Universal Insurance reports Q3’24 CoR of 116.9% and net loss of $16.2m

Florida-domiciled and expansive primary insurance company, Universal Insurance Holdings, has reported a Q3 2024 combined ratio of 116.9%, up by 6.2 points from the comparative quarter, reflecting an increase in both the net loss and net expense ratios.

The insurer’s net loss ratio increased by 4.7 points in Q3 2024 to 91.7%, compared to 87% in Q3 2023, primarily due to higher weather-related losses, mainly from hurricane Helene, which were partly offset by favourable prior-year reserve development.

The net expense ratio was reported at 25.2%, an increase of 1.5 points from Q3 2023’s 23.7%, driven by higher policy acquisition costs associated with growth outside Florida and higher other operating costs.

Net loss available to common stockholders was $16.2 million in Q3 2024, up from $5.9 million in the same quarter last year. The adjusted net loss available was $20.8 million, compared to $4.6 million in the prior year quarter. The insurer attributed to higher adjusted net loss mainly to reduced underwriting income, partially offset by increased net investment income and commission revenue.

Universal’s revenue for the quarter was $387.6 million, reflecting a 7.6% year-on-year increase, with core revenue reaching $381.4 million, up to 5.4% from the prior year. This growth was driven by higher net premiums earned, net investment income, and commission revenue.

Direct premiums written by the insurer were reported at $574.4 million, an 8% increase from the prior-year quarter, with 2.1% growth in Florida and 32.9% growth in other states. This growth reflects higher policy counts, rate increases, and inflation adjustments.

Direct premiums earned were $507.7 million, an increase of 7% from the prior-year quarter, driven by growth in direct premiums written over the past twelve months.

The ceded premium ratio for Q3 2024 was 31.9%, up from 30.2% in the prior year quarter, primarily due to replacing the Reinsurance to Assist Policyholders (RAP) layer, provided by the state of Florida, with private market coverage.

Universal reported for the quarter, net premiums earned of $345.7 million, an increase of 4.4% from the prior-year quarter, driven by higher direct premiums earned, partly offset by a higher ceded premium ratio.

Finally, the net investment income was $15.4 million, up from $12.8 million in the prior year quarter, due to higher fixed-income reinvestment yields and higher invested assets.

The insurer reported commissions, policy fees and other revenue were $20.3 million, up 12.7% from the prior-year quarter, driven by the replacement of the RAP layer with private market coverage and the replacement of the catastrophe bond with traditional reinsurance coverage in the 2024-2025 programme.

For Q3 2024, the operating loss margin was 4.3%, compared to 1.7% in the prior-year quarter. The adjusted operating loss margin was 5.9%, up from 1.3% in the prior-year quarter.

Stephen J. Donaghy, Chief Executive Officer, Universal Insurance Holdings, commented: “Our hearts and thoughts go out to those impacted by recent disasters, including Hurricanes Debbie and Helene in the third quarter and Hurricane Milton in the fourth quarter.

“We’ve been through many hurricanes in our nearly three-decade history, arming us with the requisite experience to quickly and efficiently get policyholders back on their feet. Our substantial reinsurance protection and the strong reinsurance relationships that we’ve built over many years provide us with the financial resilience to weather both high-frequency and high-severity storm seasons.

“As we’ve previously disclosed, our consolidated retention drops for subsequent events and we expect a smaller financial impact from weather in the fourth quarter, inclusive of Hurricane Milton. Non-catastrophe underwriting trends continue to improve and we’re highly encouraged as we look ahead.

“On a separate note, we opened for business in Wisconsin at the beginning of the month, our 19th state. We’re excited to offer our insurance products there, as we continue to expand to new markets, diversifying our book of business and growing our addressable market.”

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