Revenue growth

Net income drops as revenue grows

Fort Lauderdale-based Universal Insurance Holdings reports a Q4 profit.

Fort Lauderdale-based Universal Insurance Holdings, parent of the largest homeowner insurance company in Florida, exceeded analysts’ expectations as the company reported an underwriting profit in the fourth quarter of 2016 despite $26.6 million in losses from Hurricane Matthew.

Net income declined by $15.5 million, or 53.2 percent, to $13.7 million, but revenue growth was strong, increasing by $16.5 million to $178.6 million in the quarter. Net premiums earned grew by $13.4 million, or 8.9 percent, to $164 million.

Total revenues and net premiums earned were each higher than in any other quarter in Universal’s history, the company said in its quarterly filing to the Securities and Exchange Commission.

Net earnings per share declined by 44 cents to 36 cents. The decline wasn’t as severe as expected, largely because the company experienced lower-than-expected losses from Hurricane Matthew, wrote analyst Arash Soleimani of financial services firm Keefe, Bruyette & Woods in a report to the firm’s clients.

In trading on the New York Stock Exchange, Universal’s share prices closed up 4.4 percent, to $27.30, on the report.

Universal had the largest number of policies — 572,865 — of any insurer in Florida, including state-run Citizens Property Insurance Corp., through the third quarter of 2016, according to state data. Citizens was second with 479,195.

Universal will likely end up as the only one of five publicly-traded Florida insurers to report underwriting profits for the fourth quarter, Soleimani predicted. He called it “impressive given the combination of Hurricane Matthew losses and industrywide pressure from assignment of benefits and litigation.”

Fourth-quarter underwriting losses have already been reported by HCI Group, which operates Tampa-based Homeowners Choice Insurance, and St. Petersburgbased United Insurance Holdings, due primarily to Hurricane Matthew.

The two publicly traded Florida companies that have not yet reported their earnings are Clearwater-based Heritage Insurance Holdings and Federated National Holding Company, based in Sunrise.

Universal policyholders filed just over 7,000 claims related to Hurricane Matthew and nearly 6,600 have been closed, the company said in an earnings call Wednesday.

On the earnings call, Universal CEO Sean Downes said the company experienced a “little uptick” in the number of claims with “assignment of benefits” affidavits “but nothing major.”

He credited his firm’s “fast-track” claims response team for holding down the number of AOB-related claims, as well as the average cost, which declined from about $21,000 in 2014 to what he expected will be around $19,000 when 2016 data is analyzed.