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Universal CEO says insurer is hyper-focused on driving more primary rate

4th August 2021 - Author: Charlie Wood

Florida headquartered insurer Universal is said to be hyper-focused on driving more primary rate into its portfolio, according to Chief Executive Officer Steve Donaghy.

universal-insurance-holdings-logoSpeaking at a recent earnings call, Donaghy described how the two pillars of price and exposure discipline, along with recent property insurance legislation in Florida and a comprehensive reinsurance program in place for the 2021 hurricane season, puts Universal on solid footing to handle any ongoing challenges.

The company announced recently that its total revenue increased 14.3% in the second quarter, while direct premiums written jumped 17% to $473.6 million.

Concurrently, however, the insurer also saw net investment income decrease 53.7% due to significantly lower yields on a reinvested portfolio.

“In addition to social inflation impacts, material and labor costs are having an impact on replacement costs,” said Donaghy.

RMS

“We expect that as supply chain backlogs subside, we will see a normalization of some of these material costs. But are monitoring these factors and inflationary pressures closely and are utilizing primary rate pricing and operational measures to manage these risks.

“While macro inflationary pressures are a headwind on replacement costs, they also imply tailwinds from increased economic activity in addition to the potential for higher investment income rates of return.

“On top of the previously mentioned factors, reinsurance costs increased as expected and as discussed in our reinsurance filing on May 28th, but were more moderate in comparison to prior years. We continue to address these impacts to margins through primary rate increases and our exposure management program.

“We were pleased to not only see the vast majority of our core longstanding reinsurance partners offer increased capacity in 2021, but also that we’re able to attract new reinsurer capacity at the 6-1 renewal.”

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