Universal’s Q1’24 CoR strengthens to 95.5% as net income rises

Universal Insurance Holdings has announced net income of $33.7 million for the first quarter of 2024, an increase of more than 39% on the prior year quarter, as the company’s combined ratio strengthened by 4.5 percentage points to 95.5%.

As well as the rise in net income, which the firm attributes to higher underwriting and investment income, Universal has reported Q1’24 total revenues of $368 million compared with $317 million a year earlier, and a 42.6% rise in operating income to $49.1 million.

Universal attributes the increase in revenue to higher net premiums earned and net investment income, partly offset by lower commission revenue.

In terms of growth, the insurer has reported direct premiums written of $446.2 million, an increase of almost 9% year-on-year, driven by 5.2% growth in Florida and 25.6% growth in other states. Direct premiums earned reached $482.1 million, up 5.9% from the prior year quarter, driven by rate-driven direct premiums written growth over the past year.

The ceded premium ratio fell from 38% in Q1 2023 to 30.7% in Q1 2024, which Universal says reflects efficiencies associated with the 2023-2024 reinsurance program, including the benefits of multi-year reinsurance and the RAP layer, partly offset by higher private market reinsurance pricing.

Net premiums earned rose by more than 18% year-on-year to $334 million in Q1 2024, driven by higher direct premiums earned and the lower ceded premium ratio.

Universal’s combined ratio strengthened from 100% in Q1 2023 to 95.5% in Q1 2024, which reflects a lower loss ratio, which came down 1.2 percentage points to 71.9%, and a lower expense ratio of 23.6%.

In terms of investments, Universal has announced net investment income of $13.5 million compared with $10.7 million a year earlier, which reflects higher fixed income reinvestment yields and higher yields on cash.

Stephen J. Donaghy, Chief Executive Officer, commented: “It was a strong quarter, including a 29.4% annualized adjusted return on common equity and 35.4% adjusted diluted EPS growth year-over-year.

“Results were solid across the board, including profitable underwriting that was complemented by our non-underwriting operations, which is a testament to our differentiated business model. Direct premiums written growth accelerated sequentially, as policies-in-force are stabilizing following our previous underwriting initiatives.

“I’m pleased to announce the completion of our 2024-2025 reinsurance renewal for our insurance entities, as our program is now fully supported and secured. We’ve also secured additional multi-year coverage, taking us through the 2025-2026 hurricane season and have added new, financially strong reinsurers to our existing panel of long-term partners. This achievement reflects the diligence and planning of our reinsurance team throughout the year. Program cost and coverage were consistent with our expectations and we’ll provide specific details at the end of May, as we typically do.”

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