NU Online News Service, May 10, 11:42 a.m. EDT

One of the largest writers of homeowners insurance in Florida reports a 29 percent drop in first-quarter earnings.

In the meantime, a fellow Florida-domestic insurer that looked to double its size with an acquisition late last year posted an enormous increase in first-quarter profit.

Fort Lauderdale, Fla.-based Universal Insurance Holdings Inc. says lower investment-portfolio results and higher general and administrative expenses are to blame for the reduction in the company’s profit during the first three months.

First-quarter net income for Universal Insurance, the third-largest writer of homeowner's multiperil insurance in the Sunshine State, was $9.9 million compared to $13.9 million during the same time last year.

A year ago, gains from the company’s investment portfolio added $6.3 million to pretax income. This year, the portfolio increased income by $1.8 million, says Universal Insurance.

Additionally, the adoption of new accounting principles took a $2.7 million bite from pretax earnings in the first quarter, the company says.

An average statewide homeowner's insurance rate increase of 14.9 percent announced last year in Florida is working its way through the book of the company’s primary insurance subsidiary, Universal Property & Casualty Insurance Co. (UPCIC), which also writes in North Carolina, South Carolina, Hawaii and Georgia.

UPCIC also announced another 14.9 percent rate increase for homeowner's in January, as well as an 8.8 percent increase for its dwelling fire program.

Direct-written premiums increased to about $190 million during the first quarter compared to about $173.2 million for 2011’s first quarter.

But first-quarter net-earned premiums were nearly halved because Universal Insurance ceded about $163.4 million in premiums written to reinsurance.

Universal Insurance reports $26.6 million in net-written premiums during the first three months compared to $49.3 million a year ago.

The story was different at Homeowners Choice Inc. due to its November 2011 buy of troubled HomeWise Insurance Co.

The assumption by Homeowners Choice of about 70,000 policies from HomeWise reduced its ratio of direct-written premiums to premiums ceded to reinsurance.

Net-earned premiums at Tampa-based Homeowners Choice during the first quarter were $40.4 million, up from $16.7 million last year.

Direct-earned premiums were $54.7 million compared to $30.9 million during 2011’s first quarter, but premiums ceded stayed relatively the same at about $14 million.

Homeowners Choice says reinsurance costs as a percentage of gross premiums should return to a more comparable range starting in June

First-quarter net income was $6.8 million compared to $800,000 as of March 31, 2011.

In March of this year Homeowners Choice hired Scott R. Wallace, former president and CEO of Florida's last-resort insurer, Citizens Property Insurance Corp.

Wallace resigned from Citizens for personal reasons.

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Q1 Profit Down 29% for Fla.&rsquo;s Universal; Up for Homeowners Choice

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