UVE Q1 2026 Earnings Transcript

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Date

Friday, April 24, 2026 at 10 a.m. ET

Call participants

• Chief Executive Officer — Stephen Donaghy
• Chief Financial Officer — Frank Wilcox

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Takeaways

• Adjusted return on common equity -- 38.5% annualized, directly attributed to management by Donaghy.
• Adjusted diluted earnings per common share -- $2, a $0.56 increase from the prior year quarter, primarily due to a lower net loss ratio and higher net investment income.
• Core revenue -- $398.2 million, up 0.8% year over year, driven mainly by higher net investment income and net premiums earned.
• Direct premiums written -- $506.5 million, reflecting 8.5% growth; includes 4.9% growth in Florida and 18.3% growth in other states.
• Direct premiums earned -- $531.4 million, up 3.5% year over year, reflecting recent premiums written growth.
• Net premiums earned -- $356.9 million, up 0.3% year over year, driven by higher direct premiums earned yet partially offset by a higher ceded premium ratio.
• Net combined ratio -- 89.7%, down by 5.3 points, reflecting an improved net loss ratio despite a higher net expense ratio.
• Net loss ratio -- 63.9%, declining by 6.6 points year over year, attributed to "better current accident year results" according to Wilcox.
• Net expense ratio -- 25.8%, up by 1.3 points, attributed to a higher ceded premium ratio and increased policy acquisition costs from non-Florida growth.
• Share repurchases -- approximately 210,000 shares repurchased for $7.1 million, with approximately $13.1 million remaining under the current authorization.
• Quarterly dividend -- $0.16 per share declared, payable May 15, 2026, to shareholders of record as of May 8, 2026.
• Reinsurance program -- 2026-2027 renewal fully secured, with $352 million of additional multiyear coverage extending through the 2027-2028 treaty period.
• Reinsurance retentions -- Unchanged at $45 million per insurance entity, with continued use of the captive for the $66 million layer above that retention for first-event coverage; structure remains "identical to last year" per Wilcox.

Summary

Universal Insurance Holdings (NYSE:UVE) reported measurable growth in both premium volume and earnings performance, alongside the completion of a fully secured multiyear reinsurance program. Management confirmed stability in the reinsurance structure and retentions, signaling no changes from the previous year for the core underwriting layer. The company highlighted continued capital management discipline, including a balanced approach to share repurchases and capital allocation to support insurance entities.

• CEO Donaghy stated, "our relationship with our agents has never been stronger," emphasizing distribution partnership strength.
• Management asserted, "we analyze our rates and are chasing rate adequacy more than we are chasing business," underlining their pricing strategy.
• Wilcox explained, "Our #1 priority with capital has always been to support the insurance entities, ensuring that they are adequately capitalized," clarifying capital management philosophy.
• Details on reinsurance pricing will be withheld until May, with Donaghy noting, "it'd be premature for us to kind of make public comments relative to how we did."

Industry glossary

• Ceded premium ratio: The percentage of gross written premiums transferred to reinsurers under reinsurance contracts.
• Net combined ratio: The sum of a company's loss and expense ratios, reflecting underwriting profitability for an insurance company.
• Retention: The portion of risk retained by an insurance company before reinsurance coverage applies.
• Captive: An insurance subsidiary created to provide risk coverage for its parent company, often used to retain specific layers of risk.
• Direct premiums written: Total premiums written by an insurer before deducting premiums ceded to reinsurers.
• Direct premiums earned: The portion of direct premiums written that corresponds to coverage that has already been provided within the reporting period.

Full Conference Call Transcript

Stephen Donaghy: Thanks, Arash. Good morning, everyone. We had a fantastic start to the year with a 38.5% annualized adjusted return on common equity. Our top line results were strong with growth across our multistate footprint, including in Florida. On a separate note, I'm pleased to announce the completion of our 2026-2027 reinsurance renewal for our insurance entities as our program is now fully supported and secured. During the renewal process in 2026, we also secured $352 million of additional multiyear coverage, taking us through the 2027-2028 treaty period. I'll turn it over to Frank to walk through our financial results. Frank?

Frank Wilcox: Thank you, Steve, and good morning. Adjusted diluted earnings per common share was $2 compared to an adjusted diluted earnings per common share of $1.44 in the prior year quarter. The higher adjusted diluted earnings per common share mostly stems from a lower net loss ratio and higher net investment income. Core revenue of $398.2 million was up 0.8% year-over-year with growth primarily stemming from higher net investment income and net premiums earned. Direct premiums written were $506.5 million, up 8.5% from the prior year quarter. The increase stems from 4.9% growth in Florida and 18.3% growth in other states. Overall growth mostly reflects higher policies in force and inflation adjustments across our multistate footprint.

Direct premiums earned were $531.4 million, up 3.5% from the prior year quarter, reflecting direct premiums written growth over the last 12 months. Net premiums earned were $356.9 million, up 0.3% from the prior year quarter. The increase is primarily attributable to higher direct premiums earned, partially offset by a higher ceded premium ratio. The net combined ratio was 89.7%, down 5.3 points compared to the prior year quarter. The decrease reflects a lower net loss ratio, partially offset by a higher net expense ratio. The 63.9% net loss ratio was down 6.6 points compared to the prior year quarter, with the decrease reflecting better current accident year results.

The net expense ratio was 25.8%, up 1.3 points compared to the prior year quarter, with the increase primarily driven by a higher ceded premium ratio and higher policy acquisition costs associated with growth outside of Florida. During the first quarter, the company repurchased approximately 210,000 shares at an aggregate cost of $7.1 million. The company's current share repurchase authorization program has approximately $13.1 million remaining. On April 10, 2026, the Board of Directors declared a quarterly cash dividend of $0.16 per share of common stock payable on May 15, 2026, to shareholders of record as of the close of business on May 8, 2026. With that, I'd like to ask the operator to open up the line for questions.

Operator: [Operator Instructions] And our first question comes from the line of Paul Newsome of Piper Sandler.

Jon Paul Newsome: Congratulations on the quarter. Maybe we could just start off with some thoughts or color on the competitive environment, both in Florida and outside of Florida. It gets lots of investor questions about whether or not we're seeing a change in the number of folks who are competing in those markets and maybe the speed at which obviously, the ROEs that you and others are reporting are so huge, whether or not that will attract a lot of new competitors.

Stephen Donaghy: Paul, thank you. I think from a competitive perspective, we analyze our rates and are chasing rate adequacy more than we are chasing business. So from a competitive perspective, we feel good about where we stand. And obviously, from the quarter, we can bring on business when we want to and we see the markets profitably. So that's probably the answer I would give you. There is competition everywhere, but we feel good about our position and our relationship with our agents has never been stronger. So, yes.

Jon Paul Newsome: Should we expect further price adjustments and rate adjustments for you folks in the future?

Stephen Donaghy: We haven't kicked off our rate analysis at this point. So as we get ready to do that, we will analyze the past 12 months and see how that impacts. And I think as we continue to benefit from the legislative environment and our business, we will do the right thing by our shareholders and our partners. So we'll take that all into account and continue to do the right thing.

Jon Paul Newsome: Maybe some thoughts on capital management. Obviously, given where the returns are accumulating some excess capital. How do you balance the various uses of that capital today? And should we expect further purchases as a focus or not? Or just maybe you could just kind of prioritize how you think about that.

Frank Wilcox: Paul, this is Frank. I think we're going to stay the course. Our #1 priority with capital has always been to support the insurance entities, ensuring that they are adequately capitalized so that we can continue to produce the business that benefits the entire holding company system. That, combined with continuing to return shareholder value.

Operator: Our next question comes from the line of Nicolas Iacoviello of Dowling & Partners.

Nicolas Iacoviello: Congrats on the quarter. Could we just start -- I was wondering if there's any additional details or commentary you could provide around the outcome of your reinsurance renewal?

Stephen Donaghy: Nick, thanks. I appreciate the comments. I think from the reinsurance perspective, we are very excited to be done and have it fully secured for 2026, '27. We were quite happy that we also extended our multiyear agreements. From a pricing perspective, we're going to sit on that until we get to May and release all the details as normal. We think it'd be premature for us to kind of make public comments relative to how we did, but we were very pleased with the market and very pleased with our partners for many, many years and how they treated us relative to this year.

Nicolas Iacoviello: Got it. I know we'll see more details in May. But I mean, is there anything you could comment on how we should think about the retention? Is it fair to assume it would be similar on a GAAP basis versus prior year, and it would include some captive usage. I get, obviously, you'll have the opportunity to maybe buy down. But as it stands today, is that a fair assumption?

Frank Wilcox: Yes. The retentions will remain the same for the insurance entities, $45 million. We plan to continue to use the captive in the same manner for the $66 million layer above $45 million for the first event. So structurally identical to last year.

Operator: I'm showing no further questions at this time. I'll now turn it back to Steve Donaghy, Chief Executive Officer, for closing remarks.

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

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

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