Universal Insurance Holdings Inc · NYSE:UVE
Universal Insurance — Q2 2019 Earnings Presentation
31 slides from Universal Insurance's earnings presentation, Jul 31, 2019
Slide 1: Investor Briefing FY19 Q2 Results
Investor Briefing FY19 Q2 Results Reported July 31, 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 $1B+ #1 MN Best-in-class Return on Equity FY18 Direct Premiums Written NH (5-yr Average) WI NY MA MI IA IL IN PA NJ DE 18 >800K MD VA States actively
Slide 4: Financial Overview
Financial Overview Underwriting Services Investments 900.0 60.0 25.0 22.7 ($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 Net Premiums 76
Slide 5: Organized around protection and insurance systems capabilities
Organized around protection and insurance systems capabilities … Protection solutions Assurance Systems OAK90 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% ($million) 31.9% 70% 501.6 0.7 30.0% 500.0 0.6 60% 25.0% 400.0 0.5 50% 20.0% 0.4 40% 300.0 25.9% 0.3 30% 15.0% 199.9 CAGR 200.0 0.2 20% 10.0% 10% 0.1 100.0 5.0% 0% 0 0.0% -10% - -0.1 UVE 5-Year A
Slide 9: Backed by the strength of our employees and agents
… backed by the strength of our employees and agents Talent (as of 6/30/2019) UVE Tenure Other Average Claims 7.0+ YRS 150 YRS 500+ YRS Talent Management Combined Reinsurance Combined Claims (Core Underwriting Specialists & Risk Experience Experience Marketing & Online Management) Distribution (Depa
Slide 10: Large and growing Homeowners Multi-peril insurance opportunity
Large and growing Homeowners Multi-peril (MP) insurance opportunity P&C Industry Homeowners MP Direct Premiums Written Opportunistic expansion (U.S & territories Homeowners Multi-Peril) ($billion) CY13-CY18 Price 120.0 CAGR ꟷ Focus on rate adequate markets and positioning for market dislocation even
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 70% +10.5% 1,000.0 764.5 828.7 60% 624.7 682.9 50% 800.0 556.3 40% 600.0 19% 23% 12% 15% 30% 400.0 9% 20% Other States 200.0 10% % of Total - 0% Technology-enabled innovation improving intelligence Premiums
Slide 15: 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 ($million) 2018 Homeowners MP FL segment* UVE 10% State Farm 1,400 0.8 Tower Hill Other Citizens 1,191 0.7 1,200 FedNat 1,056 0.6 Heritage 1,000 955 1,013 USAA 883 0.5 United 924 Security Firs
Slide 16: Leverage domain expertise in FL for geographic diversification
Leverage domain expertise in FL for geographic diversification and opportunistically offer or partner on complementary lines Geographic Expansion Commenced writing in Commenced writing in MI, AL, VA NH Opportunistically Commenced writing in Commenced writing in Commenced writing in evaluate geograph
Slide 17: Solid performance
Solid performance Revenue Consolidated GAAP Combined Ratio (Direct and net premiums) (Related expense / Net premiums earned) ($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 7
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 $3.2B First event CAT contracts $3,280M Open Market $2,980M subject to pricing changes 27% @ 6/1/20 Est. Mandatory FHCF 73% 90% of $2,200M Multi-Year (beyond xs 2020) + FHCF $780M 2nd Event 3rd
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 (beyond 2020) 1st Event coverage in excess of $1.2B 2nd Event 3rd Event 4th Event 30% $1,300M Open Market 70% Multi-Year capacity placed through 5/31/22 subject to pricing ch
Slide 20: Strong balance sheet supported by robust reinsurance program
Strong balance sheet supported by robust reinsurance program ( ) CAT contracts Coverage in excess of $27M Property and liability per risk Open Market $27.5M subject to pricing 46% Property Catastrophe changes @ Capacity placed through 5/31/20 54% FHCF Property 6/1/20 Liability $17.5M Est. Mandatory
Slide 21: Services
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Slide 22: Services overview and industry trends
Services overview Industry trends Revenue FY14 – FY18 CAGR Technology-enabled innovation improving the ($million) 60.0 1 customer experience 0.95 49.9 0.9 +9.7% 47.1 0.85 50.0 0.8 Remote surveillance increasing to improve accuracy and speed of risk management and claims 0.75 41.0 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 Internal Profitability Measure AIR mode
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 Partners Download policy documents Download policy documents Track certain types of claims
Slide 26: Investments
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Slide 27: Investments overview
Investments overview Investment Portfolio Net investment income ($942.3M as of 6/30/19) Other (Preferreds, equities, and Real Estate, net municipal bonds) 1.7% Mutual 2.1% Funds 4.2% U.S. Gov ($million) 30.0 Bonds 7.8% 25.0 24.8 Mortgage-Backed and Asset-Backed Securities Corporate 20.0 35.6% Bonds
Slide 28: Capital deployment: returning capital to shareholders
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: Second Quarter 2019 Results
Second Quarter 2019 Results 29
Slide 30: 2Q19 & 1H19: Strong progress against strategic priorities
2Q19 & 1H19: Strong progress against strategic priorities Total revenue up 11.4%; 1H19 up 17.2%. Other states (Non-Florida) direct premiums written up 28.7%; 1H19 up 29.9%. 1 Focus on disciplined growth Diluted GAAP EPS of $1.08, non-GAAP adjusted EPS* of $1.05. 1H19 Annualized return on ave
Slide 31: 2Q19 and 1H19 financial results
2Q19 and 1H19 financial results Total Revenue Annualized Return on Average Equity (ROE) Premium volume, pricing, and investment portfolio driving growth, partially offset by ($million) realized losses related to underperforming equity securities 40.0% 36.1% 1 233.7 300.0% 500.0 470.3 300.0% 35.0% 0.
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