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UNIVERSAL INSURANCE HOLDINGS, INC. (UVE)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered solid growth with total revenues of $400.1 million (+5.2% YoY) and adjusted diluted EPS of $1.23; GAAP diluted EPS was $1.21. Underwriting remained disciplined despite a higher ceded premium ratio; adjusted ROCE was 29.4% .
  • Universal beat Wall Street consensus on both EPS and revenue: EPS $1.23 vs $1.09* and revenue $400.1 million vs $360.0 million*, marking the third consecutive quarterly beat on top and bottom line (also beat in Q1 2025 and Q4 2024)*. The beat was driven by higher net premiums earned, net investment income, and commission revenue, partially offset by a higher ceded premium ratio .
  • Mix shift continued toward non-Florida markets: direct premiums written grew 25.4% in other states, offset by a 2.5% decline in Florida; policies in force rose 4.7% YoY to 872,343. The Florida market backdrop is improving, supporting management’s constructive tone .
  • Capital return remained active: $7.4 million of share repurchases in Q2 with ~$15.2 million authorization remaining and a $0.16 dividend; a new $20 million repurchase program was authorized in May 2025 .
  • Potential stock movers: estimate beats, reinsurance program stability (top-of-tower raised to $2.526B), and multi-year capacity additions vs. watch for continued ceded premium pressure and AM Best’s negative review status for UNAIC (subsidiary, not UPCIC/APPCIC) .

What Went Well and What Went Wrong

What Went Well

  • Strong profitability metrics: adjusted diluted EPS rose to $1.23 (+4.2% YoY) and adjusted ROCE reached 29.4%; management highlighted “very strong 29.4% adjusted return on common equity” and favorable underwriting trends .
  • Growth in non-Florida footprint: direct premiums written increased 25.4% in other states, supporting overall DPW growth (+3.2% YoY) and higher net premiums earned (+4.4% YoY) .
  • Higher investment and commission income: net investment income rose to $17.3 million (from $14.7 million), and commissions/policy fees/other reached $23.5 million (+20% YoY) as reinsurance brokerage commissions benefited from RAP replacement and cat bond shift to traditional coverage .

What Went Wrong

  • Margin compression: operating income margin fell to 12.0% (from 13.0% YoY) and adjusted operating income margin to 12.2% (from 12.8%), primarily due to a higher ceded premium ratio .
  • Higher underwriting ratios: net loss ratio increased 1.7 pts to 72.3%; combined ratio rose 1.9 pts to 97.8% as both loss and expense ratios edged up .
  • Reinsurance-related comp effects: CFO noted year-over-year comparisons reflect different reinsurance programs (prior period including Florida RAP at no cost), contributing to higher ceded premium ratio in Q2 2025 .

Financial Results

Income Statement and EPS vs Prior Periods

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Total revenues ($USD Thousands)$380,214 $384,809 $394,867 $400,141
Core revenue ($USD Thousands)$379,170 $386,414 $394,871 $400,922
Operating income ($USD Thousands)$49,528 $8,957 $57,068 $47,994
Operating income margin (%)13.0% 2.3% 14.5% 12.0%
Adjusted operating income ($USD Thousands)$48,484 $10,562 $57,072 $48,775
Adjusted operating income margin (%)12.8% 2.7% 14.5% 12.2%
Net income to common ($USD Thousands)$35,414 $6,016 $41,436 $35,091
Diluted EPS ($USD)$1.21 $0.21 $1.44 $1.21
Adjusted diluted EPS ($USD)$1.18 $0.25 $1.44 $1.23

Underwriting and Margin Metrics

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Net premiums earned ($USD Thousands)$344,958 $348,354 $355,721 $360,193
Ceded premium ratio (%)29.7% 32.9% 30.7% 31.2%
Loss ratio (%)70.6% 82.3% 70.5% 72.3%
Expense ratio (%)25.3% 25.6% 24.5% 25.5%
Combined ratio (%)95.9% 107.9% 95.0% 97.8%

Segment/Geography and Exposure

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Direct premiums written – Florida ($USD Thousands)$461,018 $342,565 $344,044 $449,715
Direct premiums written – Other States ($USD Thousands)$117,249 $128,330 $123,034 $147,005
Direct premiums written – Total ($USD Thousands)$578,267 $470,895 $467,078 $596,720
Policies in force – Total (Count)833,433 855,526 864,817 872,343
Premiums in force – Total ($USD Thousands)$1,999,705 $2,079,069 $2,094,505 $2,114,219
Total insured value – Total ($USD Thousands)$338,032,365 $358,511,210 $367,791,279 $376,427,554

KPIs and Capital

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Book value per share ($)$13.79 $13.28 $14.98 $16.39
Adjusted book value per share ($)$16.44 $15.53 $16.79 $17.85
Annualized ROCE (%)37.4% 6.2% 41.7% 31.9%
Annualized adjusted ROCE (%)30.5% 6.5% 36.4% 29.4%
Net investment income ($USD Thousands)$14,660 $15,559 $16,060 $17,258
Commissions, policy fees & other revenue ($USD Thousands)$19,552 (11,679+5,576+2,297) $22,501 (16,121+4,219+2,161) $22,093 (16,275+4,493+1,325) $23,471 (15,854+5,603+2,014)
Share repurchases ($USD Millions, quarter)n/a$7.7 n/a$7.4
Dividend per share ($, declared)$0.16 $0.29 (incl. special) $0.16 $0.16

Actuals vs S&P Global Consensus

MetricQ4 2024Q1 2025Q2 2025
Diluted EPS – Actual ($)$0.25 $1.44 $1.23
Diluted EPS – Consensus Mean ($)$0.09*$1.12*$1.09*
EPS Surprise ($)+$0.16*+$0.32*+$0.14*
Total Revenues – Actual ($USD Thousands)$384,809 $394,867 $400,141
Revenues – Consensus Mean ($USD Thousands)$349,905*$354,972*$359,976*
Revenue Surprise ($USD Thousands)+$34,904*+$39,895*+$40,165*

Values marked with * were retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Regular cash dividend per shareQ2 2025$0.16 (Q1 declaration) $0.16 (declared Jul 9, 2025) Maintained
Share repurchase authorizationMay 1, 2025$2.6m remaining (Q4) New $20m board authorization; ~$15.2m remaining in Q2 2025 program Raised
Reinsurance tower – top of cat program (All States)2025–2026Prior year lower by $110m$2.526B; increased by $110m vs 2024–2025 Raised
First event retention (All States)2025–2026$45m$45m (unchanged) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Florida market and legislative reformQ4: Noted three hurricanes, progress in claims trends; modest FL rate decrease filed . Q1: “2022 reforms are working,” lower weather losses; constructive backdrop .CEO: “Florida market continues to improve” with favorable underwriting trends .Improving sentiment; constructive underwriting backdrop
Reinsurance program and costsQ4: 92% of first-event cat tower already placed . Q1: Renewal completed; +$352m multi-year coverage secured .CFO: Cost as % of direct earned premium “not significantly different” YoY; higher ceded ratio driven by RAP replacement. New tower at $2.526B (+$110m) .Stable cost trajectory; stronger capacity and coverage
Geographic mix and competitionQ1: Other states DPW +34.7% YoY; Florida -3.0% .Q2: Other states DPW +25.4% YoY; Florida -2.5%; competition pockets in FL but no broad aggressive pricing .Continued diversification; balanced competitive landscape
Underwriting and ratiosQ4: Combined ratio 107.9% on weather losses . Q1: Combined ratio improved to 95.0% on lower weather .Q2: Combined ratio 97.8%; higher ceded premium ratio pressured margins .Normalization after storm-heavy Q4; still elevated ceded
Capital deploymentQ4: $7.7m buybacks; regular + special dividend . Q1: $0.16 dividend; ongoing buybacks .Q2: $7.4m buybacks; $0.16 dividend; new $20m authorization in May .Consistent returns; expanded buyback capacity
Ratings/regulatoryn/aAM Best maintained under review with negative implications for UNAIC (non-core subsidiary) .External overhang (subsidiary-specific)

Management Commentary

  • CEO (Steve Donaghy): “In the quarter, we delivered a very strong 29.4% adjusted return on common equity… we are encouraged by favorable underwriting trends, as the Florida market continues to improve and we are optimistic as we look ahead” .
  • CFO (Frank Wilcox): “Adjusted diluted earnings per common share was $1.23… mostly stems from higher direct premiums earned, net investment income, and commission revenue, partially offset by a higher ceded premium ratio” .
  • CFO on reinsurance comp effects: “Last year… we were still earning in a program that included the RAP program, which was at no cost… This year… it’s really just comping off a different structured program” .
  • CFO on program cost: “Program… effective June 1, 2025, is not significantly different than… previous period… indication of the improvement in the Florida marketplace” .

Q&A Highlights

  • Reinsurance program and ceded dynamics: Analysts probed cost and structure; management emphasized YoY cost stability as % of direct earned premiums and noted RAP replacement drove higher ceded ratio in current comp .
  • Competitive environment: Management sees pockets of competition in Florida but no broad aggressive appetite; strategy guided by experience and profitability assessment across markets .
  • Capital positioning: CFO noted holding company capital is “abundant” and repurchases are opportunistic when shares are undervalued .
  • Prior year development: Negligible in the quarter, removing a variable from loss ratio interpretation .

Estimates Context

  • UVE beat S&P Global consensus on EPS and revenue in Q2 2025: $1.23 vs $1.09*, and $400.1m vs $360.0m*. Similar beats occurred in Q1 2025 and Q4 2024, suggesting estimates may need to adjust higher for underwriting leverage and investment income tailwinds* .
  • Drivers of the beat: stronger net premiums earned, higher reinvestment yields lifting investment income, and reinsurance brokerage commissions; offset by higher ceded premium ratio .
    Values marked with * were retrieved from S&P Global.

Key Takeaways for Investors

  • Three-quarter streak of top- and bottom-line beats vs S&P Global consensus underpins near-term sentiment; estimate revisions likely skew upward if ceded ratio headwinds stabilize* .
  • Margin pressure from a higher ceded premium ratio should moderate as program cost stability persists and as mix shifts toward other states with growing scale .
  • Geographic diversification is working: other states growth offsets Florida moderation, increasing resilience against state-specific volatility .
  • Capital return remains a consistent pillar: ongoing buybacks ($7.4m in Q2; ~$15.2m remaining authorization) and steady dividends support TSR .
  • Investment income tailwind continues with higher reinvestment yields and larger invested assets, supporting earnings quality .
  • Reinsurance strength: top-of-tower raised to $2.526B and added $352m multi-year capacity enhance risk protection into 2026–2027 .
  • Monitor external risks: AM Best’s under-review status for UNAIC is a non-core subsidiary issue, but a headline overhang to watch .