Florida's Universal Insurance Holdings Reports 3Q Income of $1M

Universal Insurance Holdings, Inc. of Ft. Lauderdale reported net income of $1.0 million, or $0.02 per diluted share, in the third quarter of 2011, compared to net income of $13.1 million, or $0.32 per diluted share, for the same period in 2010. For the first nine months of 2011, the company reported net income of $22.4 million, or $0.55 per diluted share, compared to $30.8 million, or $0.76 per diluted share, for the same period of 2010. While net premiums earned improved nominally, the company's profitability decreased primarily as a result of net unrealized losses on investments during the 2011 third quarter.

Homeowners' and dwelling fire insurance policies serviced by Universal Property & Casualty Insurance Co. (UPCIC), the company's wholly owned subsidiary, and the related direct premiums written rose during the third quarter of 2011 compared to the same period of 2010. The fourth-quarter 2009 premium rate increases in Florida, which were 14.6 percent statewide for UPCIC's homeowners' program and 14.8 percent statewide for its dwelling fire policies, improved net premiums earned while contributing to profitability in the 2011 third quarter.

Additionally, the premium rate increase of 14.9 percent statewide for UPCIC's homeowners' insurance program within Florida announced in February 2011 continues to flow through UPCIC's book of business. The effective dates for the most recent rate increase were Feb. 7, 2011, for new business and March 28, 2011, for renewal business.

UPCIC's policy count grew slightly during the 2011 third quarter. At Sept. 30, 2011, UPCIC serviced approximately 595,000 homeowners' and dwelling fire insurance policies, an increase from approximately 591,000 policies at June 30, 2011, and an improvement from approximately 576,000 policies at Sept. 30, 2010. Of these, UPCIC had approximately 13,000 policies totaling approximately $15.8 million of in-force premiums at Sept. 30, 2011 in North Carolina, South Carolina and Hawaii.

Net premiums earned grew 1.6 percent in the third quarter of 2011 compared to the same quarter in 2010.

Operating costs and expenses for the third quarter of 2011 were lower compared to the third quarter of last year; losses and loss adjustment expenses (LAE) were comparable to last year, while general and administrative expenses decreased 6.1 percent. The net loss and LAE ratio, or net losses and LAE as a percentage of net earned premiums, improved slightly to 59.1 percent in the third quarter of 2011 compared to 60.1 percent in the third quarter of 2010. General and administrative expenses declined primarily as a result of a decrease in performance-based bonus accruals and a decrease in bad debt expense. These decreases were partially offset by higher stock-based compensation and non-recurring credits from the recovery of Florida Insurance Guaranty Association assessments recorded during the third quarter of 2010.

At Sept. 30, 2011, stockholders' equity was $156.9 million compared to $158.2 million at June 30, 2011, and $137.3 million at Sept. 30, 2010.