Reinsurance News

Universal improves full-year income despite heavy Q4 loss

25th February 2022 - Author: Matt Sheehan

Florida headquartered and expansive primary insurance company, Universal Insurance Holdings, has reported a 17.3% increase in net income for 2021, despite suffering a heavy loss in the fourth quarter.

universal-insurance-holdings-logoIncome for the full year was $28.4 million, compared with $24.2 million in the previous year, while the Q4 loss amounted to $64.5 million, following a loss of $27.0 million for the same period in 2020.

The company has previously warned of an $80.1 million hit to its Q4 results due to reserve strengthening and development actions.

Accordingly, Universal’s combined ratio improved by 8.1 percentage points to 105.5% for the full-year period, but deteriorated by 7.4 points to 131.4% for the quarter.

Universal attributed the improved 2021 ratio to decreased weather events, lower prior years’ adverse reserve development, and continued business expense management.

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In contrast, the quarterly ratio suffered from the aforementioned strengthening of reserves, which were made in response to inflationary pressures and increased reinsurance costs impact on the ratio.

Core losses amounted to $216.0 million for the quarter and $696.8 million for the year, compared with $134.5 million and $538.5 million for the respective periods in the previous year.

Net prior years’ adverse reserve development was $36.5 million for the quarter, versus $23.4 million in Q4 2020, and $54.5 million for the year, compared with $58.3 million in 2020.

Direct premiums written were up 8.3% to $399.3 million for Q4 and 10.1% to $1,671.3 million for the year.

Net investment income increased 37.9% for the quarter, primarily due to higher levels of invested assets, but decreased by 38.5% for the full year.

“We ended the year with a record of approximately $1.7 billion of premiums in force and a return on average equity of 4.6%, despite the accelerated inflationary trends we announced on February 10th, which resulted in the Company increasing reserves,” said Stephen J. Donaghy, Chief Executive Officer.

“We continue to sharpen our pencils on our 2022 Florida primary rate filing in the coming months and are hitting the ground running on our reinsurance renewal, with over 77% of capacity on our first event All States tower already secured.”

“We look forward to continuing to focus on resiliency through this cycle and are monitoring closely the actions in the Florida legislature in regards to several bills, including SB1728, SB1402 and SB186, amongst others.”

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