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What changed in UNIVERSAL INSURANCE HOLDINGS, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of UNIVERSAL INSURANCE HOLDINGS, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+414 added−433 removedSource: 10-K (2025-02-28) vs 10-K (2024-02-28)

Top changes in UNIVERSAL INSURANCE HOLDINGS, INC.'s 2024 10-K

414 paragraphs added · 433 removed · 323 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

42 edited+3 added−7 removed91 unchanged
Biggest changeChanging climate conditions are increasing the unpredictability of natural catastrophes, such as hurricanes, floods, severe convective storms, and wildfires, leading to significant property losses. Our responsive claims team helps to restore our customers’ lives after catastrophic losses. Our enterprise risk management framework, overseen by senior management and the Board, models and assesses loss probabilities.
Biggest changeAs 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. Changing climate conditions are increasing the unpredictability of natural catastrophes, such as hurricanes, floods, severe convective storms, and wildfires, leading to significant property losses.
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”).
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”).
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.
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 reinsurance costs.
Some state insurance laws require prior notification to state insurance regulators of an acquisition of control of a non-domiciliary insurance company doing business in that state. Insurance holding company regulations also govern the amount any affiliate of the holding company may charge the Insurance Entities for services (e.g., claims adjustment, administration, management fees and commissions).
Some state insurance laws require prior notification to state insurance regulators of an acquisition of control of a non-domiciliary insurance company doing business in that state. 9 Insurance holding company regulations also govern the amount any affiliate of the holding company may charge the Insurance Entities for services (e.g., claims adjustment, administration, management fees and commissions).
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.
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.
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.
Investments 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.
We also engage a third-party market representative to assist in ongoing training and recruitment initiatives in all of the states in which we write business. We utilize an attractive commission-based compensation plan as an incentive for independent agents to place business with us.
We also engage a third-party market representative to assist in ongoing training and recruitment initiatives in all of the states in which we write business. 5 We utilize an attractive commission-based compensation plan as an incentive for independent agents to place business with us.
Privacy and Information Security Regulation Federal and state laws and regulations require certain business entities to protect the security and confidentiality of non-public personal information and to notify customers and other individuals about their policies and practices relating to their collection and disclosure of customer information and their practices relating to protecting the security and confidentiality of that information.
Privacy and Information Security Regulation 10 Federal and state laws and regulations require certain business entities to protect the security and confidentiality of non-public personal information and to notify customers and other individuals about their policies and practices relating to their collection and disclosure of customer information and their practices relating to protecting the security and confidentiality of that information.
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 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 expired on May 31, 2024.
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.
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, 2024, the Insurance Entities’ RBC ratios exceed applicable statutory requirements.
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.
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 2024, the Insurance Entities utilized excess of loss reinsurance in various forms.
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”).
The benefits of the reinsurance strategy in 2024 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 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.
The Insurance Entities’ respective 2024-2025 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.
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.
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 50 carrier partners, and utilization of digital applications where applicable to adjust claims.
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.
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 2024 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.
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.
The Company filed its most recent ORSA summary report in May 2024. 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.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and any amendments thereto, are available, free of charge, through our website as soon as reasonably practicable after their filing with the Securities and Exchange Commission (“SEC”). These filings are also available on the SEC’s website at sec.gov.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and any amendments thereto, are available, free of charge, through our website as soon as reasonably practicable after their filing with the Securities and Exchange Commission (“SEC”). These filings are also available on the SEC’s website at sec.gov. 11 PART I
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.
Although the Florida legislature passed law changes to address market abuses, including substantial reforms in December 2022, the benefits of these law changes may not be fully realized for several years.
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).
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), 2023 (Hurricane Idalia) and 2024 (Hurricanes Helene and Milton).
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.
The benefits of UVE’s reinsurance strategy in 2024 and the specific programs are further discussed below and in “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 6 Competition The market for homeowners insurance typically is highly competitive.
(“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.
(“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 $413.5 million at December 31, 2024. 4 Risk Management Our subsidiary, Evolution Risk Advisors, Inc. (“ERA,” formerly Universal Risk Advisors, Inc.), is the managing general agent for the Insurance Entities.
Approximately 66% 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 41% of our full-time employees.
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.
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, 2024, we had 1,068 full-time employees, of whom 80% are based 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).
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, i comprise our in-house claims litigation team. Distribution We market and sell our products primarily through our network of approximately 9,600 licensed independent agents (4,000 in Florida).
The personal residential homeowners insurance industry is strictly regulated. As a result, it is difficult for insurance companies to differentiate their products, which creates low barriers to entry (other than regulatory capital and other requirements) and in typical circumstances results in a highly competitive market based largely on price and the customer experience.
As a result, it is difficult for insurance companies to differentiate their products, which creates low barriers to entry (other than regulatory capital and other requirements) and in typical circumstances results in a highly competitive market based largely on price and the customer experience.
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.
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, 2024 was 92.0%. 7 Reinsurance Reinsurance enables the Insurance Entities to limit potential exposures to catastrophic events.
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.
In hard market cycles, 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.
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-”.
Similarly, the Insurance Entities’ respective 2024-2025 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- ”.
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.
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.
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.
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.
The degree to which these state-authorized insurance mechanisms compete with private insurers such as the Insurance Entities varies over time depending on market and public policy considerations beyond our control.
The degree to which these state-authorized insurance mechanisms compete with private insurers such as the Insurance Entities varies over time depending on market and public policy considerations beyond our control. Citizens’ rate changes are limited by law, and accordingly, in times of rising insurance rates such as in recent years, its premiums can significantly lag those of the authorized market.
Correspondingly, we have historically experienced a higher volume of claims submitted in the third and fourth quarters of our fiscal year during and immediately subsequent to the peak of hurricane season, and a lower volume of claims submitted in the first and second quarters of our fiscal year.
Correspondingly, we have historically experienced a higher volume of claims submitted in the third and fourth quarters of our fiscal year during and immediately subsequent to the peak of hurricane season, and a lower volume of claims submitted in the first and second quarters of our fiscal year. 8 Government Regulation We are subject to extensive regulation in the markets we serve, primarily at the state level, and will become subject to the regulations of additional states in which we seek to conduct business in the future.
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.
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.
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.
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.
We seek to mitigate catastrophe risk for our customers and shareholders through prudent exposure management, underwriting initiatives, and sensitivity to geographic concentrations as well as through reinsurance as noted above.
Our responsive claims team helps to restore our customers’ lives after catastrophic losses. Our enterprise risk management framework, overseen by senior management and the Board, models and assesses loss probabilities. We seek to mitigate catastrophe risk for our customers and shareholders through prudent exposure management, underwriting initiatives, and sensitivity to geographic concentrations as well as through reinsurance as noted above.
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.
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.
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.
See “Part II—Item 8—Note 3 (Investments)” for more information about our investments. Markets and Competition Markets We sell insurance products in the following 19 states: Alabama, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Maryland, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Virginia and Wisconsin.
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.
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.
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.
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.
While the Insurance Entities and UVE seek to promote diversification of investments in their portfolio, UVE is not subject to the statutory investment guidelines governing insurance companies. Therefore, the investments made by UVE may differ from those made by the Insurance Entities. See “Part II—Item 8—Note 3 (Investments)” for more information about our investments.
Our investment guidelines for fixed-income investments limit duration to 5 years or less and require a portfolio average credit rating of A- or better. UVE is not subject to the statutory investment guidelines governing insurance companies. Therefore, the investments made by UVE may differ from those made by the Insurance Entities.
Within the Florida marketplace, due to the dislocating weather events of recent years and other market conditions, such as a proliferation of first-party litigation, competition from other admitted market insurers has waned as a result of some insurers having shown reduced willingness, or in some cases lack of capital, to continue writing business in accordance with state regulations and rating agency requirements.
Within the Florida marketplace, dislocating weather events of recent years and other market conditions, such as a proliferation of first-party litigation, have impacted competition from other admitted market insurers, but competition has started to show signs of normalization. The personal residential homeowners insurance industry is strictly regulated.
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.
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.
Removed
See below under “— Government Regulation .” The Insurance Entities may only make investments that are consistent with regulatory guidelines, and our investment policies for the Insurance Entities accordingly limit the amount of investments in, among other things, non-investment grade fixed maturity securities (including high-yield bonds), preferred stock and common stock, and prohibit purchasing securities on margin.
Added
See below under “— Government Regulation .” The Insurance Entities may only make investments that are consistent with regulatory guidelines, and our more restrictive investment policy guidelines for the Insurance Entities, including but not limited to, credit quality and concentration thresholds by issuer, by security type, and in aggregate, an average duration cap, and quarterly realized loss budget requirements.
Removed
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.
Added
We have an additional license to write in Tennessee and completed our non-renewal of policies in Hawaii as part of our strategy to exit the Hawaii market by 2024. During 2024, 77.2% of our overall direct premiums written were in Florida.
Removed
During 2023, 81.4% of our overall direct premiums written were in Florida.
Added
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.
Removed
Although the timing is uncertain, we expect the lull in admitted market competition to be advantageous to companies with sufficient capital, and expect long term competition to normalize as either new capital explores opportunities that might arise or as premiums and products of existing market participants adjust to the current market dynamics.
Removed
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.
Removed
Citizens’ rate changes are limited by law, and accordingly, in times of rising insurance rates such as in recent years and continuing currently, its premiums can significantly lag those of the authorized market.
Removed
Government Regulation We are subject to extensive regulation in the markets we serve, primarily at the state level, and will become subject to the regulations of additional states in which we seek to conduct business in the future.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

53 edited+13 added−3 removed168 unchanged
Biggest changeThird parties may seek to gain access to our systems either directly or using equipment or security passwords belonging to employees, customers, third-party service providers, or other users of our systems. Our systems also may inadvertently expose, through a computer programming error or otherwise, confidential information as well as that of our customers and third parties with whom we interact.
Biggest changeOur systems also may inadvertently expose, through a computer programming error or otherwise, confidential information as well as that of our customers and third parties with whom we interact. Our computer systems have been, and likely will continue to be, subject to cyber hacking activities, computer viruses, other malicious codes, or other computer-related penetrations.
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.
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; • our ability to stay competitive as evolving 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.
The ability of the Insurance Entities to make such payments is limited by applicable law, as set forth in “Item 1—Business—Government Regulation—Restrictions on Dividends and Distributions.” For more details on our cash flows, see “Part II—Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” Regulations limiting rate changes and requiring us to participate in loss sharing or assessments may decrease our profitability.
The ability of the Insurance Entities to make such payments is limited by applicable law, as set forth in “Item 1—Business—Government Regulation—Restrictions on Dividends and Distributions.” For more details on our cash flows, see “Part II—Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” 21 Regulations limiting rate changes and requiring us to participate in loss sharing or assessments may decrease our profitability.
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.
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 17 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.
For example, the occurrence of significant winter storms in certain states we have expanded into has in some circumstances limited the effectiveness of our revenue and risk diversification strategy by decreasing revenue we expected to receive outside of the Florida hurricane season or increasing our overall risk in ways we had not anticipated when entering those markets.
For example, the occurrence of significant winter storms in certain states we have expanded into has in some circumstances limited the effectiveness of our revenue and risk diversification strategy by decreasing revenue we expected to receive outside of the Florida hurricane season or increasing our overall risk in 16 ways we had not anticipated when entering those markets.
This is especially the case in Florida, where insurance companies, including the Insurance Entities, have experienced high rates of first-party litigation due largely to the state’s one-way attorneys’ fee statute and resulting institutionalization of a litigation-oriented climate and to the ability of vendors to take assignments of policyholders’ post-loss claims benefits.
This is especially the case in Florida, where insurance companies, including the Insurance Entities, have experienced high rates of first-party litigation due largely to the state’s prior one-way attorneys’ fee statute and resulting institutionalization of a litigation-oriented climate and to the ability of vendors to take assignments of policyholders’ post-loss claims benefits.
Financial strength and stability ratings are primarily directed towards policyholders of the Insurance Entities, and are not evaluations directed toward the protection of our shareholders, and are not recommendations to buy, sell or hold securities. Breaches of our information systems or denial of service on our website could have an adverse impact on our business and reputation.
Financial strength and stability ratings are primarily directed towards policyholders of the Insurance Entities, and are not evaluations directed toward the protection of our shareholders, and are not recommendations to buy, sell or hold securities. 18 Breaches of our information systems or denial of service on our website could have an adverse impact on our business and reputation.
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.
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.
In addition, the models are not necessarily reflective of company or state-specific policy language, demand surge for labor and materials, consumer behavior, prevailing or changing claims, legal and litigation environments, or loss settlement expenses, all of which are subject to wide variation by catastrophe.
In addition, the models are not necessarily reflective of company or state-specific policy language, demand surge for labor and materials, consumer behavior, prevailing or changing claims, legal and litigation 15 environments, or loss settlement expenses, all of which are subject to wide variation by catastrophe.
We expend significant additional resources to modify our protective measures or to investigate and remediate vulnerabilities, exposures, or information security events. Due to the complexity and interconnectedness of our systems, the process of enhancing our protective measures can itself create a risk of systems disruptions and security issues.
We expend significant additional resources to modify our protective measures and to investigate and remediate vulnerabilities, exposures, and information security events. Due to the complexity and interconnectedness of our systems, the process of enhancing our protective measures can itself create a risk of systems disruptions and security issues.
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.
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 the prevalence 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.
Longer-term weather trends may be changing, and new types of catastrophe losses may be developing due to climate change, a phenomenon that has been associated with greenhouse gases and extreme weather events linked to rising temperatures, including effects on global weather patterns, sea, land and air temperature, sea levels, rain, and snow.
Longer-term weather trends are changing, and new types of catastrophe losses are developing due to climate change, a phenomenon that has been associated with greenhouse gases and extreme weather events linked to rising temperatures, including effects on global weather patterns, sea, land and air temperature, sea levels, rain, and snow.
In hard markets such as the current Florida market, insurance agents and their customers therefore increasingly choose Citizens over private market insurers like the Insurance Entities for their residential property insurance coverage.
In hard markets such as the current Florida market, insurance agents and their customers therefore commonly choose Citizens over private market insurers like the Insurance Entities for their residential property insurance coverage.
RISKS RELATING TO OUR BUSINESS AND OPERATIONS As a property and casualty insurer, we may face significant losses, and our financial results may vary from period to period, due to exposure to catastrophic events and severe weather conditions, the frequency and severity of which could be affected by climate change.
RISKS RELATING TO OUR BUSINESS AND OPERATIONS As a property and casualty insurer, we may face significant losses, and our financial results may vary from period to period, due to exposure to catastrophic events and severe weather conditions, the frequency and severity of which are affected by climate change.
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.
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 5,600 independent insurance agents outside of Florida.
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.
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. 20 The Insurance Entities are each domiciled in Florida and are highly regulated by state insurance authorities in Florida.
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.
Catastrophic claim severity is impacted by the effects of continued, high levels 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.
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.
We may not be able to effectively implement or adapt to changes in technology, particularly with respect to AI, which may result in interruptions to our business or even in a competitive disadvantage. Developments in technology are affecting the insurance business.
For example, insurance companies are beginning to use artificial intelligence in a number of applications, including risk assessment, claims processing, customer service, fraud detection, and predictive analytics and modeling.
For example, insurance companies are beginning to use AI in a number of applications, including risk assessment, claims processing, customer service, fraud detection, and predictive analytics and modeling.
We have not determined the amount of resources and the time that this development and implementation may require, which may result in short-term, unexpected interruptions to our business, or may result in a competitive disadvantage in price and/or efficiency, as we endeavor to develop or implement new technologies.
We have not determined the amount of resources and the time that this development and implementation may require, which may result in short-term, unexpected interruptions to our business, as we endeavor to develop or implement new technologies.
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.
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.
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.
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.
Any changes in existing RBC requirements, minimum statutory capital requirements, or applicable writings ratios may require us to increase our statutory capital levels, which we may be unable to do, or require us to reduce the amount of premiums we write, which could adversely affect our business and our operating results.
Any changes in existing RBC requirements, minimum statutory capital requirements, or applicable writings ratios may require us to increase our statutory capital levels, which we may be unable to do, or require us to reduce the amount of premiums we write, which could adversely affect our business and our operating results. 22 RISKS RELATING TO DEBT OBLIGATIONS To service our debt, we will require a significant amount of cash.
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.
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.
These exclusions and conditions are designed to manage our exposure to certain risk types or risk characteristics and expanding theories of legal liability. In addition, applicable law limits the time period during which a policyholder may bring a claim under the policy.
All of the policies we issue include exclusions or other conditions that define and limit coverage. These exclusions and conditions are designed to manage our exposure to certain risk types or risk characteristics and expanding theories of legal liability. In addition, applicable law limits the time period during which a policyholder may bring a claim under the policy.
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.
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.
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.
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, which expired on May 31, 2024.
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.
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.
RISKS RELATING TO DEBT OBLIGATIONS To service our debt, we will require a significant amount of cash. Our ability to generate cash depends on many factors. In November 2021, we issued and sold $100 million of 5.625% Senior Unsecured Notes due 2026 (the “Notes”).
Our ability to generate cash depends on many factors. In November 2021, we issued and sold $100 million of 5.625% Senior Unsecured Notes due 2026 (the “Notes”).
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 reserve for losses and LAE is reported net of receivables for subrogation. Recorded claim reserves in the property and casualty business and amounts recoverable through subrogation 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”).
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.
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.
The full extent of the ongoing disruptions and claims behaviors in the Florida market, and the extent to which legislative efforts aimed at mitigating these concerns will be successful, is unknown and still unfolding. Subrogation is a significant component of our total net reserves for losses and LAE.
The full extent of the ongoing disruptions and claims behaviors in the Florida market, and the extent to which legislative efforts aimed at mitigating these concerns will be successful, is unknown and still unfolding.
In addition, changes in technology typically outpace corresponding regulations, which may lead to periods of uncertainty in the permissible uses of certain technology and to differences or even inconsistencies in the regulatory approaches across jurisdictions. The absence of regulations or conflicts in regulations may further limit our ability to implement new technology in an effective and timely manner.
In addition, changes in technology typically outpace corresponding regulations, which may lead to periods of uncertainty in the permissible uses of certain technology and to differences or even inconsistencies in the regulatory approaches across jurisdictions.
If we fail to adequately price the risks we underwrite, or if emerging trends outpace our ability to adjust prices timely, or if we lose desirable exposures to competitors by overpricing our risks, we may experience underwriting losses depleting surplus at the Insurance Entities and capital at the holding company.
If we fail to adequately price the risks we underwrite, or if emerging trends outpace our ability to adjust prices timely, or if we lose desirable exposures to competitors by overpricing our risks, we may experience underwriting losses depleting surplus at the Insurance Entities and capital at the holding company. 13 Our results of operations and financial condition depend on our ability to underwrite and set premiums adequately for a variety of risks while remaining competitive.
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.
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. 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.
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.
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.
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.
Although we pursue various loss management initiatives in order to mitigate future increases in claim severity and frequency, there can be no assurances that these initiatives will successfully identify or reduce the effect of future increases in claim severity and frequency.
Although we pursue various loss management initiatives in order to mitigate future increases in claim severity and frequency, there can be no assurances that these initiatives will successfully identify or reduce the effect of future increases in claim severity and frequency. 14 The failure of the risk mitigation strategies we utilize could have a material adverse effect on our financial condition or results of operations.
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.
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.
The nature and level of future catastrophes, the incidence and severity of weather conditions in any future period, and the impact of catastrophes on behaviors related to non-catastrophe claims cannot be predicted and could materially and adversely impact our operations.
The nature and level of future catastrophes, the incidence and severity of weather conditions in any future period, and the impact of catastrophes on behaviors related to non-catastrophe claims cannot be predicted and could materially and adversely impact our operations. 12 Therefore, prevailing regulatory, consumer behavior, legal, economic, political, demographic, competitive, weather, and other conditions in Florida disproportionately affect our revenues and profitability.
Lack of effectiveness of exclusions and other loss limitation methods in the insurance policies we write or changes in laws and/or potential regulatory approaches relating to them could have a material adverse effect on our financial condition or our results of operations. All of the policies we issue include exclusions or other conditions that define and limit coverage.
The absence of regulations or conflicts in regulations may further limit our ability to implement new technology in an effective and timely manner. 19 Lack of effectiveness of exclusions and other loss limitation methods in the insurance policies we write or changes in laws and/or potential regulatory approaches relating to them could have a material adverse effect on our financial condition or our results of operations.
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.
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.
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.
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.
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.
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 covered claim.
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.
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.
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.
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.
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.
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.
Our results of operations and financial condition depend on our ability to underwrite and set premiums adequately for a variety of risks while remaining competitive. Rate adequacy is necessary to generate sufficient premiums to pay losses, LAE, reinsurance costs, and underwriting expenses and to earn a reasonable profit.
Rate adequacy is necessary to generate sufficient premiums to pay losses, LAE, reinsurance costs, and underwriting expenses and to earn a reasonable profit.
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.
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. These laws and regulations, particularly, but not limited to, those at the federal level, may be impacted by the change in the U.S. Presidential administration in 2025.
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.
The Florida legislature amends laws related to property insurance almost annually, and more often in recent years.
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.
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.
Moreover, these laws and regulations are administered and enforced by a number of different governmental authorities, including state insurance regulators, the U.S. Department of Justice, and state attorneys general, each of which exercises a degree of interpretive latitude.
Department of Justice, and state attorneys general, each of which exercises a degree of interpretive latitude.
Our computer systems have been, and likely will continue to be, subject to cyber hacking activities, computer viruses, other malicious codes, or other computer-related penetrations. This is especially the case as the number of our employees working remotely has increased.
This is especially the case as the number of our employees working remotely has increased.
Removed
The failure of the risk mitigation strategies we utilize could have a material adverse effect on our financial condition or results of operations.
Added
Subrogation is a significant component of our total net reserves for losses and LAE and our estimates of potential subrogation recoveries are revised as part of the actuarial review which includes changes to trends impacting the actuarial and reserve setting process.
Removed
For example, our competitive position could be impacted if we are unable to deploy, in a cost effective and competitive manner, technology such as AI and machine learning that collects and analyzes a wide variety of data points (so-called “big data” analysis) to make underwriting or other decisions, or if our competitors collect and use data which we do not have the ability to access or use.
Added
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.
Removed
In addition, innovations, such as telematics and other usage-based methods of determining premiums, can impact product design and pricing and are becoming an increasingly important competitive factor.
Added
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. Our reinsurance program is designed to mitigate our exposure to catastrophes.
Added
As such, we are subject to credit risk with respect to our reinsurers.
Added
We could be adversely affected if our controls designed to ensure compliance with guidelines, policies and legal and regulatory standards are not effective.
Added
Our future results are dependent in part on our ability to successfully operate in a highly competitive insurance industry. The property and casualty insurance industry is highly competitive.
Added
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.
Added
Third parties may seek to gain access to our systems either directly or using equipment or security passwords belonging to employees, customers, third-party service providers, or other users of our systems. These threat actors have grown increasingly sophisticated, and have begun using tools like AI to facilitate cyberattacks, leaving us increasingly vulnerable to these kinds of attacks.
Added
Further, the interconnectedness of our technology platforms and those of direct or indirect third-party providers could result in disruptions to our service due to malfunctions of or errors in third-parties’ software or systems that are beyond our control. In addition, any significant data security breach of our independent agents or third-party vendors could harm our business and reputation.
Added
There is a risk that our competitors may utilize these technologies more effectively than us, which may result in a competitive disadvantage in price and/or efficiency.
Added
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. The laws and regulations affecting the insurance industry are complex and subject to change.
Added
In addition, this can lead to perceptions among lawmakers, insureds and others that prior reforms have not had the intended effect and therefore should be rescinded or modified.
Added
These changes, in turn, create additional extended periods of uncertainty and could have adverse impacts on the availability and price of insurance for consumers as well as adverse impacts on the Insurance Entities’ underwriting results. UVE is a holding company and, consequently, its cash flow is dependent on dividends and other permissible payments from its subsidiaries.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeCYBERSECURITY The Company recognizes the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of our data that is created, collected, stored, and used to operate our business. 26 The Company evaluates cybersecurity risks through its comprehensive Enterprise Risk Management (“ERM”) framework, which is governed by the Risk Committee of the Board and encompasses the spectrum of risks, including cybersecurity risks and threats, that are integral to the Company’s strategic objectives.
Biggest changeITEM 1C. CYBERSECURITY The Company understands the critical importance of developing, implementing, and maintaining robust cybersecurity measures to protect our information systems and ensure the confidentiality, integrity, and availability of our data that is created, collected, stored, and used to operate our business.
The CIO and IT Management continuously address key management personnel on relevant cybersecurity issues, which can span a wide range of topics, including but not limited to recent developments, evolving standards, vulnerability assessments, third-party and independent reviews, and the current threat environment.
The CIO and IT Management inform key management personnel on relevant cybersecurity issues, which can span a wide range of topics, including but not limited to recent developments, evolving standards, vulnerability assessments, third-party and independent reviews, and the current threat environment.
Risk Management and Strategy The Company’s process for assessing, identifying, evaluating and managing cybersecurity risks as part of its broader ERM program includes: • Risk Identification and Prioritization : The Company employs various methods to assess and identify cybersecurity risks, which methods may, from time to time, include tabletop exercises to test our preparedness and incident response process, business unit assessments, control gap analyses, threat modeling, impact analyses, internal audits, external audits, penetration tests, and engaging third parties to conduct analyses of our information security program.
The Committee reports to and receives direction from the Board as part of its oversight function. 23 Risk Management and Strategy The Company’s process for assessing, identifying, evaluating and managing cybersecurity risks as part of its broader ERM program includes: • Risk Identification and Prioritization : The Company employs various methods to assess and identify cybersecurity risks, which methods may, from time to time, include tabletop exercises to test our preparedness and incident response process, business unit assessments, control gap analyses, threat modeling, impact analyses, internal audits, external audits, penetration tests, and engaging third parties to conduct analyses of our information security program.
This process includes evaluating the likelihood and impact of potential cybersecurity incidents. • Continuous Risk Monitoring : The Company actively monitors cybersecurity risks including third-party risk from vendors and suppliers.
This process includes evaluating the likelihood and impact of potential cybersecurity incidents. The company engages third parties in connection with risk management processes. • Continuous Risk Monitoring : The Company actively monitors cybersecurity risks including third-party risk from vendors and suppliers.
Cybersecurity risks and threats are managed by a dedicated security team within the Information Technology (“IT”) Department, under the leadership of the Chief Information Officer (“CIO”), who is also a member of the Risk Committee (Executive Director). This team collaborates with various departments across the Company, including legal, compliance, and human resources, to ensure a comprehensive approach to cybersecurity.
Cybersecurity risks and threats are managed by a dedicated team within the Information Technology (“IT”) Department, as well as a Security Operations Center (“SOC”) managed by a third-party provider, under the leadership of the Chief Information Officer (“CIO”). This team collaborates with various departments across the Company, including legal, compliance, and human resources, to ensure a comprehensive approach to cybersecurity.
Internal Audit Periodic audits are performed by our Internal Audit team as part of the Company’s compliance with the Information Security Plan and the overall ERM framework. 27 Chief Risk Officer The ERM structure is further bolstered by the support of a dedicated Chief Risk Officer, who provides specialized expertise and oversight in the broader domain of risk management.
Internal Audit Periodic audits are performed by our Internal Audit team as part of the Company’s compliance with the Incident Management and Information Security Plan and the overall ERM framework.
The Risk Committee provides assurances to management and the Board that the Company has identified, and evaluated key risks and implemented mitigating controls, including the Company’s Incident Management and Information Security Plan, to assess, identify, and manage cybersecurity risks.
The Risk Committee is tasked with developing and overseeing risk management processes and systems of internal controls. These are intended to ensure that management and the Company’s Board of Directors have identified, and evaluated key enterprise risks and implemented mitigating controls. This includes the groups Incident Management and Information Security Plan, which assesses, identifies, and manages cybersecurity risks.
Added
The Company assesses cybersecurity risks, along with other key risks through its comprehensive Enterprise Risk Management (“ERM”) framework. This framework mandates the compilation of a quarterly risk packet, which includes the results of KPIs for the designated risks and determinations as to where the results fell within the predefined tolerance threshold.
Added
All key risks are identified at the company level, which is governed by the Risk Committee of the Board and encompasses the broad spectrum of risks, including cybersecurity risks and threats, which are integral to the Company’s strategic objectives.
Added
Chief Risk Officer The ERM structure is further bolstered by the support of a dedicated Chief Risk Officer, who provides specialized expertise and oversight in the broader domain of risk management. 24

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES We conduct our insurance operations primarily from two locations, our general corporate offices located at 1110 West Commercial Boulevard, Fort Lauderdale, Florida 33309 and an office building located at 5341 Northwest 33rd Avenue, Fort Lauderdale, Florida 33309. The majority of our operations is conducted from these two facilities.
Biggest changePROPERTIES We conduct our insurance operations primarily from three locations, which we own: our general corporate offices located at 1110 West Commercial Boulevard, Fort Lauderdale, Florida 33309; an office building located at 5341 Northwest 33rd Avenue, Fort Lauderdale, Florida 33309; and an office building located at 491 Montgomery Place, Altamonte Springs, FL 32714, which was acquired in November 2024.
We believe that our facilities and equipment are generally well maintained, in good operating condition and suitable and adequate for our present operations. The current facilities are expected to be adequate for our operations for the near future. There are no mortgage or lease arrangements for our real estate owned property.
The majority of our operations is conducted from these three facilities. We believe that our facilities and equipment are generally well maintained, in good operating condition and suitable and adequate for our present operations. The current facilities are expected to be adequate for our operations for the near future.
Added
There are no mortgage or lease arrangements for our real estate owned property.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeIn 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.
Biggest changeIn 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. Legal proceedings are subject to many factors that cannot be predicted with certainty, and the Company may be exposed to losses in excess of any amounts accrued.
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
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. 25 PART II
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 3. LEGAL PROCEEDINGS Lawsuits and other legal proceedings are filed against the Company from time to time. These legal matters typically include civil and administrative or regulatory considerations for which the Company obtains internal or third-party legal or other assistance to provide guidance, and when applicable, to represent and protect the Company’s interest.
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.
From time to time, the Company is also involved in various other legal proceedings unrelated to claims disputes. The Company contests liability and/or the amount of damages as it considers appropriate according to the facts and circumstances of each matter.
Removed
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.
Added
Many of these legal proceedings involve disputes as to coverage or the scope and amount of damage arising from direct claims or recoveries from assigned claims under contracts or policies that the Company underwrites. The Company establishes reserves for its anticipated claims obligations net of expected reinsurance.
Removed
Legal proceedings are subject to many uncertain factors that generally cannot be predicted with certainty, and the Company may be exposed to losses in excess of any amounts accrued.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

13 edited+1 added−2 removed1 unchanged
Biggest changeDividend Policy Future cash dividend payments are subject to business conditions, our financial position and requirements for working capital and other corporate purposes, as well as to compliance with the applicable provisions of the Delaware General Corporation Law. Subject to these qualifications, we expect to continue our regular practice of paying a comparable quarterly dividend to our stockholders.
Biggest changeThe stock price performance in the graph and table are not intended to forecast the future performance of our common stock and may not be indicative of future price performance. 26 Dividend Policy Future cash dividend payments are subject to business conditions, our financial position and requirements for working capital and other corporate purposes, as well as to compliance with the applicable provisions of the Delaware General Corporation Law and, of course, the business judgment of our Board of Directors.
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”).
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, 2024 and 2023, 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, 2023 and 2022.
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, 2024 and 2023.
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.
Stock Performance Graph The following graph and table compare the cumulative total stockholder return of our common stock from December 31, 2019 through December 31, 2024 with the performance of: (i) Standard & Poor’s (“S&P”) 500 Index, (ii) Russell 2000 Index and (iii) S&P Insurance Select Industry Index.
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.
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 24, 2025, there were 57 shareholders of record of our common stock.
(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.
(2) Number of shares was calculated using a closing price at December 31, 2024 of $21.06 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, 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.
The graph and table assume an investment of $100 in our common stock and in each of the three indices on December 31, 2019 with all dividends being reinvested on the ex-dividend date. The closing price of our common stock as of December 31, 2024 (the last trading day of the year) was $21.06 per share.
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
In total, during the year ended December 31, 2024, we repurchased an aggregate of 1,079,149 shares of our common stock pursuant to the March 2026 Share Repurchase Program and the June 2025 Share Repurchase Program at an aggregate price of approximately $21.5 million. ITEM 6. RESERVED
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.
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) 10/1/2024 - 10/31/2024 40,000 $ 20.27 40,000 — 11/1/2024 - 11/30/2024 90,000 $ 20.03 90,000 — 12/1/2024 - 12/31/2024 240,321 $ 21.06 240,321 122,784 Total for the three months ended December 31, 2024 370,321 $ 20.68 370,321 122,784 (1) Average price paid per share does not reflect brokerage commissions paid to acquire shares in open market transactions.
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.
As of December 31, 2024, we have repurchased all authorized common stock under the June 2025 Share Repurchase Program. • On March 11, 2024, our Board of Directors authorized the repurchase of up to $20.0 million of our common stock through March 11, 2026 (the “March 2026 Share Repurchase Program”) pursuant to which we repurchased 871,427 shares of our common stock at an aggregate cost of approximately $17.4 million.
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.
As of December 31, 2024, we have the ability to purchase up to approximately $2.6 million of our common stock under the March 2026 Share Repurchase Program.
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.
During 2024, there were two authorized repurchase plans in effect: • 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 1,320,675 shares of our common stock at an aggregate cost of approximately $20.0 million.
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).
Period Ended Index 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Universal Insurance Holdings, Inc. $ 56.51 $ 66.88 $ 44.50 $ 70.35 $ 96.21 S&P 500 Index 118.40 152.39 124.79 157.59 197.02 Russell 2000 Index 119.96 137.74 109.59 128.14 142.93 S&P Insurance Select Industry Index 97.21 119.69 124.27 139.85 178.32 We have generated these comparisons using data supplied by S&P Global Market Intelligence (Centennial, Colorado).
Removed
The stock price performance in the graph and table are not intended to forecast the future performance of our common stock and may not be indicative of future price performance.
Added
Subject to these qualifications, we expect to continue our regular practice of paying a comparable quarterly dividend to our stockholders.
Removed
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.

Item 7. Management's Discussion & Analysis

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

197 edited+69 added−96 removed162 unchanged
Biggest changeThe geographical distribution of our policies in force, premium in force and total insured value across all states were as follows, as of December 31, 2023, 2022 and 2021 (dollars in thousands, rounded to the nearest thousand): As of December 31, 2023 Policies Premium Total Insured State In Force % In Force % Value % Florida 567,893 70.1 % $ 1,577,210 81.5 % $ 188,516,949 58.3 % North Carolina 56,787 7.0 % 70,170 3.6 % 25,990,577 8.0 % Georgia 31,335 3.9 % 54,315 2.8 % 16,704,678 5.2 % Massachusetts 21,443 2.6 % 33,902 1.8 % 16,702,823 5.2 % Virginia 19,213 2.4 % 25,736 1.3 % 12,788,156 4.0 % New Jersey 18,606 2.3 % 25,712 1.3 % 13,358,747 4.1 % Alabama 16,440 2.0 % 29,589 1.5 % 7,404,975 2.3 % South Carolina 19,201 2.4 % 28,184 1.5 % 8,997,564 2.8 % Indiana 12,584 1.6 % 18,386 1.0 % 5,326,469 1.6 % Minnesota 9,446 1.2 % 19,407 1.0 % 5,613,856 1.7 % Pennsylvania 9,439 1.2 % 12,648 0.7 % 4,965,478 1.5 % Maryland 8,671 1.1 % 9,379 0.4 % 4,431,977 1.4 % New York 7,102 0.9 % 12,359 0.6 % 5,771,055 1.8 % Michigan 4,890 0.6 % 7,641 0.4 % 2,634,991 0.8 % Delaware 2,341 0.2 % 3,330 0.2 % 1,531,896 0.5 % Hawaii 858 0.1 % 1,100 0.1 % 510,735 0.2 % Illinois 2,491 0.3 % 3,720 0.2 % 1,498,349 0.4 % New Hampshire 318 — % 358 — % 230,587 0.1 % Iowa 874 0.1 % 1,222 0.1 % 476,843 0.1 % Total 809,932 100.0 % $ 1,934,368 100.0 % $ 323,456,705 100.0 % 34 As of December 31, 2022 Policies Premium Total Insured State In Force % In Force % Value % Florida 615,796 72.5 % $ 1,547,383 83.4 % $ 201,237,145 62.4 % North Carolina 54,988 6.5 % 60,990 3.3 % 23,135,353 7.2 % Georgia 35,174 4.2 % 53,250 2.9 % 17,684,518 5.5 % Massachusetts 18,849 2.2 % 28,729 1.5 % 13,886,783 4.3 % Virginia 20,123 2.4 % 24,622 1.3 % 12,691,444 3.9 % New Jersey 17,965 2.1 % 23,551 1.3 % 12,434,136 3.9 % Alabama 14,218 1.7 % 22,794 1.2 % 6,043,021 1.9 % South Carolina 17,260 2.0 % 20,304 1.1 % 7,344,000 2.3 % Indiana 14,441 1.7 % 18,804 1.0 % 5,885,207 1.8 % Minnesota 9,545 1.1 % 18,100 1.0 % 5,456,394 1.7 % Pennsylvania 11,179 1.3 % 13,700 0.7 % 5,645,993 1.7 % Maryland 6,840 0.8 % 6,642 0.4 % 3,116,236 1.0 % New York 3,897 0.5 % 5,963 0.3 % 2,912,117 0.9 % Michigan 3,497 0.4 % 4,995 0.3 % 1,756,525 0.5 % Delaware 1,939 0.2 % 2,645 0.1 % 1,220,586 0.4 % Hawaii 1,566 0.2 % 1,901 0.1 % 875,158 0.3 % Illinois 1,057 0.1 % 1,435 0.1 % 588,925 0.2 % New Hampshire 350 0.1 % 306 — % 239,970 0.1 % Iowa 172 — % 225 — % 89,629 — % Total 848,856 100.0 % $ 1,856,339 100.0 % $ 322,243,140 100.0 % As of December 31, 2021 Policies Premium Total Insured State In Force % In Force % Value % Florida 695,533 73.7 % $ 1,395,476 83.1 % $ 203,062,948 63.3 % North Carolina 58,644 6.2 % 57,534 3.4 % 22,703,801 7.1 % Georgia 41,097 4.4 % 53,956 3.2 % 19,057,338 5.9 % Massachusetts 16,793 1.8 % 23,790 1.4 % 11,467,490 3.6 % Virginia 23,306 2.5 % 21,069 1.3 % 13,854,648 4.3 % Alabama 14,484 1.5 % 19,966 1.2 % 5,725,381 1.8 % Indiana 17,744 1.9 % 19,018 1.1 % 6,810,107 2.1 % Minnesota 11,934 1.2 % 18,216 1.1 % 6,372,221 2.0 % New Jersey 14,844 1.6 % 18,054 1.1 % 9,523,904 3.0 % South Carolina 17,563 1.8 % 17,976 1.1 % 6,860,210 2.1 % Pennsylvania 13,930 1.5 % 14,688 0.9 % 6,528,352 2.0 % Maryland 6,615 0.7 % 6,003 0.4 % 2,802,756 0.9 % Michigan 3,476 0.4 % 4,572 0.3 % 1,585,940 0.5 % New York 2,808 0.3 % 3,814 0.2 % 1,898,297 0.6 % Delaware 1,819 0.2 % 2,316 0.1 % 1,061,987 0.3 % Hawaii 1,773 0.2 % 1,974 0.1 % 903,844 0.3 % Illinois 786 0.1 % 1,006 — % 409,660 0.1 % New Hampshire 369 — % 301 — % 235,154 0.1 % Iowa 75 — % 92 — % 34,396 — % Total 943,593 100.0 % $ 1,679,821 100.0 % $ 320,898,434 100.0 % 35 KEY PERFORMANCE INDICATORS The Company considers the measures and ratios in the following discussion to be key performance indicators for its businesses.
Biggest changeOur diversification strategy seeks to increase business outside of Florida and to improve geographical distribution within Florida. 30 The geographical distribution of our policies in force, premium in force and total insured value across all states were as follows, as of December 31, 2024, 2023 and 2022 (dollars in thousands, rounded to the nearest thousand): As of December 31, 2024 Policies Premium Total Insured State In Force % In Force % Value % Florida 567,307 66.4 % $ 1,608,142 77.3 % $ 186,751,842 52.1 % North Carolina 65,901 7.8 % 86,556 4.2 % 33,078,243 9.2 % Georgia 29,470 3.4 % 59,530 2.9 % 16,332,651 4.6 % Massachusetts 24,475 2.9 % 44,279 2.1 % 20,418,055 5.7 % Virginia 21,751 2.5 % 30,011 1.4 % 15,044,367 4.2 % New Jersey 18,834 2.2 % 28,012 1.3 % 13,830,947 3.9 % Alabama 18,907 2.2 % 39,774 1.9 % 9,072,192 2.5 % South Carolina 24,766 2.9 % 43,306 2.1 % 12,745,333 3.6 % Indiana 12,861 1.5 % 20,945 1.0 % 5,737,050 1.6 % Minnesota 11,340 1.3 % 26,351 1.3 % 7,103,977 2.0 % Pennsylvania 8,375 1.0 % 12,139 0.6 % 4,562,202 1.2 % Maryland 15,669 1.8 % 20,284 1.0 % 9,591,760 2.7 % New York 7,951 0.9 % 14,056 0.7 % 6,828,505 1.9 % Michigan 10,655 1.2 % 18,041 0.9 % 6,199,390 1.7 % Delaware 3,219 0.4 % 4,883 0.2 % 2,249,566 0.6 % Illinois 5,634 0.7 % 9,637 0.5 % 3,767,743 1.0 % New Hampshire 330 — % 397 — % 252,782 0.1 % Iowa 7,978 0.9 % 12,611 0.6 % 4,865,077 1.4 % Wisconsin 103 — % 115 — % 79,529 — % Total 855,526 100.0 % $ 2,079,069 100.0 % $ 358,511,211 100.0 % As of December 31, 2023 Policies Premium Total Insured State In Force % In Force % Value % Florida 567,893 70.1 % $ 1,577,210 81.5 % $ 188,516,949 58.3 % North Carolina 56,787 7.0 % 70,170 3.6 % 25,990,577 8.0 % Georgia 31,335 3.9 % 54,315 2.8 % 16,704,678 5.2 % Massachusetts 21,443 2.6 % 33,902 1.8 % 16,702,823 5.2 % Virginia 19,213 2.4 % 25,736 1.3 % 12,788,156 4.0 % New Jersey 18,606 2.3 % 25,712 1.3 % 13,358,747 4.1 % Alabama 16,440 2.0 % 29,589 1.5 % 7,404,975 2.3 % South Carolina 19,201 2.4 % 28,184 1.5 % 8,997,564 2.8 % Indiana 12,584 1.6 % 18,386 1.0 % 5,326,469 1.6 % Minnesota 9,446 1.2 % 19,407 1.0 % 5,613,856 1.7 % Pennsylvania 9,439 1.2 % 12,648 0.7 % 4,965,478 1.5 % Maryland 8,671 1.1 % 9,379 0.4 % 4,431,977 1.4 % New York 7,102 0.9 % 12,359 0.6 % 5,771,055 1.8 % Michigan 4,890 0.6 % 7,641 0.4 % 2,634,991 0.8 % Delaware 2,341 0.2 % 3,330 0.2 % 1,531,896 0.5 % Hawaii 858 0.1 % 1,100 0.1 % 510,735 0.2 % Illinois 2,491 0.3 % 3,720 0.2 % 1,498,349 0.4 % New Hampshire 318 — % 358 — % 230,587 0.1 % Iowa 874 0.1 % 1,222 0.1 % 476,843 0.1 % Total 809,932 100.0 % $ 1,934,368 100.0 % $ 323,456,705 100.0 % 31 As of December 31, 2022 Policies Premium Total Insured State In Force % In Force % Value % Florida 615,796 72.5 % $ 1,547,383 83.4 % $ 201,237,145 62.4 % North Carolina 54,988 6.5 % 60,990 3.3 % 23,135,353 7.2 % Georgia 35,174 4.2 % 53,250 2.9 % 17,684,518 5.5 % Massachusetts 18,849 2.2 % 28,729 1.5 % 13,886,783 4.3 % Virginia 20,123 2.4 % 24,622 1.3 % 12,691,444 3.9 % New Jersey 17,965 2.1 % 23,551 1.3 % 12,434,136 3.9 % Alabama 14,218 1.7 % 22,794 1.2 % 6,043,021 1.9 % South Carolina 17,260 2.0 % 20,304 1.1 % 7,344,000 2.3 % Indiana 14,441 1.7 % 18,804 1.0 % 5,885,207 1.8 % Minnesota 9,545 1.1 % 18,100 1.0 % 5,456,394 1.7 % Pennsylvania 11,179 1.3 % 13,700 0.7 % 5,645,993 1.7 % Maryland 6,840 0.8 % 6,642 0.4 % 3,116,236 1.0 % Michigan 3,897 0.5 % 5,963 0.3 % 2,912,117 0.9 % New York 3,497 0.4 % 4,995 0.3 % 1,756,525 0.5 % Delaware 1,939 0.2 % 2,645 0.1 % 1,220,586 0.4 % Hawaii 1,566 0.2 % 1,901 0.1 % 875,158 0.3 % Illinois 1,057 0.1 % 1,435 0.1 % 588,925 0.2 % New Hampshire 350 0.1 % 306 — % 239,970 0.1 % Iowa 172 — % 225 — % 89,629 — % Total 848,856 100.0 % $ 1,856,339 100.0 % $ 322,243,140 100.0 % KEY PERFORMANCE INDICATORS The Company considers the measures and ratios in the following discussion to be key performance indicators for its businesses.
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.
Book Value Per Common Share ― total stockholders’ equity, adjusted for preferred stock liquidation, divided by the number of common shares outstanding as of a reporting period. Book value per common share is the excess of assets over liabilities at a reporting period attributed to each share of stock.
Book Value Per Common Share ― total stockholders’ equity, adjusted for preferred stock liquidation, divided by the number of common shares outstanding as of a reporting period. Book value per common share is the excess of assets over liabilities at a reporting period attributed to each share of common stock.
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.
Other 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.
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) on investments, net of tax.
(in thousands) Years Ended December 31, Change 2023 2022 $ % REVENUES Direct premiums written $ 1,921,833 $ 1,845,786 $ 76,047 4.1 % Change in unearned premium (46,704) (86,085) 39,381 (45.7) % Direct premium earned 1,875,129 1,759,701 115,428 6.6 % Ceded premium earned (623,193) (631,075) 7,882 (1.2) % Premiums earned, net 1,251,936 1,128,626 123,310 10.9 % Net investment income 48,449 25,785 22,664 87.9 % Net realized gains (losses) on investments (1,229) 348 (1,577) NM Net change in unrealized gains (losses) on investments 12,046 (13,145) 25,191 NM Commission revenue 54,058 53,168 890 1.7 % Policy fees 18,881 20,182 (1,301) (6.4) % Other revenue 7,441 7,694 (253) (3.3) % Total revenues 1,391,582 1,222,658 168,924 13.8 % OPERATING COSTS AND EXPENSES Losses and loss adjustment expenses 992,636 938,399 54,237 5.8 % General and administrative expenses 304,066 304,897 (831) (0.3) % Total operating costs and expenses 1,296,702 1,243,296 53,406 4.3 % Interest and amortization of debt issuance costs 6,531 6,609 (78) (1.2) % INCOME (LOSS) BEFORE INCOME TAX EXPENSE (BENEFIT) 88,349 (27,247) 115,596 NM Income tax expense (benefit) 21,526 (4,990) 26,516 NM NET INCOME (LOSS) $ 66,823 $ (22,257) $ 89,080 NM Other comprehensive income (loss), net of taxes 29,610 (88,214) 117,824 NM COMPREHENSIVE INCOME (LOSS) $ 96,433 $ (110,471) $ 206,904 NM DILUTED EARNINGS (LOSS) PER SHARE DATA: Diluted earnings (loss) per common share $ 2.22 $ (0.72) $ 2.94 NM Weighted average diluted common shares outstanding 30,147 30,751 (604) (2.0) % NM - Not Meaningful 43 Revenues Direct premiums written increased by $76.0 million, or 4.1%, for the year ended December 31, 2023, driven by premium growth within our Florida business of $27.1 million, or 1.8%, and premium growth in our other states business of $49.0 million, or 15.9%, as compared to the prior year.
Years Ended December 31, Change 2023 2022 $ % REVENUES Direct premiums written $ 1,921,833 $ 1,845,786 $ 76,047 4.1 % Change in unearned premium (46,704) (86,085) 39,381 (45.7) % Direct premium earned 1,875,129 1,759,701 115,428 6.6 % Ceded premium earned (623,193) (631,075) 7,882 (1.2) % Premiums earned, net 1,251,936 1,128,626 123,310 10.9 % Net investment income 48,449 25,785 22,664 87.9 % Net realized gains (losses) on investments (1,229) 348 (1,577) NM Net change in unrealized gains (losses) on investments 12,046 (13,145) 25,191 NM Commission revenue 54,058 53,168 890 1.7 % Policy fees 18,881 20,182 (1,301) (6.4) % Other revenue 7,441 7,694 (253) (3.3) % Total revenues 1,391,582 1,222,658 168,924 13.8 % OPERATING COSTS AND EXPENSES Losses and loss adjustment expenses 992,636 938,399 54,237 5.8 % General and administrative expenses 304,066 304,897 (831) (0.3) % Total operating costs and expenses 1,296,702 1,243,296 53,406 4.3 % Interest and amortization of debt issuance costs 6,531 6,609 (78) (1.2) % INCOME (LOSS) BEFORE INCOME TAX EXPENSE (BENEFIT) 88,349 (27,247) 115,596 NM Income tax expense (benefit) 21,526 (4,990) 26,516 NM NET INCOME (LOSS) $ 66,823 $ (22,257) $ 89,080 NM Other comprehensive income (loss), net of taxes 29,610 (88,214) 117,824 NM COMPREHENSIVE INCOME (LOSS) $ 96,433 $ (110,471) $ 206,904 NM DILUTED EARNINGS PER SHARE DATA: Diluted earnings per common share $ 2.22 $ (0.72) $ 2.94 NM Weighted average diluted common shares outstanding 30,147 30,751 (604) (2.0) % NM - Not Meaningful 44 Revenues Direct premiums written increased by $76.0 million, or 4.1%, for the year ended December 31, 2023, driven by premium growth within our Florida business of $27.1 million, or 1.8%, and premium growth in our other states business of $49.0 million, or 15.9%, as compared to the prior year.
Liquidity is required at the holding company for us to cover the payment of holding company general operating expenses and contingencies, dividends to shareholders (if and when authorized and declared by our Board of Directors), payment for the possible repurchase of our common stock (if and when authorized by our Board of Directors), payment of our tax obligations to taxing authorities, settlement of taxes between subsidiaries in accordance with our tax sharing agreement, capital contributions to subsidiaries or surplus note contributions to the Insurance Entities, if needed, and interest and principal payments on outstanding debt obligations of the holding company.
Liquidity is required at the holding company for us to cover the payment of holding company general operating expenses, provide for contingencies if needed, dividends to shareholders (if and when authorized and declared by our Board of Directors), payment for the possible repurchase of our common stock (if and when authorized by our Board of Directors), payment of our tax obligations to taxing authorities, settlement of taxes between subsidiaries in accordance with our tax sharing agreement, capital contributions to subsidiaries or surplus note contributions to the Insurance Entities, if needed, and interest and principal payments on outstanding debt obligations of the holding company.
For a further discussion of our involvement with the VIE, see “Part II—Item 8—Note 2 (Summary of Significant Accounting Policies)” and “Item 8—Note 18 (Variable Interest Entities).” CRITICAL ACCOUNTING POLICIES AND ESTIMATES Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
For a further discussion of our involvement with the VIE, see “Part II—Item 8—Note 2 (Summary of Significant Accounting Policies)” and “Item 8—Note 18 (Variable Interest Entities).” 55 CRITICAL ACCOUNTING POLICIES AND ESTIMATES Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
The Florida legislature also reduced the post-loss time period for submitting claims to one year as contrasted with prior laws permitting claims to be reported two years or even three years after loss events, which led to extended solicitations of claims by contractors, public adjusters, and attorneys and challenges for insurers in evaluating the cause and amount of the late-reported claims.
The Florida Legislature also reduced the post-loss time period for submitting claims to one year as contrasted with prior laws permitting claims to be reported two years or even three years after loss events, which led to extended solicitations of claims by contractors, public adjusters, and attorneys and created challenges for insurers in evaluating the cause and amount of the late-reported claims.
Management believes this metric is meaningful, as it allows investors to evaluate underlying book value growth by excluding the impact of unrealized gains and losses due to interest rate volatility. Adjusted common stockholders’ equity ― is a non-GAAP measure that is calculated by GAAP common stockholders’ equity, excluding accumulated other comprehensive income (loss).
Management believes this metric is meaningful, as it allows investors to evaluate underlying book value growth by excluding the impact of unrealized gains and losses due to interest rate volatility. Adjusted common stockholders’ equity ― is a non-GAAP measure that is calculated as GAAP common stockholders’ equity less accumulated other comprehensive income (loss).
Inherent seasonality in our business makes this measure more useful when comparing each quarter’s balance to the same quarter in prior years. Weather events ― an estimate of losses and LAE from weather events occurring during the current accident year that exceed initial estimates of expected weather events when establishing the core loss ratio for each accident year.
Inherent seasonality in our business makes this measure more useful when comparing each quarter’s balance to the same quarter in prior years. Weather events ― an estimate of losses and LAE from weather events occurring during the current accident year that exceed initial estimates of expected weather events when establishing the expected loss ratio for each accident year.
The credit line is subject to annual renewals. The credit line contains customary financial and other covenants, with which the Company is in compliance. Long-term Debt In November 2021, we issued and sold $100 million of 5.625% Senior Unsecured Notes due 2026 (the “Notes”) to certain institutional accredited investors and qualified institutional buyers.
The credit line is subject to annual renewals. The credit line contains customary financial and other covenants, with which the Company is in compliance. 52 Long-term Debt In November 2021, we issued and sold $100 million of 5.625% Senior Unsecured Notes due 2026 (the “Notes”) to certain institutional accredited investors and qualified institutional buyers.
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.
Inherent seasonality in our business makes this measure more useful when comparing each quarter’s balance to the same quarter in prior years. Premium in Force ― is the amount of the annual direct premiums written previously recorded by the Company for policies which are still active as of the reporting date.
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.
Adjusted return on common equity (Adjusted “ROCE”) ― is a non-GAAP measure that is calculated as 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.
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.
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 to cover losses upon the occurrence of a single catastrophic event and a series of catastrophic events occurring in the same hurricane season.
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.
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.
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.
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.
The Insurance Entities are required annually to comply with the NAIC RBC requirements. RBC requirements prescribe a method of measuring the amount of capital appropriate for an insurance company to support its overall business operations in light of its size and risk profile.
Risk-Based Capital Requirements The Insurance Entities are required annually to comply with the NAIC RBC requirements. RBC requirements prescribe a method of measuring the amount of capital appropriate for an insurance company to support its overall business operations in light of its size and risk profile.
Total invested assets were $1.16 billion as of December 31, 2023 compared to $1.11 billion as of December 31, 2022. The increase is primarily attributable to unrealized gains on our fixed income and equity portfolio, and increases in net investment income.
Total invested assets were $1.16 billion as of December 31, 2023 compared to $1.1 billion as of December 31, 2022. The increase is primarily attributable to unrealized gains on our fixed income and equity portfolio, and increases in net investment income.
For example, if a change in law is expected to have a significant impact on the development of claim severity, actuarial judgment is applied to determine appropriate development factors that will most accurately reflect the expected impact on that specific estimate.
For example, if a change in law is expected to have a significant impact on the development of claim severity, actuarial judgment is applied to determine appropriate development factors that will most 56 accurately reflect the expected impact on that specific estimate.
We calculate and record a single best reserve estimate, in conformance with generally accepted actuarial standards, for reported and unreported losses and LAE losses and as a result we believe no other estimate is better than our recorded amount.
We calculate and record a single best reserve estimate, in conformance with generally accepted actuarial standards, for reported and unreported losses, LAE losses and subrogation, and as a result we believe no other estimate is better than our recorded amount.
Combined Ratio ― the combined ratio is a measure of underwriting profitability for a reporting period and is calculated by dividing total operating costs and expenses (which is made up of losses and LAE and general and administrative expenses) by premiums earned, net, which is net of ceded premiums earned.
Combined Ratio ― the combined ratio is a measure of underwriting profitability for a reporting period and is calculated by dividing total operating costs and expenses (which is made up of losses and LAE and general and administrative expenses) by premiums earned, net, which is net of ceded premium earned.
Return on Average Common Equity (“ROCE”) ― calculated by actual net income (loss) attributable to common stockholders divided by average common stockholders’ equity. ROCE is a capital profitability measure of how efficiently management creates profits.
Return on Average Common Equity (“ROCE”) ― calculated as actual net income (loss) attributable to common stockholders divided by average common stockholders’ equity. ROCE is a capital profitability measure of how efficiently management creates profits.
Among the reforms, the Florida legislature eliminated policyholders’ former one-way statutory right to attorneys’ fees reimbursement and eliminated the ability of policyholders to assign their insurance benefits to third parties.
Among the reforms, the Florida Legislature eliminated policyholders’ former one-way statutory right to attorneys’ fees and eliminated the ability of policyholders to assign their insurance benefits to third parties.
Insurer financial stability or financial strength ratings primarily directed towards policyholders, and are not evaluations directed toward the protection of investors in a company, including holders of a company’s common stock, and are not recommendations to buy, sell, or hold securities. The “A” rating on the 5.625% Senior Unsecured Notes due 2026 was reaffirmed by Egan-Jones Ratings Company in 2023.
Insurer financial stability or financial strength ratings primarily directed towards policyholders, and are not evaluations directed toward the protection of investors in a company, including holders of a company’s common stock, and are not recommendations to buy, sell, or hold securities. The “A” rating on the 5.625% Senior Unsecured Notes due 2026 was reaffirmed by Egan-Jones Ratings Company in 2024.
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.
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.
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.
The average credit rating on our available-for-sale securities was A+ as of December 31, 2024 and December 31, 2023. 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, 2023, 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, 2024, 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, 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, 2024, 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, 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, 2024, 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, 2023. 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, 2024. Unpaid losses and LAE are net of estimated subrogation recoveries.
Invested cash balances along with liquidity generated by our investment portfolio from maturities, principal repayments, and interest payments received were invested in higher rates, resulting in an increase in investment returns on our portfolio and cash balances. 44 We look to optimize our investment portfolio on a rolling basis, which, from time-to-time, results in portfolio shaping opportunities.
Invested cash balances along with liquidity generated by our investment portfolio from maturities, principal repayments, and interest payments received were invested in higher rates, resulting in an increase in investment returns on our portfolio and cash balances. 45 We look to optimize our investment portfolio on a rolling basis, which, from time-to-time, results in portfolio shaping opportunities.
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.
The reduction during 2024 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. See “— Liquidity and Capital Resources” for more information.
Unearned Premiums ― represents the portion of direct premiums corresponding to the time period remaining on an insurance policy and available for future earning by the Company. Trends in unearned premiums generally indicate expansion, if growing, or contraction, if reducing, which are important indicators to management.
Unearned Premiums ― represents the portion of direct premiums corresponding to the time period remaining on an insurance policy and available for future earning by the Company. Trends in unearned premiums generally indicate expansion, if growing, or contraction, if declining, which are important indicators to management.
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.
At December 31, 2024, 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.
When claims are adjusted by our claims team and files handled by our legal group in this litigious environment, there are synergies achieved by having these two functions within the same consolidated group that could not be achieved through third parties.
When claims are adjusted by our claims team and files are handled by our legal group in this litigious environment in Florida, synergies are achieved by having these two functions within the same consolidated group that could not be achieved through third parties.
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-”.
The Insurance Entities currently maintain acceptable ratings from two rating agencies recognized by Freddie Mac and Fannie Mae. In 2024, Demotech, Inc. affirmed the Financial Stability Rating® of “A” for the Insurance Entities and Kroll affirmed its insurer financial strength ratings of “A-”.
Adjusted operating income (loss) margin ― is a non-GAAP measure that is computed by adjusted operating income (loss) divided by core revenue.
Adjusted operating income (loss) margin ― is a non-GAAP measure that is computed as adjusted operating income (loss) divided by core revenue.
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.
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, 2024.
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.
Recorded reserves are compared to the indicated range provided in the actuary’s report accompanying the SAO. At December 31, 2024, the recorded amount for net loss and LAE falls within the range determined by the Company’s appointed independent actuary.
Income Tax Expense (Benefit) Income tax expense was $21.5 million for the year ended December 31, 2023 , compared to income tax benefit of $(5.0) million for the year ended December 31, 2022. Our effective tax rate (“ETR”) increased to 24.4% for the year ended December 31, 2023, as compared to 18.3% for the year ended December 31, 2022.
Income Tax Expense (Benefit) Income tax expense was $21.5 million for the year ended December 31, 2023, compared to income tax benefit of $5.0 million or the year ended December 31, 2022. Our effective tax rate (“ETR”) increased to 24.4% for the year ended December 31, 47 2023, as compared to 18.3% for the year ended December 31, 2022.
These changes have had a meaningful influence on development pattern selections applied to 2013 through 2017 accident year claims in the reserving estimates for each of the methods described in “Item 8—Note 17 (Liability for Unpaid Losses and Loss Adjustment Expenses).” More recently, since 2016 there has been a significant increase in efforts to pursue subrogation against third parties responsible for property damage losses to our insureds.
These changes have had a meaningful influence on development pattern selections applied to 2013 through 2017 accident year claims in the reserving estimates for each of the methods described in “Part II—Item 8—Note 17 (Liability for Unpaid Losses and Loss Adjustment Expenses).” More recently, since 2016 there has been a significant increase in efforts to pursue subrogation against third parties responsible for property damage losses to our insureds.
Accordingly, the rate decrease that was temporarily implemented in response to the RAP coverage will expire one year from its effective date, on July 15, 2024. In July 2023, UPCIC filed a 7.5% rate increase on Florida personal residential homeowners’ line of business, effective July 17, 2023, for new business and November 4, 2023, for renewal business.
Accordingly, the rate decrease that was temporarily implemented in response to the RAP coverage expired one year from its effective date, on July 15, 2024. In July 2023, UPCIC filed a 7.5% rate increase on Florida personal residential homeowners’ line of business, effective July 17, 2023, for new business and November 4, 2023, for renewal business.
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.
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 economic, 54 financial, and business conditions.
In April 2023, UPCIC submitted and received approval for a rate decrease of 1.4% for Homeowners’, and a rate decrease of 1.6% for Dwelling Fire in the State of Florida, effective July 15, 2023, for new and renewal business. This filing resulted from UPCIC’s statutorily required participation in Florida’s Reinsurance to Assist Policyholders Program (“RAP”).
Summary of Recent Rate Changes In April 2023, UPCIC submitted and received approval for a rate decrease of 1.4% for Homeowners’, and a rate decrease of 1.6% for Dwelling Fire in the State of Florida, effective July 15, 2023, for new and renewal business. This filing resulted from UPCIC’s statutorily required participation in Florida’s Reinsurance to Assist Policyholders Program (“RAP”).
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 balance of restricted cash and cash equivalents as of December 31, 2024 and 2023 represents cash equivalents on deposit with certain regulatory agencies in the various states in which our Insurance Entities do business.
Revolving Loan As discussed in “Part II—Item 8—Note 7 (Long-term Debt),” the Company entered into a committed and unsecured $40.0 million revolving credit line with JP Morgan Chase Bank N.A. This agreement succeeded the previous $37.5 million revolving credit line with J.P. Morgan Chase, N.A.
Revolving Loan As discussed in “Part II—Item 8—Note 7 (Long-term Debt),” the Company entered into a committed and unsecured $50.0 million revolving credit line with JP Morgan Chase Bank, N.A. This agreement succeeded the previous $40.0 million revolving credit line with J.P. Morgan Chase, N.A.
Management believes that these indicators are helpful in understanding the underlying trends in the Company’s businesses. Some of these indicators are reported on a quarterly basis and others on an annual basis. Please also refer to “Item 8—Note 2 (Summary of Significant Accounting Policies)” for definitions of certain other terms we use when describing our financial results.
Management believes that these indicators are helpful in understanding the underlying trends in the Company’s businesses. Some of these indicators are reported on a quarterly basis and others on an annual basis. Please also refer to “Part II—Item 8—Note 2 (Summary of Significant Accounting Policies)” for definitions of certain other terms we use when describing our financial results.
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.
During the years ended December 31, 2024 and 2023 the Insurance Entities did not pay dividends to PSI. As of December 31, 2024, the Insurance Entities did not have the capacity to pay ordinary dividends. On November 23, 2021, we issued $100.0 million of 5.625% Senior Unsecured Notes due 2026.
In general, estimates for catastrophe reserves are based on claim adjuster inspections and the application of historical loss development factors as described previously and in “Item 8—Note 17 (Liability for Unpaid Losses and Loss Adjustment Expenses)” to the consolidated financial statements. However, depending on the nature of the catastrophe, as noted above, the estimation process can be further complicated.
In general, estimates for catastrophe reserves are based on claim adjuster inspections and the application of historical loss development factors as described previously and in “Part II—Item 8—Note 17 (Liability for Unpaid Losses and Loss Adjustment Expenses)” to the consolidated financial statements. However, depending on the nature of the catastrophe, as noted above, the estimation process can be further complicated.
However, because rate filings rely upon past loss and expense data and take time to develop, file and implement, we can experience significant delays between identifying needed rate adjustments, filing the associated rate changes, and ultimately collecting and earning the resulting increased premiums.
Rate filings rely upon past loss and expense data and take time to develop, file and implement. We therefore can experience significant delays between identifying needed rate adjustments, filing the associated rate changes, and ultimately collecting and earning the resulting increased premiums.
The maximum amount of dividends that can be paid by Florida insurance companies without prior approval of the FLOIR is subject to restrictions as referenced below and in “Item 8—Note 5 (Insurance Operations).” Dividends from the Insurance Entities can only be paid from accumulated unassigned funds derived from net operating profits and net realized capital gains.
The maximum amount of dividends that can be paid by Florida insurance companies without prior approval of the FLOIR is subject to restrictions as referenced below and in “Part II—Item 8—Note 5 (Insurance Operations).” Dividends from the Insurance Entities can only be paid from accumulated unassigned funds derived from net operating profits and net realized capital gains.
In selecting development factors and averages described in “Item 8—Note 17 (Liability for Unpaid Losses and Loss Adjustment Expenses)” to the consolidated financial statements, due consideration is given to how the historical experience patterns change from one year to the next over the course of several consecutive years of recent history.
In selecting development factors and averages described in “Part II—Item 8—Note 17 (Liability for Unpaid Losses and Loss Adjustment Expenses)” to the consolidated financial statements, due consideration is given to how the historical experience patterns change from one year to the next over the course of several consecutive years of recent history.
Dividends are also paid from income earned from brokerage commissions we earn from third-party reinsurers on reinsurance contracts placed by our wholly-owned subsidiary, BARC and policy fees. We also maintain high quality investments in our portfolio as a source of liquidity along with ongoing interest and dividend income from those investments.
Dividends are also paid from income earned from brokerage commissions paid by third-party reinsurers earned on reinsurance contracts placed by our wholly-owned subsidiary, BARC and policy fees charged to policyholders. We also maintain high quality investments in our portfolio as a source of liquidity along with ongoing interest and dividend income from those investments.
Premiums earned, net of ceded premium earned, grew by 10.9%, or $123.3 million, to $1,251.9 million for the year ended December 31, 2023, reflecting an increase in direct premium earned and decreased costs for reinsurance.
Premiums earned, net of ceded premium earned, grew by 10.9%, or $123.3 million, to $1.25 billion for the year ended December 31, 2023, reflecting an increase in direct premium earned and decreased costs for reinsurance.
This ratio helps management measure the amount of financing leverage in place in relation to equity and future leverage capacity. Debt-to-Total Capital Ratio ― long-term debt divided by the sum of total stockholders’ equity and long-term debt (often referred to as total capital resources).
This ratio helps management measure the amount of financing leverage in place in relation to equity and allows investors to evaluate future leverage capacity. Debt-to-Total Capital Ratio ― long-term debt divided by the sum of total stockholders’ equity and long-term debt (often referred to as total capital resources).
The Notes mature on November 26, 2026, at which time the entire $100.0 million of principal is due and payable. At any time on or after November 23, 2023, the Company may redeem all or part of the Notes. See “Part II—Item 8—Note 7 (Long-term debt)” for additional details.
The Notes mature on November 30, 2026, at which time the entire $100 million of principal is due and payable. At any time on or after November 30, 2023, the Company may redeem all or part of the Notes. See “Part II—Item 8—Note 7 (Long-term debt)” for additional details.
As an example, the Company considered and included the effects of the enacted legislation in developing its ultimate loss projections and reserve estimates as of December 31, 2023, as noted in “Item 8—Note 17 (Liability for Unpaid Losses and Loss Adjustment Expenses)” to the consolidated financial statements.
As an example, the Company considered and included the effects of the enacted legislation in developing its ultimate loss projections and reserve estimates as of December 31, 2023, as noted in “Part II—Item 8—Note 17 (Liability for Unpaid Losses and Loss Adjustment Expenses)” to the consolidated financial statements.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to assist in an understanding of our financial condition and results of operations and should be read in conjunction with our consolidated financial statements and accompanying notes in “Item 8—Financial Statements and Supplementary Data” below.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to assist in an understanding of our financial condition and results of operations and should be read in conjunction with our consolidated financial statements and accompanying notes in “Part II—Item 8—Financial Statements and Supplementary Data” below.
Other sources of revenue include: commissions paid by our reinsurers to our reinsurance intermediary subsidiary BARC on reinsurance it places for the Insurance Entities; policy fees collected from policyholders by our managing general agent subsidiary, ERA (formerly Universal Risk Advisors, Inc.); and financing fees charged to policyholders who choose to defer premium payments reflected in other income.
Other sources of revenue include: commissions paid by our reinsurers to our reinsurance intermediary subsidiary BARC on reinsurance it places for the Insurance Entities; policy fees collected from policyholders by our managing general agent subsidiary, ERA; and financing fees charged to policyholders who choose to defer premium payments reflected in other income.
Best and S&P financial strength ratings for each of the largest rated third-party reinsurers in UPCIC’s 2023-2024 reinsurance program: Reinsurer A.M. Best S&P Florida Hurricane Catastrophe Fund (1) N/A N/A Various Lloyd’s of London Syndicates A A+ Munich Reinsurance America Inc. A+ AA- DaVinci Reinsurance Ltd. A A+ Renaissance Reinsurance Ltd. A+ A+ Chubb Tempest Reinsurance Ltd.
Best and S&P financial strength ratings for each of the largest rated third-party reinsurers in the Insurance Entities’ 2024-2025 reinsurance program: Reinsurer A.M. Best S&P Florida Hurricane Catastrophe Fund (1) N/A N/A Various Lloyd’s of London Syndicates A+ AA- Munich Reinsurance America Inc. A+ AA DaVinci Reinsurance Ltd. A A+ Renaissance Reinsurance Ltd. A+ A+ Chubb Tempest Reinsurance Ltd.
During 2023 these claims related activities generated a financial benefit of $50.4 million compared to $62.4 million during 2022 General and Administrative Expenses For the year ended December 31, 2023, general and administrative expenses were $304.1 million, compared to $304.9 million during the same period in 2022, as follows (dollars in thousands): For the Years Ended December 31, Change 2023 2022 $ % $ Ratio $ Ratio Premiums earned, net $ 1,251,936 $ 1,128,626 $ 123,310 10.9 % General and administrative expenses: Policy acquisition costs 208,011 16.6 % 214,259 19.0 % (6,248) (2.9) % Other operating costs 96,055 7.7 % 90,638 8.0 % 5,417 6.0 % Total general and administrative expenses $ 304,066 24.3 % $ 304,897 27.0 % $ (831) (0.3) % Gen eral and administrative expenses decreased by $0.8 million, which was the result of decreases in policy acquisition costs of $6.2 million offset by an increase in other operating costs of $5.4 million.
General and Administrative Expenses For the year ended December 31, 2023, general and administrative expenses were $304.1 million, compared to $304.9 million during the same period in 2022, as follows (dollars in thousands): For the Years Ended December 31, Change 2023 2022 $ % $ Ratio $ Ratio Premiums earned, net $ 1,251,936 $ 1,128,626 $ 123,310 10.9 % General and administrative expenses: Policy acquisition costs 208,011 16.6 % 214,259 19.0 % (6,248) (2.9) % Other operating costs 96,055 7.7 % 90,638 8.0 % 5,417 6.0 % Total general and administrative expenses $ 304,066 24.3 % $ 304,897 27.0 % $ (831) (0.3) % Gen eral and administrative expenses decreased by $0.8 million, which was the result of decreases in policy acquisition costs of $6.2 million offset by an increase in other operating costs of $5.4 million.
As discussed in “Item 8—Note 5 (Insurance Operations),” there are limitations on the dividends the Insurance Entities may pay to their immediate parent company, Protection Solutions, Inc. (“PSI,” formerly known as Universal Insurance Holding Company of Florida).
As discussed in “Part II—Item 8—Note 5 (Insurance Operations),” there are limitations on the dividends the Insurance Entities may pay to their immediate parent company, Protection Solutions, Inc. (“PSI,” formerly known as Universal Insurance Holding Company of Florida).
Non-GAAP Core revenue, representing total GAAP revenue, excluding net realized gains (losses) on investments and net changes in unrealized gains (losses) on investments, was $1.4 billion for the year ended December 31, 2023 compared to $1.2 billion for the same period in 2022.
Non-GAAP Core revenue, representing total GAAP revenue, excluding net realized gains (losses) on investments and net changes in unrealized gains (losses) on investments, was $1.38 billion for the year ended December 31, 2023 compared to $1.24 billion for the same period in 2022.
New regulations or changes to existing regulations imposed on the Company and its affiliates may also impact the amount and timing of future dividend payments to the parent.
New regulations or changes to existing regulations or their interpretations imposed on the Company and its affiliates may also impact the availability, amount and timing of future dividend payments to the parent.
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 ratio helps management measure the amount of financing leverage in place (long-term debt) in relation to total capital resources and allows investors to evaluate future leverage capacity. Diluted adjusted earnings per common share ― is a non-GAAP measure, which is calculated as adjusted net income available to common stockholders divided by weighted average diluted common shares outstanding.
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.
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 after-tax net realized gains (losses) on investments and net changes in unrealized gains (losses) on investments, net of tax, was 12.4% as of December 31, 2024 and 14.7% as of December 31, 2023.
Interest and Amortization of Debt Issuance Costs Interest and amortization of debt issuance costs for the year ended December 31, 2022 was $6.6 million compared to $0.6 million f or the same period in 2021.
Interest and Amortization of Debt Issuance Costs Interest and amortization of debt issuance costs for the year ended December 31, 2023 was $6.5 million compared to $6.6 million f or the same period in 2022.
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.
A summary of the recent rate adjustments driving changes in written premiums is discussed above under “Overview—Trends and Geographical Distribution—Florida Trends.” Rate changes are applied on new business submissions at policy inception and on renewals from the effective date of their renewal, and then are earned subsequently over the policy period.
As of December 31, 2023, the Company has not borrowed any amount under this revolving loan. The Company must pay an annual commitment of 0.50% of the unused portion of the commitment. Borrowings mature on June 29, 2024, 364 days after the inception date and carries an interest rate of prime rate plus a margin of 56 2% .
As of December 31, 2024, the Company has not borrowed any amount under this revolving loan. The Company must pay an annual commitment of 0.50% of the unused portion of the commitment. Borrowings mature on May 30, 2025, 364 days after the inception date and carries an interest rate of prime rate plus a margin of 2.00% on borrowings .
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.
Adjusted net income (loss) attributable to common stockholders ― is a non-GAAP measure that is calculated as GAAP net income (loss) attributable to common stockholders, less net realized gains (losses) on investments and net changes in unrealized gains (losses) on investments, net of tax.
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 balance of cash and cash equivalents, excluding restricted cash, as of December 31, 2024 was $259.4 million, compared to $397.3 million at December 31, 2023. See “Part II—Item 8—Consolidated Statements of Cash Flows” for a reconciliation of the balance of cash and cash equivalents between December 31, 2024 and 2023.
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.
Core revenue ― is a non-GAAP measure that is calculated as total GAAP revenue, less net realized gains (losses) on investments and net changes in unrealized gains (losses) on investments.
This program is unrelated to the FHCF and allows insurers to access a layer of reinsurance coverage that is below the FHCF industry retention at no cost to the insurer. In exchange the Insurance Entities adopted a corresponding one-year rate reduction. Under current law, the RAP program expires with the reinsurance contract year ending May 31, 2024.
This program is unrelated to the FHCF and allowed insurers to access a layer of reinsurance coverage below the FHCF industry retention at no cost to the insurer. In exchange the Insurance Entities adopted a corresponding one-year rate reduction. The RAP program expired with the reinsurance contract year ending May 31, 2024.
Surplus notes are considered bonds in function and payout structure, but are accounted for as equity in the statutory reporting of the Insurance Entities. The holding company has outstanding with the Insurance Entities $134.0 million in surplus notes.
Surplus notes are considered bonds in function and 50 payout structure, but are accounted for as equity in the statutory reporting of the Insurance Entities. The holding company has outstanding with the Insurance Entities $134.0 million in surplus notes and accrued interest as of December 31, 2024.
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.
This synergistic relationship results in more efficient handling and coordination of claims, including represented claims handled by our legal group.
See “— Liquidity and Capital Resources ” for more information. Reinsurance payable, net, represents the unpaid reinsurance premium installments owed to reinsurers, unpaid reinstatement premiums due to reinsurers, and cash advances received from reinsurers, if any. On June 1 st of each year, we renew our core catastrophe reinsurance program and record the estimated annual cost of our reinsurance program.
Reinsurance payable, net, represents the unpaid reinsurance premium installments owed to reinsurers, unpaid reinstatement premiums due to reinsurers, and cash advances received from reinsurers, if any. On June 1 st of each year, we renew our core catastrophe reinsurance program and record the estimated annual cost of our reinsurance program.
Changes to the combined ratio over time provide management with an understanding of costs to operate its business in relation to net premiums it is earning and the impact of rate, underwriting and other business management actions on underwriting profitability.
Changes to the combined ratio over time provide management with an understanding of costs to operate its business in relation to net premiums it is earning and the impact of rate, underwriting and other business management actions on underwriting profitability. A combined ratio below 100% indicates an underwriting profit; a combined ratio above 100% indicates an underwriting loss.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe 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.
Biggest changeThe 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, 2024 2025 2026 2027 2028 2029 Thereafter Other Total Amortized cost $ 158,437 $ 209,968 $ 248,992 $ 125,914 $ 129,322 $ 477,397 $ 3,502 $ 1,353,532 Fair market value $ 156,618 $ 204,367 $ 240,785 $ 120,510 $ 120,451 $ 422,974 $ 3,374 $ 1,269,079 Coupon rate 3.21 % 3.01 % 2.95 % 3.68 % 3.61 % 3.47 % 4.77 % 3.30 % Book yield 2.80 % 2.66 % 3.07 % 3.40 % 3.20 % 3.16 % 1.23 % 3.03 % * Years to effective maturity - 4.1 years 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 All securities, except those with perpetual maturities, were categorized in the tables above utilizing years to effective maturity.
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.
Our investment portfolio as of December 31, 2024 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.
Effective maturity takes into consideration all forms of potential prepayment, such as call features or prepayment schedules, that shorten the lifespan of contractual maturity dates. Equity Price Risk Equity price risk is the potential for loss in fair value of Financial Instruments in common stock and mutual funds from adverse changes in the prices of those Financial Instruments.
Effective maturity takes into consideration all forms of potential prepayment, such as call features or prepayment schedules, which shorten the lifespan of contractual maturity dates. Equity Price Risk Equity price risk is the potential for loss in fair value of Financial Instruments in common stock and mutual funds and other from adverse changes in the prices of those Financial Instruments.
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.
Generally, when interest rates rise, the fair market value of our fixed rate Financial Instruments declines. 61 The following tables provide information about our fixed income Financial Instruments as of December 31, 2024 compared to December 31, 2023, which are sensitive to changes in interest rates.
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.
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, 2024 December 31, 2023 Fair Value Percent Fair Value Percent Equity Securities: Common stock $ 14,409 18.5 % $ 15,438 19.2 % Mutual funds and other 63,343 81.5 % 65,057 80.8 % Total equity securities $ 77,752 100.0 % $ 80,495 100.0 % A hypothetical decrease of 20% in the market prices of each of the equity securities held at December 31, 2024 and 2023 would have resulted in a decrease of $15.6 million and $16.1 million, respectively, in the fair value of those securities.

Other UVE 10-K year-over-year comparisons