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Universal grows direct premiums in Q2 off higher organic pricing

30th July 2020 - Author: Luke Gallin

Florida headquartered and expansive primary insurance company, Universal Insurance Holdings, has reported an 8.1% rise in total revenue for the second-quarter of 2020, while quarterly direct premiums written jumped 13.1% to $404.7 million.

universal-insurance-holdings-logoThe firm reports that during the second-quarter of the year, the COVID-19 pandemic did not have a material impact on its business, financial position or liquidity.

According to Universal, the growth in direct premiums in Q2 2020 was primarily a result of higher organic pricing and volume in its integrated services, in part offset by elevated reinsurance costs and lower net investment income.

Direct premiums earned increased by more than 11% to $337.6 million in Q2 2020, while net earned premiums increased by 7.6% to $226.3 million in the period.

Overall, Universal’s combined ratio deteriorated by 12.6 percentage points in the second-quarter of 2020 to 99.5%, which is comprised of a loss ratio of 66.9% and an expense ratio of 32.6%. In Q2 2019, Universal recorded a combined ratio of 86.9%, comprised of a 33% expense ratio and a loss ratio of 53.9%.

RMS

In Q2 2020, weather event in excess of plan of $17 million were related to the previously announced historically above average second quarter weather events from 14 Property Claims Services (PCS) events across a series of states where the company does business.

Net investment income dipped by 16.6% in the quarter and by 16.3% in H1 2020, which Universal attributes to lower yields on cash and short term investments during the first half of 2020 when compared to the first half of 2019.

The company’s Chief Executive Officer (CEO), Stephen J. Donaghy, commented: “We delivered solid second quarter results, underpinned by strong top line growth as a result of pockets of attractive pricing and volume, resulting in an annualized return on average equity in the first half of 2020 of 15.5%.

“In addition, we continue to enter new states as an agent, serving independent third-party carriers with our digital insurance agency CloveredSM. We launched CloveredSM just over a year ago and continue to add partners and expand its offerings to consumers, while enhancing the overall digital experience. CloveredSM continues to be an attractive growth opportunity for us, with approximately 40% premium growth from the year-ago second quarter to its total book of business, while growing non risk bearing business by over 200% in the same time period. The shift to online policy acquisition continues to grow in part due to a very desirable refinance and new home market. CloveredSM represents Universal Property and Casualty’s fastest growing agency across its nearly 10,000 independent agents.

“Though we are off to a solid start to the first half of the year overall, including the successful completion of our reinsurance renewal on time and on budget, we are taking a more measured approach to guidance as a result of previously announced historically above average weather events in the second quarter. We believe our liquidity and ability to drive growth remain strong and we continue to execute for our consumers and stakeholders.”

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