Universal Insurance Q2 2025 Earnings Report

Universal Insurance EPS Results

• Actual EPS: $1.23
• Consensus EPS: $1.09
• Beat/Miss: Beat by +$0.14
• One Year Ago EPS: N/A

Universal Insurance Revenue Results

• Actual Revenue: $596.72 million
• Expected Revenue: $359.98 million
• Beat/Miss: Beat by +$236.74 million
• YoY Revenue Growth: N/A

Universal Insurance Announcement Details

• Quarter: Q2 2025
• Date: 7/24/2025
• Time: After Market Closes
• Conference Call Date: Friday, July 25, 2025
• Conference Call Time: 10:00AM ET

Universal Insurance (NYSE:UVE) Holdings, Inc., together with its subsidiaries, operates as an integrated insurance holding company in the United States. It develops, markets, and underwrites insurance products for personal residential insurance, such as homeowners, renters/tenants, condo unit owners, and dwelling/fire; and offers allied lines, coverage for other structures, and personal property, liability, and personal articles coverages. The company also advises on actuarial issues, oversees distribution, administers claims payments, performs policy administration and underwriting, and assists with reinsurance negotiations; places and manages reinsurance programs for the insurance entities; and operates Clovered.com, a digital agency for various carrier partners and utilization of digital applications for adjusting claims. It offers its products through a network of independent agents, as well as direct-to-consumer online solutions, including digital insurance agency. The company was formerly known as Universal Heights, Inc. and changed its name to Universal Insurance Holdings, Inc. in January 2001. Universal Insurance Holdings, Inc. was incorporated in 1990 and is headquartered in Fort Lauderdale, Florida.

Universal Insurance Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: The company delivered a 29.4% adjusted return on common equity in Q2 2025, reflecting strong profitability and favorable underwriting trends.
• Positive Sentiment: Adjusted diluted earnings per share rose to $1.23 from $1.18 a year ago, driven by higher premiums, net investment income, and commission revenue.
• Negative Sentiment: The net combined ratio increased by 1.9 points to 97.8% due to higher loss and expense ratios, largely from an increased ceded premium ratio and policy acquisition costs.
• Positive Sentiment: During the quarter, the company repurchased approximately 287,000 shares for $7.4 million and has about $15.2 million remaining under its share buyback authorization.
• Positive Sentiment: The board declared a quarterly cash dividend of $0.16 per share, payable on August 8, 2025, to shareholders of record as of August 1, 2025.

Presentation

[Operator]

Good morning, ladies and gentlemen, and welcome to Universal's Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Arash Soleimani, Chief Strategy Officer.

[Arash Soleimani, Chief Strategy Officer at Universal Insurance]

Good morning. Thank you for joining us today. Welcome to our quarterly earnings call. On the call with me today are Steve Donaghy, Chief Executive Officer and Frank Wilcox, Chief Financial Officer. Before we begin, please note today's discussion may contain forward looking statements and non GAAP financial measures.

[Arash Soleimani, Chief Strategy Officer at Universal Insurance]

Forward looking statements involve assumptions, risks and uncertainties that could cause actual results to differ materially from those statements. For more information, please see the press release and Universal's SEC filings, all of which are available on the Investors section of our website at universalinsuranceholdings.com and on the SEC's website. A reconciliation of non GAAP financial measures to comparable GAAP measures is included in the quarterly press release and can also be found on Universal's website at universalinsuranceholdings.com. With that, I'll turn the call over to Steve.

[Stephen Donaghy, CEO at Universal Insurance]

Thanks, Arash. Good morning, everyone. In the quarter, we delivered a very strong 29.4% adjusted return on common equity. We are encouraged by favorable underwriting trends as the Florida market continues to improve, and we are optimistic as we look ahead. I'll turn it over to Frank to walk through our financial results. Frank?

[Frank Wilcox, CFO at Universal Insurance]

Thanks, Steve. Good morning. Adjusted diluted earnings per common share was $1.23 compared to adjusted diluted earnings per common share of $1.18 in the prior year quarter. The higher adjusted diluted earnings per common share mostly stems from higher direct premiums earned, net investment income and commission revenue, partially offset by a higher ceded premium ratio. Core revenue of $400,900,000 was up 5.7% year over year, with growth primarily stemming from higher net premiums earned, net investment income and commission revenue. Direct premiums written were $596,700,000 up 3.2% from the prior year quarter. The increase stems from 25.4% growth in other states, partially offset by 2.5 decrease in Florida. Overall growth mostly reflects higher policies in force, higher rates and inflation adjustments across our multi state footprint.

[Frank Wilcox, CFO at Universal Insurance]

Direct premiums earned were $523,400,000 up 6.7% from the prior year quarter, reflecting direct premiums written growth over the last twelve months. Net premiums earned were $360,200,000 up 4.4% from the prior year quarter. The increase is primarily attributable to higher direct premiums earned, partially offset by a higher ceded premium ratio as described above. The net combined ratio was 97.8%, up 1.9 points compared to the prior year quarter. The increase reflects higher net loss and expense ratios.

[Frank Wilcox, CFO at Universal Insurance]

The 72.3% net loss ratio was up 1.7 points compared to the prior year quarter, with the increase primarily reflecting a higher ceded premium ratio. The net expense was 25.5%, up 0.2 points compared to the prior year quarter with the increase primarily driven by higher ceded premium ratio and higher policy acquisition costs associated with growth outside of Florida, partially offset by economies of scale. During the second quarter, the company repurchased approximately 287,000 shares at an aggregate cost of $7,400,000 The company's current share repurchase authorization program has approximately $15,200,000 remaining. On 07/09/2025, the Board of Directors declared a quarterly cash dividend of $0.16 per common share payable on 08/08/2025 to shareholders of record as of the close of business on 08/01/2025. With that, I'd like to ask the operator to open the line for questions.

[Operator]

Thank you. Our first question comes from Paul Newsome with Piper Sandler. You may proceed.

[Paul Newsome, MD & Senior Research Analyst at Piper Sandler Companies]

Good morning. Could you give us a little bit more about the reinsurance ceding change and what's going on there just as the drivers?

[Frank Wilcox, CFO at Universal Insurance]

Good morning, Paul. So you have to appreciate that when you're comping over this particular quarter, you're looking at several different reinsurance programs that are earning in. Last year, the first two months, April and May, we were still earning in a program that included the WRAP program, which was at no cost. And that was much lower the cost to replace that. So this year, April and May, was last year's program winding up plus the first month of this year's program.

[Frank Wilcox, CFO at Universal Insurance]

So it's really just comping off a different structure of program.

[Paul Newsome, MD & Senior Research Analyst at Piper Sandler Companies]

Different question. You bought back some shares recently. Maybe a review of kind of where you think you are from a capital perspective, including kind of how you think about how we should measure it as an outsider?

[Frank Wilcox, CFO at Universal Insurance]

Well, at the holding company is abundant. Naturally, we take opportunities to purchase shares when we believe that they're undervalued. Continue to do so when appropriate.

[Paul Newsome, MD & Senior Research Analyst at Piper Sandler Companies]

Okay. And then just a few thoughts on the competitive environment. There concerns, I think, that we're seeing some companies that may not necessarily you, but some companies becoming more competitive in the environment, particularly in Florida, but maybe elsewhere as well. Do you think it's incrementally more competitive market today than it was last quarter or the quarter before?

[Stephen Donaghy, CEO at Universal Insurance]

Hey Paul, this is Steve. Good morning. I wouldn't say that it's a more competitive market. We are not driven by the competition. We are driven by twenty five years of experience in Florida and as we've expanded into other states, we use our boots on the ground, our claims experience, etc.

[Stephen Donaghy, CEO at Universal Insurance]

To really assess and understand where we want to write business and where it can be the most profitable for our shareholders. And I would say that we've recently opened up additional territories in Florida and feel good about the business that we're bringing in at this time across the state. Clearly there are more competitors in Florida as well than there was a year ago or a quarter ago, but we don't see anybody with a real hungry appetite from a competitive perspective across the state. We see pockets of competition in Florida, but nothing dramatic across the entire state.

[Paul Newsome, MD & Senior Research Analyst at Piper Sandler Companies]

Appreciate the help. I'll let some other folks ask questions. You.

[Stephen Donaghy, CEO at Universal Insurance]

Thanks, Paul. Have a good day.

[Operator]

Thank you. Our next question comes from Nick Acoviello with Dowling and Partners. You may proceed.

[Nicolas Iacoviello, Equity Research Analyst at Dowling & Partners]

Was there any net prior year development or claims handling benefits in the quarter? I'm assuming no, but just wanted to confirm.

[Frank Wilcox, CFO at Universal Insurance]

It was negligible, Nick. Nothing to really speak of.

[Nicolas Iacoviello, Equity Research Analyst at Dowling & Partners]

Okay, great. And then just on the new reinsurance program, so I know we have one month of ceded premiums now with this Q2 result, but could you discuss the cost, which wasn't disclosed this year, maybe as a percentage of director and premium as you've done in years prior?

[Frank Wilcox, CFO at Universal Insurance]

The cost year over year, this program that went into effect June 1, is not significantly different than what the cost was as a percentage of direct earned premium for the previous period, which we're very pleased with naturally, given the fact that we had three landfalling storms last year, which typically, following those events, the the price would go up significantly. And that's certainly an indication of the improvement in, Florida marketplace.

[Nicolas Iacoviello, Equity Research Analyst at Dowling & Partners]

Great. That's all I had. Thank you.

[Stephen Donaghy, CEO at Universal Insurance]

Yeah. Thanks, Nick.

[Operator]

Thank you. I would now like to turn the call back over to Steve Donaghy for any closing remarks.

[Stephen Donaghy, CEO at Universal Insurance]

Thank you. I'd like to thank all of our associates, consumers, agents, and our stakeholders for their continued support of Universal. Have a good day.

[Operator]

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

Participants

Executives

• Arash Soleimani, Chief Strategy Officer
• Stephen Donaghy, CEO
• Frank Wilcox, CFO

Analysts

• Paul Newsome, MD & Senior Research Analyst at Piper Sandler Companies
• Nicolas Iacoviello, Equity Research Analyst at Dowling & Partners