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Universal Announces A $72m Net Loss In Q3

Universal Announces A $72m Net Loss In Q3

Universal Announces A $72m Net Loss In Q3

Universal Announces A $72m Net Loss In Q3

In contrast to the third quarter of the previous year, when Universal Insurance Holdings had a net income of $20.2 million, the third quarter of 2022 saw a net loss of $72.3 million.

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Additionally, the firm disclosed an adjusted net loss of $69.4 million for the quarter, compared to an adjusted net income of $19.8 million for the same period the previous year. The $111.0 million in retained Hurricane Ian losses account for the majority of the reduction in adjusted net income, which has been partially mitigated by greater net investment income and commission income as well as a better net expense ratio.

Universal’s overall revenue for Q3 was $312.8 million, an 8.9% increase from the prior year quarter and core revenue was $316.7 million, up 10.5% from the prior-year quarter.

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Universal Announces A $72m Net Loss In Q3

At the same time, direct premiums written for the quarter were $500.7 million, up 15.6% from the same period last year. Universal stated that the increase stems from a 16.3% growth in Florida and a 12.7% growth in other states.

Moreover, direct premiums earned were $452.5 million for the quarter, a 10.2% increase from the prior-year quarter.

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Net premiums earned for the quarter were $290.6 million, up 9.8% from the prior-year quarter,  while net investment income was $6.1 million, up from $2.8 million in the prior year quarter.

Meanwhile, Universal’s net loss ratio for Q3 was 113.7%, up 42.8 points compared to the prior-year quarter. The increase primarily reflects $111.0 million of retained Hurricane Ian losses and a higher attritional initial accident year loss pick.

Universal Announces A $72m Net Loss In Q3

Stephen J. Donaghy, Chief Executive Officer, commented: “Our thoughts continue to be with all impacted policyholders. Since landfall, we’ve had boots on the ground, helping our insureds in their time of need. As we recently disclosed, our portfolio is underweight in the most impacted regions and is further cushioned by our high proportion of condo unit and renters policies, which provide interior and contents coverage.

ALSO, READ Universal Appoints William Degnan As Chief Claims Officer

“To date, claims volume from Hurricane Ian reflects approximately 50% of Irma’s volume received at this point. We maintain one of the largest claims and legal teams in the state of Florida, providing us with significant resources and capacity to efficiently close Ian-related claims.

Despite our $1 billion estimated gross loss from Hurricane Ian, we have a $3 billion reinsurance tower in place for a subsequent event in the 2022 Atlantic hurricane season and our consolidated retention would be meaningfully lower, highlighting the strength and breadth of our catastrophe reinsurance program.

Universal Announces A $72m Net Loss In Q3

“We’ve started the planning process for the 2023 Atlantic hurricane season and are already well underway, as we have almost $400 million of pre-negotiated multi-year capacity below the Florida Hurricane Catastrophe Fund’s (FHCF) attachment point, approximately $200 million of estimated cost-free coverage from the Reinsurance to Assist Policyholders (RAP) program and a projected $150 million from our catastrophe bond.

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Coupled with our 90% participation in the FHCF, we estimate that the vast majority of our first event 2023 catastrophe reinsurance program will be insulated from open market pricing dynamics. We value our reinsurance partner relationships and appreciate their support.”


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