Business Wire | Feb 25, 2021 04:27PM EST

Universal Insurance Holdings Reports Fourth Quarter 2020 Results

Feb. 25, 2021

FORT LAUDERDALE, Fla.--(BUSINESS WIRE)--Feb. 25, 2021--Universal Insurance Holdings (NYSE: UVE) (the "Company") reported 2020 fourth quarter diluted EPS of $(0.57) on a GAAP basis and $(0.84) non-GAAP adjusted EPS1. Quarterly direct premiums written were up 21.9% from the year-ago quarter to $368.8 million.

^1 Excludes net realized and unrealized gains and losses on investments as wellas extraordinary reinstatement premiums and associated commissions ("non-GAAPadjusted EPS"). Reconciliations of GAAP to non-GAAP financial measures areprovided in the attached tables.

"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. "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. 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."

Summary Financial Results

($thousands,except per Three Months Ended December 31, Twelve Months Ended December 31,share data)

2020 2019 Change 2020 2019 Change

(GAAP comparison)

Total $ 273,126 $ 239,402 14.1 % $ 1,072,770 $ 939,351 14.2 %revenue

Income(loss) (26,999) (69,053) 61.0 % 24,231 63,517 (61.9) %beforeincome taxes

Income(loss) 18.9 (4.5)before (9.9) % (28.8) % pts 2.3 % 6.8 % ptsincome taxesmargin

Diluted EPS (0.57) (1.55) 63.2 % 0.60 1.36 (55.9) %



Annualizedreturn on (15.4) % (38.4) % 23.0 4.1 % 9.2 % (5.1)average pts ptsequity (ROE)

Book valueper share, 14.43 15.13 (4.6) % 14.43 15.13 (4.6) %end ofperiod



(Non-GAAPcomparison)^ 2

Adjustedoperating (38,227) (69,687) 45.1 % (39,044) 55,833 NMincome

Adjusted EPS (0.84) (1.57) 46.5 % (0.90) 1.18 NM



^2 Reconciliation of GAAP to non-GAAP financial measures are provided in theattached tables. Adjusted operating income excludes net realized and unrealizedgains and losses on investments, interest expense, and extraordinaryreinstatement premiums and associated commissions. Non-GAAP adjusted EPSexcludes net realized and unrealized gains and losses on investments, as wellas extraordinary reinstatement premiums and associated commissions.

NM = Not Meaningful

Total revenue grew double digits for both the quarter and the year, driven primarily by growth in net premiums earned (organic new business growth and primary rate increases), partially offset by increased reinsurance costs. Revenue growth was also attributable to realized gains on investments, and increases in service revenue, partially offset by decreases in net investment income. GAAP diluted EPS and non-GAAP adjusted EPS results for the quarter and the year benefited from the aforementioned items, but were impacted predominantly by weather events and related social dynamics and increased reinsurance costs.

Underwriting

($thousands, except policies in force)

Three Months Ended December 31, Twelve Months Ended December 31,

2020 2019 Change 2020 2019 Change

Policiesin force(as of 984,830 888,361 10.9 % 984,830 888,361 10.9 %end ofperiod)

Premiumsin force(as of $ 1,519,949 $ 1,296,416 17.2 % $ 1,519,949 $ 1,296,416 17.2 %end ofperiod)



Directpremiums 368,823 302,655 21.9 % 1,517,479 1,292,721 17.4 %written

Directpremiums 374,825 321,571 16.6 % 1,395,623 1,233,121 13.2 %earned

Netpremiums 242,173 215,819 12.2 % 923,563 842,502 9.6 %earned



Expense 27.3 % 29.6 % (2.3) 31.4 % 32.3 % (90)ratio^3 pts bps

Loss & (16.6) 10.6LAE 96.7 % 113.3 % pts 82.2 % 71.6 % ptsratio

Combined 124.0 % 142.9 % (18.9) 113.6 % 103.9 % 9.7ratio pts pts



^3 Expense ratio excludes interest expense.

Direct premiums written were up more than 20% for the quarter, led by the continued impact of rate increases in Florida and other states, as well as strong direct premium growth of 18.9% in Other States (non-Florida). For the year, direct premiums written were up double digits, led by rate increases and volume, with strong direct premium growth of 17.7% in Other States (non-Florida), and a slightly improved policy retention. In 2020 we implemented new guidelines on new business to address emerging loss trends that have since slowed the rate of growth in Florida.

On the expense side, the combined ratio decreased 18.9 points for the quarter, but increased 9.7 points for the year. The increases for the year were driven primarily by increased weather events in 2020, an increase in our core loss pick when compared to the full prior year, and the effect on the ratio from increased reinsurance costs. The increases were partially offset by lower prior year development, a benefit from our claims adjusting business, and an improvement in the expense ratio as set forth below.

* The expense ratio improved 2.3 points for the quarter driven by a 3.1 point improvement in the other operating expense ratio, partially offset by a 80 basis point increase in policy acquisition costs. For the year, the expense ratio improved 90 basis points driven by a 1.4 point improvement in other operating expenses, partially offset by a 50 basis point increase in policy acquisition costs. Increases in the policy acquisition cost ratio were primarily driven by the effect of reinsurance costs. * The net loss and loss adjustment expense ratio increased 16.6 points for the quarter and 10.6 points for the year. Quarterly and full year drivers for 2020 include: 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, which were offset by a benefit from our claims adjusting business. Reinsurance costs also drove increases in the core net loss ratio. Weather events in excess of plan of $76.0 million or 31.4 points ($16.7 million in 4Q19) for the quarter were related to a number of weather events in the states where we do business. For the full year, weather events in excess of plan were $162.0 million or 17.6 points ($38.7 million in FY19), which includes one significant hurricane, Hurricane Sally, and a significant number of other smaller hurricanes and other PCS events. 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 were primarily related to the continued adjusting and settlement of Hurricane Irma and companion claims.

Services

($thousands) Three Months Ended December 31, Twelve Months Ended December 31,

2020 2019 Change 2020 2019 Change

Commission $ 9,393 $ 7,168 31.0 % $ 33,163 $ 26,101 27.1 %revenue

Policy fees 5,520 4,973 11.0 % 23,773 21,560 10.3 %

Other revenue 1,972 2,603 (24.2) % 8,501 7,972 6.6 %

Total 16,885 14,744 14.5 % 65,437 55,633 17.6 %

Total services revenue increased 14.5% for the quarter and 17.6% for the full year. The increase was driven by commission revenue earned on ceded premiums and an increase in policy fees due to an increase in volume, partially offset by other revenue.

Investments

($thousands) Three Months Ended December 31, Twelve Months Ended December 31,

2020 2019 Change 2020 2019 Change

Net investment $ 2,823 $ 7,578 (62.7) % $ 20,393 $ 30,743 (33.7) %income

Realized gains 9,058 437 1,972.8 % 63,352 (12,715) NM(losses)

Unrealized gains 2,187 824 165.4 % 25 23,188 (99.9) %(losses)

NM = Not Meaningful

Net investment income decreased 62.7% for the quarter and 33.7% for the year, primarily due to lower yields on cash and fixed-income investments during 2020 when compared to 2019. Realized gains for the quarter and for the full year resulted primarily from taking advantage of increased market prices on our available-for-sale debt investment portfolio, and to a lesser extent aided by the sale of equity securities. Unrealized gains were driven by market fluctuations in equity securities resulting in a favorable outcome for the quarter and the full year.

Capital Deployment

During the fourth quarter, the Company repurchased approximately 193 thousand shares at an aggregate cost of $2.4 million. For the full year, the Company repurchased approximately 1.6 million shares at an aggregate cost of $28.9 million. The Company's current share repurchase authorization program has $19.4 million remaining as of December 31, 2020 and runs through November 3, 2022.

Guidance

Universal initiated the following guidance for fiscal 2021:

* GAAP and Non-GAAP Adjusted EPS in a range of $2.75 - $3.00 (assuming no extraordinary weather events in 2021) * Annualized return on average equity in a range of 17% - 19%

Conference Call and Webcast

* Friday, February 26, 2021 at 9:00 a.m. ET * U.S. Dial-in Number: (855) 752-6647 * International: (503) 343-6667 * Participant code: 9074399 * Listen to live webcast: UniversalInsuranceHoldings.com * Replay of the call will be available on the UVE website and by phone at (855) 859-2056 or internationally at (404) 537-3406 using the participant code: 9074399 through March 13, 2021

About Universal Insurance Holdings, Inc.

Universal Insurance Holdings (UVE) is a holding company offering property and casualty insurance and value-added insurance services. We develop, market, and write insurance products for consumers predominantly in the personal residential homeowners lines of business and perform substantially all other insurance-related services for our primary insurance entities, including risk management, claims management and distribution. We sell insurance products through both our appointed independent agents and through our direct online distribution channels in the United States across 19 states (primarily Florida). Learn more at UniversalInsuranceHoldings.com.

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the U.S. Securities and Exchange Commission ("SEC"), including adjusted earnings per diluted share, which excludes the impact of the net realized and unrealized gains and losses on investments as well as extraordinary reinstatement premiums and associated commissions. Extraordinary reinstatement premiums are not covered by reinstatement premium protection and attach just below the Florida Hurricane Catastrophe Fund ("FHCF") reinsurance layer. Adjusted operating income excludes the impact of the net realized and unrealized gains and losses on investments, as well as interest expense and extraordinary reinstatement premiums and associated commissions. A "non-GAAP financial measure" is generally defined as a numerical measure of a company's historical or future performance that excludes or includes amounts, or is subject to adjustments, so as to be different from the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles ("GAAP"). UVE management believes that these non-GAAP financial measures, when considered together with the GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionately positive or negative impact on results in any particular period. UVE management also believes that these non-GAAP financial measures enhance the ability of investors to analyze UVE's business trends and to understand UVE's performance. UVE's management utilizes these non-GAAP financial measures as guides in long-term planning. Non-GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, financial measures presented in accordance with GAAP. For more information regarding our key performance indicators, please refer to the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations - Key Performance Indicators" in our forthcoming Annual Report on Form 10-K for the year ended December 31, 2020.

Forward-Looking Statements

This press release may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "anticipate," "will," "plan," and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Such statements may include commentary on plans, products and lines of business, marketing arrangements, reinsurance programs and other business developments and assumptions relating to the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, including those risks and uncertainties described under the heading "Risk Factors" and "Liquidity and Capital Resources" in our 2020 Annual Report on Form 10-K, and supplemented in our subsequent Quarterly Reports on Form 10-Q. Future results could differ materially from those described, and the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. For further information regarding risk factors that could affect the Company's operations and future results, refer to the Company's reports filed with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K and the most recent quarterly reports on Form 10-Q.

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except per share data)

December 31, December 31,

2020 2019

ASSETS

Invested Assets

Fixed maturities, at fair value $ 819,861 $ 855,284

Equity securities, at fair value 84,887 43,717

Investment real estate, net 15,176 15,585

Total invested assets 919,924 914,586

Cash and cash equivalents 167,156 182,109

Restricted cash and cash equivalents 12,715 2,635

Prepaid reinsurance premiums 215,723 175,208

Reinsurance recoverable 160,417 193,236

Premiums receivable, net 66,883 63,883

Property and equipment, net 53,572 41,351

Deferred policy acquisition costs 110,614 91,882

Goodwill 2,319 2,319

Other assets 49,418 52,643

TOTAL ASSETS $ 1,758,741 $ 1,719,852



LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:

Unpaid losses and loss adjustment expenses $ 322,465 $ 267,760

Unearned premiums 783,135 661,279

Advance premium 49,562 30,975

Reinsurance payable, net 10,312 122,581

Long-term debt 8,456 9,926

Other liabilities 135,549 133,430

Total liabilities 1,309,479 1,225,951

STOCKHOLDERS' EQUITY:

Cumulative convertible preferred stock ($0.01 par - - value)^4

Common stock ($0.01 par value)^5 468 467

Treasury shares, at cost - 15,680 and 14,069 (225,506) (196,585)

Additional paid-in capital 103,445 96,036

Accumulated other comprehensive income (loss), 3,343 20,364 net of taxes

Retained earnings 567,512 573,619

Total stockholders' equity 449,262 493,901

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,758,741 $ 1,719,852



Notes:

^4 Cumulative convertible preferred stock ($0.01 par value): Authorized - 1,000shares; Issued - 10 and 10 shares; Outstanding - 10 and 10 shares; Minimumliquidation preference - $9.99 and $9.99 per share.

^5 Common stock ($0.01 par value): Authorized - 55,000 shares; Issued - 46,817and 46,707 shares; Outstanding 31,137 and 32,638 shares.

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

(in thousands)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2020

2019

2020

2019

REVENUES

Net premiums earned

$

242,173

$

215,819

$

923,563

$

842,502

Net investment income

2,823

7,578

20,393

30,743

Net realized gains (losses) on sale on investments

9,058

437

63,352

(12,715)

Net change in unrealized gains (losses) of equity securities

2,187

824

25

23,188

Commission revenue

9,393

7,168

33,163

26,101

Policy fees

5,520

4,973

23,773

21,560

Other revenue

1,972

2,603

8,501

7,972

Total revenues

273,126

239,402

1,072,770

939,351

EXPENSES

Losses and loss adjustment expenses

233,940

244,445

758,810

603,406

Policy acquisition costs

52,120

44,667

199,102

177,530

Other operating expenses

14,048

19,298

90,525

94,650

Interest expense

17

45

102

248

Total expenses

300,125

308,455

1,048,539

875,834

Income (loss) before income tax expense

(26,999)

(69,053)

24,231

63,517

Income tax expense (benefit)

(9,324)

(17,980)

5,126

17,003

NET INCOME (LOSS)

$

(17,675)

$

(51,073)

$

19,105

$

46,514

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

(in thousands)

Three Months Ended Twelve Months Ended

December 31, December 31,

2020 2019 2020 2019

REVENUES

Net premiums earned $ 242,173 $ 215,819 $ 923,563 $ 842,502

Net investment 2,823 7,578 20,393 30,743 income

Net realized gains(losses) on sale on 9,058 437 63,352 (12,715) investments

Net change inunrealized gains 2,187 824 25 23,188 (losses) of equitysecurities

Commission revenue 9,393 7,168 33,163 26,101

Policy fees 5,520 4,973 23,773 21,560

Other revenue 1,972 2,603 8,501 7,972

Total revenues 273,126 239,402 1,072,770 939,351



EXPENSES

Losses and loss 233,940 244,445 758,810 603,406 adjustment expenses

Policy acquisition 52,120 44,667 199,102 177,530 costs

Other operating 14,048 19,298 90,525 94,650 expenses

Interest expense 17 45 102 248

Total expenses 300,125 308,455 1,048,539 875,834



Income (loss)before income tax (26,999) (69,053) 24,231 63,517 expense

Income tax expense (9,324) (17,980) 5,126 17,003 (benefit)

NET INCOME (LOSS) $ (17,675) $ (51,073) $ 19,105 $ 46,514

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

SHARE AND PER SHARE INFORMATION

(in thousands, except per share data)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2020

2019

2020

2019

Weighted average common shares outstanding - basic

31,193

32,889

31,884

33,893

Weighted average common shares outstanding - diluted

31,295

32,889

31,972

34,233

Shares outstanding, end of period

31,137

32,638

31,137

32,638

Basic earnings (loss) per common share

$

(0.57)

$

(1.55)

$

0.60

$

1.37

Diluted earnings (loss) per common share

$

(0.57)

$

(1.55)

$

0.60

$

1.36

Cash dividend declared per common share

$

0.29

$

0.29

$

0.77

$

0.77

Book value per share, end of period

$

14.43

$

15.13

$

14.43

$

15.13

Annualized return on average equity (ROE)

(15.4)

%

(38.4)

%

4.1

%

9.2

%

NM = Not Meaningful

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

SHARE AND PER SHARE INFORMATION

(in thousands, except per share data)

Three Months Ended Twelve Months Ended

December 31, December 31,

2020 2019 2020 2019

Weighted average common 31,193 32,889 31,884 33,893 shares outstanding - basic

Weighted average commonshares outstanding - 31,295 32,889 31,972 34,233 diluted

Shares outstanding, end of 31,137 32,638 31,137 32,638 period

Basic earnings (loss) per $ (0.57) $ (1.55) $ 0.60 $ 1.37 common share

Diluted earnings (loss) per $ (0.57) $ (1.55) $ 0.60 $ 1.36 common share

Cash dividend declared per $ 0.29 $ 0.29 $ 0.77 $ 0.77 common share

Book value per share, end $ 14.43 $ 15.13 $ 14.43 $ 15.13 of period

Annualized return on (15.4) % (38.4) % 4.1 % 9.2 %average equity (ROE)

NM = Not Meaningful

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

SUPPLEMENTARY INFORMATION

(in thousands, except for Policies In-Force data)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2020

2019

2020

2019

Premiums

Direct premiums written - Florida

$

302,552

$

246,927

$

1,250,748

$

1,066,112

Direct premiums written - Other States

66,271

55,728

266,731

226,609

Direct premiums written - Total

$

368,823

$

302,655

$

1,517,479

$

1,292,721

Direct premiums earned

$

374,825

$

321,571

$

1,395,623

$

1,233,121

Net premiums earned

$

242,173

$

215,819

$

923,563

$

842,502

Underwriting Ratios - Net

Loss and loss adjustment expense ratio

96.7

%

113.3

%

82.2

%

71.6

%

General and administrative expense ratio6

27.3

%

29.6

%

31.4

%

32.3

%

Policy acquisition cost ratio

21.5

%

20.7

%

21.6

%

21.1

%

Other operating expense ratio6

5.8

%

8.9

%

9.8

%

11.2

%

Combined ratio

124.0

%

142.9

%

113.6

%

103.9

%

Other Items

(Favorable)/Unfavorable prior year reserve development

$

23,433

$

84,365

$

58,337

$

88,068

Points on the loss and loss adjustment expense ratio

9.7

pts

39.1

pts

6.3

pts

10.4

pts

6 Expense ratio excludes interest expense.

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

SUPPLEMENTARY INFORMATION

(in thousands, except for Policies In-Force data)

Three Months Ended Twelve Months Ended

December 31, December 31,

2020 2019 2020 2019

Premiums

Directpremiums $ 302,552 $ 246,927 $ 1,250,748 $ 1,066,112 written -Florida

Directpremiums 66,271 55,728 266,731 226,609 written -Other States

Directpremiums $ 368,823 $ 302,655 $ 1,517,479 $ 1,292,721 written -Total

Directpremiums $ 374,825 $ 321,571 $ 1,395,623 $ 1,233,121 earned

Net premiums $ 242,173 $ 215,819 $ 923,563 $ 842,502 earned



Underwriting Ratios - Net

Loss and lossadjustment 96.7 % 113.3 % 82.2 % 71.6 %expense ratio

General andadministrative 27.3 % 29.6 % 31.4 % 32.3 %expense ratio^6

Policyacquisition 21.5 % 20.7 % 21.6 % 21.1 %cost ratio

Otheroperating 5.8 % 8.9 % 9.8 % 11.2 %expense ratio^6

Combined ratio 124.0 % 142.9 % 113.6 % 103.9 %



Other Items

(Favorable)/Unfavorableprior year $ 23,433 $ 84,365 $ 58,337 $ 88,068 reservedevelopment

Points on theloss and loss 9.7 pts 39.1 pts 6.3 pts 10.4 ptsadjustmentexpense ratio

^6 Expense ratio excludes interest expense.

As of

December 31,

2020

2019

Policies in force

Florida

728,211

662,343

Other States

256,619

226,018

Total

984,830

888,361

Premiums in force

Florida

$

1,252,916

$

1,070,034

Other States

267,033

226,382

Total

1,519,949

1,296,416

Total Insured Value

Florida

$

192,504,430

$

164,654,848

Other States

109,976,625

91,401,560

Total

302,481,055

256,056,408

As of

December 31,

2020 2019

Policies in force

Florida 728,211 662,343

Other States 256,619 226,018

Total 984,830 888,361



Premiums in force

Florida $ 1,252,916 $ 1,070,034

Other States 267,033 226,382

Total 1,519,949 1,296,416



Total Insured Value

Florida $ 192,504,430 $ 164,654,848

Other States 109,976,625 91,401,560

Total 302,481,055 256,056,408

Three Months Ended December 31, 2020

Direct

Loss Ratio

Ceded

Loss Ratio

Net

Loss Ratio

Premiums earned

$

374,825

$

132,652

$

242,173

Loss and loss adjustment expenses:

Core losses

$

134,734

35.9

%

$

190

0.1

%

$

134,544

55.6

%

Weather events7

168,917

45.1

%

92,954

70.1

%

75,963

31.4

%

Prior years' reserve development

93,511

24.9

%

70,078

52.8

%

23,433

9.7

%

Total losses and loss adjustment expenses

$

397,162

105.9

%

$

163,222

123.0

%

$

233,940

96.7

%

7 Includes only current year weather events beyond those expected.

Three Months Ended December 31, 2020

Direct Loss Ceded Loss Net Loss Ratio Ratio Ratio

Premiums $ 374,825 $ 132,652 $ 242,173 earned



Loss andloss adjustmentexpenses:

Core losses $ 134,734 35.9 % $ 190 0.1 % $ 134,544 55.6 %

Weather 168,917 45.1 % 92,954 70.1 % 75,963 31.4 %events^7

Prioryears' 93,511 24.9 % 70,078 52.8 % 23,433 9.7 %reservedevelopment

Totallosses andloss $ 397,162 105.9 % $ 163,222 123.0 % $ 233,940 96.7 %adjustmentexpenses



^7 Includes only current year weather events beyond those expected.

Twelve Months Ended December 31, 2020

Direct

Loss Ratio

Ceded

Loss Ratio

Net

Loss Ratio

Premiums earned

$

1,395,623

$

472,060

$

923,563

Loss and loss adjustment expenses:

Core losses

$

538,826

38.6

%

$

316

0.1

%

$

538,510

58.3

%

Weather events7

256,917

18.4

%

94,954

20.1

%

161,963

17.6

%

Prior years' reserve development

284,315

20.4

%

225,978

47.9

%

58,337

6.3

%

Total losses and loss adjustment expenses

$

1,080,058

77.4

%

$

321,248

68.1

%

$

758,810

82.2

%

7 Includes only current year weather events beyond those expected.

Twelve Months Ended December 31, 2020

Direct Loss Ceded Loss Net Loss Ratio Ratio Ratio

Premiums $ 1,395,623 $ 472,060 $ 923,563 earned



Loss andloss adjustmentexpenses:

Core losses $ 538,826 38.6 % $ 316 0.1 % $ 538,510 58.3 %

Weather 256,917 18.4 % 94,954 20.1 % 161,963 17.6 %events^7

Prioryears' 284,315 20.4 % 225,978 47.9 % 58,337 6.3 %reservedevelopment

Totallosses andloss $ 1,080,058 77.4 % $ 321,248 68.1 % $ 758,810 82.2 %adjustmentexpenses



^7 Includes only current year weather events beyond those expected.

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands, except for per share data)

Three Months Ended

Twelve Months Ended

Guidance

December 31,

December 31,

Full Year 2021E

2020

2019

2020

2019

Income (Loss) Before Income Taxes

$

(26,999)

$

(69,053)

$

24,231

$

63,517

Adjustments:

Reinstatement premium, net of commissions8

-

582

-

2,541

Net unrealized (gains)/losses on equity securities

(2,187)

(824)

(25)

(23,188)

Net realized (gains)/losses on investments

(9,058)

(437)

(63,352)

12,715

Interest Expense

17

45

102

248

Total Adjustments

(11,228)

(634)

(63,275)

(7,684)

Non-GAAP Adjusted Operating Income

$

(38,227)

$

(69,687)

$

(39,044)

$

55,833

GAAP Diluted EPS

$

(0.57)

$

(1.55)

$

0.60

$

1.36

$2.75 - $3.00

Adjustments:

Reinstatement premium, net of commissions8

-

0.02

-

0.07

Net unrealized (gains)/losses on equity securities

(0.07)

(0.03)

-

(0.68)

Net realized (gains)/losses on investments

(0.29)

(0.01)

(1.98)

0.37

Total Pre-Tax Adjustments

(0.36)

(0.02)

(1.98)

(0.24)

Income Tax on Above Adjustments

0.09

-

0.48

0.06

Total Adjustments

(0.27)

(0.02)

(1.50)

(0.18)

Non-GAAP Adjusted EPS

$

(0.84)

$

(1.57)

$

(0.90)

$

1.18

$2.75 - $3.00

8 Includes reinstatement premiums not covered by reinstatement premium protection and related commissions.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210225005996/en/

CONTACT: Investor Relations Contact: Rob Luther, 954-595-7272 VP, Corporate Development, Strategy & IR rluther@universalproperty.com

CONTACT: Media Relations Contact: Andy Brimmer / Mahmoud Siddig, 212-355-4449 Joele Frank, Wilkinson Brimmer Katcher