UNIVERSAL INSURANCE HOLDINGS INC

Good morning, ladies and gentlemen. Welcome to Universal's first quarter 2026 earnings conference call. As a reminder, this conference call is being recorded. I'll now turn the conference over to Arash Soleimani, Chief Strategy Officer.

Good morning. Thank you for joining us today. Welcome to our quarterly earnings call. On the call with me today are Steve Donaghy, Chief Executive Officer, and Frank Wilcox, Chief Financial Officer. Before we begin, please note today's discussion may contain forward-looking statements and non-GAAP financial measures. Forward-looking statements involve assumptions, risks, and uncertainties that could cause actual results to differ materially from those statements. For more information, please see the press release on Universal's SEC filings, all of which are available on the Investor section of our website at universalinsuranceholdings.com and on the SEC's website, A reconciliation of non-GAAP financial measures to comparable GAAP measures is included in the quarterly press release and can also be found on Universal's website at universalinsuranceholdings.com. With that, I'll turn the call over to Steve.

Thanks, Arash. Good morning, everyone. We had a fantastic start to the year with a 38.5% annualized adjusted return on common equity. Our top-line results were strong with growth across our multi-state footprint including in Florida. On a separate note, I'm pleased to announce the completion of our 2026-2027 reinsurance renewal for our insurance entities, as our program is now fully supported and secured. During the renewal process in 2026, we also secured $352 million of additional multi-year coverage, taking us through the 2027-2028 treaty period. I'll turn it over to Frank to walk through our financial results. Frank.

Thank you, Steve, and good morning. Adjusted diluted earnings per common share was $2 compared to an adjusted diluted earnings per common share of $1.44 in the prior year quarter. The higher adjusted diluted earnings per common share mostly stems from a lower net loss ratio and higher net investment income. Core revenue of $398.2 million was up 0.8% year-over-year with growth primarily stemming from higher net investment income and net premiums earned. Direct premiums written were $506.5 million, up 8.5% from the prior year quarter. The increase stems from 4.9% growth in Florida and 18.3% growth in other states. Overall growth mostly reflects higher policies in force and inflation adjustments across our multistate footprint. Direct premiums earned were $531.4 million, up 3.5 percent from the prior year quarter, reflecting direct premiums written growth over the last 12 months. Net premiums earned were $356.9 million, up 0.3 percent from the prior year quarter. The increase is primarily attributable to higher direct premiums earned, partially offset by a higher seeded premium ratio. The net combined ratio was 89.7 percent, down 5.3 points compared to the prior year quarter. The decrease reflects a lower net loss ratio, partially offset by a higher net expense ratio. The 63.9 percent net loss ratio was down 6.6 points compared to the prior year quarter, with the decrease reflecting better current accident year results. The net expense ratio was 25.8 percent, up 1.3 points compared to the prior year quarter, with the increase primarily driven by a higher seeded premium ratio and higher policy acquisition costs associated with growth outside of Florida. During the first quarter, the company repurchased approximately 210,000 shares at an aggregate cost of $7.1 million. The company's current share repurchase authorization program has approximately $13.1 million remaining. On April 10, 2026, the Board of Directors declared a quarterly cash dividend of $0.16 per share of common stock payable on May 15, 2026, to shareholders of record as of the close of business on May 8, With that, I'd like to ask the operator to open up the line for questions.

Thank you. At this time, we'll conduct a question and answer session. As a reminder to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster. And our first question comes from the line of Paul Newsome of Piper Stanley. Your line is now open.

Good morning. Congratulations on the quarter. Maybe we could just start off with some thoughts or color on the competitive environment, both in Florida and outside of Florida. It gets lots of investor questions about whether or not we're seeing a change in the number of folks who are competing in those markets. maybe the speed at which obviously the ROEs that you and others are reporting are so huge, whether or not that will attract a lot of new competitors.

Hey, Paul. Good morning, and thank you. You know, I think from a competitive perspective, we analyze our rates and are chasing rate adequacy more than we are chasing business. From a competitive perspective, we feel good about where we stand. And obviously from the quarter, you know, we can bring on business when we want to and we see the markets profitably. So, you know, that's probably the answer I would give you. There is competition everywhere, but we feel good about our position and our relationship with our agents has never been stronger. So, yeah.

I'll be honest. Should we expect further price adjustments and rate adjustments for you folks in the future?

We haven't kicked off our rate analysis at this point, so as we get ready to do that, we will analyze the past 12 months and see how that impacts. I think as we continue to benefit from the legislative environment and our business, we will do the right thing by our shareholders and our partners. We'll take that all into account and continue to do the right thing.

Maybe some thoughts on capital management. Obviously, given where the returns on accumulating some excess capital, you know, how do you balance the various uses of capital today? And should we expect further lease purchases as a focus or not? Or just maybe you can just kind of prioritize how you think about that.

Good morning, Paul. This is Frank. I think we're going to stay the course. Our number one priority with capital has always been to support the insurance entities, ensuring that they are adequately capitalized so that we can continue to produce the business that benefits the entire holding company system. That combined with continuing to return shareholder value.

Great. I'll let somebody else ask questions, but appreciate the help. Thank you.

Thanks, Paul. Have a good day.

Thank you. One moment for our next question. Our next question comes from the line of Nicholas Lagaviello of Darling Partners. Your line is now open.

Morning. Congrats on the quarter and thanks for taking my questions. Could we just start, I was wondering if there's any additional details or commentary you could provide around the outcome of your reinsurance renewal?

Good morning, Nick, and thanks. Appreciate the comments. You know, I think from the reinsurance perspective, you know, we are very excited to be done and have it fully secured for 2026-27. We were quite happy that we also extended our multi-year agreements. You know, from a pricing perspective, we're going to sit on that until we get to May and release all the details as normal. We think it'd be premature for us to kind of make public comments relative to how we did, but we were very pleased with the market and very pleased with our partners for many, many years and how they treated us relative to this year.

Got it. I know we'll see more details in May, but I mean, is there anything you could comment on how we should think about the retention. Is it fair to assume it would be similar on a gap basis, you know, versus the prior year, and it would include some captive usage? I get obviously you'll have the opportunity to maybe buy down, you know, but as it stands today, is that a fair assumption?

Yeah, the retentions will remain the same for the insurance entities, $45 million. We plan to continue to use the captive in the same manner for the $66 million layer above $45 million for the first event. So structurally identical to last year.

Okay. Appreciate it, guys. Thank you. Thanks, Nick. Have a good day.

Thank you. I'm showing no further questions at this time. I'll now turn it back to Steve Donaghy, Chief Executive Officer for Cozumel Marks.

Thank you. I'd like to thank all of our associates, consumers, agents, and our stakeholders for their continued support of Universal. Have a nice day.

Thank you for your participation in today's conference. To just conclude the program, you may now disconnect.