SCHEDULE II – CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Universal Insurance Holdings, Inc. had no long term obligations, guarantees or material contingencies as of December 31, 2016 and 2015. 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,
	2016			2015
ASSETS
Cash and cash equivalents	$	3,951		$	2,046
Investments in subsidiaries and undistributed earnings		362,759			291,793
Fixed maturities, at fair value		3,003			2,980
Equity maturities, at fair value		625			551
Income taxes recoverable		3,262			5,420
Deferred income taxes		10,674			13,912
Other assets		1,003			358
Total assets	$	385,277		$	317,060
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Accounts payable	$	50		$	—
Long-term debt		—			6,851
Other accrued expenses		14,037			17,117
Total liabilities		14,087			23,968

STOCKHOLDERS' EQUITY:
Cumulative convertible preferred stock, $.01 par value		—			—
Authorized shares - 1,000
Issued shares - 10 and 10
Outstanding shares - 10 and 10
Minimum liquidation preference - $9.99 and $9.99 per share
Common stock, $.01 par value		453			455
Authorized shares - 55,000
Issued shares - 45,324 and 45,525
Outstanding shares - 35,052 and 35,110
Treasury shares, at cost - 10,272 and 10,415		(86,982	)		(80,802	)
Additional paid-in capital		82,263			70,789
Accumulated other comprehensive income (loss), net of taxes		(6,408	)		(4,006	)
Retained earnings		381,864			306,656
Total stockholders' equity		371,190			293,092
Total liabilities and stockholders' equity	$	385,277		$	317,060

See accompanying notes to condensed financial statements

CONDENSED STATEMENTS OF INCOME

	For the Years Ended December 31,
	2016			2015			2014
REVENUES
Net investment income (expense)	$	(35	)	$	22		$	(23	)
Net realized gains (losses) on investments		667			66			625
Management fee		138			140			121
Other revenue		80			—			—
Total premiums earned and other revenues		850			228			723
OPERATING COSTS AND EXPENSES
General and administrative expenses		35,342			48,056			39,062
Total operating cost and expenses		35,342			48,056			39,062
LOSS BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES		(34,492	)		(47,828	)		(38,339	)
Benefit from income taxes		(12,055	)		(17,495	)		(16,403	)
LOSS BEFORE EQUITY IN NET EARNINGS OF SUBSIDIARIES		(22,437	)		(30,333	)		(21,936	)
Equity in net income of subsidiaries		121,847			136,817			94,924
CONSOLIDATED NET INCOME	$	99,410		$	106,484		$	72,988

See accompanying notes to condensed financial statements

CONDENSED STATEMENTS OF CASH FLOWS

	For the Years Ended December 31,
	2016			2015			2014
Cash flows from operating activities
Net Income	$	99,410		$	106,484		$	72,988
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Equity in net income of subsidiaries		(121,847	)		(136,817	)		(94,924	)
Distribution of income from subsidiaries		46,914			58,224			55,805
Depreciation		2			4			2
Amortization of share-based compensation		10,288			17,386			12,342
Amortization of original issue discount on debt		149			521			840
Accretion of deferred credit		(149	)		(521	)		(840	)
Net realized (gains) losses on investments		(667	)		(66	)		(625	)
Deferred income taxes		4,724			(693	)		1,118
Excess tax benefits from share-based compensation		1,154			(5,310	)		(7,006	)
Net changes in assets and liabilities relating to operating activities:
Income taxes recoverable		1,004			255			2,477
Income taxes payable		—			3,510			6,239
Other operating assets and liabilities		(596	)		(1,338	)		5,752
Other liabilities and accrued expenses		(2,896	)		—			—
Net cash provided by (used in) operating activities		37,490			41,639			54,168
Cash flows from investing activities:
Capital contributions to subsidiaries		—			—			(5,585	)
Purchases of equity securities, available for sale		(2,037	)		(1,442	)		(15,836	)
Purchase of fixed maturities, available for sale		(3,000	)		—			(3,000	)
Proceeds from sales of equity securities, available for sale		2,456			1,481			26,060
Proceeds from sales of fixed maturities, available for sale		3,229			—			770
Net cash provided by (used in) investing activities		648			39			2,409
Cash flows from financing activities:
Repayment of debt		—			(7,000	)		(6,000	)
Preferred stock dividend		(10	)		(10	)		(13	)
Common stock dividend		(24,192	)		(22,287	)		(19,240	)
Issuance of common stock		119			511			73
Purchase of treasury stock		(8,510	)		(18,649	)		(29,736	)
Sale of treasury stock		2,965			—			—
Purchase of preferred stock		—			(256	)		—
Proceeds received from issuance of contingently redeemable common stock		—			—			19,000
Payments related to tax withholding for share-based compensation		(5,451	)		(12,141	)		(17,655	)
Excess tax benefits (shortfall) from share-based compensation		(1,154	)		5,310			7,006
Net cash provided by (used in) financing activities		(36,233	)		(54,522	)		(46,565	)
Net increase (decrease) in cash and cash equivalents		1,905			(12,844	)		10,012
Cash and cash equivalents at beginning of period		2,046			14,890			4,878
Cash and cash equivalents at end of period	$	3,951		$	2,046		$	14,890

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 incorporated in 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, 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 earnings on investments and management fees. 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 reclassified in order to conform to current period presentation. Such reclassifications had no effect on net income or stockholders’ equity.

NOTE 2 – SUBSEQUENT EVENTS

The Company performed an evaluation of subsequent events through the date the financial statements were issued and determined there were no recognized or unrecognized subsequent events that would require an adjustment or additional disclosure in the consolidated financial statements as of December 31, 2016.

On January 23, 2017, the Company declared a dividend of $0.14 per share on its outstanding common stock payable on March 2, 2017, to shareholders of record on February 17, 2017.