Universal Insurance Holdings has reported a Q2 2023 combined ratio of 99.1%, 1.8 points lower than in Q2 2022 which stood at 100.9%.
For the quarter, the combined ratio consists of a 73.5% loss ratio and a 25.3% expense ratio, compared with 72.3% and 28.6%, respectively, a year earlier.
The company’s direct premiums written of $547.1 million for the quarter showed a 2.7% from Q2 2022. The increase is credited to 0.8% growth in Florida, and 13.6% growth in other states. The growth reflects rate increases, partly offset by lower policies in force, said the insurer.
Universal’s direct premiums earned were $463.3 million, up 8.1% year over year, this was offset by rate-driven direct premiums written growth over the past twelve months.
The ceded premium ratio is hit 34.5% in Q2 2023, down from 35.4% in the prior-year quarter. The decrease reflects a lower ceded premium ratio associated with the 2023-2024 reinsurance program, direct premiums earned growth associated with primary rate increases, and also reinsurance savings associated with leveraging self-insurance captive. All of this was partly offset by reinstatement premiums related to Hurricane Ian, and higher reinsurance pricing and costs as a result of the increase in insured values.
The primary insurer’s earned net premiums for the quarter of $303.3 million, increased 9.5% from the prior-year quarter, due to higher direct premiums earned and a lower ceded premium ratio.
All in all, Universal has reported net income of $28.6 million for the second quarter of 2023, compared with $7.3 million a year earlier, reflecting growth of a huge 288%.
The company’s net investment income was $11.3 million, up from $5.2 million in Q2 2022. The increase is attributed to higher fixed-income reinvestment yields and higher yields on cash, says the firm.
Stephen J. Donaghy, Chief Executive Officer, commented, “Results were solid, including a 25.3% annualized adjusted return on common equity and 85.1% adjusted diluted EPS growth year-over-year. While it’s still early days, we’re encouraged by favourable claims and litigation trends that are beginning to emerge as a result of recent legislative reforms and give us optimism as we look forward to 2024 and beyond.
“We continue to benefit from rate-driven premium growth and an improving spread of risk across our geographic footprint. I’m proud of the reinsurance program we put together for the 2023-2024 treaty year. Our program’s terms, conditions and coverage are consistent with the prior year, but we reduced our consolidated retention and ceded premium ratio.”
