Universal Insurance Holdings Inc · NYSE:UVE
Universal Insurance — Q1 2022 Earnings Presentation
29 slides from Universal Insurance's earnings presentation, Apr 28, 2022
Slide 1: Investor Briefing FY22 Q1 Results
Investor Briefing FY22 Q1 Results Reported April 28th, 2022 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 ~$1.7B ~14% MN FY21 Direct Premiums Written 5-year average Return on Equity* NH WI NY MA MI IA IL IN PA NJ DE 19 >900K MD VA States actively doing bus
Slide 4: Financial Overview
Financial Overview Underwriting Services Investments 35.0 1,200.0 80.0 ($million) ($million) 72.0 ($million) 30.7 1,035.5 190.0% 2,000 70.0 65.4 30.0 1,000.0 923.6 170.0% 842.5 60.0 55.6 24.8 768.4 49.9 1,500 25.0 800.0 688.8 150.0% 50.0 47.1 20.4 632.4 41.0 20.0 Revenue 130.0% 985 600.0 113.6% 40.0
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 6.09 15.72 0.5 3.78 15.00 15.13 3.05 12.95 14.42 14.43 0.4 13.76 12.67 2.36 0.3 10.02 10.59 10.00 1.67 0.2 6.90 8.35 Cumulative 5.46 1.04 Dividends 0.1 Per Share 0.49 5.86 5.00 Book Value 4.97 Per Share 0 -
Slide 8: Backed by the strength of our employees and agents
… backed by the strength of our employees and agents Talent (as of 3/31/2022) Other Marketing & Online Distribution Risk Management Service Claims ▪ In-house reinsurance and ▪ Strong partner relationships actuary experience ▪ Quality customer advocates ▪ In-house claims and underwriting teams Underw
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) ($billion) CY16-CY21 Price 140.0 CAGR 5.5% ꟷ Focus on rate adequate markets and positioning for 119.7 0.7 market
Slide 10: Multi-year strategic priorities – Strengthening the foundation
Multi-year strategic priorities – Strengthening the foundation Core franchises 1 Focus on disciplined growth and maximize earnings stability 2 Maintain a resilient balance sheet Protection Solutions Distribution 3 Make customer service and continuous improvement a way-of-life Risk Management Claims
Slide 11: Underwriting
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Slide 12: Overview of insurance offerings
Overview of insurance offerings Homeowners coverage Products offered Form Type Carrier ▪ HO2 – Broad Form (named perils only) Coverage A Coverage B ▪ HO3 – Special Form (Most common) Dwelling, attached structures Other structures (e.g., garages, decks) (e.g., detached garage, shed, fence) ▪ HO5 – Co
Slide 13: Underwriting overview and industry trends
Underwriting overview FY16 – FY21 Industry trends Policies in force CAGR (thousands) 1,200.0 984.8 943.6 70% 6.7% 828.7 888.4 60% 1,000.0 682.9 764.5 50% 800.0 23% 25% 26% 26% 40% Primary rate increases improving rate adequacy 600.0 15% 19% 30% 400.0 20% Other States 200.0 10% % of Total - 0% Constr
Slide 14: UVE organically grew into #1 in FL
UVE organically grew into #1 in FL FL Direct premiums written growth … … led to #1 homeowner provider in FL ($million) 2021 Homeowners MP FL segment* UVE 10% Citizens 1,800 0.8 State Farm 1,671 Other Tower Hill 1,600 1,517 0.7 Progressive 1,400 0.6 1,293 USAA 1,388 1,191 First Protective 1,200 1,251
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) FY16 – FY21 CAGR 1,800.0 1 120.0% 1,671.3 0.95 11.9% 113.6% 0.9 103.9% 105.6% 1,600.0 1,517.5 0.85 100.0% 0.8 31.4% 1,400.0 1,292.7 0.75 Combined Ratio 87.3% 30.3% 82.5%
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 $3.364B First event CAT contracts $3,364M Capacity placed through 5/31/22 Open Market Multi-Year capacity placed through 5/31/24 subject to $3,085M pricing changes 25% @ 6/1/22 75% Est. Mandatory F
Slide 18: Resilient balance sheet supported by robust reinsurance program (Other States)
Resilient balance sheet supported by robust reinsurance program ( Other States) First event Open market CAT contracts Multi-Year (beyond 2021) 1st Event coverage in excess of $1.4B 2nd Event 3rd Event 4th Event $1,401M 39% Multi-Year capacity placed through 5/31/22 Open Market 61% subject to pricing
Slide 19: 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 More than $35M in Coverage Open Market $38M Capacity placed through 5/31/22 subject to pricing 49% changes @ 51% 6/1/22 FHCF Property Liability $28.9M Est. Mandatory
Slide 20: Services
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Slide 21: Services overview and industry trends
Services overview Industry trends Revenue FY16 – FY21 CAGR ($million) 80.0 1 11.9% 72.0 0.95 0.9 Services based business enhanced by hardening of 70.0 65.4 0.85 primary rate increases 0.8 60.0 55.6 0.75 0.7 49.9 50.0 47.1 0.65 0.6 41.0 0.55 Technology-enabled innovation improving the 40.0 0.5 custom
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 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 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 ($1.1B as of 3/31/22) Other (Preferreds, equities, Real Estate, net and municipal bonds) U.S. Gov 0.5% 2.4% Bonds 2.0% Mutual ($million) 35.0 Funds and other 30.7 5.6% 30.0 Mortgage-Backed and 24.8 Asset-Backed Securities 25.0 Corporate
Slide 27: Capital deployment
Capital deployment Committed to returning capital to shareholders, and maintaining a resilient balance sheet ($million) 776 504 *5 YR FCF less share repurchases, dividends, repayment of debt. 27
Slide 28: First Quarter 2022 Results & Guidance
First Quarter 2022 Results & Guidance 28
Slide 29: First Quarter 2022 Results & Guidance
First Quarter 2022 Results & Guidance 1Q22 results ▪ Diluted GAAP earnings per share (“EPS”) of $0.56, non-GAAP adjusted EPS* of $0.64 ▪ Annualized return on average equity (“ROE”) of 16.9% ▪ Book value per share of $12.80, down 7.0% from year-end 2021 ▪ Direct premiums written of $396.5 million, up
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