Universal Insurance ((UVE)) has held its Q4 earnings call. Read on for the main highlights of the call.
The recent earnings call for Universal Insurance painted a mixed picture, highlighting both achievements and challenges. While the company experienced significant growth in premiums and made strides in its reinsurance program, it also faced decreased earnings, higher combined and loss ratios, and increased expenses.
Growth in Premiums
Universal Insurance reported a notable increase in direct premiums written, totaling $470.9 million, which marks an 8.8% rise from the previous year. This growth was driven by a 0.8% increase in Florida and a substantial 38.4% growth in other states, attributed to higher policies in force and inflation adjustments.
Reinsurance Program Progress
The company made significant progress in its reinsurance program, with 92% of the first event catastrophe tower for the 2025 reinsurance program already placed. Additionally, Universal secured substantial multiyear capacity for the 2026 hurricane season, demonstrating a proactive approach to risk management.
Dividend Declaration
Universal declared a regular quarterly cash dividend of $0.16 per common share, payable on March 14, 2025. This decision reflects the company’s commitment to returning value to its shareholders despite facing financial challenges.
Decrease in Earnings
The earnings call revealed a decrease in adjusted diluted earnings per common share, which fell to $0.25 from $0.43 in the prior year quarter. This decline was primarily due to lower underwriting income, although it was partially offset by higher net investment income and commission revenue.
Increased Combined and Loss Ratios
Universal’s net combined ratio increased to 107.9%, up 4.2 points, while the loss ratio rose to 82.3%, up 0.4 points. These increases were largely attributed to higher weather losses from Hurricane Milton, impacting the company’s overall profitability.
Higher Expense Ratios
The net expense ratio climbed to 25.6%, an increase of 3.8 points from the previous year. This rise was driven by higher policy acquisition costs and operating expenses, presenting a challenge for the company’s cost management efforts.
Forward-Looking Guidance
Looking ahead, Universal Insurance provided guidance on several key metrics. The company emphasized its focus on increasing core revenue, which rose by 5.7% to $386.4 million, supported by higher net premiums earned and investment income. Universal also highlighted its strategic share repurchase of 370,000 shares costing $7.7 million and its ongoing efforts to secure reinsurance for future seasons.
In summary, Universal Insurance’s earnings call reflected a complex scenario of growth and challenges. While the company achieved significant premium growth and reinsurance progress, it also faced decreased earnings and increased ratios. The forward-looking guidance suggests a continued focus on revenue growth and strategic risk management.