Reinsurance News

Universal’s operating income drops in Q1 due to higher losses

25th April 2019 - Author: Matt Sheehan

Florida-based property and casualty (P&C) insurer Universal Insurance Holdings, Inc. has posted its results for the first quarter of 2019, which show a 20.5% drop in adjusted operating income due primarily to a $37.17 million increase in losses and loss adjustment expenses.

universal-insurance-holdings-logoUniversal’s combined ratio was 87.2% in Q1 2019, compared with 76.6% in Q1 2018, while its net income showed little change at $40.15 million, compared with $40.06 million in 2018.

The company explained that the increase in its combined ratio was driven by higher losses in connection with the diversified growth in its underlying business, loss creep previously disclosed in Q4 2018, a reduced benefit from its claims adjusting business, and losses from the hail event  that hit Brevard County, Florida in March.

In contrast, Universal’s total revenue was up 23.5% for the quarter to $236.6 million, driven primarily by higher organic premium volume, pricing, and investment portfolio performance.

Direct premiums written were up 7.1% to $289.23 million for the quarter, led by growth of 31.5% in other states (non-Florida) and 3.4% in Florida, where growth was tempered by more disciplined underwriting guidelines.

Direct premium earned was also up 12.6% to $295.38 million, while net premium earned was up 14.9% to $209.73 million.

Additionally, the company increased its net investment income by 70.2% to $8.14 million due to rising interest rates, asset mix, and higher average levels of invested assets.

“We are off to a good start to 2019 with solid first quarter results, including a 31.5% increase in other states direct premiums written, strong performance from our investment portfolio, and a total annualized return on average equity of 30.4%,” said Sean P. Downes, Chairman and Chief Executive Officer of Universal.

“In addition, we received rate increase approvals in Florida and Georgia for new and renewal business, including high single digit increases in certain territories, the majority of which will take effect in the latter part of the second quarter,” he continued.

“We also continued to expand our addressable market in the first quarter through the launch of Universal Property in Illinois, one of the top five largest personal residential homeowners states in the country by direct premiums written,” Downes explained. “Lastly, we added nine carrier appointments to our digital insurance distribution channel CloveredSM across Homeowners, Auto, Flood, and E&S lines.”

“These milestones mark good progress against our strategic priorities and put us in position to focus on disciplined growth, maximize earnings stability, and continue to strengthen our foundation.”

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