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Universal reports 15.7% rise in direct premiums for Q1

28th April 2020 - Author: Charlie Wood

Universal Insurance Holdings has reported a 15.7% increase in direct premiums written for the first quarter, totalling $334.6 million, against the prior year quarter.

universal-insurance-holdings-logoTotal revenue decreased 0.6% for the quarter, driven primarily by higher reinsurance costs and unrealised losses on investments, partially offset by higher organic premium pricing and volume and integrated services.

Income before tax produced an 11.7% margin for the quarter, which was primarily impacted by accruing incremental reserves and the company’s investment portfolio’s volatility from COVID-19, partially offset by a reduced impact from weather events during the quarter.

On the expense side, the combined ratio increased 7 points for the quarter. The increases were driven primarily by increased losses in connection with the continued diversification in the company’s underlying business to states outside Florida, an increased core loss pick for 2020, and increased prior year adverse development.

Net investment income decreased 16.1% for the quarter, primarily due to significantly lower yields on cash and short term investments during the first quarter of 2020 when compared to the first quarter of 2019.

All other losses and loss adjustment expenses stand at $129.7 million or 58.7 points for the quarter were primarily related to diversified growth, and accruing incremental reserves for the current accident year.

“The circumstances of the past few months in all of our communities have been both difficult and inspiring. Our hearts go out to all those affected directly and indirectly by the COVID-19 pandemic. We are inspired by the health care providers, the first responders, the ingenuity of our communities, our businesses, and governments,” said Stephen J. Donaghy, Chief Executive Officer.

“We commenced business operations more than 20 years ago, intent on protecting and serving our consumers in their most critical time, in some of the most challenging coastal areas in the U.S. for natural disasters.

“We have remained highly proficient and steadfast in that commitment. We enter this critical time in a position of strength with a debt-to-equity ratio less than 2.0%, currently accruing more reserves than at any point in the company’s history, and with a highly experienced rapid response disaster preparedness team.

“We are off to a good start to 2020 with solid first quarter results, including an annualized return on average equity of 16.1% and progress on our reinsurance renewals for June 1st. In this dynamic environment, we continue to support our consumers, whether they are shopping for new policies, submitting claims, refinancing, or extending terms, while having substantially all of our employees in our rapid response virtual protocol.

“We do not have exposure to many lines of business directly impacted by COVID-19, but continue to monitor the currently unknowable longer tail impacts to the housing and rental markets. We believe we remain well positioned for 2020 and remain resolute in serving our consumers and creating value for our stakeholders.”

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