• 3Q21 direct premiums earned up 15.0% driven by primary rate increases earning-in
• 3Q21 diluted GAAP earnings per share (“EPS”) of $0.64, non-GAAP adjusted EPS¹ of $0.63
• 3Q21 combined ratio of 98.6%
• 3Q21 annualized return on average equity of 16.4%
• Florida primary average rate increase of 14.9% for UPCIC approved during 3Q21

Universal Insurance Holdings (NYSE: UVE) (the “Company”) reported 2021 third quarter diluted EPS of $0.64 on a GAAP basis and $0.63 on a non-GAAP¹ adjusted basis. Quarterly direct premiums earned were up 15.0% from the year-ago quarter to $410.6 million, with an annualized return on average equity of 16.4%.

¹ Excludes net realized and unrealized gains and losses on investments as well as any extraordinary reinstatement premiums and associated commissions (“non-GAAP adjusted EPS”). Reconciliations of GAAP to non-GAAP financial measures are provided in the attached tables.

“Our third quarter results demonstrate continued execution of our multi-year strategic priorities, including disciplined growth and operational improvements,” said Stephen J. Donaghy, Chief Executive Officer. “Our direct premiums earned growth of 15.0% in the third quarter was primarily driven by primary rate increases in Florida earning through the book. We have now filed for more than 34% in primary rate increases in Florida over the past 18 months, while simultaneously continuing to shape our underwriting risks with total policies-in-force relatively flat year-over-year. Our business expenses were lower from continued expense management controls, including lower agency commissions and employee productivity gains, in addition to lower executive compensation accruals. These results were highlighted by a 16.4% annualized return on average equity in the quarter.”

Summary Financial Results

Total revenue declined 7.8% for the quarter, driven primarily by the realized gain on investments of $53.8 million in the third quarter of the prior year, versus a $4.3 million realized gain in the current quarter. Total revenue for the quarter benefited from continued primary rate increases earning through the book as policies renew. GAAP diluted EPS and non-GAAP adjusted EPS results for the quarter were driven primarily by a lower impact from weather events and lower prior years’ development when compared to the prior year’s quarter, partially offset by the impact of current year strengthening. The Company produced an annualized return on average equity of 16.4%.

Underwriting

Direct premiums earned were up 15.0% for the quarter, led by primary rate increases in Florida and other states, while policies-in-force remained relatively flat.

On the expense side, the combined ratio improved 36.1 points for the quarter. The improvement was driven primarily by decreased weather events and lower prior years’ reserve development, in addition to business expense management, partially offset by current year strengthening and higher reinsurance costs impact on the ratio.

• The expense ratio improved 3.7 pointson a direct premiums earned basis due to continued focus on operating efficiencies. On a net basis, the expense ratio improved 5.2 points for the quarter.
• The net loss and LAE ratio improved 30.9 points for the quarter. Quarterly drivers include:
  • A 29.0 point net improvement related to weather events being within the plan.
  • Adverse prior year’s reserve development of $11.5 million ($30.1 million in 3Q20) resulted in an 8.5 point net improvement for the quarter. Net adverse development in the current quarter was driven primarily by continued adjusting and settlement of Hurricane Irma and non-CAT claims on accident years prior to 2020.
  • Core losses of $176.1 million for the quarter ($140.4 million in 3Q20) resulted in a 3.6 point increase on a direct premium earned basis, driven by current year strengthening. On a net basis, core losses increased 6.6 points for the quarter.

Services

Total services revenue increased 12.5% for the quarter. The increase was primarily driven by commission revenue earned on ceded premiums, partially offset by lower policy fees.

Investments

Net investment income decreased 38.6% for the quarter as well as a significant decline in realized gains when compared to the prior year’s quarter. Both decreases are the result of the sale, and subsequent reinvestment at lower yields, of a majority of securities in the portfolio that were in an unrealized gain position in the third and fourth quarters of 2020 to recognize the fair value benefits in surplus.

Capital Deployment

During the third quarter, the Company repurchased approximately 101 thousand shares at an aggregate cost of $1.4 million. The Company’s current share repurchase authorization program has $17.8 million remaining as of September 30, 2021 and runs through November 3, 2022.

On July 19, 2021, the Board of Directors declared a quarterly cash dividend of 16 cents per share of common stock, which was paid on August 9, 2021, to shareholders of record as of the close of business on August 2, 2021.

Guidance

The Company is maintaining its guidance for 2021 (assuming no further extraordinary weather events and no realized or unrealized gains in 2021):

• GAAP and Non-GAAP Adjusted EPS in a range of $2.75 - $3.00
• Annualized return on average equity in a range of 17.0% - 19.0%

Conference Call and Webcast

• Thursday, October 28, 2021 at 9:00 a.m. ET
• U.S. Dial-in Number: (855) 752-6647
• International: (503) 343-6667
• Participant code: 3793583
• 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: 3793583 through November 12, 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 and Key Performance Indicators

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 any 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 any 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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.

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.

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