Reinsurance News

Universal reports $27m loss in Q4

26th February 2021 - Author: Matt Sheehan

Universal Insurance Holdings, the Florida headquartered and expansive primary insurance carrier, has reported that it suffered a net loss of $27.0 million in the fourth quarter of 2020.

universal-insurance-holdings-logoIt comes after Universal warned that it was due to incur catastrophe losses of $76.0 million for the quarter.

The Q4 loss did represent an improvement over the same period in 2019, when it reported a loss of $69.1 million.

But looking at the full year, income fell by 61.9% from $63.5 million in 2019 to $24.2 million last year.

Universal’s revenues increased by roughly 14% for both the Q4 and full year period, to $273.1 million and $1.1 billion, respectively.

The company attributed this growth in revenue primarily to higher net earned premiums, including both organic new business growth and primary rate increases.

Revenue growth was also driven by realized gains on investments, and increases in service revenue, partially offset by decreases in net investment income and by increased reinsurance costs.

Universal’s combined ratio decreased 18.9 points to 124.0% for the Q4 period and increased by 9.7 points to 113.6% for the full year.

Core losses of $134.5 million or 55.6 points for the quarter and $538.5 million or 58.3 points for the year were primarily related to accruing incremental reserves as the industry continues to see increased severity in represented claims.

Weather events also drove losses of $76.0 million, or 31.4 points, for the quarter and $162.0 million, or 17.6 points, for the whole year.

Prior years’ reserve development of $23.4 million or 9.7 points for the quarter and $58.3 million or 6.3 points for the year mainly related to the continued adjusting and settlement of Hurricane Irma and companion claims.

“We ended the year with a record of $1.5 billion of premium now in force. Unfortunately, we also saw a record-setting frequency of weather events during the 2020 wind season, which impacted our fourth quarter and full year results,” said Stephen J. Donaghy, Chief Executive Officer of Universal.

“In 2020 we continued our focus on underwriting, increasing our primary rates in Florida close to 20% for the full year, including 7% in the fourth quarter for reinsurance costs, as well as primary rate increases in some of our other states. We have continued to maintain a resilient balance sheet that has self-funded our risk bearing entities capital requirements, in addition to enhancing our reserves. We continue to be backed by our great reinsurance program and partners with close to 75% of our first event reinsurance capacity for June 1st, 2021 secured already,” Donaghy continued.

“We continued our geographic expansion efforts in 2020, and implemented our catastrophe rapid response teams during the COVID-19 pandemic, which accelerated our use of digital technology for adjusting claims. We also continue to develop adaptive adjusting approaches to address claims loss cost trends. We look forward to 2021 as we continue to focus on resiliency and taking the necessary steps to provide reliability to consumers and reduce uncertainty for shareholders.”

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