.55 Technology-enabled innovation improving the 0.5 cus
Slide 22: 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 Internal Profitability Measure (IPM) mo
Slide 23: 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 day settlement capability) Operations Subrogation Recoveries** $52M+ Litigation 3-year subr
Slide 24: 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 Partners ▪ Download policy documents ▪ Download policy documents ▪ Track certain types of claims
Slide 25: Investments
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Slide 26: Investments overview
Investments overview Investment Portfolio Net investment income ($919.9M as of 12/31/20) Other (Preferreds, equities, and Real Estate, net municipal bonds) U.S. Gov 1.7% 2.5% Bonds 6.5% Mutual ($million) 35.0 Funds 8.9% 30.7 30.0 Mortgage-Backed and 24.8 Asset-Backed Securities 25.0 Corporate 34.8%
Slide 27: Capital deployment
Capital deployment Committed to returning capital to shareholders, and bolstering the balance sheet ($million) 662 382 *5 YR FCF less share repurchases, dividends, repayment of debt. 27
Slide 28: Fourth Quarter 2020 Results & Guidance
Fourth Quarter 2020 Results & Guidance 28
Slide 29: 4Q20 and FY20 results & guidance
4Q20 and FY20 results & guidance 4Q20 and FY20 results ▪ 4Q20 total revenue up 14.1% to $273.1 million; FY20 up 14.2% to $1.1 billion ▪ More than $1.5 billion of premium now in force ▪ 4Q20 diluted GAAP earnings per share (EPS) of $(0.57), non-GAAP adjusted EPS* of $(0.84) ▪ FY20 diluted GAAP EPS of
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