Fourth Quarter 2018 Results

Transcription

1 Fourth Quarter 28 Results Earnings Call Presentation March, 29

2 Forwardlooking statements and Regulation G Disclosure Statement Forwardlooking statements This presentation may contain "forwardlooking statements" within the meaning of the Private Securities Litigation Reform Act of 995. The words "believe," "expect," "anticipate," and similar expressions identify forwardlooking 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. Forwardlooking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future results could differ materially from those described, and the Company disclaims any intention or obligation to update or revise any forwardlooking 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 K to be filed for the fiscal year ended December 3, 28. Regulation G Disclosure Statement This presentation includes financial results with respect to adjusted operating income, and adjusted earnings per share, which are nongaap financial measures as defined by the SEC s Regulation G. NonGAAP financial measures should be viewed as supplementing, and not as an alternative or substitute for the Company's financial results prepared in accordance with GAAP. Reconciliations of such nongaap financial measures in this presentation to the most comparable GAAP financial measures can be found in the Company s earnings release for the fourth quarter and full year of 28, filed with the SEC as an exhibit to a Current Report on Form 8K on March, 29, and also available on the Company s website at under Investors with the subheading of Earnings Releases. 2

3 Solid FY8 results against strategic priorities Grow Other States and Florida 4Q8 direct premiums written up 2.3%; FY8 up 2.8% 4Q8 other states direct premiums written up 33.9%; FY8 up 34.6% 4Q8 Florida direct premiums written up 8.7%; FY8 up 9.7% 2 Focus on disciplined growth FY8 diluted GAAP EPS up 9.4% to $3.27, nongaap adjusted EPS* up 39.3% to $4. FY8 combined ratio of 87.3% FY8 return on average equity of 24.% 3 Maintain strong balance sheet Gross catastrophe losses well below 8 9 reinsurance first event ceiling of ~$3.B YoY Book value per share up 3.8% Total unrestricted cash and invested assets up 3.9% to $.B *Reconciliations of such nongaap financial measures in this presentation to the most comparable GAAP financial measures can be found in the Company s earnings release for the fourth quarter and full year of 28, filed with the SEC as an exhibit to a Current Report on Form 8K on March, 29, and also available on the Company s website at under Investors with the subheading of Earnings Releases. 3

4 Improving customer experience through digital transformation Revitalized UVE brand and launched all new Investor website. Refreshed Universal Property brand; New online presence to get a quote, bind a policy, download policy docs, and track a claim. New online presence to get a quote, bind a policy, download policy docs, and track a claim. Launching our new digital insurance distribution channel Clovered.com. Enables consumers to learn how to Prepare, Protect, and Recover from the unexpected. Will be enabled in 29 with a streamlined process to purchase a policy online. Established as a subsidiary of our new holding company Oak9, to maintain autonomy. 4

5 Organizing around capabilities Protection solutions Assurance Systems OAK9 (Formerly Universal Risk Advisors) (Formerly known as Universal Adjusting) (Formerly known as Universal Inspection) 5

6 with an endmarket focus across the insurance value chain Policy administration / Products Pricing / Underwriting Distribution Claims back office Risk Management (in partnership with Blue Atlantic) Independent Agents (in partnership with Evolution) Insurance offerings Product specifications Actuarial analysis / Risk selection Inspection Customer experience / Channel management Directtoconsumer Sales and Marketing Policy execution Quotes / binding / issuing / renewals Payments & Collections Claims management Risk / Catastrophe assessment Reinsurance programs Actuarial analysis 6

7 4Q8 and FY8 financial results 25. Total Revenue 5. Pretax Income. margin % Total Revenue Premium volume, pricing, and services driving growth, partially offset by unrealized and realized gains and losses on investments, and reinstatement premiums % (5.2)% 3.% 25.% % 5.%.% 5.%.% (5.)% % % 8.6% 7.% 6.% 5.% 4.% 3.% 2.%.% Annualized Return on Average Equity (ROE) 45.% Return on Average Equity 35.% 25.% 5.% 5.% 33.% NM 4.% 35.% 3.% 25.% 2.% 5.%.% 5.% 25.7% 24.% (.6)pts..% 4Q7 4Q8 (.)% FY7 FY8.% 5.% 4Q7 4Q8. FY7 FY8 Income before income tax 58.6 (.2) % Adjusted operating income* ($ per share) Earnings per Diluted Share (EPS) Premium volume, pricing, taxes, and services driving growth, offset by strengthening prior accident years loss reserves Book Value, end of period GAAP EPS.3 () $ book value per share (BVPS) $million book value.4 NonGAAP Adjusted.2 EPS*. ().3 (87.4)% % 4Q7 4Q8 FY7 FY % Q7 4Q8 4Q7 4Q8 (). *Reconciliations of such nongaap financial measures in this presentation to the most comparable GAAP financial measures can be found in the Company s earnings release for the fourth quarter and full year of 28, filed with the SEC as an exhibit to a Current Report () on Form 8K on March, 29, and also available on the Company s website at under Investors with the subheading of Earnings Releases %. 7

8 Underwriting Policiesinforce Inforce premium Total Insured Value (TIV) (thousands), 8%,4 3% 25,. 228,77 8%,93, % 6%,2,, % 25% 2,. 98, % 7% 6% +8.4% 5% 8 5,. 5% 6. 2% 4% 6 4%,. Other States % of Total 9% 23% 3% 2% 4 Other States 2 % of Total 2% 5% 5% Other States 5,. % of Total 26% 32% 3% 2% % % % 4Q7 4Q8 4Q7 4Q8 4Q7 4Q8 8

9 Underwriting Revenue (Direct and net premiums) 3., 4Q direct premium written up 2.3%; FY8 up 2.8% 268.9,,9 6.8% of total direct premium written in 4Q from Other States Direct Premium Written Ceded premium earned + change in unearned % 24.6,., % 4Q other states direct premium written up 33.9% to $45.2M; FY8 up 34.6% to $77.6M 4Q Florida direct premium written up 8.7% to $223.8M; FY8 up 9.7% to $.B Net Premium Earned % % 4Q ceded premium earned (excluding reinstatement premium) as a percent of direct premium earned declined.5 points to 28.8%; FY8 down.4 points 5. 4Q ceded premium earned of $85.6M*; FY8 $332.6M*.. Dollar cost of reinsurance program driven by volume 4Q7 4Q8 FY7 FY8 Direct Premium Earned ,2.6 Ceded Premium earned as % of Direct Premium Earned* 3% 28.8% 3.% 29.7% 4Q reinstatement premium, net of commissions of $6.4M, FY8 $2M due to losses on Hurricane Irma *Excludes reinstatement premium 9

10 Underwriting (related expense / Net premium earned) Consolidated GAAP Combined Ratio Expense 32.3% / 3.7% Loss & LAE 45.3% / 79.5% 2.%.% Other op. ratio 8.% Acquisition ratio 6.% PYD ratio 4.% Weather ratio 2.% Other Loss and LAE ratio.% 2.% 77.6%.6% 2% 4.3% 4% 9.2% 4Q7.2% % 2.% 47.6% 27.2% 4Q8 2.%.%.% 8.% 8.% 6.% 6.% 4.% 4.8% 4.% 2.% 2.%.%.% 84.4% 87.3% 3.3% 2.9% 2% 2% 4.2% 4.% 3.% 42.7% 39.% FY7 FY8.2.9% Expense 33.5% / 33.4% Loss & LAE 5% / 53.9% 4Q General and Administrative expenses decrease related to performance rewards; FY8 flat 4Q Prior Year Development: $97.3M; FY8 $99.5M Systemic claims representation in Florida (Increased frequency and severity of noncatastrophe claims spanning several prior accident years) Loss and LAE (gross and net of reinsurance) Companion claims to Hurricane Irma Accelerated operational focus on claims resolutions PYD Weather Other Loss and LAE ,,, , Q weather loss: Gross $36M, $9.8M net; FY8 $395M gross, $4.8M net 3Q8 Hurricane Florence 4Q8 Hurricane Michael 4Q8 Gross 4Q8 Net FY8 Gross FY8 Net

11 Services Revenue Q Services revenue down 6.%; FY8 up 5.9% (6.)% % 4Q risk management commissions down 3.5% to $5.8M; FY8 up 5.6% to $22.4M Q MGA policy fees up 6.8% to $4.5M; FY8 up 7.6% to $2M Q policy installment fees, premium financing, and other revenue down 8.6% to $.9M; FY8 up 2.3% to $7.2M Q7 4Q8 FY7 FY8

12 Investments Net investment income and realized gains (losses)* Realized gains (losses) Q total unrestricted cash and invested assets up 3.9% to $.B Unrestricted cash: $66.4M Invested Assets: $98.2M 4. Net Investment 3. Income ** Q Net investment income up 7% to $7.6M; FY8 up 84.4% to $24.8M Increased cash and invested assets.. 4Q7 4Q8 (5.) FY7 (2.) FY8. Increase in yields due to shift in asset mix and rising interest rates Average fixed income credit rating of A+ during 4Q8 Unrealized*** (8.) (7.2) *Excludes net unrealized gains and losses on investments. **Includes interest earned on cash and cash equivalents, restricted cash and cash equivalents and investment income earned on real estate investments. Net of custodial fees, investment accounting, advisory fees and expenses associated with real estate investments *** Net unrealized gains (losses) on investments 2

13 FY9 and beyond strategic priorities Make customer service and continuous improvement a wayoflife 2 Focus on disciplined growth 3 Maintain a strong balance sheet 4 Maximize earnings stability 3