Universal Insurance Hldgs (NYSE:UVE) released first-quarter financial results and hosted an earnings call on Friday. Read the complete transcript below.

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Summary

Universal Insurance Hldgs reported a strong start to 2026 with a 38.5% annualized adjusted return on common equity.

Adjusted diluted earnings per share increased to $2 from $1.44 in the prior year, driven by a lower net loss ratio and higher net investment income.

Core revenue rose by 0.8% year over year, and direct premiums written increased by 8.5%, with notable growth in Florida and other states.

The company completed its 2026-2027 reinsurance renewal and secured $352 million of additional multi-year coverage.

The net combined ratio improved to 89.7%, reflecting better accident year results, despite a higher net expense ratio.

Universal Insurance Hldgs repurchased approximately 210,000 shares at a total cost of $7.1 million and declared a quarterly cash dividend of $0.16 per share.

Management expressed confidence in their competitive position and capital management strategy, prioritizing insurance entity capitalization and shareholder value.

Full Transcript

OPERATOR

Good morning ladies and gentlemen. Welcome to Universal's first quarter 2026 earnings conference call. As a reminder, this conference call is being recorded. I'll now turn the conference over to Arash Solemani, Chief Strategy Officer. Good morning.

Arash Solemani (Chief Strategy Officer)

Thank you for joining us today. Welcome to our quarterly earnings call. On the call with me today are Steve Donaghy, Chief Executive Officer and Frank Wilcox, Chief Financial Officer. Before we begin, please note today's discussion may contain forward looking statements and non-GAAP financial measures. Forward looking statements involve assumptions, risks and uncertainties that could cause actual results to differ materially from those statements. For more information, please see the press release and Universal Insurance Hldgs' SEC filings, all of which are available on the Investors section of our website at universalinsuranceholdings.com and on the SEC's website. A reconciliation of non-GAAP financial measures to comparable GAAP measures is included in the quarterly press release and can also be found on Universal's website at universalinsuranceholdings.com With that, I'll turn the call over to Steve.

Steve Donaghy (Chief Executive Officer)

Thanks Arash. Good morning everyone. We had a fantastic start to the year with a 38.5% annualized adjusted return on common equity. Our top line results were strong with growth across our multistate footprint including in Florida. On a separate note, I'm pleased to announce the completion of our 2026-2027 reinsurance renewal for our insurance entities as our program is now fully supported and secured during the renewal process in 2026. We also secured $352 million of additional multi year coverage taking us through the 2027-2028 treaty period. I'll turn it over to Frank to walk through our financial results.

Frank Wilcox (Chief Financial Officer)

Frank thank you Steve and good morning. Adjusted diluted earnings per common share was $2 compared to an adjusted diluted earnings per common share of $1.44 in the prior year quarter. The higher adjusted diluted earnings per common share mostly stems from a lower net loss ratio and higher net investment income. Core revenue of 398.2 million was up 0.8% year over year with growth primarily stemming from higher net investment income and net premiums earned. Direct Premiums written were 506.5 million, up 8.5% from the prior year quarter. The increase stems from 4.9% growth in Florida and 18.3% growth in other states. Overall growth mostly reflects higher policies in force and inflation adjustments across our multi-state footprint. Direct premiums earned were 531.4 million, up 3.5% from the prior year quarter reflecting direct premiums written growth over the last 12 months. Net premiums earned were 356.9 million, up 0.3% from the prior year quarter. The increase is primarily attributable to higher direct premiums earned, partially offset by a higher ceded premium ratio. The net combined ratio was 89.7%, down 5.3 points compared to the prior year quarter. The decrease reflects a lower net loss ratio, partially offset by a higher net expense ratio. The 63.9% net loss ratio was down 6.6 points compared to the prior year quarter, with the decrease reflecting better current accident year results. The net expense ratio was 25.8%, up 1.3 points compared to the prior year quarter, with the increase primarily driven by a higher ceded premium ratio and higher policy acquisition costs associated with growth outside of Florida. During the first quarter, the company repurchased approximately 210,000 shares at an aggregate cost of 7.1 million. The company's current share repurchase authorization program has approximately 13.1 million remaining. On April 10, 2026, the Board of Directors declared a quarterly cash dividend of $0.16 per share of common stock payable on May 15, 2026 to shareholders of record as of the close of business on May 8, 2026. With that, I'd like to ask the operator to open up the line for questions.

OPERATOR

Thank you. At this time we'll conduct a question and answer session. As a reminder to ask the question, you will need to press Star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. The please stand by while we compile the Q and A roster. And our first question comes from the line of Paul Newsom of Piper Saint Elite. Your line is now open. Good morning.

Paul Newsom (Equity Analyst)

Congratulations on the quarter. Maybe we could just start off with some thoughts or color on the competitive environment both in Florida and outside of Florida gets lots of investor questions about whether or not we're seeing a change in the number of folks who are competing in those markets and maybe the speed at which obviously the returns on equity that you and others are reporting are so huge, whether or not that it will attract a lot of new competitors.

Steve Donaghy (Chief Executive Officer)

Hey Paul, Good morning and thank you. You know, I think from a competitive perspective we analyze our rates and are chasing rate adequacy more than we are chasing business. So from a competitive perspective we feel good about where we stand and obviously from the quarter, you know, we can bring on business when we want to and we see the markets profitably so, you know, that's probably the answer I would give you. There is competition everywhere but we feel good about our position and our relationship with our agents has never been stronger. So yeah.

Paul Newsom (Equity Analyst)

Should we expect further price adjustments and rate adjustments for you folks in the future?

Steve Donaghy (Chief Executive Officer)

You know, we haven't kicked off our rate analysis at this point. So as we get ready to do that, we will review the past 12 months and see how that impacts and you know, I think as we continue to benefit from the legislative environment and our business, you know, we will do the right thing by our shareholders and our partners. So we'll take that all into account and continue to do the right thing.

Paul Newsom (Equity Analyst)

Maybe some thoughts on capital management. Obviously given where the returns on accumulating some excess capital? how do you balance the various uses of the capital today and should we expect further share repurchases as a focus or not? Or maybe you can just prioritize how you think about that.

Frank Wilcox (Chief Financial Officer)

Morning Paul, this is Frank. I think we're going to stay the course. Our number one priority with capital has always been to support the insurance entities ensuring that they are adequately capitalized so

Paul Newsom (Equity Analyst)

that we can continue to produce the business that benefits the entire holding company system. That combined with continuing to return shareholder value. Great. I'll let anybody else ask questions, but appreciate the help. Thank you.

Frank Wilcox (Chief Financial Officer)

Thanks Paul. Have a good day.

OPERATOR

Thank you. One moment for our next question. Our next question comes from the line of Nicholas Lagaviello of Darling Partners. Your line is now open.

Nicholas Lagaviello (Equity Analyst)

Morning. Congrats on the quarter and thanks for taking my questions.

Steve Donaghy (Chief Executive Officer)

Could we just start? I was wondering if there's any additional details or commentary you could provide around the outcome of your reinsurance renewal. Good morning Nick, and thanks. Appreciate the comments. I think from the reinsurance perspective we are very excited to be done and have it fully secured for 2026-2027. We were quite happy that we also extended our multi year agreements. You know, from a pricing perspective we're going to sit on that until we get to May and release all the details as normal. We think it'd be premature for us to kind of make public comments relative to how we did, but we were very pleased with the market and very pleased with our partners for many, many years and how they treated us relative to this year.

Nicholas Lagaviello (Equity Analyst)

Got it. I know we'll see more details in May, but I mean is there anything you could comment on and how we should think about the retention? Is it fair to assume it would be similar on a GAAP basis, versus the prior year and it would include some captive usage I get. Obviously, you'll have the opportunity to maybe buy down, you know, but as it stands today, is that a fair assumption? Yeah. The retentions will remain the same for the insurance entities, 45 million. We plan to continue to use the captive in the same manner for the $66 million layer above 45 million for the first event. So structurally identical to last year. Okay, appreciate it, guys. Thank you.

Steve Donaghy (Chief Executive Officer)

Have a good day.

OPERATOR

Thank you. I'm showing no further questions at this time. I'll now turn it back to Steve Donaghy for closing remarks. Thank you. I'd like to thank all of our associates, consumers, agents, and our stakeholders for their continued support of Universal. Have a nice day. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.