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UNIVERSAL INSURANCE HOLDINGS, INC.

UNIVERSAL INSURANCE HOLDINGS, INC.UVEEarnings & Financial Report

NYSE · Financials · Fire, Marine & Casualty Insurance

New York Life Insurance Company (NYLIC), most commonly known as New York Life, is the second-largest life insurance company and the largest mutual life insurance company in the United States, and is ranked #69 on the 2025 Fortune 500 list of the largest U.S. corporations by total revenue. In 2025, NYLIC achieved the best possible ratings by the four independent rating companies. Other New York Life affiliates provide an array of securities products and services, as well as institutional and r...

What changed in UNIVERSAL INSURANCE HOLDINGS, INC.'s 10-K — 2022 vs 2023

Top changes in UNIVERSAL INSURANCE HOLDINGS, INC.'s 2023 10-K

421 paragraphs added · 447 removed · 328 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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The long-term effectiveness of these changes will depend on many factors, including, but not limited to, the manner in which the reforms are interpreted by courts and applied by regulatory authorities, our effectiveness in implementing operational and procedural changes to account for the reform, the impact of the changes on policyholders, public adjusters, vendors and attorneys, and the impact of economic conditions such as inflation on claims costs and related expenses.
The long-term effectiveness of these changes will depend on many factors, including, but not limited to, the manner in which the reforms are interpreted by courts and applied by regulatory authorities, our effectiveness in implementing operational and procedural changes to account for the reforms, the impact of the changes on policyholders, public adjusters, vendors and attorneys, and the impact of economic conditions such as inflation on claims costs and related expenses.
In hard market cycles, such as Florida is currently experiencing, the availability of homeowners insurance can be negatively affected by insurers’ available capacity to absorb risks, their rate levels in relation to anticipated losses, loss adjustment expenses and reinsurance costs, and uncertainties regarding the future effectiveness of reforms designed to combat abuses.
In hard market cycles, such as what Florida is currently experiencing, the availability of homeowners insurance can be negatively affected by insurers’ available capacity to absorb risks, their rate levels in relation to anticipated losses, loss adjustment expenses and reinsurance costs, and uncertainties regarding the future effectiveness of reforms designed to combat abuses.
The nature, size and experience of our primary competitors varies across the states in which we do business. Several states, including Florida, have insurance mechanisms that provide insurance to consumers who are not otherwise able to obtain coverage in the private insurance market. The largest such insurance mechanism is Florida’s Citizens Property Insurance Corporation (“Citizens”).
The nature, size and experience of our primary competitors varies across the states in which we do business. 7 Several states, including Florida, have insurance mechanisms that provide insurance to consumers who are not otherwise able to obtain coverage in the private insurance market. The largest such insurance mechanism is Florida’s Citizens Property Insurance Corporation (“Citizens”).
From time to time, states also enact legislation designed to increase consumer protections and curtail fraud or abuses in the insurance market. State insurance laws and regulations affect substantially all aspects of our business. Accordingly, interpretations of those laws and changes to those laws over time have significant impacts on our business, whether favorable or unfavorable.
From time to time, states also enact legislation designed to increase consumer protections and curtail fraud or abuses in the insurance market. 9 State insurance laws and regulations affect substantially all aspects of our business. Accordingly, interpretations of those laws and changes to those laws over time have significant impacts on our business, whether favorable or unfavorable.
We also strive to provide excellent service to our independent agents and brokers, which has yielded long-standing partnerships with our independent agents (a number of which have relationships that span more than a decade) that benefit the Company in our target markets through hard and soft market cycles.
We also strive to provide excellent service to our independent agents and brokers, which has yielded long-standing partnerships with our independent agents (a number of which have relationships with us that span more than a decade) that benefit the Company in our target markets through hard and soft market cycles.
Our investment guidelines for fixed-income investments require an average duration of 5 years or less and a portfolio average credit rating of A- or better. In addition, our investment guidelines, 6 including single-issue and aggregate limitations, promote diversification to limit exposure to single-sector risks.
Our investment guidelines for fixed-income investments require an average duration of 5 years or less and a portfolio average credit rating of A- or better. In addition, our investment guidelines, including single-issue and aggregate limitations, promote diversification to limit exposure to single-sector risks.
These laws, among other things, (i) require us to file periodic information with the FLOIR, including information concerning our capital structure, ownership, financial condition and general business operations, (ii) regulate certain transactions between us and our affiliates, including the amount of dividends and other distributions, the terms of surplus notes and amounts that our affiliates can charge the Insurance Entities for services such as policy administration and claims administration, and (iii) restrict the ability of any one person to acquire certain levels of our voting securities without prior regulatory approval.
These laws, among other things, (i) require us to file periodic information with the FLOIR, including information concerning our capital structure, ownership, financial condition and general business operations, (ii) regulate certain transactions between our Insurance Entities and affiliates, including the amount of dividends and other distributions the Insurance Entities may pay, the terms of surplus notes and amounts that our affiliates can charge the Insurance Entities for services such as policy administration and claims administration, and (iii) restrict the ability of any one person to acquire certain levels of our voting securities without prior regulatory approval.
The maximum amount of dividends that can be paid by Florida insurance companies such as the Insurance Entities without prior approval of the Commissioner of the FLOIR is subject to restrictions relating to statutory surplus.
The maximum amount of dividends that can be paid by Florida insurance companies such as the Insurance Entities without prior approval of the FLOIR is subject to restrictions relating to statutory surplus.
Developing and implementing our reinsurance strategy to adequately protect our balance sheet and Insurance Entities in the event of one or more catastrophes while maintaining efficient reinsurance costs has been a key strategic priority for UVE. For 2022, the Insurance Entities utilized excess of loss reinsurance in various forms.
Developing and implementing our reinsurance strategy to adequately protect our balance sheet and Insurance Entities in the event of one or more catastrophes while maintaining efficient reinsurance costs has been a key strategic priority for UVE. For 2023, the Insurance Entities utilized excess of loss reinsurance in various forms.
The benefits of the reinsurance strategy in 2022 and the specific programs are further discussed in “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations.” In order to limit our potential exposure to catastrophic events, the Insurance Entities purchase significant reinsurance from a variety of third-party reinsurers, including traditional reinsurers, alternative capital providers (e.g., via catastrophe bonds) and government entities such as the Florida Hurricane Catastrophe Fund (the “FHCF”).
The benefits of the reinsurance strategy in 2023 and the specific programs are further discussed in “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 8 In order to limit our potential exposure to catastrophic events, the Insurance Entities purchase significant reinsurance from a variety of third-party reinsurers, including traditional reinsurers, alternative capital providers (e.g., via catastrophe bonds), and government entities such as the Florida Hurricane Catastrophe Fund (the “FHCF”).
For example, volatility and market dislocation were evident in Florida following Hurricane Andrew in 1992, the 2004 and 2005 hurricane seasons (during which eight hurricanes made landfall in coastal states), as well as following 2017 (Hurricane Irma), 2018 (Hurricanes Michael and Florence) and 2022 (Hurricane Ian).
For example, volatility and market dislocation were evident in Florida following Hurricane Andrew in 1992, the 2004 and 2005 hurricane seasons (during which eight hurricanes made landfall in coastal states), as well as following 2017 (Hurricane Irma), 2018 (Hurricanes Michael and Florence), 2022 (Hurricane Ian) and 2023 (Hurricane Idalia).
The Insurance Entities’ respective 2022-2023 reinsurance programs meet the FLOIR’s requirements, which are based on, among other things, successfully demonstrating cohesive and comprehensive reinsurance programs that satisfy a series of stress test catastrophe loss scenarios based on past historical events.
The Insurance Entities’ respective 2023-2024 reinsurance programs meet the FLOIR’s requirements, which are based on, among other things, successfully demonstrating cohesive and comprehensive reinsurance programs that satisfy a series of stress test catastrophe loss scenarios based on past historical events.
However, in each case, these reforms either were not effective or merely served to slow the pace of the market’s deterioration but did not address the underlying causes and therefore were not effective in stemming the adverse loss and loss adjustment expense environment that plagued the market.
However, in each case, these reforms either were not effective or merely served to slow the pace of the market’s deterioration but did not address the underlying causes and therefore did not stem the adverse loss and loss adjustment expense environment that plagued the market.
We have made substantial efforts in recent years to innovate across all of our service businesses, including continued development of our digital agency Clovered.com, where we have more than 20 carrier partners, and utilization of digital applications where applicable to adjust claims.
We have made substantial efforts in recent years to innovate across all of our service businesses, including continued development of our digital agency Clovered.com, where we have more than 41 carrier partners, and utilization of digital applications where applicable to adjust claims.
The benefits of UVE’s reinsurance strategy in 2022 and the specific programs are further discussed below and in “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Competition The market for homeowners insurance typically is highly competitive.
The benefits of UVE’s reinsurance strategy in 2023 and the specific programs are further discussed below and in “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Competition The market for homeowners insurance typically is highly competitive.
Dividends paid by our subsidiaries other than the Insurance Entities are not subject to the statutory restrictions set forth in the Florida Insurance Code. Dividends paid by UVE to our shareholders in 2022 were paid from the earnings of UVE and our subsidiaries other than the Insurance Entities. State insurance laws govern the payment of dividends by insurance companies.
Dividends paid by our subsidiaries other than the Insurance Entities are not subject to the statutory restrictions set forth in the Florida Insurance Code. Dividends paid by UVE to our shareholders in 2023 were paid from the earnings of UVE and our subsidiaries other than the Insurance Entities. State insurance laws govern the payment of dividends by insurance companies.
These regulations (i) restrict certain policy non-renewals or cancellations and require advance notice on certain policy non-renewals and (ii) from a practical standpoint, limit or delay rate changes for a specified period during or after a catastrophe event.
These regulations (i) restrict certain policy non-renewals or cancellations and require advance notice of certain policy non-renewals and (ii) from a practical standpoint, limit or delay rate changes for a specified period during or after a catastrophe event.
The Company filed its most recent ORSA summary report in May 2022. Capital Requirements State insurance authorities monitor insurance companies’ solvency and capital requirements using various statutory requirements and industry ratios. Initially, states require minimum capital levels based on the lines of business written by a company and set requirements regarding the ongoing amount and composition of capital.
The Company filed its most recent ORSA summary report in May 2023. 10 Capital Requirements State insurance authorities monitor insurance companies’ solvency and capital requirements using various statutory requirements and industry ratios. Initially, states require minimum capital levels based on the lines of business written by a company and set requirements regarding the ongoing amount and composition of capital.
Most states, including Florida, have enacted the NAIC guidelines as statutory requirements, and insurers having less surplus than required by applicable statutes and ratios are subject to varying degrees of regulatory action 10 depending on the level of capital inadequacy. As of December 31, 2022, the Insurance Entities’ RBC ratios exceed applicable statutory requirements.
Most states, including Florida, have enacted the NAIC guidelines as statutory requirements, and insurers having less surplus than required by applicable statutes and ratios are subject to varying degrees of regulatory action depending on the level of capital inadequacy. As of December 31, 2023, the Insurance Entities’ RBC ratios exceed applicable statutory requirements.
Currently, due to adverse market conditions including the proliferation of claims-related litigation in Florida, UPCIC and other authorized insurers have implemented rate increases in Florida that in many instances have exceeded and continue to exceed the amount by which Citizens may increase its rates in any single year.
Currently, due to adverse market conditions, including the proliferation of claims-related litigation in Florida, the Insurance Entities and other authorized insurers have implemented rate increases in Florida that in many instances have exceeded and continue to exceed the amount by which Citizens may increase its rates in any single year.
Investments Funds in excess of operating needs from the Insurance Entities and UVE are invested in accordance with our investment policy guidelines. The Investment Committee of our Board of Directors (the “Board of Directors” or the “Board”) oversees the investment portfolio and reports overall investment results to our Board, at least on a quarterly basis.
Investments 6 Funds in excess of operating needs for the Insurance Entities and UVE are invested in accordance with our investment policy guidelines. The Investment Committee of our Board of Directors (the “Board of Directors” or the “Board”) oversees the investment portfolio and reports overall investment results to our Board, at least on a quarterly basis.
Alder’s data intelligence allows the Insurance Entities, ERA and our reinsurance partners to identify trends and refine the underwriting process and guidelines to seek adequate price related to risk and identify needed adjustments. Our claims management operations provide cost-effective solutions in servicing claims for the Insurance Entities and generates additional fee income from adjusting claims ceded to reinsurers.
Alder’s data intelligence allows the Insurance Entities, ERA, and our reinsurance partners to identify trends and refine the underwriting process and guidelines to seek adequate pricing and identify needed adjustments. Our claims management operations provide cost-effective solutions in servicing claims for the Insurance Entities and generates additional fee income from adjusting claims ceded to reinsurers.
Our in-house claims litigation team continues to focus on more effectively and efficiently protecting our rights in litigation, including through subrogation. Subrogation is the act of seeking reimbursement from a third party that caused an insurance loss to an insured for the amount we paid on the insured’s behalf.
Our in-house claims litigation team continues to focus on more effectively and efficiently protecting our rights in litigation, including through subrogation. Subrogation is the act of seeking reimbursement from a third party that caused a covered event to an insured for the amount we paid on the insured’s behalf.
The Florida Office of Insurance Regulation (“FLOIR”) requires the Insurance Entities, like all residential property insurance companies doing business in Florida, to have a certain amount of capital and reinsurance coverage in order to cover losses upon the occurrence of a single catastrophic event and a series of catastrophic events occurring in the same hurricane season.
The FLOIR requires the Insurance Entities, like all residential property insurance companies doing business in Florida, to have a certain amount of capital and reinsurance coverage in order to cover losses upon the occurrence of a single catastrophic event and a series of catastrophic events occurring in the same hurricane season.
In addition, UVE’s strong operating teams and streamlined in-house value-added services strive to provide value to consumers through operating efficiencies across the business. Our monthly weighted average renewal retention rate for the year ended December 31, 2022 was 85.0%. Reinsurance Reinsurance enables the Insurance Entities to limit potential exposures to catastrophic events.
In addition, UVE’s strong operating teams and streamlined in-house value-added services strive to provide value to consumers through operating efficiencies across the business. Our monthly weighted average renewal retention rate for the year ended December 31, 2023 was 88.6%. Reinsurance Reinsurance enables the Insurance Entities to limit potential exposures to catastrophic events.
The December 2022 reforms include eliminating policyholders’ statutory one-way right to attorneys’ fees; prohibiting the assignment of post-loss benefits under 9 residential property insurance policies; establishing a clearer standard for policyholders to substantiate bad faith actions; and improving the usefulness of Florida’s offer of judgment statute in resolving disputes.
The December 2022 reforms included eliminating policyholders’ statutory one-way right to attorneys’ fees; prohibiting the assignment of post-loss benefits under residential property insurance policies; establishing a clearer standard by which policyholders must substantiate bad faith actions; and improving the usefulness of Florida’s offer of judgment statute in resolving disputes.
(“Demotech”) and “A-” by Kroll Bond Rating Agency (“Kroll”), which are rating agencies specializing in evaluating insurer financial strength and stability. Our combined statutory capital surplus was approximately $423.7 million at December 31, 2022. Risk Management Our subsidiary, Evolution Risk Advisors, Inc. (“ERA”, formerly Universal Risk Advisors, Inc.), is the managing general agent for the Insurance Entities.
(“Demotech”) and “A-” by Kroll Bond Rating Agency (“Kroll”), which are rating agencies specializing in evaluating insurer financial strength and stability. Our combined statutory capital surplus was approximately $376.5 million at December 31, 2023. Risk Management Our subsidiary, Evolution Risk Advisors, Inc. (“ERA,” formerly Universal Risk Advisors, Inc.), is the managing general agent for the Insurance Entities.
Markets and Competition Markets We sell insurance products in the following 19 states: Alabama, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Maryland, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, South Carolina and Virginia. We have additional licenses to write in Tennessee and Wisconsin.
Markets and Competition Markets We sell insurance products in the following 18 states: Alabama, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Maryland, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, South Carolina and Virginia. We have additional licenses to write in Tennessee and Wisconsin and are in the process of withdrawing from Hawaii.
Reflecting our efforts to improve and enhance our claims operations and to address emerging claims and litigation trends, approximately 68% of our employees work in our claims management operations. Of these employees, 39% comprise our in-house claims litigation team. Distribution We market and sell our products primarily through our network of over 10,000 licensed independent agents (4,100 in Florida).
Reflecting our efforts to improve and enhance our claims operations and to address emerging claims and litigation trends, approximately 66% of our employees work in our claims management operations. Of these employees, 58% comprise our in-house claims litigation team. Distribution We market and sell our products primarily through our network of over 9,900 licensed independent agents (4,000 in Florida).
Our primary insurance entities, Universal Property & Casualty Insurance Company (“UPCIC”) and American Platinum Property and Casualty Insurance Company (“APPCIC” and together with UPCIC, the “Insurance Entities”), offer insurance products through both our appointed independent agent network and our online distribution channels across 19 states (primarily in Florida), with licenses to write insurance in two additional states.
Our primary insurance entities, Universal Property & Casualty Insurance Company (“UPCIC”) and American Platinum Property and Casualty Insurance Company (“APPCIC” and together with UPCIC, the “Insurance Entities”), offer insurance products through both our appointed independent agent network and our online distribution channels across our multi-state footprint (primarily in Florida).
Claims Management Our subsidiary, Universal Adjusting Corporation d/b/a Alder Adjusting (“Alder”), manages our claims processing and adjusting functions from claim inception to conclusion, which we believe allows us to increase efficiency and provide a high level of customer service.
Claims Management Our subsidiary, Universal Adjusting Corporation d/b/a Alder Adjusting (“Alder”), manages our claims processing and adjusting functions from claim inception to conclusion, which we believe allows us to increase efficiency and provide a high level of customer service. Alder updates its claims-handling procedures over time in response to market trends.
In 2022, the Florida legislature authorized additional reinsurance support through a no-cost program called Reinsurance to Assist Policyholders (“ RAP”), in which the Insurance Entities are required to participate in either 2022 or 2023. The Insurance Entities deferred their participation until the contract year beginning June 1, 2023.
In 2022, the Florida legislature authorized additional reinsurance support through a no-cost program called Reinsurance to Assist Policyholders (“RAP”), in which the Insurance Entities were required to participate in either 2022 or 2023. The Insurance Entities deferred their participation until the contract year beginning June 1, 2023. The RAP program expires on May 31, 2024.
In the event we experience an unusually high volume of claims due to a hurricane or severe weather event, in addition to cross-trained staff, the Company utilizes outsourced third-party adjusters and outsourced call center support to maintain regulatory and internal service standards.
In the event we experience an unusually high volume of claims due to a hurricane or severe weather event, in addition to cross-trained staff, the Company utilizes outsourced third-party adjusters and outsourced call center support to maintain regulatory and internal service standards. 12 Our business is dependent on adequate levels of staff to service our new business and policies in force, process reported claims, and provide support services to the Company.
These guaranty associations typically are funded by assets of the failed insurance companies and by assessments on insurance companies transacting business in the respective states. When the Insurance Entities are subject to assessments, in some instances they must remit the assessed amounts to the guaranty associations. The Insurance Entities subsequently seek to recover the assessed amounts through recoupments from policyholders.
When the Insurance Entities are subject to assessments, in some instances they must remit the assessed amounts to the guaranty associations. The Insurance Entities subsequently seek to recover the assessed amounts through recoupments from policyholders.
In conjunction with ERA, our fully-licensed reinsurance intermediary, Blue Atlantic Reinsurance Corporation (“BARC”), partners with a third-party reinsurance broker to place and manage our reinsurance programs for the Insurance Entities.
In conjunction with ERA, our licensed reinsurance intermediary, Blue Atlantic Reinsurance Corporation (“BARC”), partners with a third-party reinsurance broker to place and manage our reinsurance programs for the Insurance Entities. BARC receives commission revenue, net of third-party co-broker fees, from third-party reinsurers in connection with these services, which can serve to mitigate rising reinsurance costs.
Federal and state lawmakers and regulatory bodies may be expected to consider additional or more detailed regulation regarding these subjects and the privacy and security of non-public personal information.
Federal and state lawmakers and regulatory bodies may be expected to consider additional or more detailed regulation regarding these subjects and the privacy and security of non-public personal information. 11 Statutory Insurance Organizations Many states in which the Insurance Entities operate have statutorily-mandated insurance organizations or other insurance mechanisms in which the Insurance Entities are required to participate or to potentially pay assessments.
Alder’s Fast Track initiative (“Fast Track”) has expedited the claims settlement process to close certain types of claims in as little as 24 hours through prompt analysis and on-site field adjusting. Alder has increased its use of technology to inspect properties and adjust claims. In addition to our in-house claims operation, we assign some field inspections to third-party adjusters.
Through Alder, we have adopted initiatives to adjust and pay straightforward, meritorious claims as promptly as possible through timely analysis and on-site field adjusting. Alder also has increased its use of technology to inspect properties and adjust claims. In addition to our in-house claims operation, we assign some field inspections to third-party adjusters.
Similarly, the Insurance Entities’ respective 2022-2023 reinsurance programs meet the stress test and review requirements of Demotech’s Financial Stability Rating® of “A” (Exceptional) and Kroll’s insurer financial strength ratings of “A-”. 8 FHCF is a statutorily-created entity in Florida that provides a layer of reimbursement (reinsurance) protection at a price that is typically lower than what would otherwise be available in the third-party reinsurance market.
FHCF is a statutorily-created entity in Florida that provides a layer of reimbursement (reinsurance) protection at a price that is typically lower than what would otherwise be available in the third-party reinsurance market.
In addition to distributing our products through our independent agency network, we offer direct-to-consumer online capabilities including through our wholly-owned digital insurance agency, Clovered, which is operational across our multi-state footprint and provides us with direct-to-consumer capabilities.
Our technology systems have evolved into a highly valued tool that enables agents to quickly understand the status of a policy and assist their clients with policy-related questions. In addition to distributing our products through our independent agency network, we offer direct-to-consumer online distribution, including through our wholly-owned digital insurance agency, Clovered, which is operational across our multi-state footprint.
As of February 3, 2023, we had 1,223 full-time employees, of whom 93% are based in Florida. Approximately 68% of our employees work in our claims management operations. Our in-house claims litigation team represents 39% of our full-time employees..
Approximately 66% of our employees work in our claims management operations. Our in-house claims litigation team represents 39% of our full-time employees.
This is evidenced by the rapid growth in Citizens’ policy count, which began in late 2019 and still continues in the current market. 7 Price Pricing has generally been defined by “hard” and “soft” cyclical markets.
This is evidenced by Citizens’ policy count, which began to grow rapidly in late 2019 and remains elevated in the current market even as some other insurers have showed interest in offering coverage to Citizens’ policyholder with attractively-priced policies. Price Pricing has generally been defined by “hard” and “soft” cyclical markets.
We did not furlough or terminate any employees due to COVID-19. None of our employees are represented by a labor union. Available Information Our corporate headquarters is located in Fort Lauderdale, FL. Our investor website is UniversalInsuranceHoldings.com.
We continue our support of diversity to create an inclusive culture and deliver a sustainable talent model to enhance performance and broaden perspectives. None of our employees are represented by a labor union. Available Information Our corporate headquarters is located in Fort Lauderdale, FL. Our investor website is UniversalInsuranceHoldings.com.
While we cannot predict the amount or timing of future guaranty association assessments, we believe that any such assessments will not have a material effect on our financial position or results of operations. 11 Human Capital Resources The Company is a vertically integrated insurance holding company with its employees performing substantially all insurance and support related services for our Insurance Entities, including policy underwriting, marketing, online distribution, risk management and claims management.
While we cannot predict the amount or timing of future guaranty association assessments, we believe that any such assessments will not have a material effect on our financial position or results of operations.
Statutory Insurance Organizations Many states in which the Insurance Entities operate have statutorily-mandated insurance organizations or other insurance mechanisms in which the Insurance Entities are required to participate or to potentially pay assessments. Each state has insurance guaranty association laws providing for the payment of policyholders’ claims when insurance companies doing business in that state become insolvent.
Each state has insurance guaranty association laws providing for the payment of policyholders’ claims when insurance companies doing business in that state become insolvent. These guaranty associations typically are funded by assets of the failed insurance companies and by assessments on insurance companies transacting business in the respective states.
To that end, we provide extensive training and development sessions, strong benefits, and competitive pay to employees at all levels in the organization, including equity awards to key contributors. We continue our support of diversity to create an inclusive culture and deliver a sustainable talent model to enhance performance and broaden perspectives.
Given our focus on operational excellence and continuous improvement, our objective is to create a collaborative work environment with many opportunities for advancement in order to attract energetic and entrepreneurial talent. To that end, we provide extensive training and development sessions, strong benefits, and competitive pay to employees at all levels in the organization, including equity awards to key contributors.
During 2022, 83.3% of our overall direct premiums written was in Florida, with the remaining 16.7% in other states.
During 2023, 81.4% of our overall direct premiums written were in Florida.
BARC receives commission revenue, net of third-party co-broker fees, from third-party reinsurers in connection with these services, which can serve to mitigate rising reinsurance costs. 5 As a property and casualty insurance company with a concentration in Florida, natural catastrophes are among the most serious risks facing our customers and communities.
We have sought, and continue to seek, to mitigate these risks through our exposure management initiatives, efforts to attain rate adequacy, implementing product updates, and tailoring our claims and legal processes to market conditions. 5 As we are a property and casualty insurance company with a concentration in Florida and other coastal states, natural catastrophes are among the most serious risks facing our customers and communities.
Our business is dependent on adequate levels of staff to service our new business and policies in force, process reported claims and provide support services to the Company. Support services consist of technology, human resources, finance, corporate and internal audit teams.
Support services consist of technology, human resources, finance, corporate, and internal audit teams. We anticipate staffing needs and make changes to our staff to assure our regulatory requirements are met and our service standards to customers are achieved.
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Our technology systems have evolved into a highly valued tool that enables agents to quickly understand the status of a policy and assist their clients with policy-related questions.
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Due to our exposure to Florida’s residential property insurance market, we face risks associated with the adverse conditions that have affected the magnitude of both catastrophe and non-catastrophe losses and loss adjustment expenses in Florida in recent years.
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The Florida legislature also has adopted a program known as the Florida Optional Reinsurance Assistance program (“FORA”) in which participating insurers such as the Insurance Entities have the option, but not an obligation, to purchase certain additional coverage for the contract year beginning June 1, 2023, at a price established by the legislature.
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Although the Florida legislature passed law changes to address market abuses, including substantial reforms in December 2022, the benefits of these law changes will not be fully realized for several years.
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Although lawmakers involved in drafting the December 2022 reforms have stated that the new laws will take some time to produce beneficial changes for the Florida residential property insurance market as a whole, many of the key reforms became effective as of or soon after December 16, 2022.
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Similarly, the Insurance Entities’ respective 2023-2024 reinsurance programs meet the stress test and review requirements of Demotech’s Financial Stability Rating® of “A” (Exceptional) and Kroll’s insurer financial strength rating of “A-”.
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Therefore, some of the recent reforms, when coupled with steps previously taken by the Insurance Entities in response to market conditions and prior law changes, may begin to have a favorable near-term impact on the Insurance Entities’ loss and LAE experience.
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Human Capital Resources The Company is a vertically integrated insurance holding company with its employees performing substantially all insurance and support related services for our Insurance Entities, including policy underwriting, marketing, online distribution, risk management and claims management. As of December 31, 2023, we had 1,244 full-time employees, of whom 92% are based in Florida.
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The Insurance Entities are monitoring these impacts closely and will continue to do so as they fully implement the reforms adopted on December 16, 2022.
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We anticipate staffing needs and make changes to our staff to assure our regulatory requirements are met and our service standards to customers are achieved. Given our focus on operational excellence and continuous improvement, our objective is to create a collaborative work environment with many opportunities for advancement in order to attract energetic and entrepreneurial talent.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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While some of these law changes have been designed to reduce abuses in the Florida market and reinvigorate admitted market interest in expanding writings, other law changes have imposed new or increased requirements on insurers that might prove to be detrimental to our business.
While some of these law changes have been designed to reduce abuses in the Florida market and reinvigorate admitted market interest in expanding writings, other changes in the law have imposed new or increased requirements on insurers that might prove to be detrimental to our business.
Similarly, other pandemics or other outbreaks of disease might create conditions and cause responses that differ from those experienced with COVID-19 in ways we cannot predict, which also could adversely affect our future business and financial results and could compound other risks discussed in this section.
Similarly, pandemics or other outbreaks of disease might create conditions and cause responses that differ from those experienced with COVID-19 in ways we cannot predict, which also could adversely affect our future business and financial results and could compound other risks discussed in this section.
As industry practices and legal, judicial, social and other environmental conditions change, unexpected and unintended issues related to claims and coverage have arisen and may in the future arise, including judicial expansion of policy coverage and the impact of new theories of liability, plaintiffs targeting property and casualty insurers in purported class-action litigation relating to claims-handling and other practices, and adverse changes in loss cost trends, including inflationary pressures in home repair costs or other legal or regulatory conditions incentivizing increases in disputed or litigated claims.
As industry practices and legal, judicial, social, and other environmental conditions change, unexpected and unintended issues related to claims and coverage have arisen and may in the future arise, including judicial expansion of policy coverage and the impact of new theories of liability, plaintiffs targeting property and casualty insurers in purported class-action litigation or other forms of litigation relating to claims-handling, and other practices, and adverse changes in loss cost trends, including inflationary pressures in home repair costs or other legal or regulatory conditions incentivizing increases in disputed or litigated claims.
It is possible that a regulatory authority would refuse to approve or a court could nullify or void an exclusion or limitation or 19 interpret existing coverages more broadly than we anticipate, that legislation could be enacted modifying or barring the use of these exclusions or limitations, or that legislation purporting to implement limitations or exclusions will be determined by courts to be ineffective or less effective than anticipated.
It is possible that a regulatory authority would refuse to approve or a court could nullify or void an exclusion or limitation or interpret existing coverages more broadly than we anticipate, that legislation could be enacted modifying or barring the use of these exclusions or limitations, or that legislation purporting to implement limitations or exclusions will be determined by courts to be ineffective or less effective than anticipated.
In addition, there is a risk that encryption and other protective measures, despite their sophistication, may be defeated, particularly to the extent that new computing technologies vastly increase the speed and computing power available. In addition, any significant data security breach of our independent agents or third-party vendors could harm our business and reputation.
In addition, there is a risk that encryption and other protective measures, despite their sophistication, may be defeated, particularly to the extent that new computing technologies vastly increase the speed and computing power available. 22 In addition, any significant data security breach of our independent agents or third-party vendors could harm our business and reputation.
Any failure to effectively manage the claims adjustment process, including failure to pay claims accurately and in a timely manner and failure to oversee third-party claims adjusters, could lead to material litigation, regulatory penalties or sanctions, 17 undermine our reputation in the marketplace and with our network of independent agents, impair our corporate image and negatively affect our financial results.
Any failure to effectively manage the claims adjustment process, including failure to pay claims accurately and in a timely manner and failure to oversee third-party claims adjusters, could lead to material litigation, regulatory penalties or sanctions, undermine our reputation in the marketplace and with our network of independent agents, impair our corporate image, and negatively affect our financial results.
In addition, our failure to 18 maintain at least one financial strength or stability rating acceptable in the secondary mortgage market would adversely affect our ability to write new and renewal business. Further, a downgrade to or reduction of our financial strength or stability ratings below acceptable levels could constitute a default under credit obligations of UVE.
In addition, our failure to maintain at least one financial strength or stability rating acceptable in the secondary mortgage market would adversely affect our ability to write new and renewal business. Further, a downgrade to or reduction of our financial strength or stability ratings below acceptable levels could constitute a default under credit obligations of UVE.
Further, although we use widely recognized and commercially available models to estimate our exposure to loss and LAE from hurricanes and certain other catastrophes, other models exist that might produce a wider or more narrow range of loss estimates, 12 or loss estimates from perils considered less significant to our insured risks, such as wildfires.
Further, although we use widely recognized and commercially available models to estimate our exposure to loss and LAE from hurricanes and certain other catastrophes, other models exist that might produce a wider or more narrow range of loss estimates, or loss estimates from perils considered less significant to our insured risks, such as wildfires.
We may not be able to consummate those dispositions of assets or obtain the proceeds that we could realize from them, and these proceeds may not be adequate to meet any debt service obligations then due, including obligations under the Notes. 22 Our indebtedness could adversely affect our financial results and prevent us from fulfilling our obligations under the Notes.
We may not be able to consummate those dispositions of assets or obtain the proceeds that we could realize from them, and these proceeds may not be adequate to meet any debt service obligations then due, including obligations under the Notes. Our indebtedness could adversely affect our financial results and prevent us from fulfilling our obligations under the Notes.
In addition to the currently outstanding indebtedness of the Company and its subsidiaries, we may need to borrow substantial additional indebtedness in the future, including by accessing the capital markets. If new indebtedness is incurred in addition to our current debt levels, the related risks that we now face could increase, particularly if the cost of new indebtedness is high.
In addition to the currently outstanding indebtedness of the Company and its subsidiaries, we may need to borrow substantial additional amounts in the future, including by accessing the capital markets. If new indebtedness is incurred in addition to our current debt levels, the related risks that we now face could increase, particularly if the cost of new indebtedness is high.
As a result, incurred losses from such events and the demand, price and availability of reinsurance coverages for homeowners insurance may be affected. The loss estimates developed by the models we use are dependent upon assumptions or scenarios incorporated by a third-party developer and by us.
As a result, incurred losses from such events and the demand, price and availability of reinsurance coverages for homeowners insurance may be affected. 13 The loss estimates developed by the models we use are dependent upon assumptions or scenarios incorporated by a third-party developer and by us.
Additionally, due to statutorily-imposed limits on rate increases, Florida’s residual property insurance market, Citizens, often charges lower premiums in hard insurance markets than the Insurance Entities are able to charge in accordance with applicable regulatory filings, actuarial standards and prudent financial management.
Additionally, due to statutorily-imposed limits on rate increases, Florida’s residual property insurance market, Citizens, often charges lower premiums in hard insurance markets than what the Insurance Entities are able to charge in accordance with applicable regulatory filings, actuarial standards and prudent financial management.
We also could overprice our risks, thereby making our products relatively less attractive than other alternatives, negatively impacting our competitive position and potentially leading to a reduction in demand for our products and our market share. 14 In either event, our profitability could be materially and adversely affected.
We also could overprice our risks, thereby making our products relatively less attractive than other alternatives, thereby negatively impacting our competitive position and potentially leading to a reduction in demand for our products and in our market share. In either event, our profitability could be materially and adversely affected.
If the Insurance Entities fail to comply with applicable regulatory requirements, the regulatory agencies can revoke or suspend the 20 Insurance Entities’ licenses, withhold required approvals, require corrective action, impose operating limitations, impose penalties and fines or pursue other remedies available under applicable laws and regulations.
If the Insurance Entities fail to comply with applicable regulatory requirements, the regulatory agencies can revoke or suspend the Insurance Entities’ licenses, withhold required approvals, require corrective action, impose operating limitations, impose penalties and fines or pursue other remedies available under applicable laws and regulations.
Independent agents typically represent other insurance companies in addition to representing us, and such agents are not 15 obligated to sell or promote our products. Other insurance companies may pay higher commissions than we do, provide services to the agents that we do not provide, or may be more attractive to the agents than we are.
Independent agents typically represent other insurance companies in addition to representing us, and such agents are not obligated to sell or promote our products. Other insurance companies may pay higher commissions than we do, provide services to the agents that we do not provide, or may be more attractive to the agents than we are.
In some instances, the intended effects of approved policy language and court interpretation of the same may not become apparent until sometime after we have issued the insurance policies and case law sets a precedent for legal interpretation of them.
In some instances, the intended effects of approved policy language and court interpretations of the same may not become apparent until sometime after we have issued the insurance policies and case law sets a precedent for legal interpretation of them.
In addition, significant long-term increases in claim frequency also have an adverse effect on our operating results and financial condition. Further, the level of claim frequency we experience varies from period to period, or from region to region.
In addition, significant long-term increases in claim frequency also have an adverse effect on our operating results and financial condition. Further, the level of claim frequency we experience varies from period to period, and from region to region.
The current Florida 13 homeowners’ insurance market is adversely impacted by changes in claimant behaviors resulting in losses and LAE exceeding historical trends, amounts experienced in other states, and amounts we previously estimated.
The current Florida homeowners’ insurance market is adversely impacted by changes in claimant behaviors resulting in losses and LAE exceeding historical trends, amounts experienced in other states, and amounts we previously estimated.
These concerns are compounded when Florida’s statutorily-created residual property insurance market, Citizens Property Insurance Corporation (“Citizens”), provides insurance based on rates substantially below its actuarial indication and at resulting premiums lower than those of admitted insurers such as the Insurance Entities. Unanticipated increases in the severity or frequency of claims adversely affect our profitability and financial condition.
These concerns are compounded when Florida’s statutorily-created residual property insurance market, Citizens, provides insurance based on rates substantially below its actuarial indication and at resulting premiums lower than those of admitted insurers such as the Insurance Entities. Unanticipated increases in the severity or frequency of claims adversely affect our profitability and financial condition.
As we saw with the initial phase of the COVID-19 pandemic, outbreaks of disease can cause governments, public institutions and other organizations to impose or recommend, and businesses and individuals to implement, restrictions on various activities or take other actions to combat the disease’s spread, such as warnings, restrictions and bans on travel, transportation or in-person gatherings; and local or regional closures or lockdowns.
As we saw with the COVID-19 pandemic, outbreaks of disease can cause governments, public institutions, and other organizations to impose or recommend, and businesses and individuals to implement restrictions on various activities or take other actions to combat the disease’s spread, such as warnings, restrictions, and bans on travel, transportation, or in-person gatherings; and local or regional closures or lockdowns.
Because of our concentration in Florida, and in particular in Broward, Palm Beach and Miami-Dade counties, we are exposed to hurricanes and windstorms and other catastrophes affecting Florida.
Because of our concentration in Florida, and in particular in Broward, Palm Beach and Miami-Dade counties, we are exposed to hurricanes, windstorms, and other catastrophes affecting South Florida.
For example, state insurance laws and regulations are generally intended to protect or benefit purchasers or users of insurance products, and not shareholders.
For example, state insurance laws and regulations are generally intended to protect or benefit purchasers or users of insurance products, and not shareholders of insurance companies.
A downgrade in or withdrawal of these ratings, or a decision by a rating agency to require us to make a capital infusion into the Insurance Entities or otherwise alter operations to maintain their ratings, may adversely affect our liquidity, operating results and financial condition.
A downgrade in or withdrawal of these ratings, or a decision by a rating agency to require us to make a capital infusion into the Insurance Entities or otherwise alter operations to maintain its rating, may adversely affect our liquidity, operating results and financial condition.
Therefore, prevailing regulatory, consumer behavior, legal, economic, political, demographic, competitive, weather and other conditions in Florida disproportionately affect our revenues and profitability. The Florida legislature changes laws related to property insurance almost annually, and more often in recent years.
Therefore, prevailing regulatory, consumer behavior, legal, economic, political, demographic, competitive, weather, and other conditions in Florida disproportionately affect our revenues and profitability. The Florida legislature amends laws related to property insurance almost annually, and more often in recent years.
Although we have not seen a direct material impact from COVID-19 on our business, our financial position, our liquidity, or our ability to service our policyholders and maintain critical operations, indirectly, inflationary pressures, in part due to supply chain and labor constraints during the COVID-19 pandemic, have affected and continue to affect claims costs and, to a lesser degree, other expenses.
Although we did not experience a direct material impact from COVID-19 on our business, our financial position, our liquidity, or our ability to service our policyholders and maintain critical operations, indirectly, inflationary pressures, in part due to supply chain and labor constraints during the COVID-19 pandemic, have affected and continue to affect claims costs and, to a lesser degree, other expenses.
These 16 conditions can have a material adverse effect on our results of operations and cash flows.
These conditions can have a material adverse effect on our results of operations and cash flows.
In addition, many law changes apply only to policies issued or renewed after the laws’ effective dates, and in some cases the laws are subject to legal challenges that further postpone or cause uncertainties in their implementation.
In addition, many law changes apply only to policies issued or renewed after the laws’ effective dates, and in some cases the laws are subject to legal challenges that further limit or postpone their effectiveness or cause uncertainties in their implementation.
These will depend on our financial and operating performance, which are subject to our loss and loss adjustment experience, weather and climate trends, and general economic, financial, competitive, legislative, regulatory and capital market conditions that are beyond our control.
This will depend on our financial and operating performance, which are subject to our loss and loss adjustment experience, weather and climate trends, and general economic, financial, competitive, legislative, regulatory, and capital market conditions that are beyond our control.
Additionally, law changes intended to alleviate abuses in the property insurance market often are interpreted as applying only prospectively to policies issued or renewed after their effective dates, potentially creating competitive advantages for insurers that enter markets or expand writings after the laws’ effective dates as compared to insurers like the Insurance Entities, which continue to have certain policy and claims servicing obligations on previously issued policies.
Additionally, some law changes intended to alleviate abuses in the property insurance market are interpreted as applying only prospectively to policies issued or renewed after the new laws’ effective dates, potentially creating competitive advantages for insurers that enter markets or expand writings after the laws’ effective dates as compared to insurers like the Insurance Entities, which continue to have certain policy and claims servicing obligations on previously issued policies.
Adverse changes in these conditions have a more pronounced effect on us than it would on other insurance companies that are more geographically diversified throughout the United States.
Adverse changes in these conditions have a more pronounced effect on us than they would on other insurance companies that are more geographically diversified throughout the United States.
We currently market our policies to a broad range of prospective policyholders through approximately 4,100 independent insurance agents in Florida as well as approximately 5,900 independent insurance agents outside of Florida.
We currently market our policies to a broad range of prospective policyholders through approximately 4,000 independent insurance agents in Florida as well as approximately 5,900 independent insurance agents outside of Florida.
This is especially the case in hard markets such as the current Florida market, where many insurers are submitting filings for 21 significant rate increases and consequently thereby affecting the FLOIR’s workload and affecting its ability to timely review filings.
This is especially the case in hard markets such as the current Florida market, where many insurers are submitting filings for significant rate increases and thereby adding to the FLOIR’s workload and affecting its ability to timely review filings.
Other state regulations require insurance companies to file insurance premium rate schedules and policy forms for review, restrict our ability to cancel or non-renew policies and determine the accounting standards we use in preparation of our consolidated financial statements. These regulations also affect many other aspects of the Insurance Entities’ businesses.
Other state regulations require insurance companies to file insurance rates and policy forms for review, restrict our ability to cancel or non-renew policies and determine the accounting standards we use in preparation of our consolidated financial statements. These regulations also affect many other aspects of the Insurance Entities’ businesses.
We also may be subject to litigation or administrative actions arising from the conduct of our business and the regulatory authority of state insurance departments or other agencies having oversight or enforcement authority over the various aspects of our business.
We also are subject to litigation or administrative actions arising from the conduct of our business and the regulatory authority of state insurance departments or other agencies having oversight or enforcement authority over the various aspects of our business.
Our ability to adequately price our products, anticipate market response and generate underwriting profits is subject to a number of risks and uncertainties, some of which are outside our control, including: • the availability of sufficient and reliable data; • regulatory review periods or delays in reviewing and approving filed rate changes or our failure to gain regulatory approval; • the uncertainties that inherently underlie estimates and assumptions; • our ability to timely identify or anticipate unforeseen adverse trends or other emerging costs in the rate making process; • inflationary pressures on labor and materials, including supply chain disruptions; • the effect of climate change on frequency and severity of insured events from severe weather; • uncertainties regarding the impact of law changes and their interpretations, including the near-term and long-term effects, if any, of the law changes on claims handling and resolution practices, repair and restoration costs, consumer behaviors, activities by public adjusters and policyholders’ attorneys, and judicial decisions: and • adverse changes to statutes, rules or judicial precedent that are not contemplated in existing rate levels and are not addressed or mitigated by current underwriting criteria or policy forms.
Our ability to adequately price our products, anticipate market response, and generate underwriting profits is subject to a number of risks and uncertainties, some of which are outside our control, including: • the availability of sufficient and reliable data; 15 • regulatory review periods or delays in reviewing and approving filed rate changes or our failure to gain regulatory approval; • the uncertainties that inherently underlie estimates and assumptions; • our ability to timely identify or anticipate unforeseen adverse trends or other emerging costs in the rate making process; • our ability to stay competitive as evolving competitive technologies emerge such as artificial intelligence (“AI”) and machine learning to make pricing, underwriting, or other decisions; • inflationary pressures on labor and materials, including supply chain disruptions; • the effect of climate change on frequency and severity of insured events from severe weather; • uncertainties regarding the impact of law changes and their interpretations, including the near-term and long-term effects, if any, of the law changes on claims handling and resolution practices, repair and restoration costs, consumer behaviors, activities by public adjusters and policyholders’ attorneys, and judicial decisions: and • adverse changes to statutes, rules, or judicial precedent that are not contemplated in existing rate levels and are not addressed or mitigated by current underwriting criteria or policy forms.
Conversely, increases in market interest rates, including the U.S. Federal Reserve’s recent increases in interest rates, also can have an adverse effect on the value of our investment portfolio by decreasing the fair values of the available-for-sale debt securities that comprise a large portion of our investment portfolio. Similarly, declines in the equities markets adversely affect our existing portfolio.
Conversely, increases in market interest rates also can have an adverse effect on the value of our investment portfolio by decreasing the fair values of the available-for-sale debt securities that comprise a large portion of our investment portfolio. Similarly, declines in the equities markets adversely affect our existing portfolio.
Many factors affect the ability of our claims professionals to effectively manage claims by our policyholders, including: • the accuracy of our adjusters as they make their assessments and submit their estimates of damages; • the training, background and experience of our claims representatives; • the ability of our claims professionals to ensure consistent and timely claims handling; • the ability of our claims professionals to translate the information provided by adjusters into acceptable claims resolutions; and • the ability of our claims professionals to maintain and update our claims handling procedures and systems as they evolve over time based on claims and geographical trends in claims reporting as well as consumer behaviors affecting claims handling.
Many factors affect the ability of our claims professionals to effectively manage claims by our policyholders, including: • the accuracy of our adjusters as they make their assessments and submit their estimates of damages; • the training, background, and experience of our claims representatives; • the ability of our claims professionals to ensure consistent and timely claims handling; • the availability and timing of information from, and the overall degree of cooperation or lack thereof by, policyholders and their representatives; • the ability of our claims professionals to translate the information provided by adjusters into acceptable claims resolutions; and • the ability of our claims professionals to maintain and update our claims handling procedures and systems as they evolve over time based on claims and geographical trends in claims reporting as well as consumer behaviors affecting claims handling.
However, changes in the level of the severity of claims are not limited to the effects of inflation and demand surge in these various sectors of the economy. Increases in claim severity can also arise from unexpected events that are inherently difficult to predict.
However, changes in the level of the severity of claims are not limited to the effects of inflation and demand surge in these various sectors of the economy or to Florida’s disproportionately high incidence of represented claims. Increases in claim severity can also arise from unexpected events that are inherently difficult to predict.
If we are unable to maintain our current level of reinsurance or purchase new reinsurance protection in amounts that we consider sufficient and at prices and terms that we consider acceptable, we would have to either accept an increase in our exposure risk, reduce our insurance writings, seek rate adjustments at levels that might not be approved or might adversely affect policy retention, or develop or seek other alternatives, which could have an adverse effect on our profitability and results of operations.
If we are unable to maintain our current level of reinsurance or purchase new reinsurance protection in amounts that we consider sufficient and at prices and terms that we consider acceptable, we would have to either accept an increase in our exposure risk, reduce our insurance writings, seek rate adjustments at levels that might not be approved or might adversely affect policy retention, or develop or seek other alternatives, which could have an adverse effect on our profitability and results of operations. 18 Reinsurance subjects us to the credit risk of our reinsurers, which could have a material adverse effect on our operating results and financial condition.
All operations are conducted by the Insurance Entities and by other operating subsidiaries, most of which support the business of the Insurance Entities. As a holding company, UVE’s sources of cash flow consist primarily of dividends and other permissible payments from its subsidiaries.
UVE is a holding company that conducts no insurance operations of its own. All operations are conducted by the Insurance Entities and by other operating subsidiaries, most of which support the business of the Insurance Entities. As a holding company, UVE’s sources of cash flow consist primarily of dividends and other permissible payments from its subsidiaries.
While addressing price adequacy, management needs to anticipate and navigate potential impacts to market share and competition.
While addressing price adequacy, management also seeks to anticipate and navigate potential impacts to market share and competition.
Because we conduct the majority of our business in Florida, our financial results depend on the regulatory, economic and weather conditions in Florida. Though we are licensed to transact insurance business in other states, we write a majority of our policies in Florida.
Because we conduct the majority of our business in Florida, our financial results are affected by the regulatory, economic, and weather conditions in Florida. Although we are licensed to transact insurance business in other states, we write a majority of our policies in Florida.
Residential property insurers like the Insurance Entities must maintain financial strength or stability ratings from at least one rating organization acceptable to each of the Federal Home Loan Mortgage Corporation (“Freddie Mac’) and the Federal National Mortgage Association (“Fannie Mae”) Our Insurance Entities maintain Financial Stability Ratings® of “A” (“Exceptional”) by Demotech and insurance financial strength ratings of “A-” by Kroll.
Residential property insurers like the Insurance Entities must maintain financial strength or stability ratings from at least one rating organization acceptable to each of the Federal Home Loan Mortgage Corporation (“Freddie Mac’) and the Federal National Mortgage Association (“Fannie Mae”).
We may not be able to effectively implement or adapt to changes in technology, which may result in interruptions to our business or a competitive disadvantage. Developments in technology are affecting the insurance business.
We may not be able to effectively implement or adapt to changes in technology, particularly with respect to artificial intelligence, which may result in interruptions to our business or even in a competitive disadvantage. Developments in technology are affecting the insurance business.
Because of the competitive nature of the insurance industry, including competition for producers such as independent agents, there can be no assurance that we will continue to develop and maintain productive relationships with independent agents, effectively compete with our industry rivals, or that competitive pressures will not have a material adverse effect on our business, operating results or financial condition.
Because of the competitive nature of the insurance industry, including competition for producers such as independent agents, there can be no assurance that we will continue to develop and maintain productive relationships with independent agents, effectively compete with our industry rivals, or that competitive pressures will not have a material adverse effect on our business, operating results or financial condition. 21 A downgrade in our financial strength or stability ratings may have an adverse effect on our competitive position, the marketability of our product offerings, and our liquidity, operating results and financial condition.
The reserve for losses and LAE is reported net of receivables for subrogation. Recorded claim reserves in the property and casualty business are based on our best estimates of what the ultimate settlement and administration of claims will cost, both reported and incurred but not reported (“IBNR”).
Recorded claim reserves in the property and casualty business are based on our best estimates of what the ultimate settlement and administration of claims will cost, both reported and incurred but not reported (“IBNR”).
The guaranty funds and other statutory entities periodically levy assessments against all applicable insurance companies doing business in the state and the amounts and timing of those assessments are unpredictable.
Additionally, we are required to participate in guaranty funds for insolvent insurance companies and other statutory insurance entities. The guaranty funds and other statutory entities periodically levy assessments against all applicable insurance companies doing business in the state and the amounts and timing of those assessments are unpredictable.
Competition for these individuals is intense and our ability to operate successfully may be impaired if we are not effective in filling critical leadership positions, in developing the talent and skills of our human resources, in assimilating new executive talent into our organization, or in deploying human resource talent consistent with our business goals.
Competition for these individuals is intense and our ability to operate successfully may be impaired if we are not effective in filling critical leadership positions, in developing the talent and skills of our human resources, in assimilating new executive talent into our organization, or in deploying human resource talent consistent with our business goals. 19 We could be adversely affected if our controls designed to ensure compliance with guidelines, policies and legal and regulatory standards are not effective.
This is particularly true in certain Florida counties where we write a high concentration of policies such that a catastrophic event, or series of catastrophic events, in these counties have had and could in the future have a significant impact on our business, financial condition and results of operations.
This is particularly true in certain Florida counties where we write a high concentration of policies such that a catastrophic event, or series of catastrophic events, in these counties have had and could in the future have a significant impact on our business, financial condition, and results of operations. 14 Actual claims incurred have exceeded, and in the future may exceed, reserves established for claims, adversely affecting our operating results and financial condition.
Starting in 2016, there has been a significant increase in our efforts to pursue subrogation against third parties responsible for property damage losses to our insureds. More recently, changes in Florida’s claims environment and legal climate have reduced the effectiveness of our efforts to properly apportion losses through subrogation.
Since 2016, we have significantly increased our efforts to pursue subrogation against third parties responsible for property damage losses to our insureds. More recently, changes in Florida’s claims environment and legal climate have reduced the effectiveness of our efforts to properly apportion losses through subrogation.
Such regulations, among other things, require that certain transactions between the Insurance Entities and their affiliates must be fair and reasonable and require prior notice and non-disapproval of such transactions by the applicable state insurance authority.
The Insurance Entities are also regulated by state insurance authorities in the other states in which they conduct business. Such regulations, among other things, require that certain transactions between the Insurance Entities and their affiliates must be fair and reasonable and require prior notice and non-disapproval of such transactions by the applicable state insurance authority.
Litigation or regulatory matters have negatively affected and may in the future negatively affect us by resulting in the payment of substantial awards or settlements, increasing legal and compliance costs, requiring us to change certain aspects of our business operations, diverting management attention from other business issues, harming our reputation with agents and customers or making it more difficult to retain current customers and to recruit and retain employees or agents.
Litigation or regulatory matters have negatively affected and may in the future negatively affect us by resulting in the payment of substantial awards or settlements, increasing legal and compliance costs, requiring us to change certain aspects of our business operations, diverting management attention from other business issues, harming our reputation with agents, customers, reinsurers, creditors, regulators or others, or making it more difficult to retain current customers and to recruit and retain employees or agents. 20 Our future results are dependent in part on our ability to successfully operate in a highly competitive insurance industry.
The success of our business depends, in part, on the leadership and performance of our executive management team and key employees and on our ability to attract, retain and motivate talented employees. An absence of the leadership and performance of the executive management team or our inability to retain talented employees could significantly impact our future performance.
The success of our business depends, in part, on the leadership and performance of our executive management team and key employees and on our ability to attract, retain, and motivate talented employees.
Any failure by the Insurance Entities to meet the applicable RBC or minimum statutory capital requirements imposed by the laws of Florida (or other states where we currently or may eventually conduct business) could subject them to further examination or corrective action imposed by state regulators, including limitations on our writing of additional business, state supervision or receivership, which could have a material adverse impact on our reputation and financial condition.
Our Insurance Entities could exceed these ratios if their volume increases faster than anticipated or if their surplus declines due to catastrophe or non-catastrophe losses or excessive underwriting and operational expenses. 25 Any failure by the Insurance Entities to meet the applicable RBC or minimum statutory capital requirements imposed by the laws of Florida (or other states where we currently or may eventually conduct business) could subject them to further examination or corrective action imposed by state regulators, including limitations on our writing of additional business, state supervision or receivership, which could have a material adverse impact on our reputation and financial condition.
Changes in homeowners’ claim severity can be and have been driven by inflation in the construction industry, in building materials and in home furnishings, as well as by other economic and environmental factors, including increased demand for services and supplies in areas affected by catastrophes, supply chain disruptions and labor shortages, and prevailing attitudes towards insurers and the claims process, including increases in the number of litigated claims or claims involving representation.
Changes in homeowners’ claim severity can be and have been driven by inflation in the construction industry, in building materials, and in home furnishings, as well as by other economic and environmental factors, including increased demand for services and supplies in areas affected by catastrophes, supply chain disruptions, labor shortages, and prevailing attitudes towards insurers and the claims process, including increases in the number of litigated claims or claims involving representation as well as continuing efforts by policyholder representatives to seek larger settlements on pre-reform claims in recognition that the elimination of the statutory right to attorneys’ fees and other law changes will apply to future claims.
Catastrophic claim severity is impacted by the effects of inflation and increases in insured value and factors such as the overall claims, legal and litigation environments in affected areas, in addition to the geographic concentration of insured property. Changing climate conditions may adversely affect our financial condition, profitability or cash flows.
Catastrophic claim severity is impacted by the effects of inflation and increases in insured value and factors such as the overall claims, legal and litigation environments in affected areas, in addition to the geographic concentration of insured property.
Claim frequency can be influenced by natural conditions such as the number and types of severe weather events affecting areas where we write policies as well as by factors such as the prevalence of solicited and represented claims.
Claim frequency can be influenced by natural conditions such as the number and types of severe weather events affecting areas where we write policies as well as by factors such as the prevalence of solicited and represented claims, including efforts by policyholder representatives to encourage claims activity related to policy periods predating law changes.
In many respects, these laws and regulations limit our ability to grow and improve the profitability of our business or effectively respond to changing market conditions, and may place constraints on our ability to meet our revenue and net profit goals.
In many respects, these laws and regulations limit our ability to grow and improve the profitability of our business or effectively respond to changing market conditions, and may place constraints on our ability to meet our revenue and net profit goals. The Insurance Entities are highly regulated by state insurance authorities in Florida, which is where each is domiciled.
However, there are inherent limitations in all of these strategies, and no assurance can be given that an event or series of events will not result in loss levels in excess of our probable maximum loss models, or that our non-catastrophe forecasts or modeling is accurate, which could have a material adverse effect on our financial condition or results of operations.
We utilize a number of strategies to mitigate our risk exposure, such as: • engaging in rigorous underwriting; • carefully evaluating terms and conditions of our policies and binding guidelines; and • ceding risk to reinsurers. 16 However, there are inherent limitations in all of these strategies, and no assurance can be given that an event or series of events will not result in loss levels in excess of our probable maximum loss models, or that our non-catastrophe forecasts or modeling is accurate, which could have a material adverse effect on our financial condition or results of operations.
Further, because the returns on our investment portfolio are subject to market volatility, our overall results of operations could likewise be volatile from period to period even if we do not experience significant financial variances in our insurance operations.
Further, because the returns on our investment portfolio are subject to market volatility, our overall results of operations could likewise be volatile from period to period even if we do not experience significant financial variances in our insurance operations. 23 RISKS RELATING TO THE INSURANCE INDUSTRY We are subject to extensive regulation and potential further restrictive regulation may increase our operating costs and limit our growth and profitability.
When competitors attempt to increase market share by lowering rates, we can experience reductions in our underwriting margins, or a decline in sales of our insurance policies as customers purchase lower-priced products from our competitors.
Many of these entities may also be affiliated with other entities that have greater financial and other resources than we have. When competitors attempt to increase market share by lowering rates, we can experience reductions in our underwriting margins, or a decline in sales of our insurance policies as customers purchase lower-priced products from our competitors.
Therefore, law changes that are intended or perceived to have a beneficial effect on our business might take longer than anticipated to produce those benefits, might be less effective than anticipated, or ultimately might not be beneficial at all.
Therefore, law changes that are intended or perceived to have a beneficial effect on our business might take longer than anticipated to produce those benefits, might be less effective than anticipated, or ultimately might not be beneficial at all. 24 UVE is a holding company and, consequently, its cash flow is dependent on dividends and other permissible payments from its subsidiaries.
These and similar ratings are important factors in establishing the competitive position of insurance companies and generally have an effect on an insurance company’s business.
Our Insurance Entities maintain Financial Stability Ratings® of “A” (“Exceptional”) by Demotech and insurance financial strength ratings of “A-” by Kroll. These and similar ratings are important factors in establishing the competitive position of insurance companies and generally have an effect on an insurance company’s business.
We compete against large national carriers that have greater capital resources and longer operating histories, regional carriers and managing general agencies, as well as newly formed and less-capitalized companies that might have more aggressive underwriting or pricing strategies. Many of these entities may also be affiliated with other entities that have greater financial and other resources than we have.
The property and casualty insurance industry is highly competitive. We compete against large national carriers that have greater capital resources and longer operating histories, regional carriers, and managing general agencies, as well as newly formed and less-capitalized companies that might have more aggressive underwriting or pricing strategies.
In addition, changes to Florida’s insurance laws often are followed by extended implementation periods, ensuing regulatory rule making timelines, and even periods of uncertainty as opponents of the changes challenge them in court. Resulting delays in the effectiveness of new laws, even when intended to be beneficial for the insurance industry, limit or delay their impact on our business.
In addition, changes to Florida’s insurance laws often are followed by extended implementation periods, ensuing regulatory rule making timelines, and even periods of uncertainty as opponents of the changes challenge them in court or seek to avoid their effects by revising their business practices.
Market conditions beyond our control determine the availability and cost of the reinsurance we purchase and the ability of the FHCF to reimburse insurers at levels contemplated by their reimbursement contracts.
Our reinsurance program is designed to mitigate our exposure to catastrophes. Market conditions and public policy decisions beyond our control determine the availability and cost of the reinsurance we purchase, the ability of the FHCF to reimburse insurers at levels contemplated by their reimbursement contracts, and the expiration of time-limited governmental programs such as RAP.
For these reasons and other factors that might not be known to us, the accuracy of models in estimating insured losses from prior storms has varied considerably by catastrophe when compared to actual results from those catastrophes.
For these reasons and other factors that might not be known to us, the accuracy of models in estimating insured losses from prior storms has varied considerably by catastrophe when compared to actual results from those catastrophes. 17 Reinsurance may be unavailable in the future at reasonable levels and prices or on reasonable terms, which may limit our ability to write new business or to adequately mitigate our exposure to loss.
To the extent the COVID-19 pandemic adversely affects our future business and financial results, it may also have the effect of heightening many of the other risks we discuss in this section.
In general, other effects of a pandemic may include significant volatility and disruption of the global financial markets and limitations on access to sources of liquidity, among others. To the extent a pandemic adversely affects our future business and financial results, it may also have the effect of heightening many of the other risks we discuss in this section.
Reinsurance subjects us to the credit risk of our reinsurers, which could have a material adverse effect on our operating results and financial condition. Reinsurance does not legally discharge us from our primary liability for the full amount of the risk we insure, although it does make the reinsurer liable to us in the event of a claim.
Reinsurance does not legally discharge us from our primary liability for the full amount of the risk we insure, although it does make the reinsurer liable to us in the event of a covered claim. As such, we are subject to credit risk with respect to our reinsurers.
Compliance with these laws and regulations may increase the costs of running our business and may even slow our ability to respond effectively and quickly to operational opportunities. Moreover, these laws and regulations are administered and enforced by a number of different governmental authorities, including state insurance regulators, the U.S.
The laws and regulations affecting the insurance industry are complex and subject to change. Compliance with these laws and regulations may increase the costs of running our business and may even slow our ability to respond effectively and quickly to operational opportunities.
Actual claims incurred have exceeded, and in the future may exceed, reserves established for claims, adversely affecting our operating results and financial condition. We maintain loss reserves to cover our estimated ultimate liability for unpaid losses and LAE for reported and unreported claims as of the end of each accounting period.
We maintain loss reserves to cover our estimated ultimate liability for unpaid losses and LAE for reported and unreported claims as of the end of each accounting period. The reserve for losses and LAE is reported net of receivables for subrogation.
The failure of the risk mitigation strategies we utilize could have a material adverse effect on our financial condition or results of operations. We utilize a number of strategies to mitigate our risk exposure, such as: • engaging in rigorous underwriting; • carefully evaluating terms and conditions of our policies and binding guidelines; and • ceding risk to reinsurers.
The failure of the risk mitigation strategies we utilize could have a material adverse effect on our financial condition or results of operations.
In addition, the Insurance Entities are required to maintain certain minimum capital and surplus and to limit premiums written to specified multiples of capital and surplus. Our Insurance Entities could exceed these ratios if their volume increases faster than anticipated or if their surplus declines due to catastrophe or non-catastrophe losses or excessive underwriting and operational expenses.
In addition, the Insurance Entities are required to maintain certain minimum capital and surplus and to limit premiums written to specified multiples of capital and surplus.
Our ability to afford reinsurance required to reduce our catastrophe risk also depends in part on our ability to adjust rates for our costs. Additionally, we are required to participate in guaranty funds for insolvent insurance companies and other statutory insurance entities.
When state regulations allow our Insurance Entities to implement rate changes while filings are pending, we risk having to refund premiums if the implemented changes are greater than those ultimately approved. Our ability to pay for reinsurance required to appropriately reduce our catastrophe risk also depends in part on our ability to adjust rates for our costs.
Additionally, there sometimes is a significant reporting lag between the occurrence of an event and the time it is reported to us.
Some of the law changes apply only to policies with effective dates after December 16, 2022, resulting in an extended period during which our losses and LAE will continue to be influenced by pre-reform laws and market conditions. Additionally, there sometimes is a significant reporting lag between the occurrence of an event and the time it is reported to us.
Removed
There is a growing consensus that changing climate conditions are leading to increased frequency and severity of catastrophic events or severe weather conditions which, in addition to the attendant increase in claims-related costs, may also cause an increase in our reinsurance costs and/or negatively impact our ability to provide insurance to our policyholders in the future.
Added
Further, some changes apply only to policies issued after the new laws’ effective dates, creating extended periods in which existing and some newly reported claims remain subject to prior adverse conditions. Resulting delays in the effectiveness of new laws, even when intended to be beneficial for the insurance industry, limit or delay their impact on our business.
Removed
In addition, we cannot predict how legal, regulatory and societal responses to concerns around climate change may impact our business.
Added
Further, in accordance with Florida law and regulatory requirements, we must use a model that has been reviewed and deemed acceptable by a state commission in accordance with standards over which we have no control and that might not align with our business.
Removed
The inherent uncertainties associated with studying, understanding and modeling changing climate conditions, available analyses and models in this area typically relate to potential meteorological or sea level impacts and generally are not intended to analyze or predict impacts on insured losses.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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The Company currently estimates that the reasonably possible losses for legal proceedings, whether in excess of a related accrued liability or where there is no accrued liability, and for which the Company is able to estimate a possible loss, are immaterial. This represents management’s estimate of possible loss with respect to these matters and is based on currently available information.
The Company currently estimates that the reasonably possible losses for legal proceedings, whether in excess of a related accrued liability, including reserves, or where there is no accrued liability, and for which the Company is able to estimate a possible loss, are immaterial.
These estimates of possible loss do not represent our maximum loss exposure, and actual results may vary significantly from current estimates. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 23 PART II
This represents management’s estimate of possible loss with respect to these matters and is based on currently available information. These estimates of possible loss do not represent our maximum loss exposure, and actual results may vary significantly from current estimates. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 28 PART II
The Company contests liability and/or the amount of damages as appropriate in each pending matter. In accordance with applicable accounting guidance, the Company establishes an accrued liability for legal matters when those matters present loss contingencies that are both probable and estimable.
In accordance with applicable accounting guidance, the Company establishes reserves intended to encompass claims-related legal proceedings and establishes an accrued liability for legal matters when those matters present loss contingencies that are both probable and estimable.
ITEM 3. LEGAL PROCEEDINGS Lawsuits and other legal proceedings are filed against the Company from time to time. Many of these legal proceedings involve claims under policies that we underwrite and reserve for as an insurer.
Many of these legal proceedings involve claims under policies that we underwrite and reserve for as an insurer. We are also involved in various other legal proceedings and litigation unrelated to claims under our policies that arise in the ordinary course of business operations.
We are also involved in various other legal proceedings and litigation unrelated to claims under our policies that arise in the ordinary course of business operations. Management believes that any liabilities that may arise as a result of these legal matters will not have a material adverse effect on our financial condition or results of operations.
Management believes that any liabilities that may arise as a result of these legal matters will not have a material adverse effect on our financial condition or results of operations. The Company contests liability and/or the amount of damages as it considers appropriate according to the facts and circumstances of each matter.
Added
ITEM 3. LEGAL PROCEEDINGS Lawsuits and other legal proceedings are filed against the Company from time to time. These legal matters include regulatory and contract considerations for which the Company obtains internal or third-party legal or other assistance, such as actuarial services, to provide guidance, and when applicable, to represent and protect the Company’s interest.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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A substantially greater number of holders of our common stock are “street name” or beneficial holders, whose shares are held of record by banks, brokers, and other financial institutions. As of December 31, 2022 and 2021, there was one shareholder of our Series A Cumulative Convertible Preferred Stock (“Series A Preferred Stock”).
A substantially greater number of holders of our common stock are “street name” or beneficial holders, whose shares are held of record by banks, brokers, and other financial institutions. As of December 31, 2023 and 2022, there was one shareholder of our Series A Cumulative Convertible Preferred Stock (“Series A Preferred Stock”).
We declared and paid aggregate dividends to this holder of record of the company’s Series A Preferred Stock of $10,000 for each of the years ended December 31, 2022 and 2021.
We declared and paid aggregate dividends to this holder of record of the company’s Series A Preferred Stock of $10,000 for each of the years ended December 31, 2023 and 2022.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock, par value $0.01 per share, is listed and traded on the New York Stock Exchange (“NYSE”) under the symbol “UVE.” As of February 21, 2023, there were 56 shareholders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock, par value $0.01 per share, is listed and traded on the New York Stock Exchange (“NYSE”) under the symbol “UVE.” As of February 21, 2024, there were 51 shareholders of record of our common stock.
Stock Performance Graph The following graph and table compare the cumulative total stockholder return of our common stock from December 31, 2017 through December 31, 2022 with the performance of: (i) Standard & Poor’s (“S&P”) 500 Index, (ii) Russell 2000 Index and (iii) S&P Insurance Select Industry Index.
Stock Performance Graph The following graph and table compare the cumulative total stockholder return of our common stock from December 31, 2018 through December 31, 2023 with the performance of: (i) Standard & Poor’s (“S&P”) 500 Index, (ii) Russell 2000 Index and (iii) S&P Insurance Select Industry Index.
(2) Number of shares was calculated using a closing price at December 30, 2022 of $10.59 per share. We may repurchase shares from time to time at our discretion, based on ongoing assessments of our capital needs, the market price of our common stock and general market conditions. We will fund the share repurchase program with cash from operations.
(2) Number of shares was calculated using a closing price at December 29, 2023 of $15.98 per share. We may repurchase shares from time to time at our discretion, based on ongoing assessments of our capital needs, the market price of our common stock and general market conditions. We will fund the share repurchase program with cash from operations.
The graph and table assume an investment of $100 in our common stock and in each of the three indices on December 31, 2017 with all dividends being reinvested on the ex-dividend date. The closing price of our common stock as of December 30, 2022 (the last trading day of the year) was $10.59 per share.
The graph and table assume an investment of $100 in our common stock and in each of the three indices on December 31, 2018 with all dividends being reinvested on the ex-dividend date. The closing price of our common stock as of December 29, 2023 (the last trading day of the year) was $15.98 per share.
See “Part I—Business—Government Regulation—Restrictions on Dividends and Distributions” and “Part II—Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Registrant Purchases of Equity Securities Total Number of Shares Purchased Average Price Paid per Share (1) Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs (2) 10/1/2022 - 10/31/2022 — $ — — — 11/1/2022 - 11/30/2022 — $ — — — 12/1/2022 - 12/31/2022 186,435 $ 9.86 186,435 581,647 Total for the three months ended December 31, 2022 186,435 $ 9.86 186,435 581,647 (1) Average price paid per share does not reflect brokerage commissions paid to acquire shares in open market transactions.
See “Part I—Business—Government Regulation—Restrictions on Dividends and Distributions” and “Part II—Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Registrant Purchases of Equity Securities Total Number of Shares Purchased Average Price Paid per Share (1) Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs (2) 10/1/2023 - 10/31/2023 — $ — — 558,098 11/1/2023 - 11/30/2023 128,462 $ 16.27 128,462 344,127 12/1/2023 - 12/31/2023 94,925 $ 16.28 94,925 262,123 Total for the three months ended December 31, 2023 223,387 $ 16.28 223,387 262,123 (1) Average price paid per share does not reflect brokerage commissions paid to acquire shares in open market transactions.
The November 2022 Share Repurchase Program expired on November 3, 2022. • On December 15, 2022, our Board of Directors authorized a successor share repurchase program under which the Company is authorized to repurchase up to $8.0 million of shares of our common stock through December 15, 2024 (the “December 2024 Share Repurchase Program”), which represents the unused portion of the November 2022 Share Repurchase Program authorization.
During 2023, there were two authorized repurchase plans in effect: • On December 15, 2022, our Board of Directors authorized a successor share repurchase program under which the Company is authorized to repurchase up to $8.0 million of shares of our common stock through December 15, 2024 (the “December 2024 Share Repurchase Program”), which represents the unused portion of those authorized under the predecessor November 2022 Share Repurchase Program.
In total, during the year ended December 31, 2022, we repurchased an aggregate of 992,759 shares of our common stock pursuant to the November 2022 Share Repurchase Program and the December 2024 Share Repurchase Program at an aggregate price of approximately $11.6 million. ITEM 6. RESERVED
In total, during the year ended December 31, 2023, we repurchased an aggregate of 1,513,644 shares of our common stock pursuant to the December 2024 Share Repurchase Program and the June 2025 Share Repurchase Program at an aggregate price of approximately $22.0 million. ITEM 6. RESERVED 30
Under the December 2024 Share Repurchase Program, we repurchased 186,435 shares of our common stock in December 2022 at an aggregate cost of approximately $1.8 million. As of December 31, 2022, we have the ability to purchase up to approximately $6.2 million of our common stock under the December 2024 Share Repurchase Program.
Under the December 2024 Share Repurchase Program, we repurchased 587,126 shares of our common stock at an aggregate cost of approximately $8.0 million.
During 2022, there were two authorized repurchase plans in effect: • On November 3, 2020, we announced that our Board of Directors authorized the repurchase of up to $20 million of outstanding shares of our common stock through November 3, 2022 (the “November 2022 Share Repurchase Program”) pursuant to which we repurchased 968,915 shares of our common stock at an aggregate cost of approximately $12.0 million.
As of December 31, 2023, all amounts authorized under the December 2024 Share Repurchase Program were repurchased. • On June 12, 2023, our Board of Directors authorized the repurchase of up to $20.0 million of our common stock through June 10, 2025 (“The June 2025 Share Repurchase Program”), pursuant to which we repurchased 1,112,953 shares of our common stock at an aggregate cost of approximately $15.9 million.
Period Ended Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Universal Insurance Holdings, Inc. $ 141.44 $ 107.16 $ 60.54 $ 71.68 $ 47.65 S&P 500 Index 95.62 125.72 148.85 191.58 156.88 Russell 2000 Index 88.99 111.70 134.00 153.85 122.41 S&P Insurance Select Industry Index 94.43 120.54 117.18 144.28 149.80 24 We have generated these comparisons using data supplied by S&P Global Market Intelligence (Centennial, Colorado).
Period Ended Index 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Universal Insurance Holdings, Inc. $ 75.76 $ 42.81 $ 50.68 $ 33.69 $ 53.28 S&P 500 Index 131.49 155.68 200.37 164.08 207.21 Russell 2000 Index 125.52 150.58 172.90 137.56 160.85 S&P Insurance Select Industry Index 127.65 124.08 152.79 158.63 178.52 29 We have generated these comparisons using data supplied by S&P Global Market Intelligence (Centennial, Colorado).
Added
As of December 31, 2023, we have the ability to purchase up to approximately $4.1 million of our common stock authorized under the June 2025 Share Repurchase Program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Management believes this metric is meaningful, as it allows investors to evaluate underlying profitability and enhances comparability across periods, by excluding items that are heavily impacted by investment market fluctuations and other economic factors and are not indicative of operating trends.
Management believes this metric is meaningful, as it allows investors to evaluate underlying profitability and enhances comparability across periods, by excluding items that are heavily impacted by investment market fluctuations and other economic factors and are not indicative of operating trends.
Management believes this metric is meaningful, as it allows investors to evaluate underlying profitability and enhances comparability across periods, by excluding items that are heavily impacted by investment market fluctuations and other economic factors and are not indicative of operating trends.
Management believes this metric is meaningful, as it allows investors to evaluate underlying profitability and enhances comparability across periods, by excluding items that are heavily impacted by investment market fluctuations and other economic factors and are not indicative of operating trends.
Management believes this metric is meaningful, as it allows investors to evaluate underlying profitability and enhances comparability across periods, by excluding items that are heavily impacted by investment market fluctuations and other economic factors and are not indicative of operating trends.
Management believes this metric is meaningful, as it allows investors to evaluate underlying profitability and enhances comparability across periods, by excluding items that are heavily impacted by investment market fluctuations and other economic factors and are not indicative of operating trends.
A detailed discussion of our results of operations follows the table below (in thousands, except per share data).
A detailed discussion of our results of operations follows the table below (in thousands, except per share data).
Key assumptions that are premised on future emergence that are inconsistent with historical loss reserve development patterns include but are not limited to: • Adverse changes in loss cost trends, including inflationary pressures in home repair costs; • Judicial expansion of policy coverage and the impact of new theories of liability; and • Plaintiffs targeting property and casualty insurers in purported class action litigation related to claims-handling and other practices.
Key assumptions that are premised on future emergence that are inconsistent with historical loss reserve development patterns include but are not limited to: • Adverse changes in loss cost trends, including inflationary pressures in home repair costs; • Judicial expansion of policy coverage and the impact of new theories of liability; and • Plaintiffs targeting property and casualty insurers in purported class action or other litigation related to claims-handling and other practices.
This is due to an increasing number of policyholders who have one or more recent prior losses with the Insurance Entities or with other insurers, which then require evaluation during subsequent claims and 26 determinations regarding whether property has been repaired consistently with the scope and amount of damage previously asserted.
This is due to an increasing number of policyholders who have one or more recent prior losses with the Insurance Entities or with other insurers, which then require evaluation during subsequent claims and determinations regarding whether property has been repaired consistently with the scope and amount of damage previously asserted.
Factors that could cause or contribute to such differences include, but are not limited to, those discussed above under “Cautionary Note Regarding Forward-Looking Statements” and “Part I— Item 1A—Risk Factors.” 25 Overview We are a vertically integrated holding company offering homeowners insurance to our customers.
Factors that could cause or contribute to such differences include, but are not limited to, those discussed above under “Cautionary Note Regarding Forward-Looking Statements” and “Part I— Item 1A—Risk Factors.” Overview We are a vertically integrated holding company offering homeowners insurance to our customers.
In addition, we are authorized to do business in Tennessee and Wisconsin and are proceeding with product filings in those states. At December 31, 2022, policies in force decreased 94,737 policies, or 10.0%, premium in force increased $176.5 million, or 10.5%, and total insured value increased $1.3 billion, or 0.4%, compared to December 31, 2021.
In addition, we are authorized to do business in Tennessee and Wisconsin and are proceeding with product filings in those states. At December 31, 2022, policies in force decreased by 94,737 policies, or 10.0%, premium in force increased $176.5 million, or 10.5%, and total insured value increased $1.3 billion, or 0.4%, compared to December 31, 2021.
This also affects a large number of claims from inception or during the adjusting process as a substantial and growing percentage of policyholders obtain representation early in the process, and sometimes even before notifying insurers of their claims. These market conditions also add, and will continue to add, complexity to efforts to efficiently and expeditiously adjust claims.
This also affects a large number of claims from inception or during the adjusting process as a substantial percentage of policyholders obtain representation early in the process, sometimes even before notifying insurers of their claims. These market conditions also add, and will continue to add, complexity to efforts to efficiently and expeditiously adjust claims.
Adjusted return on common equity (Adjusted “ROCE”) ― is a non-GAAP measure, that is calculated by actual or annualized adjusted net income attributable to common stockholders divided by average adjusted common stockholders' equity, with the denominator excluding current period income statement net realized gains (losses) on investments and net changes in unrealized gains (losses) of equity securities, net of tax.
Adjusted return on common equity (Adjusted “ROCE”) ― is a non-GAAP measure, that is calculated by actual or annualized adjusted net income attributable to common stockholders divided by average adjusted common stockholders’ equity, with the denominator excluding current period income statement net realized gains (losses) on investments and net changes in unrealized gains (losses) on investments, net of tax.
(in thousands) Years Ended December 31, Change 2022 2021 $ % REVENUES Direct premiums written $ 1,845,786 $ 1,671,252 $ 174,534 10.4 % Change in unearned premium (86,085) (74,634) (11,451) 15.3 % Direct premium earned 1,759,701 1,596,618 163,083 10.2 % Ceded premium earned (631,075) (561,155) (69,920) 12.5 % Premiums earned, net 1,128,626 1,035,463 93,163 9.0 % Net investment income 25,785 12,535 13,250 105.7 % Net realized gains (losses) on investments 348 5,892 (5,544) (94.1) % Net change in unrealized gains (losses) of equity securities (13,145) (4,032) (9,113) 226.0 % Commission revenue 53,168 41,649 11,519 27.7 % Policy fees 20,182 22,713 (2,531) (11.1) % Other revenue 7,694 7,631 63 0.8 % Total revenues 1,222,658 1,121,851 100,807 9.0 % OPERATING COSTS AND EXPENSES Losses and loss adjustment expenses 938,399 779,205 159,194 20.4 % General and administrative expenses 304,897 313,595 (8,698) (2.8) % Total operating costs and expenses 1,243,296 1,092,800 150,496 13.8 % Interest and amortization of debt issuance costs 6,609 638 5,971 935.9 % INCOME (LOSS) BEFORE INCOME TAX EXPENSE (BENEFIT) (27,247) 28,413 (55,660) NM Income tax expense (benefit) (4,990) 8,006 (12,996) NM NET INCOME (LOSS) $ (22,257) $ 20,407 $ (42,664) NM Other comprehensive income (loss), net of taxes (88,214) (18,911) (69,303) 366.5 % COMPREHENSIVE INCOME (LOSS) $ (110,471) $ 1,496 $ (111,967) NM DILUTED EARNINGS (LOSS) PER SHARE DATA: Diluted earnings (loss) per common share $ (0.72) $ 0.65 $ (1.37) NM Weighted average diluted common shares outstanding 30,751 31,307 (556) (1.8) % NM - Not Meaningful 37 Revenues Direct premiums written increased by $174.5 million, or 10.4%, for the year ended December 31, 2022, driven by premium growth within our Florida business of $149.8 million, or 10.8%, and premium growth in our other states business of $24.7 million, or 8.7%, as compared to the same period of the prior year.
Years Ended December 31, Change 2022 2021 $ % REVENUES Direct premiums written $ 1,845,786 $ 1,671,252 $ 174,534 10.4 % Change in unearned premium (86,085) (74,634) (11,451) 15.3 % Direct premium earned 1,759,701 1,596,618 163,083 10.2 % Ceded premium earned (631,075) (561,155) (69,920) 12.5 % Premiums earned, net 1,128,626 1,035,463 93,163 9.0 % Net investment income 25,785 12,535 13,250 105.7 % Net realized gains (losses) on investments 348 5,892 (5,544) (94.1) % Net change in unrealized gains (losses) on investments (13,145) (4,032) (9,113) 226.0 % Commission revenue 53,168 41,649 11,519 27.7 % Policy fees 20,182 22,713 (2,531) (11.1) % Other revenue 7,694 7,631 63 0.8 % Total revenues 1,222,658 1,121,851 100,807 9.0 % OPERATING COSTS AND EXPENSES Losses and loss adjustment expenses 938,399 779,205 159,194 20.4 % General and administrative expenses 304,897 313,595 (8,698) (2.8) % Total operating costs and expenses 1,243,296 1,092,800 150,496 13.8 % Interest and amortization of debt issuance costs 6,609 638 5,971 935.9 % INCOME (LOSS) BEFORE INCOME TAX EXPENSE (27,247) 28,413 (55,660) NM Income tax expense (4,990) 8,006 (12,996) NM NET INCOME (LOSS) $ (22,257) $ 20,407 $ (42,664) NM Other comprehensive income (loss), net of taxes (88,214) (18,911) (69,303) 366.5 % COMPREHENSIVE INCOME (LOSS) $ (110,471) $ 1,496 $ (111,967) NM DILUTED EARNINGS PER SHARE DATA: Diluted earnings per common share $ (0.72) $ 0.65 $ (1.37) NM Weighted average diluted common shares outstanding 30,751 31,307 (556) (1.8) % NM - Not Meaningful 48 Revenues Direct premiums written increased by $174.5 million, or 10.4%, for the year ended December 31, 2022, driven by premium growth within our Florida business of $149.8 million, or 10.8%, and premium growth in our other states business of $24.7 million, or 8.7%, as compared to the same period of the prior year.
SELECTED FINANCIAL DATA The following selected historical consolidated financial data should be read in conjunction with our consolidated financial statements and notes thereto and “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth elsewhere in the Annual Report on Form 10-K.
SELECTED FINANCIAL DATA The following selected historical consolidated financial data should be read in conjunction with our consolidated financial statements and notes thereto and “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of 39 Operations” set forth elsewhere in the Annual Report on Form 10-K.
During the years ended December 31, 2022 and 2021 the Insurance Entities did not pay dividends to PSI. As of December 31, 2022, the Insurance Entities did not have the capacity to pay ordinary dividends. On November 23, 2021, we issued $100 million of 5.625% Senior Unsecured Notes due 2026.
During the years ended December 31, 2023 and 2022 the Insurance Entities did not pay dividends to PSI. As of December 31, 2023, the Insurance Entities did not have the capacity to pay ordinary dividends. On November 23, 2021, we issued $100 million of 5.625% Senior Unsecured Notes due 2026.
Catastrophes are commonly caused by various natural events including high winds, tornadoes, wildfires, winter storms, tropical storms and hurricanes. The estimation of claims and claims expense reserves for catastrophes also comprises estimates of losses from reported and unreported claims, primarily for damage to property.
Catastrophes are commonly caused by various natural events including high winds, tornadoes, wildfires, winter storms, tropical storms and hurricanes. 61 The estimation of claims and claims expense reserves for catastrophes also comprises estimates of losses from reported and unreported claims, primarily for damage to property.
The effects of numerous other considerations, include the timing of a catastrophe in relation to other events, such as at or near the end of a financial reporting period, which 56 can affect the availability of information needed to estimate reserves for that reporting period.
The effects of numerous other considerations, include the timing of a catastrophe in relation to other events, such as at or near the end of a financial reporting period, which can affect the availability of information needed to estimate reserves for that reporting period.
We may repurchase shares from time to time at our discretion, based on ongoing assessments of our capital needs, the market price of our common stock and general market conditions. We will fund the share repurchase program with cash from operations.
Common Stock Repurchases We may repurchase shares from time to time at our discretion, based on ongoing assessments of our capital needs, the market price of our common stock, and general market conditions. We will fund the share repurchase program with cash from operations.
Income Tax Expense (Benefit) Income tax benefit was $5.0 million for the year ended December 31, 2022 , compared to income tax expense of $8.0 million for the year ended December 31, 2021. Our effective tax rate (“ETR”) decreased to 18.3% for the year ended December 31, 2022, as compared to 28.2% for the year ended December 31, 2021.
Income Tax Expense (Benefit) Income tax benefit was $5.0 million for the year ended December 31, 2022 , compared to income tax expense of $8.0 million for the year ended December 31, 2021. Our effective tax rate decreased to 18.3% for the year ended December 31, 2022, as compared to 28.2% for the year ended December 31, 2021.
When these 55 types of changes are experienced, actuarial judgment is applied in the determination and selection of development factors in order to better reflect new trends or expectations.
When these types of changes are experienced, actuarial judgment is applied in the determination and selection of development factors in order to better reflect new trends or expectations.
Any future economic changes which result in prolonged and increasing levels of inflation could cause increases in the dollar amount of incurred loss and LAE and thereby materially adversely affect future liability requirements. 54 Arrangements with Variable Interest Entities We entered into a reinsurance captive arrangement with a VIE in the normal course of business, and consolidated the VIE since we are the primary beneficiary.
Any future economic changes which result in prolonged and increasing levels of inflation could cause increases in the dollar amount of incurred loss and LAE and thereby materially adversely affect future liability requirements. 59 Arrangements with Variable Interest Entities We entered into a reinsurance captive arrangement with a VIE in the normal course of business, and consolidated the VIE since we are the primary beneficiary.
The one-way right to attorneys’ fees essentially means that unless an insurer’s position is substantially upheld in litigation, the insurer must pay the plaintiff’s attorneys’ fees in addition to its own defense costs. This affects not only claims that are litigated to resolution, but also the settlement discussions that take place with nearly all litigated claims.
The one-way right to attorneys’ fees essentially means that unless an insurer’s position is substantially upheld in litigation, the insurer must pay the plaintiff’s attorneys’ fees in addition to its own defense costs. This affects not only pre-reform claims that are litigated to resolution, but also the settlement discussions that take place with nearly all litigated pre-reform claims.
This ratio helps management measure the amount of financing leverage in place (long-term debt) in relation to total capital resources and future leverage capacity. Diluted adjusted earnings per common share ― is a non-GAAP measure, which is calculated by adjusted net income available to common stockholders divided by weighted average diluted common shares outstanding.
This ratio helps management measure the amount of financing leverage in place (long-term debt) in relation to total capital resources and future leverage capacity. Diluted adjusted earnings per common share ― is a non-GAAP measure that is calculated by adjusted net income available to common stockholders divided by weighted average diluted common shares outstanding.
This measure assists management in measuring the level of insured exposure and progress toward meeting revenue goals for the current year, and provides an indication of business available for renewal in the next twelve months. Inherent seasonality in our business makes this measure more useful when comparing each quarter’s balance to the same quarter in prior years.
This measure assists management in measuring the level of insured exposure and progress toward meeting revenue goals for the current year, and provides an indication of business available for renewal in the next 12 months. Inherent seasonality in our business makes this measure more useful when comparing each quarter’s balance to the same quarter in prior years.
Inherent seasonality in our business makes this measure more useful when comparing each quarter’s balance to the same quarter in prior years. 31 Premium in Force ― is the amount of the annual direct written premiums previously recorded by the Company for policies which are still active as of the reporting date.
Inherent seasonality in our business makes this measure more useful when comparing each quarter’s balance to the same quarter in prior years. 37 Premium in Force ― is the amount of the annual direct written premiums previously recorded by the Company for policies which are still active as of the reporting date.
Duration is a measure of a bond’s sensitivity to interest rate changes and is used by management to limit the potential impact of longer-term investments. 50 The Insurance Entities are responsible for losses related to catastrophic events in excess of coverage provided by the Insurance Entities’ reinsurance programs and retentions before our reinsurance protection commences.
Duration is a measure of a bond’s sensitivity to interest rate changes and is used by management to limit the potential impact of longer-term investments. 55 The Insurance Entities are responsible for losses related to catastrophic events in excess of coverage provided by the Insurance Entities’ reinsurance programs and retentions before our reinsurance protection commences.
The Insurance Entities’ respective 2022-2023 reinsurance programs meet the FLOIR’s requirements, which are based on, among other things, successfully demonstrating cohesive and comprehensive reinsurance programs that protect the policyholders of our Insurance Entities as well as satisfying a series of stress test catastrophe loss scenarios based on past historical events.
The Insurance Entities’ respective 2023-2024 reinsurance programs meet the FLOIR’s requirements, which are based on, among other things, successfully demonstrating cohesive and comprehensive reinsurance programs that protect the policyholders of our Insurance Entities as well as satisfying a series of stress test catastrophe loss scenarios based on past historical events.
The average credit rating on our available-for-sale securities was A+ as of December 31, 2022 and December 31, 2021. Credit ratings are a measure of collection risk on invested assets. Credit ratings are provided by third party nationally recognized rating agencies and are periodically updated. Management establishes guidelines for minimum credit rating and overall credit rating for all investments.
The average credit rating on our available-for-sale securities was A+ as of December 31, 2023 and December 31, 2022. Credit ratings are a measure of collection risk on invested assets. Credit ratings are provided by third party nationally recognized rating agencies and are periodically updated. Management establishes guidelines for minimum credit rating and overall credit rating for all investments.
NAIC’s RBC requirements are used by regulators to determine appropriate regulatory actions relating to insurers who show signs of weak or deteriorating condition. As of December 31, 2022, based on calculations using the appropriate NAIC RBC formula, the Insurance Entities reported respective total adjusted capital in excess of the requirements.
NAIC’s RBC requirements are used by regulators to determine appropriate regulatory actions relating to insurers who show signs of weak or deteriorating condition. As of December 31, 2023, based on calculations using the appropriate NAIC RBC formula, the Insurance Entities reported respective total adjusted capital in excess of the requirements.
As of December 31, 2022, UPCIC’s net written premium to surplus ratio and gross written premium to surplus ratio were in excess of the required minimums and, therefore, UPCIC is not subject to increases in interest rates. See “Part II—Item 8—Note 7 (Long-term debt)” for additional details.
As of December 31, 2023, UPCIC’s net written premium to surplus ratio and gross written premium to surplus ratio were in excess of the required minimums and, therefore, UPCIC is not subject to increases in interest rates. See “Part II—Item 8—Note 7 (Long-term debt)” for additional details.
As of December 31, 2022, we were in compliance with all applicable covenants. We will also continue to evaluate opportunities to access the debt capital markets to raise additional capital. We anticipate any proceeds would be used for general corporate purposes, including investing in the capital and surplus of the Insurance Entities.
As of December 31, 2023, we were in compliance with all applicable covenants. We will also continue to evaluate opportunities to access the debt capital markets to raise additional capital. We anticipate any proceeds would be used for general corporate purposes, including investing in the capital and surplus of the Insurance Entities.
The ultimate amount and timing of unpaid losses and LAE could differ materially from the amounts in the table above. Further, the unpaid losses and LAE do not represent all the obligations that will arise under the contracts, but rather only the estimated liability incurred through December 31, 2022. Unpaid losses and LAE are net of estimated subrogation recoveries.
The ultimate amount and timing of unpaid losses and LAE could differ materially from the amounts in the table above. Further, the unpaid losses and LAE do not represent all the obligations that will arise under the contracts, but rather only the estimated liability incurred through December 31, 2023. Unpaid losses and LAE are net of estimated subrogation recoveries.
Similarly, the Insurance Entities’ respective 2022-2023 reinsurance programs meet the stress test and review requirements of Demotech, Inc., for maintaining Financial Stability Ratings® of A (Exceptional) and of Kroll for maintaining insurer financial strength ratings of “A-”. We believe the Insurance Entities’ retentions under their respective reinsurance programs are appropriate and structured to protect policyholders.
Similarly, the Insurance Entities’ respective 2023-2024 reinsurance programs meet the stress test and review requirements of Demotech, Inc., for maintaining Financial Stability Ratings® of A (Exceptional) and of Kroll for maintaining insurer financial strength ratings of “A-”. We believe the Insurance Entities’ retentions under their respective reinsurance programs are appropriate and structured to protect policyholders.
The reduction in long-term debt was primarily the result of principal payments on long-term debt of $1.5 million offset by amortization of debt issuance costs of $0.7 million on our 5.625% Senior Unsecured Notes due 2026 during 2022 . See “— Liquidity and Capital Resources” for more information.
The reduction in long-term debt was primarily the result of principal payments on long-term debt of $1.5 million offset by amortization of debt issuance costs of $0.7 million on our 5.625% Senior Unsecured Notes due 2026 during 2023 . See “— Liquidity and Capital Resources” for more information.
As a result, we saw 38 increased yields on securities purchased in late 2021, and throughout 2022, and increased unrealized losses on our portfolio, reflected after-tax in the equity section of our balance sheet as increased market yields negatively impacted the fair value of much of our available-for-sale debt securities.
As a result, we saw 49 increased yields on securities purchased in late 2021, and throughout 2022, and increased unrealized losses on our portfolio, reflected after-tax in the equity section of our balance sheet as increased market yields negatively impacted the fair value of much of our available-for-sale debt securities.
Looking Forward We continue to monitor a range of financial metrics related to our business. Although we have not experienced material adverse impacts on our business or liquidity, conditions are subject to change depending on the extent of the economic downturn, and the pace and extent of an economic recovery.
Looking Forward We continue to monitor a range of financial metrics related to our business. Although we have not experienced material adverse impacts on our business or liquidity, conditions are subject to change depending on the extent of the economic outcomes, and the pace and extent of an economic recovery.
Net change in unrealized gains or losses for equity securities still held at the end of the reported period are recorded at fair value in the Consolidated Balance Sheet with changes in the fair value of equity securities reported in current period earnings in the Consolidated Statements of Income within net change in unrealized gains (losses) of equity securities as they occur.
Net change in unrealized gains or losses for equity securities still held at the end of the reported period are recorded at fair value in the Consolidated Balance Sheet with changes in the fair value of equity securities reported in current period earnings in the Consolidated Statements of Income within net change in unrealized gains (losses) on investments as they occur.
At December 31, 2022, UPCIC was in compliance with the terms of the surplus note and with each of the loan’s covenants as implemented by rules promulgated by the SBA. Total adjusted capital and surplus, which includes the surplus note, was in excess of regulatory requirements for both UPCIC and APPCIC.
At December 31, 2023, UPCIC was in compliance with the terms of the surplus note and with each of the loan’s covenants as implemented by rules promulgated by the SBA. Total adjusted capital and surplus, which includes the surplus note, was in excess of regulatory requirements for both UPCIC and APPCIC.
See the discussion above for the Insurance Entities’ 2022-2023 reinsurance programs and “Part II—Item 8— Note 4 (Reinsurance).” Premiums earned, net of ceded premium earned, grew by 9.0%, or $93.2 million, to $1,128.6 million for the year ended December 31, 2022, reflecting an increase in direct premium earned offset by increased costs for reinsurance.
See the discussion above for the Insurance Entities’ 2022-2023 reinsurance programs and “Part II—Item 8— Note 4 (Reinsurance).” Premiums earned, net of ceded premium earned, grew by 9.0%, or $93.2 million, to $1.1 billion for the year ended December 31, 2022, reflecting an increase in direct premium earned offset by increased costs for reinsurance.
Also see “Part II—Item 5—Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Registrant Purchases of Equity Securities” for share repurchase activity during 2022 and the three months ended December 31, 2022.
Also see “Part II—Item 5—Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Registrant Purchases of Equity Securities” for share repurchase activity during the three months ended December 31, 2023.
Recorded reserves are compared to the indicated range provided in the actuary’s report accompanying the SAO. At December 31, 2022, the recorded amount for net loss and LAE falls within the range determined by the Company’s appointed independent actuary.
Recorded reserves are compared to the indicated range provided in the actuary’s report accompanying the SAO. At December 31, 2023, the recorded amount for net loss and LAE falls within the range determined by the Company’s appointed independent actuary.
According to Kroll, its category of “A” ratings, inclusive of A+, A and A- ratings, indicates an insurer’s financial condition is strong and it is very likely to meet its policy obligations under difficult 53 economic, financial, and business conditions.
According to Kroll, its category of “A” ratings, inclusive of A+, A, and A- ratings, 58 indicates an insurer’s financial condition is strong and it is very likely to meet its policy obligations under difficult economic, financial, and business conditions.
Despite our initiatives in implementing prior law changes and responding to adverse claims behaviors and trends, our costs to settle claims in Florida have increased for the reasons noted herein. For example, the Company continues to adjust its estimate of expected losses and has increased its current year loss estimates and increased estimates associated with prior years’ claims.
Despite our initiatives in implementing law changes and responding to adverse claims behaviors and trends, our costs to settle claims in Florida have increased for the reasons noted herein. For example, the Company continues to adjust its estimate of expected losses and has increased its current year gross loss estimates and increased estimates associated with prior years’ claims when indicated.
A summary of the recent 42 rate increases which are driving increases in written premium is discussed above under “Overview—Trends and Geographical Distribution—Florida Trends.” These rate increases are applied on new business submissions and renewals from the effective date of their renewal, and then are earned subsequently over the policy period.
A summary of the recent rate increases which are driving increases in written premium is discussed above under “Overview—Trends and Geographical Distribution—Florida Trends.” Rate changes are applied on new business submissions and renewals from the effective date of their renewal, and then are earned subsequently over the policy period.
The balance of restricted cash and cash equivalents as of December 31, 2022 and 2021 represents cash equivalents on deposit with certain regulatory agencies in the various states in which our Insurance Entities do business.
The balance of restricted cash and cash equivalents as of December 31, 2023 and 2022 represents cash equivalents on deposit with certain regulatory agencies in the various states in which our Insurance Entities do business.
The full extent and duration of these market disruptions and inflationary pressures are unknown and still unfolding, and we will monitor the impact of such disruptions on the recording and reporting of claim costs. The Company has taken a series of steps over time to mitigate the financial impact of these negative trends in the Florida market.
The full extent and duration of these market disruptions on the claim settlement process and inflationary pressures are unknown and still unfolding, and we will monitor the impact of such disruptions on the recording and reporting of claim costs. 32 The Company has taken a series of steps over time to mitigate the financial impact of these negative trends in the Florida market.
Core revenue, representing total GAAP revenue, excluding net realized gains (losses) on investments and net changes in unrealized gains (losses) of equity securities, was $1,235.5 million for the year ended December 31, 2022 compared to $1,120.0 million for the same period in 2021.
Core revenue, representing total GAAP revenue, excluding net realized gains (losses) on investments and net changes in unrealized gains (losses) on investments, was $1,235.5 million for the year ended December 31, 2022 compared to $1,120.0 million for the same period in 2021.
While the Company retains the risk that otherwise would be transferred to third party-reinsurers for this layer, the additional risk is substantially offset by the savings in premiums that would otherwise have been paid to third-party reinsurers. • Specific 2 nd event private market excess of loss coverage of $66 million in excess of $45 million sitting behind captive arrangement. • Specific 3 rd and 4 th event private market catastrophe excess of loss coverage of $86 million in excess of $25 million provides frequency protection for multiple events during the treaty period including a $20 million reduction in retention for a 3rd and 4th event. • For the FHCF Reimbursement Contracts effective June 1, 2022, UPCIC has continued the election of the 90% coverage level.
While the Company retains the risk that otherwise would be transferred to third-party reinsurers for this layer, the additional risk is substantially offset by the savings in premiums that would otherwise have been paid to third-party reinsurers. • Specific 2 nd event private market excess of loss coverage of $66 million in excess of $45 million sitting behind captive arrangement. • Specific 3 rd and 4 th event private market catastrophe excess of loss coverage of $86 million in excess of $25 million provides frequency protection for multiple events during the treaty period including a $20 million reduction in retention for a 3 rd and 4 th event. • For the FHCF Reimbursement Contracts effective June 1, 2023, both UPCIC and APPCIC have continued the election of the 90% coverage level.
(2) Other revenue consists of commission revenue, policy fees, and other revenue. (3) For the year ended December 31, 2022 and 2021, long-term debt includes a private placement of $100 million of 5.625% Senior Unsecured Notes due 2026.
(2) Other revenue consists of commission revenue, policy fees, and other revenue. 40 (3) For the year ended December 31, 2023 and 2022, long-term debt includes a private placement of $100 million of 5.625% Senior Unsecured Notes due 2026.
Adjusted net income (loss) attributable to common stockholders represents GAAP net income (loss) attributable to common stockholders, excluding net realized gains (losses) on investments and net changes in unrealized gains (losses) of equity securities, net of tax.
Adjusted net income (loss) attributable to common stockholders represents GAAP net income (loss) attributable to common stockholders, excluding net realized gains (losses) on investments and net changes in unrealized gains (losses) on investments, net of tax.
Adjusted net income (loss) attributable to common stockholders represents GAAP net income (loss) attributable to common stockholders, excluding net realized gains (losses) on investments and net changes in unrealized gains (losses) of equity securities, net of tax.
Adjusted net income (loss) attributable to common stockholders represents GAAP net income (loss) attributable to common stockholders, excluding net realized gains (losses) on investments and net changes in unrealized gains (losses) on investments, net of tax.
The Insurance Entities currently maintain acceptable ratings from two rating agencies recognized by Freddie Mac and Fannie Mae. In December 2022, Demotech, Inc. affirmed the Financial Stability Rating® of “A” for the Insurance Entities and Kroll affirmed its insurer financial strength ratings of “A-”.
The Insurance Entities currently maintain acceptable ratings from two rating agencies recognized by Freddie Mac and Fannie Mae. In 2023, Demotech, Inc. affirmed the Financial Stability Rating® of “A” for the Insurance Entities and Kroll affirmed its insurer financial strength ratings of “A-”.
See discussion above and “Part II—Item 8—Note 14 (Other Comprehensive Income (Loss))” for additional information about the amounts comprising other comprehensive income (loss), net of taxes for these periods . 40 Non-GAAP Adjusted operating income (loss) represents GAAP operating income (loss), excluding net realized gains (losses) on investments and net changes in unrealized gains (losses) of equity securities.
See discussion above and “Part II—Item 8—Note 14 (Other Comprehensive Income (Loss))” for additional information about the amounts comprising other comprehensive income (loss), net of taxes for these periods . 51 Non-GAAP Adjusted operating income (loss) represents GAAP operating income (loss), excluding net realized gains (losses) on investments and net changes in unrealized gains (losses) on investments.
Hurricane Ian triggered reinstatement premiums, increasing ceded premiums written by $24.6 million which will be earned prospectively effective September 28, 2022 to May 31, 2023, increasing ceded premiums earned for the year ended December 31, 2022 by $9.5 million.
Hurricane Ian triggered reinstatement premiums, increasing ceded premiums written by $24.6 million which were earned prospectively effective September 28, 2022 to May 31, 2023, increasing ceded premiums earned for the year ended December 31, 2022 by $9.5 million.
The expense ratio includes management fees and commissions, which are based on market rates, paid to an affiliate of the Insurance Entities in the amount of $135.8 million and $135.2 million for UPCIC for the years ended December 31, 2022 and 2021, respectively, and $1.7 million and $0.9 million for APPCIC for the years ended December 31, 2022 and 2021, respectively.
The expense ratio includes management fees and commissions, which are based on market rates, paid to an affiliate of the Insurance Entities in the amount of $122.0 million and $135.8 million for UPCIC for the years ended December 31, 2023 and 2022, respectively, and $2.8 million and $1.7 million for APPCIC for the years ended December 31, 2023 and 2022, respectively.
Renewal commission to agents were lowered to 8% from 10% during 2022 resulting in lower acquisition costs compared to the prior year.
Renewal commissions to agents were lowered to 8% from 10% during 2022 resulting in lower acquisition costs compared to the prior year.
Adjusted net income (loss) attributable to common stockholders ― is a non-GAAP measure, that is calculated by GAAP net income (loss) attributable to common stockholders, excluding net realized gains (losses) on investment and net changes in unrealized gains (losses) of equity securities, net of tax.
Adjusted net income (loss) attributable to common stockholders ― is a non-GAAP measure that is calculated by GAAP net income (loss) attributable to common stockholders, excluding net realized gains (losses) on investment and net changes in unrealized gains (losses) on investments, net of tax.
The Florida Office of Insurance Regulation (“FLOIR”) requires the Insurance Entities, like all residential property insurance companies doing business in Florida, to have a certain amount of capital and reinsurance coverage in order to cover losses upon the occurrence of a single catastrophic event and a series of catastrophic events occurring in the same hurricane season.
The FLOIR requires the Insurance Entities, like all residential property insurance companies doing business in Florida, to have a certain amount of capital and reinsurance coverage in order to cover losses upon the occurrence of a single catastrophic event and a series of catastrophic events occurring in the same hurricane season.
These estimated annual costs are increased or decreased during the year based on premium adjustments or as a result of new placements during the year. The annual cost initially increases reinsurance payable, which is then reduced as installment payments are made over the policy period of the reinsurance, which typically runs from June 1st to May 31st.
These estimated annual costs are increased or decreased during the year based on premium adjustments or as a result of new placements during the year. The annual cost initially increases reinsurance payable, which is then reduced as installment payments are made over the policy period of the reinsurance, which typically runs from June 1 st to May 31 st .
We currently sell insurance policies in 19 states with Florida representing 83.3% of our direct premiums written, with licenses to write insurance in two additional states. We seek to produce an underwriting profit (defined as earned premium-net minus losses, LAE, policy acquisition costs and other operating costs) over the long term, along with growing our Other Revenue Sources.
We currently sell insurance policies in 18 states with Florida representing 81.4% of our direct premiums written, with licenses to write insurance in two additional states. We seek to produce an underwriting profit (defined as earned premium-net minus losses, LAE, policy acquisition costs and other operating costs) over the long term, along with growing our Other Revenue Sources.
Adjusted operating income (loss) margin ― is a non-GAAP measure, which is computed by adjusted operating income (loss) divided by core revenue.
Adjusted operating income (loss) margin ― is a non-GAAP measure that is computed by adjusted operating income (loss) divided by core revenue.
Effective June 1, 2022, the Insurance Entities entered into multiple reinsurance agreements comprising our 2022-2023 reinsurance program.
Effective June 1, 2023, the Insurance Entities entered into multiple reinsurance agreements comprising our 2023-2024 reinsurance program.
Core revenue ― is a non-GAAP measure, that is calculated by total GAAP revenue, excluding net realized gains (losses) on investments and net changes in unrealized gains (losses) of equity securities.
Core revenue ― is a non-GAAP measure that is calculated by total GAAP revenue, excluding net realized gains (losses) on investments and net changes in unrealized gains (losses) on investments.
We estimate the total mandatory FHCF layer will provide approximately $1.679 billion of coverage for UPCIC, which inures to the benefit of the open market coverage secured from private reinsurers and Cosaint Re Pte.
We estimate the total mandatory FHCF layer will provide approximately $1.316 billion of coverage for UPCIC, which insures to the benefit of the open market coverage secured from private reinsurers and Cosaint Re Pte.
The recent rate increases in Florida are in response to rising claim costs driven by higher costs of material and labor associated with claims, the cost of weather events, the rising cost of catastrophe and other reinsurance protecting policyholders and, more importantly, the impact of “social inflation” on claims as claim settlements increasingly have involved inflated demands, representation and litigation.
The recent rate and inflation increases in Florida are in response to rising claim costs driven by higher costs of material and labor associated with claims, the cost of weather events, the rising cost of catastrophe and other reinsurance protecting policyholders and, more importantly, the impact of an increased cost and use of litigation by policyholders on claims as claim settlements increasingly have involved inflated demands, representation, and litigation.
Adjusted return on common equity representing actual or annualized adjusted net income (loss) attributable to common stockholders divided by average adjusted common stockholders' equity, with the denominator excluding current period income statement net realized gains (losses) on investments and net changes in unrealized gains (losses) of equity securities, net of tax, was (3.0)% as of December 31, 2022 and 4.3% as of December 31, 2021.
Adjusted return on common equity representing actual or annualized adjusted net income (loss) attributable to common stockholders divided by average adjusted common stockholders' equity, with the denominator excluding current period income statement net realized gains (losses) on investments and net changes in unrealized gains (losses) on investments, net of tax, was 14.7% as of December 31, 2023 and (3.0)% as of December 31, 2022.
This synergistic relationship results in more efficient handling and coordination of claims including represented claims handled by our legal group of over 500 employees.
This synergistic relationship results in more efficient handling and coordination of claims including represented claims handled by our legal group of close to 500 employees.
Adjusted book value per share common share, representing adjusted common stockholders’ equity divided by outstanding common shares at the end of the reporting period, was $12.89 as of December 31, 2022 and $14.26 as of December 31, 2021.
Adjusted book value per share common share, representing adjusted common stockholders’ equity divided by outstanding common shares at the end of the reporting period, was $14.34 as of December 31, 2023 and $12.89 as of December 31, 2022.
Due to the uncertainties involved, the ultimate cost of losses and LAE may vary materially from recorded amounts, which are based on our best estimates. The liability for unpaid losses and LAE at December 31, 2022 is $1,038.8 million.
Due to the uncertainties involved, the ultimate cost of losses and LAE may vary materially from recorded amounts, which are based on our best estimates. The liability for unpaid losses and LAE at December 31, 2023 is $510.1 million.
These ratios help management measure the amount of financing leverage in place in relation to equity and future leverage capacity. Adjusted common stockholders’ equity, representing GAAP common stockholders' equity, excluding accumulated other comprehensive income (loss), was $391.6 million as of December 31, 2022 and $445.2 million as of December 31, 2021.
These ratios help management measure the amount of financing leverage in place in relation to equity and future leverage capacity. Adjusted common stockholders’ equity, representing GAAP common stockholders’ equity, excluding accumulated other comprehensive income (loss), was $415.4 million as of December 31, 2023 and $391.6 million as of December 31, 2022.
Diluted adjusted earnings per common share was $0.61 for the year ended December 31, 2021 compared to diluted adjusted loss per share of $0.91 for the same period in 2020. 47 ANALYSIS OF FINANCIAL CONDITION AS OF DECEMBER 31, 2022 COMPARED TO DECEMBER 31, 2021 We believe that cash flows generated from operations will be sufficient to meet our working capital requirements for at least the next twelve months.
Diluted adjusted loss per common share was $0.41 for the year ended December 31, 2022 compared to diluted adjusted earnings per share of $0.61 for the same period in 2021. 52 ANALYSIS OF FINANCIAL CONDITION AS OF DECEMBER 31, 2023 COMPARED TO DECEMBER 31, 2022 We believe that cash flows generated from operations will be sufficient to meet our working capital requirements for at least the next 12 months.
Effective in 2021 for UPCIC and 2022 for APPCIC, the holding company has put in place an ongoing surplus note arrangement with the Insurance Entities, which has been approved by the Florida Office of Insurance Regulation as the Insurance Entities’ domestic regulator.
Effective in 2021 for UPCIC and 2022 for APPCIC, the holding company has put in place an ongoing surplus note arrangement with the Insurance Entities, which has been approved by the FLOIR as the Insurance Entities’ domestic regulator.
Adjusted operating income (loss) ― is a non-GAAP measure, that is computed by GAAP operating income (loss), excluding net realized gains (losses) on investment and net changes in unrealized gains (losses) of equity securities.
Adjusted operating income (loss) ― is a non-GAAP measure that is computed by GAAP operating income (loss), excluding net realized gains (losses) on investment and net changes in unrealized gains (losses) on investments.
Unpaid losses and LAE are net of estimated subrogation recoveries of $134 million as of December 31, 2022 compared to $119 million as of December 31, 2021. Unearned premiums represent the portion of direct premiums written that will be earned pro-rata in the future.
Unpaid losses and LAE are net of estimated subrogation recoveries of $144.1 million as of December 31, 2023 compared to $134.4 million as of December 31, 2022. Unearned premiums represent the portion of direct premiums written that will be earned pro-rata in the future.
The balance of cash and cash equivalents, excluding restricted cash, as of December 31, 2022 was $388.7 million, compared to $250.5 million at December 31, 2021. See “Part II—Item 8—Consolidated Statements of Cash Flows” for a reconciliation of the balance of cash and cash equivalents between December 31, 2022 and 2021.
The balance of cash and cash equivalents, excluding restricted cash, as of December 31, 2023 was $397.3 million, compared to $388.7 million at December 31, 2022. See “Part II—Item 8—Consolidated Statements of Cash Flows” for a reconciliation of the balance of cash and cash equivalents between December 31, 2023 and 2022.
The decrease of $1.1 million, or 4.5%, was the result of a decrease in the combined total number of new and renewal policies written during the year ended December 31, 2021 compared to the same period in 2020 in states where we are permitted to charge this fee.
The decrease of $1.3 million, or 6.4%, was the result of a decrease in the combined total number of new and renewal policies written during the year ended December 31, 2023 compared to the same period in 2022 in states where we are permitted to charge this fee.
The duration of our available-for-sale securities was 4.0 years as of December 31, 2022 compared to 4.4 years at December 31, 2021.
The duration of our available-for-sale securities was 3.7 years as of December 31, 2023 compared to 4.0 years at December 31, 2022.
See “Item 1—Note 4 (Reinsurance).” UPCIC’s 2022-2023 Reinsurance Program • First event All States retention of $45 million. • All States first event tower extends to $3.012 billion with no co-participation in any of the layers, no limitation on loss adjustment expenses for the non-catastrophe bond Cosaint Re Pte.
See “Item 1—Note 4 (Reinsurance).” UPCIC/APPCIC 2023-2024 All States Reinsurance Program • First event All States retention of $45 million. • All States first event tower extends to $2.61 billion with no co-participation in any of the layers, no limitation on loss adjustment expenses for the non-catastrophe bond Cosaint Re Pte.
In 2022, DPAC was impacted by the reductions to Florida renewal commissions implemented during 2022 and reductions to 2021 and other changes to the Company’s commission structure. See “Part II—Item 8—Note 5 (Insurance Operations)” for a roll-forward in the balance of our DPAC. Income taxes recoverable represents the difference between estimated tax obligations and tax payments made to taxing authorities.
In 2023, DPAC was impacted by the reductions to Florida renewal commissions implemented during 2022 and other changes to the Company’s commission structure. See “Item 1—Note 5 (Insurance Operations)” for a roll-forward in the balance of our DPAC. Income taxes payable represents the difference between estimated tax obligations and tax payments made to taxing authorities.
Information prepared by the Florida Office of Insurance Regulation shows that claims in Florida are litigated at a substantially disproportionate rate when compared to other states.
Information prepared by the FLOIR shows that claims in Florida are litigated at a substantially disproportionate rate when compared to other states.
Other comprehensive loss, net of taxes for the year ended December 31, 2021 was $18.9 million compared to other comprehensive loss of $17.6 million for the same period in 2020, reflecting after-tax changes in fair value of available-for-sale debt securities held in our investment portfolio and reclassifications out of accumulated other comprehensive income (loss) for available-for-sale debt securities sold.
Comprehensive Income (Loss) Other comprehensive income, net of taxes for the year ended December 31, 2023 was $29.6 million compared to other comprehensive loss of $88.2 million for the same period in 2022, reflecting after-tax changes in fair value of available-for-sale debt securities held in our investment portfolio and reclassifications out of accumulated other comprehensive income for available-for-sale debt securities sold.
The following tables present historical selected consolidated financial data of Universal Insurance Holdings, Inc. and Subsidiaries for the five years ended December 31, 2022 (in thousands, except per share data): Years Ended December 31, 2022 2021 2020 2019 2018 Statement of Income Data: Revenues: Direct premiums written $ 1,845,786 $ 1,671,252 $ 1,517,479 $ 1,292,721 $ 1,190,875 Change in unearned premium (86,085) (74,634) (121,856) (59,600) (69,235) Direct premium earned 1,759,701 1,596,618 1,395,623 1,233,121 1,121,640 Ceded premium earned (631,075) (561,155) (472,060) (390,619) (353,258) Premiums earned, net 1,128,626 1,035,463 923,563 842,502 768,382 Net investment income (1) 25,785 12,535 20,393 30,743 24,816 Other revenue (2) 81,044 71,993 65,437 55,633 49,876 Total revenues 1,222,658 1,121,851 1,072,770 939,351 823,816 Costs and expenses: Losses and loss adjustment expenses 938,399 779,205 758,810 603,406 414,455 Policy acquisition costs 214,259 226,167 199,102 177,530 157,327 Other operating costs 90,638 87,428 90,532 94,655 98,815 Total expenses 1,243,296 1,092,800 1,048,444 875,591 670,597 Interest and amortization of debt issuance costs 6,609 638 95 243 346 Income (loss) before income tax expense (benefit) (27,247) 28,413 24,231 63,517 152,873 Income tax expense (benefit) (4,990) 8,006 5,126 17,003 35,822 Net income (loss) $ (22,257) $ 20,407 $ 19,105 $ 46,514 $ 117,051 Per Share Data: Basic earnings (loss) per common share $ (0.72) $ 0.65 $ 0.60 $ 1.37 $ 3.36 Diluted earnings (loss) per common share $ (0.72) $ 0.65 $ 0.60 $ 1.36 $ 3.27 Dividends declared per common share $ 0.77 $ 0.77 $ 0.77 $ 0.77 $ 0.73 34 As of December 31, 2022 2021 2020 2019 2018 Balance Sheet Data: Total invested assets $ 1,105,806 $ 1,093,680 $ 919,924 $ 914,586 $ 908,154 Cash and cash equivalents 388,706 250,508 167,156 182,109 166,428 Total assets 2,890,154 2,056,141 1,758,741 1,719,852 1,858,390 Unpaid losses and loss adjustment expenses 1,038,790 346,216 322,465 267,760 472,829 Unearned premiums 943,854 857,769 783,135 661,279 601,679 Long-term debt (3) 102,769 103,676 8,456 9,926 11,397 Total liabilities 2,602,258 1,626,439 1,309,479 1,225,951 1,356,757 Total stockholders’ equity $ 287,896 $ 429,702 $ 449,262 $ 493,901 $ 501,633 Shares outstanding end of period 30,389 31,221 31,137 32,638 34,783 Book value per share $ 9.47 $ 13.76 $ 14.43 $ 15.13 $ 14.42 Return on average common equity (ROCE) (6.2) % 4.6 % 4.1 % 9.2 % 24.1 % Selected Data: Loss and loss adjustment expense ratio (4) 83.2 % 75.3 % 82.1 % 71.6 % 53.9 % General and administrative expense ratio (5) 27.0 % 30.2 % 31.4 % 32.3 % 33.4 % Combined Ratio (6) 110.2 % 105.5 % 113.5 % 103.9 % 87.3 % (1) Net investment income excludes net realized gains (losses) on sale of investments and net change in unrealized gains (losses) of equity securities.
The following tables present historical selected consolidated financial data of Universal Insurance Holdings, Inc. and Subsidiaries for the five years ended December 31, 2023 (in thousands, except per share data): Years Ended December 31, 2023 2022 2021 2020 2019 Statement of Income Data: Revenues: Direct premiums written $ 1,921,833 $ 1,845,786 $ 1,671,252 $ 1,517,479 $ 1,292,721 Change in unearned premium (46,704) (86,085) (74,634) (121,856) (59,600) Direct premium earned 1,875,129 1,759,701 1,596,618 1,395,623 1,233,121 Ceded premium earned (623,193) (631,075) (561,155) (472,060) (390,619) Premiums earned, net 1,251,936 1,128,626 1,035,463 923,563 842,502 Net investment income (1) 48,449 25,785 12,535 20,393 30,743 Other revenue (2) 80,380 81,044 71,993 65,437 55,633 Total revenues 1,391,582 1,222,658 1,121,851 1,072,770 939,351 Costs and expenses: Losses and loss adjustment expenses 992,636 938,399 779,205 758,810 603,406 Policy acquisition costs 208,011 214,259 226,167 199,102 177,530 Other operating costs 96,055 90,638 87,428 90,532 94,655 Total expenses 1,296,702 1,243,296 1,092,800 1,048,444 875,591 Interest and amortization of debt issuance costs 6,531 6,609 638 95 243 Income (loss) before income tax expense (benefit) 88,349 (27,247) 28,413 24,231 63,517 Income tax expense (benefit) 21,526 (4,990) 8,006 5,126 17,003 Net income (loss) $ 66,823 $ (22,257) $ 20,407 $ 19,105 $ 46,514 Per Share Data: Basic earnings (loss) per common share $ 2.24 $ (0.72) $ 0.65 $ 0.60 $ 1.37 Diluted earnings (loss) per common share $ 2.22 $ (0.72) $ 0.65 $ 0.60 $ 1.36 Dividends declared per common share $ 0.77 $ 0.77 $ 0.77 $ 0.77 $ 0.77 As of December 31, 2023 2022 2021 2020 2019 Balance Sheet Data: Total invested assets $ 1,160,784 $ 1,105,806 $ 1,093,680 $ 919,924 $ 914,586 Cash and cash equivalents 397,306 388,706 250,508 167,156 182,109 Total assets 2,316,561 2,890,154 2,056,141 1,758,741 1,719,852 Unpaid losses and loss adjustment expenses 510,117 1,038,790 346,216 322,465 267,760 Unearned premiums 990,559 943,854 857,769 783,135 661,279 Long-term debt (3) 102,006 102,769 103,676 8,456 9,926 Total liabilities 1,975,264 2,602,258 1,626,439 1,309,479 1,225,951 Total stockholders’ equity $ 341,297 $ 287,896 $ 429,702 $ 449,262 $ 493,901 Shares outstanding end of period 28,966 30,389 31,221 31,137 32,638 Book value per share $ 11.78 $ 9.47 $ 13.76 $ 14.43 $ 15.13 Return on average common equity (ROCE) 21.2 % (6.2) % 4.6 % 4.1 % 9.2 % Selected Data: Loss and loss adjustment expense ratio (4) 79.3 % 83.2 % 75.3 % 82.1 % 71.6 % General and administrative expense ratio (5) 24.3 % 27.0 % 30.2 % 31.4 % 32.3 % Combined Ratio (6) 103.6 % 110.2 % 105.5 % 113.5 % 103.9 % (1) Net investment income excludes net realized gains (losses) on sale of investments and net change in unrealized gains (losses) on investments.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Our investment portfolio as of December 31, 2022 is comprised of available-for-sale debt securities and equity securities, carried at fair market value, which expose us to changing market conditions, specifically interest rates and equity price changes. The primary objectives of the investment portfolio are the preservation of capital and providing adequate liquidity for potential claim payments and other cash needs.
Our investment portfolio as of December 31, 2023 is comprised of available-for-sale debt securities and equity securities, carried at fair market value, which expose us to changing market conditions, specifically interest rates and equity price changes. The primary objectives of the investment portfolio are the preservation of capital and providing adequate liquidity for potential claim payments and other cash needs.
The following table provides information about the Financial Instruments in our investment portfolio subject to price risk as of the dates presented (in thousands): December 31, 2022 December 31, 2021 Fair Value Percent Fair Value Percent Equity Securities: Common stock $ 15,313 17.9 % $ 3,683 7.8 % Mutual funds 70,156 82.1 % 43,651 92.2 % Total equity securities $ 85,469 100.0 % $ 47,334 100.0 % A hypothetical decrease of 20% in the market prices of each of the equity securities held at December 31, 2022 and 2021 would have resulted in a decrease of $17.1 million and $9.5 million, respectively, in the fair value of those securities.
The following table provides information about the Financial Instruments in our investment portfolio subject to price risk as of the dates presented (in thousands): December 31, 2023 December 31, 2022 Fair Value Percent Fair Value Percent Equity Securities: Common stock $ 15,438 19.2 % $ 15,313 17.9 % Mutual funds 65,057 80.8 % 70,156 82.1 % Total equity securities $ 80,495 100.0 % $ 85,469 100.0 % A hypothetical decrease of 20% in the market prices of each of the equity securities held at December 31, 2023 and 2022 would have resulted in a decrease of $16.1 million and $17.1 million, respectively, in the fair value of those securities.
Interest Rate Risk Interest rate risk is the sensitivity of the fair market value of a fixed-rate Financial Instrument to changes in interest rates. Generally, when interest rates rise, the fair market value of our fixed-rate Financial Instruments declines.
Interest Rate Risk Interest rate risk is the sensitivity of the fair market value of a fixed-rate Financial Instrument to changes in interest rates.
The following tables provide information about our fixed income Financial Instruments as of December 31, 2022 compared to December 31, 2021, which are sensitive to changes in interest rates.
Generally, when interest rates rise, the fair market value of our fixed-rate Financial Instruments declines. 65 The following tables provide information about our fixed income Financial Instruments as of December 31, 2023 compared to December 31, 2022, which are sensitive to changes in interest rates.
The tables present the expected cash flows of Financial 60 Instruments based on years to effective maturity using amortized cost compared to fair market value and the related book yield compared to coupon yield (dollars in thousands): December 31, 2022 2023 2024 2025 2026 2027 Thereafter Other Total Amortized cost $ 76,691 $ 108,112 $ 141,162 $ 157,809 $ 162,156 $ 504,378 $ 2,544 $ 1,152,852 Fair market value $ 75,226 $ 103,211 $ 129,284 $ 140,825 $ 143,000 $ 420,963 $ 2,117 $ 1,014,626 Coupon rate 1.80 % 2.51 % 2.69 % 2.44 % 2.65 % 2.88 % 4.35 % 2.65 % Book yield 1.56 % 1.31 % 1.58 % 1.54 % 1.88 % 2.23 % 4.24 % 1.88 % * Years to effective maturity - 5.0 years December 31, 2021 2022 2023 2024 2025 2026 Thereafter Other Total Amortized cost $ 30,183 $ 97,826 $ 99,528 $ 152,982 $ 180,558 $ 499,417 $ 698 $ 1,061,192 Fair market value $ 30,163 $ 97,433 $ 98,751 $ 150,046 $ 176,711 $ 486,657 $ 694 $ 1,040,455 Coupon rate 1.34 % 1.82 % 2.23 % 2.62 % 2.65 % 2.59 % 3.53 % 2.46 % Book yield 0.50 % 0.71 % 0.87 % 1.10 % 1.28 % 1.70 % 3.54 % 1.34 % * Years to effective maturity - 5.4 years All securities, except those with perpetual maturities, were categorized in the tables above utilizing years to effective maturity.
The tables present the expected cash flows of Financial Instruments based on years to effective maturity using amortized cost compared to fair market value and the related book yield compared to coupon yield (dollars in thousands): December 31, 2023 2024 2025 2026 2027 2028 Thereafter Other Total Amortized cost $ 92,428 $ 160,575 $ 185,761 $ 166,111 $ 103,731 $ 450,811 $ 3,502 $ 1,162,919 Fair market value $ 91,247 $ 153,712 $ 173,781 $ 153,506 $ 97,304 $ 391,765 $ 3,015 $ 1,064,330 Coupon rate 2.77 % 2.96 % 2.73 % 2.71 % 3.41 % 3.02 % 4.22 % 2.94 % Book yield 2.34 % 2.16 % 2.01 % 2.11 % 2.94 % 2.49 % 1.38 % 2.34 % * Years to effective maturity - 4.6 years December 31, 2022 2023 2024 2025 2026 2027 Thereafter Other Total Amortized cost $ 76,691 $ 108,112 $ 141,162 $ 157,809 $ 162,156 $ 504,378 $ 2,544 $ 1,152,852 Fair market value $ 75,226 $ 103,211 $ 129,284 $ 140,825 $ 143,000 $ 420,963 $ 2,117 $ 1,014,626 Coupon rate 1.80 % 2.51 % 2.69 % 2.44 % 2.65 % 2.88 % 4.35 % 2.65 % Book yield 1.56 % 1.31 % 1.58 % 1.54 % 1.88 % 2.23 % 4.24 % 1.88 % * Years to effective maturity - 5.0 years All securities, except those with perpetual maturities, were categorized in the tables above utilizing years to effective maturity.

Other UVE 10-K year-over-year comparisons