Universal Insurance Holdings Inc · NYSE:UVE
Universal Insurance — Q3 2020 Earnings Presentation
29 slides from Universal Insurance's earnings presentation, Oct 27, 2020
Slide 1: Investor Briefing FY20 Q3 Results
Investor Briefing FY20 Q3 Results Reported October 27, 2020 1
Slide 2: Forward-looking statements and Regulation G Disclosure Statement
Forward-looking statements and Regulation G Disclosure Statement Forward-looking statements This press release 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 ~$1.3B ~26% MN FY19 Direct Premiums Written 5 year average Return on Equity NH WI NY MA MI IA IL IN PA NJ DE 19 >950K MD VA States actively doing busi
Slide 4: Financial Overview
Financial Overview Underwriting Services Investments 900.0 842.5 60.0 55.6 35.0 ($million) 768.4 190.0% ($million) ($million) 30.7 800.0 49.9 2,000 30.0 688.8 50.0 47.1 170.0% 700.0 632.4 24.8 41.0 25.0 600.0 150.0% 40.0 36.3 1,500 504.0 34.4 20.0 500.0 Revenue 130.0% 30.0 888 13.5 400.0 326.9 103.9
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** 600.0 0.8 30.0% 80% ($million) 26.1% 0.7 70% 493.8 500.0 25.0% 0.6 60% 400.0 0.5 20.0% 50% 0.4 40% 300.0 15.0% 19.8% 0.3 30% 199.8 5-YR CAGR 200.0 0.2 10.0% 20% 10% 0.1 5.0% 100.0 0% 0 0.0% -10% - -0.1 UVE 5-Year Average
Slide 8: Backed by the strength of our employees and agents
… backed by the strength of our employees and agents Talent (as of 9/30/2020) UVE Tenure Other Average Claims 7.0+ YRS 150 YRS 500+ YRS Talent Management Combined Reinsurance Combined Claims (Core Underwriting Specialists & Risk Experience Experience Marketing & Online Management) Distribution (Depa
Slide 9: Large and growing Homeowners Multi-peril insurance opportunity
Large and growing Homeowners Multi-peril (MP) insurance opportunity P&C Industry Homeowners MP Direct Premiums Written Opportunistic expansion (U.S. & territories Homeowners Multi-Peril) ($billion) CY14-CY19 Price 120.0 CAGR ꟷ Focus on rate adequate markets and positioning for 104.1 3.8% market disl
Slide 10: Multi-year strategic priorities – Strengthening the foundation
Multi-year strategic priorities – Strengthening the foundation Core franchises 1 Grow other states and Florida 2 Maintain strong balance sheet Protection Solutions Distribution 3 Focus on disciplined growth and maximize earnings stability 4 Make customer service and continuous improvement a way-of-l
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 FY14 – FY19 Industry trends Policies in force CAGR (thousands) 1,200.0 888.4 70% 9.8% 1,000.0 764.5 828.7 60% 624.7 682.9 50% 800.0 556.3 600.0 23% 25% 40% 15% 19% 30% 400.0 9% 12% 20% Other States 200.0 10% % of Total - 0% Primary rate increases improving rate adequacy Premium
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 ($million) 2019 Homeowners MP FL segment* UVE 10% State Farm 1,400 0.8 Tower Hill 1,293 Other Citizens 1,191 0.7 1,200 USAA 1,056 0.6 FedNat 1,000 955 1,066 1,013 United 883 0.5 Progressive 92
Slide 15: Leverage domain expertise in FL for geographic diversification
Leverage domain expertise in FL for geographic diversification and opportunistically grow commission base Geographic Expansion Complementary lines expansion (partners) Doing business Licensed Homeowners (# = Year commenced) 15 Auto 18 19 17 12 16 20 15 17 19 15 14 12 16 09 Flood E&S homeowners 20 08
Slide 16: Solid performance
Solid performance Revenue Consolidated GAAP Combined Ratio (Direct and net premiums) (Related expense / Net premiums earned) ($million) FY14 – FY19 CAGR 1,400.0 1 120.0% 1,292.7 0.95 10.4% 1,190.9 0.9 103.9% 1,200.0 0.85 100.0% 1,055.9 0.8 0.75 Combined Ratio 87.3% 1,000.0 954.6 82.5% 84.4% 32.3% 0.
Slide 17: Strong balance sheet supported by robust reinsurance program (All States)
Strong balance sheet supported by robust reinsurance program ( All States) 1st Event coverage of $3.38B First event CAT contracts $3,377M Capacity placed through 5/31/21 Open Market $3,147M subject to pricing changes 27% @ 6/1/21 Est. Mandatory FHCF 73% 90% of $2,260M Multi-Year (beyond xs 2020) + F
Slide 18: 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 $1.3B 2nd Event 3rd Event 4th Event 32% $1,343M Capacity placed Open Market 68% subject to Multi-Year capacity placed through 5/
Slide 19: Strong balance sheet supported by robust reinsurance program
Strong balance sheet supported by robust reinsurance program ( ) Property Catastrophe Property and liability per risk CAT contracts More than $40M in Coverage Open Market $43.9M Capacity placed through 5/31/21 subject to pricing 46% changes @ 54% 6/1/21 FHCF Property Liability $35.2M Est. Mandatory
Slide 20: Services
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Slide 21: Services overview and industry trends
Services overview Industry trends Revenue FY14 – FY19 CAGR ($million) 60.0 1 55.6 10.1% 0.95 49.9 0.9 Services based business riding the cyclical 50.0 47.1 0.85 hardening of primary rate increases 0.8 0.75 41.0 0.7 40.0 36.3 0.65 34.4 0.6 0.55 Technology-enabled innovation improving the 30.0 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 $3.5B+ 450K+ Claims paid over past 15 years* Claims over past 15 years Fast Track (on-site, same Catastrophe National Subrogation Subrogation Recoveries** day settlement Operations capability) ($million) 20.0 18.8 18.0 16
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 ($910.6M as of 9/30/20) Other (Preferreds, equities, and Real Estate, net municipal bonds) 1.7% Mutual 2.3% Funds 5.5% U.S. Gov ($million) 35.0 Bonds 14.9% 30.7 30.0 Mortgage-Backed and 24.8 Asset-Backed Securities 25.0 Corporate 27.8%
Slide 27: Capital deployment
Capital deployment Committed to returning capital to shareholders, and bolstering the balance sheet ($million) 858 583 *5 YR FCF less share repurchases, dividends, repayment of debt. 27
Slide 28: Third Quarter 2020 Results & Guidance
Third Quarter 2020 Results & Guidance 28
Slide 29: Third quarter 2020 results & guidance
Third quarter 2020 results & guidance Third quarter 2020 results ▪ 3Q total revenue up 35.7% to $311.7 million ▪ 3Q20 direct premiums written up 19.4% ▪ 3Q20 diluted GAAP earnings per share (“EPS”) of $(0.10), non-GAAP adjusted EPS* of $(1.43) ▪ Book value per share increased 0.1% since the end of 2
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