Schedule II - Condensed Financial Information of Registrant

12 Months Ended

Dec. 31, 2019

Condensed Financial Information Disclosure [Abstract]

Schedule II - Condensed Financial Information of Registrant

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Universal Insurance Holdings, Inc. had no long-term obligations, guarantees or material contingencies as of December 31, 2019 and 2018. 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,
	2019			2018
ASSETS
Cash and cash equivalents	$	86,508		$	91,374
Investments in subsidiaries and undistributed earnings	378,906			401,296
Available-for-sale debt securities, at fair value	808			2,986
Equity securities, at fair value	—			2,626
Income taxes recoverable	34,253			11,136
Deferred income tax asset, net	—			6,512
Other assets	149			261
Total assets	$	500,624		$	516,191
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
Accounts payable	$	20		$	29
Deferred income tax liability, net	2,602			—
Dividends payable	80			77
Other accrued expenses	3,587			14,001
Total liabilities	6,289			14,107
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	467			465
Authorized shares - 55,000
Issued shares - 46,707 and 46,514
Outstanding shares - 32,638 and 34,783
Treasury shares, at cost - 14,069 and 11,731	(196,585		)	(130,399		)
Additional paid-in capital	96,036			86,353
Accumulated other comprehensive income (loss), net of taxes	20,364			(8,010		)
Retained earnings	574,053			553,675
Total stockholders’ equity	494,335			502,084
Total liabilities and stockholders’ equity	$	500,624		$	516,191

See accompanying notes to condensed financial statements

CONDENSED STATEMENTS OF INCOME



	For the Years Ended December 31,
	2019			2018			2017
REVENUES
Net investment income	$	2,249		$	1,635		$	259
Net realized gains (losses) on investments	(1,908		)	—			255
Net change in unrealized gains (losses) of equity securities	3,186			(2,648		)	—
Management fee	166			157			151
Other revenue	10			—			12
Total revenues	3,703			(856		)	677
OPERATING COSTS AND EXPENSES
General and administrative expenses	21,526			32,063			30,819
Total operating cost and expenses	21,526			32,063			30,819
LOSS BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES	(17,823		)	(32,919		)	(30,142		)
Benefit from income taxes	(2,984		)	(10,434		)	(18,296		)
LOSS BEFORE EQUITY IN NET EARNINGS OF SUBSIDIARIES	(14,839		)	(22,485		)	(11,846		)
Equity in net income of subsidiaries	61,336			139,987			118,781
CONSOLIDATED NET INCOME	$	46,497		$	117,502		$	106,935

See accompanying notes to condensed financial statements

CONDENSED STATEMENTS OF CASH FLOWS



	For the Years Ended December 31,
	2019			2018			2017
Cash flows from operating activities:
Net cash provided by (used in) operating activities	$	84,752		$	87,306		$	117,668
Cash flows from investing activities:
Purchases of equity securities	(107		)	(35		)	(4,990		)
Purchase of available-for-sale debt securities	(3,750		)	—			(3,000		)
Proceeds from sales of equity securities	3,481			—			3,255
Proceeds from sales of available-for-sale debt securities	6,530			—			—
Net cash provided by (used in) investing activities	6,154			(35		)	(4,735		)
Cash flows from financing activities:
Preferred stock dividend	(10		)	(10		)	(10		)
Common stock dividend	(26,106		)	(25,508		)	(24,001		)
Issuance of common stock for stock option exercises	239			102			—
Purchase of treasury stock	(66,186		)	(25,276		)	(18,141		)
Payments related to tax withholding for share-based compensation	(3,709		)	(12,714		)	(7,223		)
Net cash provided by (used in) financing activities	(95,772		)	(63,406		)	(49,375		)
Net increase (decrease) in cash and cash equivalents	(4,866		)	23,865			63,558
Cash and cash equivalents at beginning of period	91,374			67,509			3,951
Cash and cash equivalents at end of period	$	86,508		$	91,374		$	67,509

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 (“UPCIC”) and American Platinum Property and Casualty Insurance Company (“APPCIC”), 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’ consolidated financial statements have been reclassified in order to conform to current period presentation. Such reclassifications had no effect on net income or stockholders’ equity.

Dividends received from Subsidiaries

During the year ended December 31, 2017, UPCIC paid dividends of $30.0 million to Universal Insurance Holdings, Inc. There were no dividends paid by UPCIC to Universal Insurance Holdings, Inc. during the years ended December 31, 2019 and 2018. There were no dividends paid from APPCIC to Universal Insurance Holdings, Inc. for the years ended December 31, 2019, 2018 and 2017.

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, 2019.

On February 11, 2020, the Company declared a quarterly cash dividend of $0.16 per share of common stock payable March 19, 2020, to shareholders of record on March 12, 2020.

In February 2020, the Company funded a $30 million capital contribution to UPCIC to increase UPCIC’s statutory capital and surplus. UPCIC included this contribution in their statutory capital and surplus at December 31, 2019 with the permission of the FLOIR under statutory accounting principles.