KBRA assigns a BBB issuer rating to Universal Insurance Holdings, Inc. (NYSE:UVE) and a BBB preliminary long-term credit rating (LTCR) to UVE's proposed $100 million fixed-rate senior unsecured notes (Notes) due 2031. The Outlook for both ratings is Stable.

UVE intends to use the net proceeds from the proposed offering to refinance its existing $100 million 5.625% senior unsecured notes due November 30, 2026, thereby extending UVE's debt maturity profile to 2031, as well as for general corporate purposes. The Notes are expected to be senior unsecured obligations of UVE and to rank equally with the company's current and future senior unsecured indebtedness, while remaining structurally subordinated to policyholder obligations and other liabilities of UVE's subsidiaries.

Key Credit Considerations

The BBB issuer rating reflects a two-notch differential from the A- insurance financial strength ratings (IFSR) assigned to Universal Property & Casualty Insurance Company (UPCIC) and American Platinum Property and Casualty Insurance Company (APPCIC). The issuer rating reflects UVE's structural subordination to the regulated insurance subsidiaries and regulatory limits on insurance subsidiary dividends, partially offset by holding company liquidity resources, substantial recurring non-insurance subsidiary cash flow, modest financial leverage, strong debt service capacity, and demonstrated support of the operating companies.

KBRA views UVE's holding company financial flexibility as supported by substantial recurring dividends and distributions from non-insurance subsidiaries, which provide cash flow not subject to ordinary insurance subsidiary dividend limitations. From 2016 through 2025, UVE received approximately $1.3 billion of dividends and distributions from non-insurance consolidated subsidiaries. Recent holding company liquidity and debt service have not relied on ordinary dividends from UPCIC or APPCIC. This recurring, largely fee-based cash flow supports holding company liquidity, debt service, shareholder distributions, and the ability to provide capital support to the regulated insurance subsidiaries.

The preliminary BBB debt rating reflects the Notes' expected senior unsecured position in UVE's capital structure, modest leverage, very strong debt service capacity, and KBRA's view that the contemplated refinancing would not materially weaken UVE's leverage or liquidity profile.

Universal's FY2025 operating company statutory results and consolidated GAAP results improved materially. On a statutory basis, UPCIC generated $90.2 million of net income and a $37.5 million underwriting gain, while APPCIC generated $5.1 million of net income and a $4.2 million underwriting gain. On a consolidated GAAP basis, UVE reported FY2025 net income of $183.0 million compared with $58.9 million in 2024. Direct premiums written increased to $2.14 billion, while net earned premium, net investment income, and lower losses and LAE supported improved earnings. Florida remains the company's largest market, representing 72.6% of 2025 direct premiums written, while UVE also maintains a multi-state operating footprint.

Rating Sensitivities

The ratings could be upgraded if the IFSRs of UVE's key operating subsidiaries are upgraded. The ratings could be downgraded if the IFSRs of UVE's key operating subsidiaries are downgraded, financial leverage becomes elevated, or service-entity earnings or distributions decline.

To access ratings and relevant documents, click here.

Methodology

Insurance: Insurer & Insurance Holding Company Global Rating Methodology

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan's Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

Doc ID: 1014704

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Analytical Contacts

Lewis Delosa, Director (Lead Analyst)

+1 646-731-2312

lewis.delosa@kbra.com

Jack Morrison, Senior Director

+1 646-731-2410

jack.morrison@kbra.com

Peter Giacone, Senior Managing Director (Rating Committee Chair)

+1 646-731-2407

peter.giacone@kbra.com

Business Development Contact

Tina Bukow, Managing Director

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KBRA Assigns Issuer Rating to Universal Insurance Holdings and Preliminary Rating to Senior Unsecured Note Offering