Universal Insurance Holdings Inc · NYSE:UVE
Universal Insurance — Q4 2023 Earnings Presentation
27 slides from Universal Insurance's earnings presentation, Feb 22, 2024
Slide 1: Investor Briefing FY23 Q4 Results
Investor Briefing FY23 Q4 Results Reported February 22nd, 2024 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 ~$1.9B ~7% MN 5-year average return on common FY23 Direct Premiums Written* NH equity* WI NY MA MI IA IL IN PA NJ DE 18 ~800K MD VA States actively do
Slide 4: Financial Overview
Financial Overview Underwriting Non risk-bearing insurance Investments 60.0 1,400.0 90.0 ($million) 1,251.9 190.0% ($million) 81.1 80.4 ($million) 2,000 1,200.0 1,128.6 80.0 72.0 50.0 48.4 1,035.5 170.0% 70.0 65.4 1,000.0 923.6 842.5 150.0% 60.0 55.6 1,500 40.0 768.4 49.9 800.0 50.0 30.7 Revenue 130
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 19.41 20.00 0.6 18.20 4.55 5.32 16.60 6.09 15.72 0.5 3.78 7.63 15.00 15.13 3.05 12.95 14.42 14.43 0.4 13.76 6.86 12.67 2.36 11.78 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
Slide 8: Backed by the strength of our employees and agents
… backed by the strength of our employees and agents Talent (as of 12/31/2023) 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 (MP) 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) ($billion) CY17-CY22 Price 160.0 CAGR 7.2% ꟷ Focus on rate adequate markets and positioning for market dislocatio
Slide 10: Multi-year strategic priorities – Strengthening the foundation
Multi-year strategic priorities – Strengthening the foundation Core franchises 1 Focus on disciplined growth and maximize earnings stability 2 Maintain a resilient balance sheet Protection Solutions Distribution 3 Make customer service and continuous improvement a way-of-life Risk Management Claims
Slide 11: Underwriting
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Slide 12: Overview of insurance offerings
Overview of insurance offerings Homeowners coverage Products offered Form Type Carrier ▪ HO2 – Broad Form (named perils only) Coverage A Coverage B ▪ HO3 – Special Form (Most common) Dwelling, attached structures Other structures (e.g., garages, decks) (e.g., detached garage, shed, fence) ▪ HO5 – Co
Slide 13: Underwriting Industry trends
Underwriting FY18 – FY23 Industry trends Policies in force CAGR (thousands) 1,200.0 984.8 943.6 70% (0.5)% 1,000.0 828.7 888.4 848.9 809.9 60% 50% 800.0 600.0 23% 25% 26% 26% 27% 30% 40% 30% Primary rate increases improving rate adequacy 400.0 20% Other States 200.0 10% % of Total- 0% Competitor con
Slide 14: UVE organically grew into a top provider in FL
UVE organically grew into a top provider in FL FL Direct premiums written growth Top homeowners insurance provider in FL ($million) 2022 Homeowners MP FL segment* Citizens 2,500 0.8 16% UVE 10% Other 0.7 State Farm Tower Hill 2,000 1,922 Progressive 1,846 0.6 USAA 1,671 First Protective 0.5 Progress
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 Flood 18 19 17 12 16 20 15 17 19 15 14 12 16 09 Auto E&S homeowners 20 08
Slide 16: Performance
Performance Revenue Consolidated GAAP Combined Ratio (Direct and net premiums) (Related expense / Net premiums earned) ($million) FY18 – FY23 CAGR 2,500.0 0.5 120.0% 10.0% 113.6% 110.2% 103.9% 105.5% 103.6% 0.3 100.0% 2,000.0 1,921.8 31.4% 27.0% 1,845.8 Combined Ratio 87.3% 30.2% 24.3% 32.3% 1,671.3
Slide 17: Resilient balance sheet supported by robust reinsurance program
Resilient balance sheet supported by robust reinsurance program ( All States) 1st Event coverage up to $2.61B First event CAT contracts Capacity placed through 5/31/23 Open Market subject to $2,610M pricing changes 35% @ 6/1/24 65% Multi-Year Capacity placed through 5/31/24 $2,173M Multi-Year (beyon
Slide 18: Non risk-bearing insurance
Non risk-bearing insurance 18
Slide 19: Non risk-bearing insurance revenues Industry trends
Non risk-bearing insurance revenues Industry trends Revenue FY18 – FY23 CAGR ($million) 90.0 0.5 10.0% 81.0 80.4 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 50.0 Technology-enabled innovation improving the -0.1 customer experience and operation
Slide 20: 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 21: 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 22: 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 23: Investments
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Slide 24: Investments
Investments Investment Portfolio Net investment income ($1.2B as of 12/31/23) Other (Preferreds, equities, municipal Real Estate, net bonds and investment in private limited U.S. Gov 0.5% partnership) Bonds 4.1% 2.0% Mutual ($million) 60.0 Funds and other 5.6% 50.0 48.4 Mortgage-Backed and Asset-Bac
Slide 25: Capital deployment
Capital deployment Committed to returning capital to shareholders, and maintaining a resilient balance sheet ($million) 699 440 *5 YR FCF (period ending 2023) less share repurchases, dividends, repayment of debt. 25 *FCF is defined as operating cash flow minus CAPEX
Slide 26: Fourth Quarter 2023 Results
Fourth Quarter 2023 Results 26
Slide 27: Fourth Quarter 2023 Results
Fourth Quarter 2023 Results 4Q23 results ▪ Diluted GAAP earnings per common share (EPS) of $0.68; diluted adjusted* EPS of $0.43 ▪ Annualized return on average common equity (“ROCE”) of 24.9%, annualized adjusted* ROCE of 12.4% ▪ Direct premiums written of $432.6 million, up 4.0% from the prior year
Universal Insurance Holdings — Q4 2023 Earnings Presentation on 6ix