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Nature of Operations and Basis of Presentation | 6 Months Ended
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Jun. 30, 2012
Nature of Operations and Basis of Presentation [Abstract] |
Nature of Operations and Basis of Presentation |
1. | Nature of Operations and Basis of Presentation
Nature of Operations Universal Insurance Holdings, Inc. (“UIH”) is a Delaware corporation originally incorporated as Universal Heights, Inc. in November 1990. UIH, with its wholly-owned subsidiaries (the “Company”) is a vertically integrated insurance company performing all aspects of insurance underwriting, distribution and claims. Through its wholly-owned subsidiaries, including Universal Property & Casualty Insurance Company (“UPCIC”) and American Platinum Property and Casualty Insurance Company (“APPCIC”), collectively referred to as the (“Insurance Entities”), the Company is principally engaged in the property and casualty insurance business offered primarily through a network of independent agents. Risk from catastrophic losses is managed through the use of reinsurance agreements. The Company’s primary product is homeowners’ insurance offered in five states as of June 30, 2012, including Florida which comprises the vast majority of the Company’s in-force policies. See Note 5, Insurance Operations, for more information regarding the Company’s insurance operations. The Company generates revenues primarily from the collection of premiums and the investment of available funds in excess of those retained for claims-paying obligations and insurance operations. Other significant sources of revenue include commissions collected from reinsurers and policy fees. Basis of Presentation The Company has prepared the accompanying unaudited Condensed Consolidated Financial Statements (“Financial Statements”) in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by United States Generally Accepted Accounting Principles (“GAAP”) for complete financial statements. Therefore, the Financial Statements should be read in conjunction with the audited Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, filed with the SEC on March 26, 2012. The condensed consolidated balance sheet at December 31, 2011, was derived from audited financial statements, but does not include all disclosures required by GAAP. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation have been included in the Financial Statements. The results for interim periods do not necessarily indicate the results that may be expected for any other interim period or for the full year. The Financial Statements include the accounts of the UIH and its wholly owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. Management must make estimates and assumptions that affect amounts reported in the Company’s Financial Statements and in disclosures of contingent assets and liabilities. Actual results could differ from those estimates. To conform to the current period presentation, certain amounts in the prior periods’ consolidated financial statements and notes have been reclassified. Such reclassifications were of an immaterial amount and had no effect on net income or stockholders’ equity. The Company has adjusted its Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2011 to reflect the effect of a reclassification made to its Condensed Consolidated Balance Sheet as of June 30, 2011 related to reinsurance payables. This reclassification was made upon discovery that the Company was offsetting receivables and payables with non-affiliated reinsurers. This correction represents a change in the presentation only of the Company’s Condensed Consolidated Balance Sheet and Condensed Consolidated Statement of Cash Flows and had no impact on earnings, equity or cash flows from operating, investing and financing activities. The following line items were adjusted (in thousands):
|  | Six Months Ended June 30, 2011 |
|  | As Reported |  |  | Reclassification |  |  | Adjusted |
Condensed Consolidated Statements of Cash Flows: |  |  |  |  |  |  |  |  |  |  |  |
Net change in assets and liabilities relating to operating activities: |  |  |  |  |  |  |  |  |  |  |  |
Reinsurance receivable, net |  | $ | — |  |  | $ | (10,419 | ) |  | $ | (10,419 | )
Reinsurance payable, net |  | $ | 54,558 |  |  | $ | 10,419 |  |  | $ | 64,977 |
An adjustment has been made to the Company’s Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2011 to reflect the effect of a reclassification made to the Company’s Condensed Consolidated Balance Sheet as of June 30, 2011 related to restricted cash and cash equivalents. The Company reclassified amounts out of cash and cash equivalents that were restricted in terms of their use and withdrawal and has presented those amounts of restricted cash and cash equivalents as a separate line item on the face of the Condensed Consolidated Balance Sheets. The following line items were adjusted (in thousands):
|  | Six Months Ended June 30, 2011 |
|  | As Reported |  |  | Reclassification |  |  | Adjusted |
Condensed Consolidated Statements of Cash Flows: |  |  |  |  |  |  |  |  |  |  |  |
Net change in assets and liabilities relating to operating activities: |  |  |  |  |  |  |  |  |  |  |  |
Restricted cash and cash equivalents |  | $ | — |  |  | $ | (19,689 | ) |  | $ | (19,689 | )
Net cash flows provided by (used in) operating activities |  | $ | 215,229 |  |  | $ | (19,689 | ) |  | $ | 195,540 |
Net increase in cash and cash equivalents |  | $ | 209,154 |  |  | $ | (19,689 | ) |  | $ | 189,465 |
Cash and cash equivalents at beginning of period |  | $ | 147,585 |  |  | $ | (13,940 | ) |  | $ | 133,645 |
Cash and cash equivalents at end of period |  | $ | 356,739 |  |  | $ | (33,629 | ) |  | $ | 323,110 |

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