Universal Insurance Holdings Inc · NYSE:UVE
Universal Insurance — Q4 2022 Earnings Presentation
28 slides from Universal Insurance's earnings presentation, Feb 23, 2023
Slide 1: Investor Briefing FY22 Q4 Results
Investor Briefing FY22 Q4 Results Reported February 23rd, 2023 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 ~$1.85B ~7% MN FY22 Direct Premiums Written 5-year average Return on Equity* NH WI NY MA MI IA IL IN PA NJ DE 19 >840K MD VA States actively doing bus
Slide 4: Financial Overview
Financial Overview Underwriting Non risk-bearing insurance Investments 1,200.0 1,128.6 90.0 35.0 ($million) ($million) 81.1 ($million) 1,035.5 190.0% 2,000 30.7 80.0 1,000.0 923.6 72.0 30.0 842.5 170.0% 65.4 25.8 24.8 70.0 768.4 55.6 1,500 25.0 800.0 150.0% 60.0 688.8 49.9 20.4 50.0 47.1 20.0 Revenu
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 … 25.00 0.8 0.7 ($ per share) 19.68 19.75 19.85 20.00 0.6 18.20 4.55 5.32 16.60 6.09 15.72 0.5 3.78 15.00 15.13 3.05 12.95 14.42 14.43 0.4 13.76 6.86 12.67 2.36 0.3 10.02 10.59 10.00 1.67 9.74 0.2 6.90 8.35 Cumulative 5.46 1.04 Dividends 0.1 Per Share 0.49 5.86 5.00 Book Value 4.
Slide 8: Backed by the strength of our employees and agents
… backed by the strength of our employees and agents Talent (as of 12/31/2022) Other Marketing & Online Distribution Underwriting & Risk Claims Risk Management Service Management In-house reinsurance and Strong partner relationships actuary experience Quality customer advocates In-house clai
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) ($billion) CY16-CY21 Price 140.0 CAGR 5.5% ꟷ Focus on rate adequate markets and positioning for 119.7 0.65 market
Slide 10: Multi-year strategic priorities – Strengthening the foundation
Multi-year strategic priorities – Strengthening the foundation Core franchises 1 Focus on disciplined growth and maximize earnings stability 2 Maintain a resilient balance sheet Protection Solutions Distribution 3 Make customer service and continuous improvement a way-of-life Risk Management Claims
Slide 11: Underwriting
Underwriting a en ae, ry Nel
Slide 12: Overview of insurance offerings
Overview of insurance offerings Homeowners coverage Products offered Form Type Carrier HO2 – Broad Form (named perils only) Coverage A Coverage B HO3 – Special Form (Most common) Dwelling, attached structures Other structures (e.g., garages, decks) (e.g., detached garage, shed, fence) HO5 – Co
Slide 13: Underwriting Industry trends
Underwriting Industry trends Policies in force FY17 – FY22 CAGR (thousands) 1,200.0 984.8 943.6 70% 2.1% 828.7 888.4 848.9 764.5 60% 1,000.0 50% Primary rate increases improving rate adequacy 800.0 24% 26% 27% 27% 28% 40% 600.0 20% 30% 400.0 20% Other States 200.0 10% % of Total - 0% Competitor cons
Slide 14: UVE organically grew into #1 in FL
UVE organically grew into #1 in FL FL Direct premiums written growth … … led to #1 homeowner provider in FL ($million) 2021 Homeowners MP FL segment* UVE 10% Citizens 2,000 0.8 State Farm 1,846 Other 1,800 0.7 Tower Hill 1,671 Progressive 1,600 1,517 0.6 USAA 1,538 1,400 First Protective 1,293 1,388
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) FY17 – FY22 CAGR 2,000.0 50.0% 120.0% 1,845.8 11.8% 113.5% 110.2% 1,800.0 103.9% 105.5% 1,671.3 30.0% 100.0% 31.4% 1,600.0 1,517.5 27.0% Combined Ratio 87.3% 30.2% 84.4%
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 up to $3.012B First event CAT contracts Capacity placed through 5/31/23 Open Market $3,012.3M subject to pricing changes 25% @ 6/1/23 Multi-Year Capacity placed through 5/31/24 $2,681.8M 75% Multi-Year (
Slide 18: 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 Coverage up $50.5M Open Market $50.5M Capacity placed through 5/31/22 subject to pricing 49% changes @ 52% 6/1/23 FHCF Property Liability $38.66M Est. Mandatory FHCF
Slide 19: Non risk-bearing insurance
Non risk-bearing insurance 19
Slide 20: Non risk-bearing insurance revenues
Non risk-bearing insurance revenues Industry trends Revenue FY17 – FY22 CAGR ($million) 11.5% 90.0 0.5 81.0 80.0 Revenues enhanced by hardening of primary rate 72.0 0.3 increases 70.0 65.4 60.0 55.6 0.1 49.9 47.1 50.0 Technology-enabled innovation improving the -0.1 customer experience and operation
Slide 21: 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 22: Claims management structure
Claims management structure Teams functionally organized around demand … … with significant experience Billions of dollars in claims paid or incurred* Fast Track (on-site, same day Catastrophe operations Streamlined processes to efficiently accelerate settlement capability) close rate Proprietary cl
Slide 23: 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 24: Investments
Investments a en ae, UNIVERSAL L ivsurance Hovoines afl
Slide 25: Investments
Investments Investment Portfolio Net investment income ($1.1B as of 12/31/22) Other (Preferreds, equities, Real Estate, net and municipal bonds) U.S. Gov 0.5% 3.2% Bonds 1.1% Mutual ($million) 35.0 Funds and other 30.7 6.3% 30.0 25.8 24.8 Mortgage-Backed and Asset-Backed Securities 25.0 Corporate 26
Slide 26: Capital deployment
Capital deployment Committed to returning capital to shareholders, and maintaining a resilient balance sheet ($million) 856 590 *5 YR FCF (period ending 2022) less share repurchases, dividends, repayment of debt. 26 *FCF is defined as operating cash flow minus CAPEX
Slide 27: Fourth Quarter 2022 Results
Fourth Quarter 2022 Results 27
Slide 28: Fourth Quarter 2022 Results
Fourth Quarter 2022 Results 4Q22 results Diluted GAAP earnings per common share (EPS) of $0.82; diluted adjusted* EPS of $0.72 Book value per share of $9.47, up 10.9% from third quarter 2022; adjusted book value per share of $12.89, up 4.5% from third quarter 2022 Net combined ratio of 101.4%,
Universal Insurance Holdings — Q4 2022 Earnings Presentation on 6ix