Universal Insurance Holdings Inc · NYSE:UVE
Universal Insurance — Q2 2022 Earnings Presentation
28 slides from Universal Insurance's earnings presentation, Jul 27, 2022
Slide 1: Investor Briefing FY22 Q2 Results
Investor Briefing FY22 Q2 Results Reported July 27th, 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 ~$1.7B ~14% MN FY21 Direct Premiums Written 5-year average Return on Equity* NH WI NY MA MI IA IL IN PA NJ DE 19 >850K MD VA States actively doing bus
Slide 4: Financial Overview
Financial Overview Underwriting Services Investments 35.0 1,200.0 80.0 ($million) ($million) 72.0 ($million) 30.7 1,035.5 190.0% 65.4 2,000 70.0 923.6 30.0 1,000.0 24.8 170.0% 842.5 60.0 55.6 768.4 49.9 25.0 47.1 1,500 688.8 20.4 800.0 150.0% 632.4 50.0 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 10.02 0.3 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 6/30/2022) 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) ($billion) CY16-CY21 Price 140.0 CAGR 5.5% ꟷ Focus on rate adequate markets and positioning for 119.7 0.7 market
Slide 10: Multi-year strategic priorities – Strengthening the foundation
Multi-year strategic priorities – Strengthening the foundation Core franchises 1 Focus on disciplined growth and maximize earnings stability 2 Maintain a resilient balance sheet Protection Solutions Distribution 3 Make customer service and continuous improvement a way-of-life Risk Management Claims
Slide 11: Underwriting
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Slide 12: Overview of insurance offerings
Overview of insurance offerings Homeowners coverage Products offered Form Type Carrier Coverage A Coverage B HO2 – Broad Form (named perils only) HO3 – Special Form (Most common) Dwelling, attached structures Other structures (e.g., garages, decks) (e.g., detached garage, shed, fence) HO5 – Co
Slide 13: Underwriting overview and industry trends
Underwriting overview Industry trends Policies in force FY16 – FY21 CAGR (thousands) 1,200.0 984.8 943.6 70% 6.7% 828.7 888.4 764.5 60% 1,000.0 800.0 682.9 50% 23% 25% 26% 26% 40% 19% Primary rate increases improving rate adequacy 600.0 400.0 15% 30% 20% Other States 200.0 10% % of Total - 0% Constr
Slide 14: UVE organically grew into #1 in FL
UVE organically grew into #1 in FL FL Direct premiums written growth … … led to #1 homeowner provider in FL ($million) 2021 Homeowners MP FL segment* UVE 10% Citizens State Farm 1,800 0.8 1,671 Other Tower Hill 1,600 1,517 0.7 Progressive USAA 1,400 0.6 1,293 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 0.5 120.0% 1,671.3 11.9% 113.6% 103.9% 105.6% 1,600.0 1,517.5 0.3 100.0% 31.4% 1,292.7 1,400.0 Combined Ratio 87.3% 30.3% 82.5% 84.4% 32.3% 1,190
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 $3.161B First event CAT contracts $3,161M Capacity placed through 5/31/23 Open Market subject to $3,011M pricing changes 24% Multi-Year Capacity placed through 5/31/24 @ 6/1/23 $2,861M 76% Est. Man
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 More than $51M in Coverage Open Market $54.85M Capacity placed through 5/31/22 subject to pricing 44% changes @ 6/1/23 56% FHCF Property Liability $44.85M Est. Manda
Slide 19: Services
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Slide 20: Services overview and industry trends
Services overview Industry trends Revenue FY16 – FY21 CAGR ($million) 11.9% 80.0 0.5 72.0 Services based business enhanced by hardening of 70.0 65.4 0.3 primary rate increases 60.0 55.6 49.9 0.1 50.0 47.1 41.0 Technology-enabled innovation improving the 40.0 -0.1 customer experience and operational
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
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Slide 25: Investments overview
Investments overview Investment Portfolio Net investment income ($1.1B as of 6/30/22) Other (Preferreds, equities, Real Estate, net and municipal bonds) U.S. Gov 0.5% 3.9% Bonds 1.8% Mutual ($million) 35.0 Funds and other 30.7 5.2% 30.0 24.8 Mortgage-Backed and Asset-Backed Securities Corporate 26.9
Slide 26: 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. 26
Slide 27: Second Quarter 2022 Results & Guidance
Second Quarter 2022 Results & Guidance 27
Slide 28: Second Quarter 2022 Results & Guidance
Second Quarter 2022 Results & Guidance 2Q22 results Diluted GAAP earnings per share (“EPS”) of $0.24, adjusted EPS* of $0.47 Annualized return on average common equity (“ROCE”) of 7.7%, adjusted* ROCE of 12.8% Direct premiums written of $532.5 million, up 12.4% from the prior year quarter Re
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