Universal Reports Fourth Quarter 2023 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 quarter
• Book value per share of $11.78, up 24.4% year-over-year; adjusted book value per share of $14.34, up 11.2% year-over-year
• Total capital returned to shareholders of $12.3 million, including $3.6 million of share repurchases, a $0.16 per share regular dividend and a $0.13 per share special dividend

Universal Insurance Holdings (NYSE:UVE) ("Universal" or the "Company") reported fourth quarter and full year 2023 results.

"We closed out both the fourth quarter and full year with double-digit adjusted returns on common equity and I believe that even stronger results are firmly in our future," said Stephen J. Donaghy, Chief Executive Officer. "2023 was a transformative year for us and our significant efforts position us for meaningful success in the new legislative environment. We've added a buffer to our loss picks and bolstered reserves for years that predate elimination of one way attorney fees and assignment of benefits to what I view as the most conservative level in our history. Importantly, we did this because we wanted to place the past in the rearview mirror and shift our focus to the future. In 2023, we took yet another step toward the future by commuting Hurricane Irma, the largest and most significant storm in our history, with the Florida Hurricane Catastrophe Fund."

"Now that we're past the one year anniversary date of the 2022 special legislative session and all new and renewal policies are subject to the new legislation, the impact of the reforms is becoming clearer - claims trends across the board are improving, including reductions in total claims, represented claims, assigned claims and daily claims. Our first event 2024-2025 reinsurance tower is already 90% secured and we've negotiated additional multi-year capacity for the future. Given our size, scale, independent agency and reinsurer relationships and the recent steps we've taken, we're particularly well positioned to succeed in the revamped Florida environment."

Quarterly Financial Results:

Net Income and Adjusted Net Income

Net income available to common stockholders was $20.0 million, down from net income of $25.1 million in the prior year quarter, and adjusted net income available to common stockholders was $12.6 million, down from adjusted net income of $22.1 million in the prior year quarter. The decrease in adjusted net income mostly stems from a higher net loss ratio and lower commission revenue, partly offset by a lower net expense ratio and higher net investment income.

Revenues

Revenue was $375.5 million, up 13.7% from the prior year quarter and core revenue was $365.7 million, up 12.1% from the prior year quarter. The increase in core revenue primarily stems from higher net premiums earned and net investment income, partly offset by lower commission revenue.

Direct premiums written were $432.6 million, up 4.0% from the prior year quarter. The increase stems from 0.6% growth in Florida and 18.6% growth in other states. Overall growth reflects rate increases, partly offset by lower policies in force.

Direct premiums earned were $482.1 million, up 3.9% from the prior year quarter. The increase stems from rate-driven direct premiums written growth over the past twelve months.

The ceded premium ratio was 30.4%, down from 37.1%, in the prior year quarter. The decrease primarily reflects efficiencies associated with the 2023-2024 reinsurance program, the inclusion of Hurricane Ian related reinstatement premiums in the prior year quarter and direct premiums earned growth associated with primary rate increases, partly offset by higher private market reinsurance pricing and higher reinsurance costs associated with an increase in home values.

Net premiums earned were $335.4 million, up 14.9% from the prior year quarter. The increase is primarily attributable to higher direct premiums earned and a lower ceded premium ratio, as described above.

Net investment income was $13.7 million, up from $10.4 million in the prior year quarter. The increase primarily stems from higher reinvestment yields and higher yields on cash.

Commissions, policy fees and other revenue were $16.6 million, down 31.0% from the prior year quarter. The decrease primarily reflects lower reinsurance brokerage commissions associated with lower ceded premiums and the inclusion of Hurricane Ian related reinstatement premiums in the prior year quarter.

Margins

The operating income margin was 7.3%, down from an operating income margin of 10.4% in the prior year quarter. The adjusted operating income margin was 4.9%, down from an adjusted operating income margin of 9.3% in the prior year quarter. The lower adjusted operating income margin primarily reflects a higher net combined ratio and lower commission revenue, partly offset by higher net investment income.

The net loss ratio was 81.9%, up 5.6 points compared to the prior year quarter. The increase primarily reflects a higher calendar year loss pick.

The net expense ratio was 21.8%, down 3.3 points from 25.1% in the prior year quarter. The reduction primarily reflects lower renewal commission rates paid to distribution partners.

The net combined ratio was 103.7%, up 2.3 points compared to the prior year quarter. The increase reflects a higher net loss ratio and a lower net expense ratio, as described above.

Capital Deployment

During the fourth quarter, the Company repurchased approximately 223 thousand shares at an aggregate cost of $3.6 million. The Company's current share repurchase authorization program has $4.1 million remaining.

On February 8, 2024, the Board of Directors declared a regular quarterly cash dividend of 16 cents per share of common stock, payable March 15, 2024 to shareholders of record as of the close of business on March 8, 2024.

Conference Call and Webcast

• Friday, February 23, 2024 at 10:00 a.m. ET
• Investors and other interested parties may listen to the call by accessing the online, real-time webcast at universalinsuranceholdings.com/investors or by registering in advance via teleconference at https://register.vevent.com/register/BI089faa181b7e43dbb7d5fdae69aef3bf. Once registration is completed, participants will be provided with a dial-in number containing a personalized conference code to access the call. An online replay of the call will be available at universalinsuranceholdings.com/investors shortly after the investor call concludes.

About Universal

Universal Insurance Holdings, Inc. (NYSE:UVE) is a holding company providing property and casualty insurance and value-added insurance services. We develop, market, and write insurance products for consumers predominantly in the personal residential homeowners lines of business and perform substantially all other insurance-related services for our primary insurance entities, including risk management, claims management and distribution. We provide insurance products in the United States through both our appointed independent agents and our direct online distribution channels, primarily in Florida. Learn more at universalinsuranceholdings.com.

Non-GAAP Financial Measures and Key Performance Indicators

This press release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the U.S. Securities and Exchange Commission ("SEC"), including core revenue, adjusted net income attributable to common stockholders and diluted adjusted earnings (loss) per common share, which exclude the impact of net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities. Adjusted operating income and adjusted operating income margin exclude the impact of net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities and interest and amortization of debt issuance costs. Adjusted common stockholders' equity and adjusted book value per share exclude accumulated other comprehensive income (AOCI), net of taxes. Adjusted return on common equity excludes after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities from the numerator and AOCI, net of taxes, and current period after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities from the denominator. A "non-GAAP financial measure" is generally defined as a numerical measure of a company's historical or future performance that excludes or includes amounts, or is subject to adjustments, so as to be different from the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles ("GAAP"). UVE management believes that these non-GAAP financial measures are meaningful, as they allow investors to evaluate underlying revenue and profitability trends and enhance comparability across periods. When considered together with the GAAP financial measures, management believes these metrics provide information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionately positive or negative impact on results in any particular period. UVE management also believes that these non-GAAP financial measures enhance the ability of investors to analyze UVE's business trends and to understand UVE's operational performance. UVE's management utilizes these non-GAAP financial measures as guides in long-term planning. Non-GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, financial measures presented in accordance with GAAP. For more information regarding our key performance indicators, please refer to the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations – Key Performance Indicators" in our forthcoming Annual Report on Form 10-K for the year ended December 31, 2023.

Forward-Looking Statements

This press release 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 expressions identify forward-looking statements, which speak only as of the date the statement was made. Such statements may include commentary on plans, products and lines of business, marketing arrangements, reinsurance programs and other business developments and assumptions relating to the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, including those risks and uncertainties described under the heading "Risk Factors" and "Liquidity and Capital Resources" in our 2023 Annual Report on Form 10-K, and supplemented in our subsequent Quarterly Reports on Form 10-Q. Future results could differ materially from those described, and the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. For further information regarding risk factors that could affect the Company's operations and future results, refer to the Company's reports filed with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K and the most recent quarterly reports on Form 10-Q.

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