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Condensed Financial Information of Registrant

12 Months Ended

Dec. 31, 2012

Condensed Financial Information of Registrant [Abstract]

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

SCHEDULE II – CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Universal Insurance Holdings, Inc. had no long term obligations, guarantees or material contingencies as of December 31, 2012 and 2011. The following summarizes the major categories of the parent company’s financial statements (in thousands, except per share data):

CONDENSED BALANCE SHEETS


	As of December 31,
	2012			2011
ASSETS

Cash and cash equivalents	$	17,733		$	6,900
Restricted cash and cash equivalents		—			30,220
Investments in subsidiaries and undistributed earnings		121,496			94,249
Equity securities		13,944			15,553
Receivable from securities		175			1,019
Other receivables		2,602			—
Deferred income taxes		19,178			22,991
Other assets		329			324

Total assets	$	175,457		$	171,256


LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES:
Accounts payable	$	339		$	160
Payable for securities		53			133
Income taxes payable		699			12,740
Other accrued expenses		10,852			8,218

Total liabilities		11,943			21,251

STOCKHOLDERS’ EQUITY:
Cumulative convertible preferred stock, $.01 par value		1			1
Authorized shares - 1,000
Issued shares - 108
Outstanding shares - 108
Minimum liquidation preference - $2.66 per share
Common stock, $.01 par value		419			411
Authorized shares - 55,000
Issued shares - 41,889 and 41,100
Outstanding shares - 40,871 and 40,082
Treasury shares, at cost - 1,018 shares		(3,101	)		(3,101	)
Additional paid-in capital		38,684			36,536
Retained earnings		127,511			116,158

Total stockholders’ equity		163,514			150,005

Total liabilities and stockholders’ equity	$	175,457		$	171,256

See accompanying notes to condensed financial statements

CONDENSED STATEMENTS OF INCOME


	For the Years Ended December 31,
	2012			2011 (Restated, see Note 1)			2010
PREMIUMS EARNED AND OTHER REVENUES
Assumed premiums written	$	10,686		$	20,703		$	4,534
Increase (decrease) in unearned assumed premiums		—			—			7,292

Premiums earned, net		10,686			20,703			11,826
Net investment income		25			54			42
Net realized gains (losses) on investments		(1,880	)		(1,186	)		1,379
Net change in unrealized gains (losses) on investments		1,162			(3,009	)		223
Management fee		142			142			41
Total premiums earned and other revenues		10,135			16,704			13,511

OPERATING COSTS AND EXPENSES
General and administrative expenses		25,051			20,830			20,417

Total operating cost and expenses		25,051			20,830			20,417

LOSS BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES		(14,916	)		(4,126	)		(6,906	)
Benefit from income taxes		(6,312	)		(1,667	)		(2,664	)

LOSS BEFORE EQUITY IN NET EARNINGS OF SUBSIDIARIES		(8,604	)		(2,459	)		(4,242	)

Equity in net income of subsidiaries		38,916			22,568			41,226

CONSOLIDATED NET INCOME	$	30,312		$	20,109		$	36,984

See accompanying notes to condensed financial statements

CONDENSED STATEMENTS OF CASH FLOWS


	For the Years Ended December 31,
	2012			2011 (Restated, see Note 1)			2010 (Restated, see Note 1)
Cash flows from operating activities
Net Income	$	30,312		$	20,109		$	36,984
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in net income of subsidiaries		(38,916	)		(22,568	)		(41,226	)
Amortization of stock-based compensation		3,830			2,848			2,962
Net realized (gains) losses on investments		1,880			1,186			(1,379	)
Net change in unrealized (gains) losses on investments		(1,162	)		3,009			(223	)
Deferred income taxes		3,813			(9,543	)		(1,333	)
Excess tax benefits from stock-based compensation		1,760			(195	)		(4,099	)
Other		—			5			16
Net changes in assets and liabilities relating to operating activities:
Restricted cash and cash equivalents		30,220			(18,880	)		5,175
Premiums receivable		—			—			8,721
Purchases of equity securities, trading		(58,836	)		(77,691	)		(12,760	)
Proceeds from sale of equity securities, trading		60,379			66,526			10,897
Income taxes recoverable		(2,594	)		—			3,212
Income taxes payable		(13,801	)		4,653			12,012
Unearned premiums		—			—			(7,292	)
Other operating assets and liabilities		2,911			1,405			604

Net cash provided by (used in) operating activities		19,796			(29,136	)		12,271


Cash flows from investing activities:
Capital contributions to subsidiaries		(28,555	)		(49,001	)		(31,134	)
Distribution of income from subsidiaries		40,222			89,322			30,455
Purchases of equity securities, available for sale		—			—			(3,578	)
Proceeds from sale of equity securities, available for sale		—			—			10,702

Net cash provided by (used in) investing activities		11,667			40,321			6,445


Cash flows from financing activities:
Preferred stock dividend		(287	)		(20	)		(20	)
Common stock dividend		(18,669	)		(12,750	)		(12,533	)
Issuance of common stock		207			5			14
Payments related to tax withholding for share-based compensation		(121	)		(172	)		(4,293	)
Excess tax benefits (shortfall) from stock-based compensation		(1,760	)		195			4,099

Net cash provided by (used in) financing activities		(20,630	)		(12,742	)		(12,733	)


Net increase (decrease) in cash and cash equivalents		10,833			(1,557	)		5,983
Cash and cash equivalents at beginning of period		6,900			8,457			2,474

Cash and cash equivalents at end of period	$	17,733		$	6,900		$	8,457

See accompanying notes to condensed financial statements

NOTE 1 – GENERAL

The financial statements of the Registrant should be read in conjunction with the consolidated financial statements in Item 8.

Nature of Operations and Basis of Presentation

Universal Insurance Holdings, Inc. (the “Company”), is a Delaware corporation originally incorporated as Universal Heights, Inc. in November 1990. The Company is an insurance holding company whose wholly-owned subsidiaries perform all aspects of insurance underwriting, distribution and claims. Through its wholly-owned subsidiaries, including Universal Property & Casualty Insurance Company and American Platinum Property and Casualty Insurance Company, 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 generates revenues from premiums earned on reinsurance contracts entered into with the Insurance Entities and earnings on investments. The Company also receives distributions of earnings from its insurance and non-insurance subsidiaries.

Certain amounts in the prior periods’ condensed financial statements have been corrected. In addition, certain amounts in the prior periods’ condensed financial statements have been reclassified in order to conform to current period presentation. Such corrections and reclassifications (“adjustments”) were of immaterial amounts and had no effect on net income or stockholders’ equity.

The following adjustments were made to the Condensed Statement of Income and the Condensed Statements of Cash Flows for the periods presented (in thousands):

RESTATED CONDENSED STATEMENT OF INCOME


	For the Year Ended December 31, 2011
	As Reported			Adjustments			As Adjusted
PREMIUMS EARNED AND OTHER REVENUES
Assumed premiums written	$	20,703		$	—		$	20,703
(Increase) decrease in unearned assumed premiums		—			—			—

Premiums earned, net		20,703			—			20,703
Net investment income		54			—			54
Net realized gains (losses) on investments		(1,186	)		—			(1,186	)
Net change in unrealized gains (losses) on investments		(3,009	)		—			(3,009	)
Management fee		142			—			142
Commission revenue		—			—			—

Total premiums earned and other revenues		16,704			—			16,704

OPERATING COSTS AND EXPENSES
General and administrative expenses		20,830			—			20,830

Total operating cost and expenses		20,830			—			20,830

LOSS BEFORE INCOME TAXES AND EQUITY IN NET INCOME OF SUBSIDIARIES		(4,126	)		—			(4,126	)
Benefit from income taxes		(3,016	)		1,349			(1,667	)

LOSS BEFORE EQUITY IN NET INCOME FROM SUBSIDIARIES		(1,110	)		(1,349	)		(2,459	)

Equity in net income for subsidiaries		21,219			1,349			22,568

CONSOLIDATED NET INCOME	$	20,109		$	—		$	20,109

RESTATED CONDENSED STATEMENT OF CASH FLOWS


	For the Years Ended December 31, 2011
	As Reported			Adjustments			As Adjusted
Cash flows from operating activities
Net Income	$	20,109		$	—		$	20,109
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in net income of subsidiaries		(20,219	)		(2,349	)		(22,568	)
Amortization of stock-based compensation		2,849			(1	)		2,848
Net realized (gains) losses on investments		1,186			—			1,186
Net change in unrealized (gains) losses on investments		3,010			(1	)		3,009
Deferred income taxes		(9,543	)		—			(9,543	)
Excess tax benefits from stock-based compensation		(195	)		—			(195	)
Other		5			—			5
Net changes in assets and liabilities relating to operating activities:
Restricted cash and cash equivalents		(18,880	)		—			(18,880	)
Purchases of equity securities, trading		(77,691	)		—			(77,691	)
Proceeds from sale of equity securities, trading		66,526			—			66,526
Income taxes payable		4,653			—			4,653
Other operating assets and liabilities		1,404			1			1,405

Net cash provided by (used in) operating activities		(27,182	)		(1,954	)		(29,136	)


Cash flows from investing activities:
Capital contributions to subsidiaries		(49,001	)		—			(49,001	)
Distribution of income from subsidiaries		—			89,322			89,322

Net cash provided by (used in) investing activities		(49,001	)		89,322			40,321


Cash flows from financing activities:
Preferred stock dividend		(20	)		—			(20	)
Common stock dividend		(12,750	)		—			(12,750	)
Issuance of common stock		5			—			5
Tax withholding payments related to stock-based compensation		(172	)		—			(172	)
Excess tax benefits from stock-based compensation		195			—			195
Transfers from subsidiaries		87,972			(87,972	)		—

Net cash provided by (used in) financing activities		74,626			(87,368	)		(12,742	)


Net increase in cash and cash equivalents		(1,557	)		—			(1,557	)
Cash and cash equivalents at beginning of period		8,457			—			8,457

Cash and cash equivalents at end of period	$	6,900		$	—		$	6,900


	For the Years Ended December 31, 2010
	As Reported			Adjustments			As Adjusted
Cash flows from operating activities
Net Income	$	36,984		$	—		$	36,984
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in net income of subsidiaries		(41,226	)		—			(41,226	)
Amortization of stock-based compensation		2,962			—			2,962
Net realized (gains) losses on investments		(1,379	)		—			(1,379	)
Net change in unrealized (gains) losses on investments		(223	)		—			(223	)
Deferred income taxes		(1,333	)		—			(1,333	)
Excess tax benefits from stock-based compensation		(4,099	)		—			(4,099	)
Other		16			—			16
Net changes in assets and liabilities relating to operating activities:
Restricted cash and cash equivalents		5,175			—			5,175
Premiums receivable		8,721			—			8,721
Purchases of equity securities, trading		(12,760	)		—			(12,760	)
Proceeds from sale of equity securities, trading		10,897			—			10,897
Income taxes recoverable		3,212			—			3,212
Income taxes payable		12,012			—			12,012
Unearned premiums		(7,292	)		—			(7,292	)
Other operating assets and liabilities		604			—			604

Net cash provided by (used in) operating activities		12,271			—			12,271


Cash flows from investing activities:
Capital contributions to subsidiaries		(39,161	)		8,027			(31,134	)
Distribution of income from subsidiaries		—			30,455			30,455
Purchases of equity securities, available for sale		(3,578	)		—			(3,578	)
Proceeds from sale of equity securities, available for sale		10,702			—			10,702

Net cash provided by (used in) investing activities		(32,037	)		38,482			6,445


Cash flows from financing activities:
Preferred stock dividend		(20	)		—			(20	)
Common stock dividend		(12,533	)		—			(12,533	)
Issuance of common stock		14			—			14
Tax withholding payments related to stock-based compensation		(4,293	)		—			(4,293	)
Excess tax benefits from stock-based compensation		4,099			—			4,099
Transfers from subsidiaries		38,482			(38,482	)		—

Net cash provided by (used in) financing activities		25,749			(87,368	)		(12,733	)


Net increase in cash and cash equivalents		5,983			—			5,983
Cash and cash equivalents at beginning of period		2,474			—			2,474

Cash and cash equivalents at end of period	$	8,457		$	—		$	8,457

- Definition

The entire disclosure for condensed financial information, including the financial position, cash flows, and the results of operations of the registrant (parent company) as of the same dates or for the same periods for which audited consolidated financial statements are being presented. Alternatively, the details of this disclosure can be reported by the specific parent company taxonomy elements, indicating the appropriate date and period contexts in an instance document.

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