Florida-based and expanding primary insurance company Universal Insurance Holdings has reported a combined combined ratio of 116.9% for the third quarter of 2024, an increase of 6.2 points from the comparable quarter, reflecting an increase in both net claims and reflected in the net expense ratio.
The insurer’s net loss ratio increased 4.7 points to 91.7% in the third quarter of 2024, compared to 875 in the third quarter of 2023, primarily due to higher weather-related losses, primarily from Hurricane Helene, partially driven by favorable reserve development in the previous year were balanced.
The net expense ratio was reported at 25.2%, an increase of 1.5 points from 23.7% in the third quarter of 2023, reflecting higher policy acquisition costs related to growth outside of Florida and higher other operating expenses.
Net loss available to common shareholders was $16.2 million in the third quarter of 2024, an increase from $5.9 million in the year-ago quarter. Available adjusted net loss was $20.8 million, compared to $4.6 million in the year-ago quarter. The insurer attributed the higher adjusted net loss primarily to lower underwriting income, partially offset by higher net investment income and commission income.
Universal’s quarterly revenue was $387.6 million, up 7.6% year-over-year. Core revenue reached $381.4 million, up 5.4% year over year. This growth was driven by higher net premiums earned, net investment income and commission income.
Direct premiums written by the insurer were $574.4 million, up 8% from the year-ago quarter, with growth of 2.1% in Florida and 32.9% in other states. This growth reflects higher policy measures, interest rate increases and inflation adjustments.
Direct premiums earned were $507.7 million, an increase of 7% from the year-ago quarter, driven by growth in direct premiums written over the trailing twelve months.
The premium ceded rate for the third quarter of 2024 was 31.9%, an increase from 30.2% in the year-ago quarter, primarily due to the replacement of the Reinsurance to Assist Policyholders (RAP) layer provided by the state of Florida with a private one market coverage.
Universal reported net earned premiums of $345.7 million for the quarter, up 4.4% from the year-ago quarter, driven by higher direct earned premiums, partially offset by a higher ceded premium rate.
Finally, net investment income was $15.4 million, up from $12.8 million in the year-ago quarter, reflecting higher fixed income reinvestment returns and higher invested assets.
The insurer reported commissions, policy fees and other revenue of $20.3 million, up 12.7% from the year-ago quarter, reflecting the replacement of the RAP layer with private market coverage and the replacement of the catastrophe bond with traditional reinsurance coverage in 2024 -2025 program.
For the third quarter of 2024, the operating loss margin was 4.3%, compared to 1.7% in the year-ago quarter. Adjusted operating loss margin was 5.9%, up from 1.3% in the year-ago quarter.
Stephen J. Donaghy, Chief Executive Officer of Universal Insurance Holdings, commented: “Our hearts and thoughts are with those affected by recent disasters, including Hurricanes Debbie and Helene in the third quarter and Hurricane Milton in the fourth quarter.”
“We have experienced many hurricanes in our nearly three-decade history and have the experience necessary to get policyholders back on their feet quickly and efficiently. Our comprehensive reinsurance coverage and the strong reinsurance relationships we have developed over many years give us the financial resilience to weather both high-frequency and high-severity storm seasons.
“As we previously announced, our consolidated deductible for subsequent events is decreasing and we expect reduced financial impacts from weather, including Hurricane Milton, in the fourth quarter. Non-catastrophe underwriting trends continue to improve and we are very confident about the future.
“On a separate note, earlier this month we opened for business in Wisconsin, our 19th state. We are pleased to be able to offer our insurance products there as we continue to expand into new markets, diversify our business portfolio and increase our addressable market.”
