Universal Insurance Holdings Inc · NYSE:UVE
Universal Insurance — Q1 2020 Earnings Presentation
30 slides from Universal Insurance's earnings presentation, Apr 27, 2020
Slide 1: Investor Briefing FY20 Q1 Results
Investor Briefing FY20 Q1 Results Reported April 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 ~$1.3B ~26% MN FY19 Direct Premiums Written 5 year average Return on Equity NH WI NY MA MI IA IL IN PA NJ DE 18 >900K MD VA States actively doing busi
Slide 4: Financial Overview
Financial Overview Underwriting Services Investments 900.0 842.5 60.0 55.6 35.0 ($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 20.0 500.0 130.0% Revenue 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% ($million) 26.1% 0.7 70% 493.8 500.0 25.0% 0.6 60% 400.0 0.5 20.0% 50% 0.4 40% 300.0 15.0% 19.8% 0.3 30% 199.8 5-YR CAGR 200.0 0.2 10.0% 20% 10% 0.1 5.0% 100.0 0% 0 0.0% -10% - -0.1 UVE 5-Year Average
Slide 8: Backed by the strength of our employees and agents
… backed by the strength of our employees and agents Talent (as of 3/31/2020) UVE Tenure Other Average Claims 7.0+ YRS 150 YRS 500+ YRS Talent Management Combined Reinsurance Combined Claims (Core Underwriting Specialists & Risk Experience Experience Marketing & Online Management) Distribution (Depa
Slide 9: Large and growing Homeowners Multi-peril insurance opportunity
Large and growing Homeowners Multi-peril (MP) insurance opportunity P&C Industry Homeowners MP Direct Premiums Written Opportunistic expansion (U.S. & territories Homeowners Multi-Peril) ($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 19% 23% 25% 40% Technology-enabled innovation improving 12% 15% 30% 400.0 Other States 200.0 9% 20% 10% intelligence % of Total - 0%
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 ($million) 2019 Homeowners MP FL segment* UVE 10% State Farm 1,400 0.8 Tower Hill 1,293 Other Citizens 1,191 0.7 1,200 USAA 1,056 0.6 FedNat 1,000 955 1,066 1,013 United 883 0.5 Progressive 92
Slide 15: Leverage domain expertise in FL for geographic diversification
Leverage domain expertise in FL for geographic diversification and opportunistically offer or partner on complementary lines Geographic Expansion Commenced writing in Commenced writing in MI, AL, VA NH Opportunistically Commenced writing in Commenced writing in Commenced writing in evaluate geograph
Slide 16: Solid performance
Solid performance Revenue Consolidated GAAP Combined Ratio (Direct and net premiums) (Related expense / Net premiums earned) ($million) FY14 – FY19 CAGR 1,400.0 1 120.0% 1,292.7 0.95 1,190.9 0.9 10.4+% 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 in excess of $3.3B First event CAT contracts $3,338M Open Market $3,064M subject to pricing changes 27% @ 6/1/20 Est. Mandatory FHCF 73% 90% of $2,265M Multi-Year (beyond xs 2020) + FHCF $799M 2nd Event 3rd
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 of $1.3B 2nd Event 3rd Event 4th Event 30% $1,300M Open Market 70% Multi-Year capacity placed through 5/31/22 subject to pricing changes Mult
Slide 19: Strong balance sheet supported by robust reinsurance program
Strong balance sheet supported by robust reinsurance program ( ) CAT contracts More than $30M in Coverage Property and liability per risk Open Market $30.7M subject to pricing 46% Property Catastrophe changes @ Capacity placed through 5/31/20 54% FHCF Property 6/1/20 Liability $22.3M Est. Mandatory
Slide 20: Services
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Slide 21: Services overview and industry trends
Services overview Industry trends Revenue FY14 – FY19 CAGR Technology-enabled innovation improving the ($million) 60.0 55.6 1 customer experience 0.95 +10.1% 0.9 49.9 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
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 AIR mode
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 ($928.6M as of 3/31/20) Other (Preferreds, equities, and Real Estate, net municipal bonds) 1.7% Mutual 1.6% Funds 4.7% U.S. Gov ($million) 35.0 Bonds 6.7% 30.7 30.0 Mortgage-Backed and 24.8 Asset-Backed Securities 25.0 Corporate 34.8% B
Slide 27: Capital deployment
Capital deployment Committed to returning capital to shareholders, bolstering the balance sheet, and investing for the future ($million) 858 583 *5 YR FCF less share repurchases, dividends, repayment of debt. 27
Slide 28: First Quarter 2020 Results
First Quarter 2020 Results 28
Slide 29: 1Q20 results against multi-year strategic priorities
1Q20 results against multi-year strategic priorities Total direct premiums written up 15.7% 1 Grow other states and Florida Other states (Non-Florida) direct premiums written up 19.0% Florida direct premiums written up 15.0% Continued progress on June 1st, 2020 renewals. Maintain strong bala
Slide 30: 1Q20 financial results
1Q20 financial results Total Revenue Annualized Return on Average Equity (ROE) Revenue: Higher reinsurance costs and unrealized losses on investments (driven by COVID-19 pandemic), partially offset by higher organic premium pricing and volume and our integrated services. ($million) 250.0 236.6 235.3
Universal Insurance Holdings — Q1 2020 Earnings Presentation on 6ix