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Universal Reports Third Quarter 2023 Results

  • Loss per common share of $0.20; adjusted* loss per common share of $0.16
  • Direct premiums written of $532.0 million, up 6.3% from the prior year quarter
  • Net combined ratio of 110.7%, down 28.5 points from the prior year quarter
  • Book value per share of $10.33, up 21.0% year-over-year; adjusted book value per share of $14.00, up 13.5% year-over-year
  • Repurchased approximately 894 thousand shares for $12.3 million. Total capital returned to shareholders of $17.2 million, including $0.16 per share regular quarterly dividend

Universal Insurance Holdings (NYSE: UVE) (“Universal” or the “Company”) reported third quarter 2023 results.

“The third quarter benefited from strong and improving underlying trends and I’m optimistic as I look forward,” said Stephen J. Donaghy, Chief Executive Officer. “During the quarter, Hurricane Idalia made Florida landfall, and, as always, we were there immediately to assist our policyholders in their time of need. The storm’s severity appears considerably smaller than initially anticipated and is comfortably absorbed within our retention. We continue to enhance our best-in-class claims infrastructure, which together with our reinsurance capabilities, serves to differentiate us from our peers. As we look forward, we are more confident in the Florida market, which is our largest geography, and have started to slowly increase new business in additional territories.”

*Reconciliations of GAAP to non-GAAP financial measures are provided in the attached tables.

Quarterly Financial Results

 

Summary Financial Results

 

($thousands, except per share data)

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

2023

 

 

 

2022

 

 

Change

 

 

 

2023

 

 

 

2022

 

 

Change

GAAP comparison

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

$

360,048

 

 

$

312,810

 

 

15.1

%

 

 

$

1,016,126

 

 

$

892,298

 

 

13.9

%

Operating income (loss)

$

(6,246

)

 

$

(91,607

)

 

(93.2

)%

 

 

$

67,349

 

 

$

(55,117

)

 

NM

 

Operating income (loss) margin

 

(1.7

)%

 

 

(29.3

)%

 

27.6 pts

 

 

 

6.6

%

 

 

(6.2

)%

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) available to common stockholders

$

(5,918

)

 

$

(72,278

)

 

(91.8

)%

 

 

$

46,816

 

 

$

(47,376

)

 

NM

 

Diluted earnings (loss) per common share

$

(0.20

)

 

$

(2.36

)

 

(91.5

)%

 

 

$

1.54

 

 

$

(1.54

)

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annualized ROCE

 

(7.4

)%

 

NM*

 

NM

 

 

 

 

21.2

%

 

 

(18.3

)%

 

NM

 

Book value per share, end of period

$

10.33

 

 

$

8.54

 

 

21.0

%

 

 

 

10.33

 

 

$

8.54

 

 

21.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP comparison1

 

 

 

 

 

 

 

 

 

 

 

 

Core revenue

$

361,764

 

 

$

316,668

 

 

14.2

%

 

 

$

1,015,060

 

 

$

909,103

 

 

11.7

%

Adjusted operating income (loss)

$

(4,530

)

 

$

(87,749

)

 

(94.8

)%

 

 

$

66,283

 

 

$

(38,312

)

 

NM

 

Adjusted operating income (loss) margin

 

(1.3

)%

 

 

(27.7

)%

 

26.4 pts

 

 

 

6.5

%

 

 

(4.2

)%

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income (loss) available to common stockholders

$

(4,624

)

 

$

(69,369

)

 

(93.3

)%

 

 

$

46,012

 

 

$

(34,705

)

 

NM

 

Adjusted diluted earnings (loss) per common share

$

(0.16

)

 

$

(2.27

)

 

(93.0

)%

 

 

$

1.51

 

 

$

(1.12

)

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annualized adjusted ROCE

 

(4.4

)%

 

NM*

 

NM

 

 

 

 

15.4

%

 

 

(11.1

)%

 

NM

 

Adjusted book value per share, end of period

$

14.00

 

 

$

12.33

 

 

13.5

%

 

 

$

14.00

 

 

$

12.33

 

 

13.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Underwriting Summary

 

 

 

 

 

 

 

 

 

 

 

 

Premiums:

 

 

 

 

 

 

 

 

 

 

 

 

Premiums in force

$

1,914,493

 

 

$

1,833,034

 

 

4.4

%

 

 

$

1,914,493

 

 

$

1,833,034

 

 

4.4

%

Policies in force

 

807,553

 

 

 

872,926

 

 

(7.5

)%

 

 

 

807,553

 

 

 

872,926

 

 

(7.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct premiums written

$

531,988

 

 

$

500,677

 

 

6.3

%

 

 

$

1,489,216

 

 

$

1,429,685

 

 

4.2

%

Direct premiums earned

$

474,311

 

 

$

452,450

 

 

4.8

%

 

 

$

1,393,003

 

 

$

1,295,858

 

 

7.5

%

Ceded premiums earned

$

(143,271

)

 

$

(161,819

)

 

(11.5

)%

 

 

$

(476,465

)

 

$

(459,102

)

 

3.8

%

Ceded premium ratio

 

30.2

%

 

 

35.8

%

 

(5.6) pts

 

 

 

34.2

%

 

 

35.4

%

 

(1.2) pts

Net premiums earned

$

331,040

 

 

$

290,631

 

 

13.9

%

 

 

$

916,538

 

 

$

836,756

 

 

9.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Net ratios:

 

 

 

 

 

 

 

 

 

 

 

 

Loss ratio

 

87.0

%

 

 

113.7

%

 

(26.7) pts

 

 

 

78.3

%

 

 

85.5

%

 

(7.2) pts

Expense ratio

 

23.7

%

 

 

25.5

%

 

(1.8) pts

 

 

 

25.2

%

 

 

27.7

%

 

(2.5) pts

Combined ratio

 

110.7

%

 

 

139.2

%

 

(28.5) pts

 

 

 

103.5

%

 

 

113.2

%

 

(9.7) pts

1 Reconciliation of GAAP to non-GAAP financial measures are provided in the attached tables. Adjusted net income available to common stockholders, adjusted diluted earnings per common share and core revenue exclude net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities. Adjusted operating income excludes the items above and interest and amortization of debt issuance costs. Adjusted book value per share excludes accumulated other comprehensive income, net of taxes. Adjusted ROCE is calculated by dividing annualized adjusted net income available to common stockholders by average adjusted book value per share, with the denominator further excluding current period after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities.

*Not meaningful, as it implies full first event hurricane retentions in the first two quarters of 2022, which in actuality were hurricane free, and it similarly implies a full first event retention in the fourth quarter of 2022, which would instead be subject to a smaller subsequent event retention on a consolidated basis.

Net Income and Adjusted Net Income

Net loss available to common stockholders was $5.9 million, compared to a loss of $72.3 million in the prior year quarter, and adjusted net loss available to common stockholders was $4.6 million, compared to a loss of $69.4 million in the prior year quarter. The improvement in adjusted net loss available to common stockholders mostly stems from better underwriting income and net investment income.

Revenues

Revenue was $360.0 million, up 15.1% from the prior year quarter and core revenue was $361.8 million, up 14.2% from the prior year quarter. The increase in core revenue primarily stems from higher net premiums earned and net investment income, partly offset by lower commission revenue.

Direct premiums written were $532.0 million, up 6.3% from the prior year quarter. The increase stems from 4.4% growth in Florida and 14.7% growth in other states. Overall growth reflects rate increases, partly offset by lower policies in force.

Direct premiums earned were $474.3 million, up 4.8% from the prior year quarter. The increase stems from rate-driven direct premiums written growth over the past twelve months.

The ceded premium ratio was 30.2%, down from 35.8% in the prior year quarter. The decrease primarily reflects efficiencies associated with the 2023-2024 reinsurance program and direct premiums earned growth associated with primary rate increases, partly offset by higher reinsurance pricing and higher reinsurance costs associated with an increase in home values.

Net premiums earned were $331.0 million, up 13.9% from the prior year quarter. The increase is primarily attributable to higher direct premiums earned and a lower ceded premium ratio, as described above.

Net investment income was $12.8 million, up from $6.1 million in the prior year quarter. The increase primarily stems from higher fixed income reinvestment yields and higher yields on cash.

Commissions, policy fees and other revenue were $18.0 million, down 10.0% from the prior year quarter. The decrease primarily reflects the difference in pricing and structure associated with our reinsurance program when compared to the prior year and a decline in policy fees associated with lower policies in force.

Margins

The GAAP operating loss margin was 1.7%, compared to a GAAP operating loss margin of 29.3% in the prior year quarter and the adjusted operating loss margin was 1.3%, compared to an adjusted operating loss margin of 27.7% in the prior year quarter. The improvement in the adjusted operating loss margin primarily reflects a lower net combined ratio and higher net investment income.

The net loss ratio was 87.0%, down 26.7 points compared to the prior year quarter. The decrease reflects a lower current accident year net loss ratio, primarily stemming from lower weather-related losses.

The net expense ratio was 23.7%, down 1.8 points from 25.5% in the prior year quarter. The reduction primarily reflects lower renewal commission rates paid to distribution partners.

The net combined ratio was 110.7%, down 28.5 points compared to the prior year quarter. The decrease reflects lower net loss and expense ratios, as described above.

Capital Deployment

During the third quarter, the Company repurchased approximately 894 thousand shares at an aggregate cost of $12.3 million. The Company currently has $7.8 million of share repurchase authorization remaining.

On July 20, 2023, the Board of Directors declared a quarterly cash dividend of 16 cents per share of common stock, payable on August 11, 2023, to shareholders of record as of the close of business on August 4, 2023.

Conference Call and Webcast

  • Friday, October 27, 2023 at 10:00 a.m. ET
  • Investors and other interested parties may listen to the call by accessing the online, real-time webcast at universalinsuranceholdings.com/investors or by registering in advance via teleconference at https://register.vevent.com/register/BIcde2db8d22eb43b9be5e115c575ebeb9. Once registration is completed, participants will be provided with a dial-in number containing a personalized conference code to access the call. An online replay of the call will be available at universalinsuranceholdings.com/investors soon after the investor call concludes.

About Universal

Universal Insurance Holdings, Inc. (NYSE: UVE) is a holding company providing property and casualty insurance and value-added insurance services. We develop, market, and write insurance products for consumers predominantly in the personal residential homeowners lines of business and perform substantially all other insurance-related services for our primary insurance entities, including risk management, claims management and distribution. We provide insurance products through both our appointed independent agents and through our direct online distribution channels in the United States across 19 states (primarily Florida). Learn more at universalinsuranceholdings.com.

Non-GAAP Financial Measures and Key Performance Indicators

This press release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the U.S. Securities and Exchange Commission (“SEC”), including core revenue, adjusted net income available to common stockholders and diluted adjusted earnings (loss) per common share, which exclude the impact of net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities. Adjusted operating income and adjusted operating income margin exclude the impact of net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities and interest and amortization of debt issuance costs. Adjusted common stockholders’ equity and adjusted book value per share exclude accumulated other comprehensive income (AOCI), net of taxes. Adjusted return on common equity excludes after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities from the numerator and AOCI, net of taxes, and current period after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities from the denominator. A “non-GAAP financial measure” is generally defined as a numerical measure of a company’s historical or future performance that excludes or includes amounts, or is subject to adjustments, so as to be different from the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles (“GAAP”). UVE management believes that these non-GAAP financial measures are meaningful, as they allow investors to evaluate underlying revenue and profitability trends and enhance comparability across periods. When considered together with the GAAP financial measures, management believes these metrics provide information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionately positive or negative impact on results in any particular period. UVE management also believes that these non-GAAP financial measures enhance the ability of investors to analyze UVE’s business trends and to understand UVE’s operational performance. UVE’s management utilizes these non-GAAP financial measures as guides in long-term planning. Non-GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, financial measures presented in accordance with GAAP. For more information regarding our key performance indicators, please refer to the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Key Performance Indicators” in our forthcoming Quarterly Report on Form 10-Q for the quarter ended September 30, 2023.

Forward-Looking Statements

This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “will,” “plan,” and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Such statements may include commentary on plans, products and lines of business, marketing arrangements, reinsurance programs and other business developments and assumptions relating to the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, including those risks and uncertainties described under the heading “Risk Factors” and “Liquidity and Capital Resources” in our 2022 Annual Report on Form 10-K, and supplemented in our subsequent Quarterly Reports on Form 10-Q. Future results could differ materially from those described, and the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. For further information regarding risk factors that could affect the Company’s operations and future results, refer to the Company’s reports filed with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K and the most recent quarterly reports on Form 10-Q.

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except per share data)

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

 

2023

 

 

 

2022

 

ASSETS:

 

 

 

 

Invested Assets

 

 

 

 

Fixed maturities, at fair value

 

$

1,031,558

 

 

$

1,014,626

 

Equity securities, at fair value

 

 

76,995

 

 

 

85,469

 

Investment real estate, net

 

 

5,572

 

 

 

5,711

 

Total invested assets

 

 

1,114,125

 

 

 

1,105,806

 

Cash and cash equivalents

 

 

343,532

 

 

 

388,706

 

Restricted cash and cash equivalents

 

 

69,488

 

 

 

2,635

 

Prepaid reinsurance premiums

 

 

379,501

 

 

 

282,427

 

Reinsurance recoverable

 

 

322,986

 

 

 

808,850

 

Premiums receivable, net

 

 

88,536

 

 

 

69,574

 

Property and equipment, net

 

 

48,729

 

 

 

51,404

 

Deferred policy acquisition costs

 

 

114,590

 

 

 

103,654

 

Goodwill

 

 

2,319

 

 

 

2,319

 

Other assets

 

 

75,049

 

 

 

74,779

 

TOTAL ASSETS

 

$

2,558,855

 

 

$

2,890,154

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

LIABILITIES:

 

 

 

 

Unpaid losses and loss adjustment expenses

 

$

551,007

 

 

$

1,038,790

 

Unearned premiums

 

 

1,040,067

 

 

 

943,854

 

Advance premium

 

 

76,030

 

 

 

54,964

 

Reinsurance payable, net

 

 

388,294

 

 

 

384,504

 

Long-term debt, net

 

 

102,196

 

 

 

102,769

 

Other liabilities

 

 

99,759

 

 

 

77,377

 

Total liabilities

 

 

2,257,353

 

 

 

2,602,258

 

STOCKHOLDERS' EQUITY:

 

 

 

 

Cumulative convertible preferred stock ($0.01 par value)2

 

 

 

 

 

 

Common stock ($0.01 par value)3

 

 

473

 

 

 

472

 

Treasury shares, at cost - 18,080 and 16,790

 

 

(257,143

)

 

 

(238,758

)

Additional paid-in capital

 

 

115,922

 

 

 

112,509

 

Accumulated other comprehensive income (loss), net of taxes

 

 

(107,115

)

 

 

(103,782

)

Retained earnings

 

 

549,365

 

 

 

517,455

 

Total stockholders' equity

 

 

301,502

 

 

 

287,896

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

2,558,855

 

 

$

2,890,154

 

 

 

 

 

 

Notes:

 

 

 

 

2 Cumulative convertible preferred stock ($0.01 par value): Authorized - 1,000 shares; Issued - 10 and 10 shares; Outstanding - 10 and 10 shares; Minimum liquidation preference - $9.99 and $9.99 per share.

3 Common stock ($0.01 par value): Authorized - 55,000 shares; Issued - 47,266 and 47,179 shares; Outstanding 29,186 and 30,389 shares.

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(in thousands)

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

 

2023

 

 

 

2022

 

 

 

 

2023

 

 

 

2022

 

REVENUES

 

 

 

 

 

 

 

 

 

Net premiums earned

 

$

331,040

 

 

$

290,631

 

 

 

$

916,538

 

 

$

836,756

 

Net investment income

 

 

12,755

 

 

 

6,074

 

 

 

 

34,735

 

 

 

15,337

 

Net realized gains (losses) on investments

 

 

(431

)

 

 

292

 

 

 

 

(337

)

 

 

(375

)

Net change in unrealized gains (losses) of equity securities

 

 

(1,285

)

 

 

(4,150

)

 

 

 

1,403

 

 

 

(16,430

)

Commission revenue

 

 

10,830

 

 

 

12,592

 

 

 

 

43,098

 

 

 

35,157

 

Policy fees

 

 

5,111

 

 

 

5,272

 

 

 

 

14,662

 

 

 

15,991

 

Other revenue

 

 

2,028

 

 

 

2,099

 

 

 

 

6,027

 

 

 

5,862

 

Total revenues

 

 

360,048

 

 

 

312,810

 

 

 

 

1,016,126

 

 

 

892,298

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

Losses and loss adjustment expenses

 

 

287,972

 

 

 

330,444

 

 

 

 

717,853

 

 

 

715,854

 

Policy acquisition costs

 

 

53,180

 

 

 

54,609

 

 

 

 

156,877

 

 

 

163,432

 

Other operating expenses

 

 

25,142

 

 

 

19,364

 

 

 

 

74,047

 

 

 

68,129

 

Total operating costs and expenses

 

 

366,294

 

 

 

404,417

 

 

 

 

948,777

 

 

 

947,415

 

Interest and amortization of debt issuance costs

 

 

1,631

 

 

 

1,630

 

 

 

 

4,896

 

 

 

4,969

 

Income (loss) before income tax expense (benefit)

 

 

(7,877

)

 

 

(93,237

)

 

 

 

62,453

 

 

 

(60,086

)

Income tax expense (benefit)

 

 

(1,962

)

 

 

(20,962

)

 

 

 

15,629

 

 

 

(12,718

)

NET INCOME (LOSS)

 

$

(5,915

)

 

$

(72,275

)

 

 

$

46,824

 

 

$

(47,368

)

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

SHARE AND PER SHARE INFORMATION

(in thousands, except per share data)

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

 

2023

 

 

 

2022

 

 

 

 

2023

 

 

 

2022

 

Weighted average common shares outstanding - basic

 

 

29,617

 

 

 

30,604

 

 

 

 

30,087

 

 

 

30,858

 

Weighted average common shares outstanding - diluted

 

 

29,617

 

 

 

30,604

 

 

 

 

30,378

 

 

 

30,858

 

Shares outstanding, end of period

 

 

29,186

 

 

 

30,513

 

 

 

 

29,186

 

 

 

30,513

 

Basic earnings (loss) per common share

 

$

(0.20

)

 

$

(2.36

)

 

 

$

1.56

 

 

$

(1.54

)

Diluted earnings (loss) per common share

 

$

(0.20

)

 

$

(2.36

)

 

 

$

1.54

 

 

$

(1.54

)

Cash dividend declared per common share

 

$

0.16

 

 

$

0.16

 

 

 

$

0.48

 

 

$

0.48

 

Book value per share, end of period

 

$

10.33

 

 

$

8.54

 

 

 

$

10.33

 

 

$

8.54

 

Annualized return on average common equity (ROCE)

(7.4

)%

NM*

21.2

%

(18.3

)%

*Not meaningful, as it implies full first event hurricane retentions in the first two quarters of 2022, which in actuality were hurricane free, and it similarly implies a full first event retention in the fourth quarter of 2022, which would instead be subject to a smaller subsequent event retention on a consolidated basis.

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

SUPPLEMENTARY INFORMATION

(in thousands, except for Policies In Force data)

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

 

2023

 

 

 

2022

 

 

 

 

2023

 

 

 

2022

 

Premiums

 

 

 

 

 

 

 

 

 

Direct premiums written - Florida

 

$

430,946

 

 

$

412,588

 

 

 

$

1,225,295

 

 

$

1,200,193

 

Direct premiums written - Other States

 

 

101,042

 

 

 

88,089

 

 

 

 

263,921

 

 

 

229,492

 

Direct premiums written - Total

 

$

531,988

 

 

$

500,677

 

 

 

$

1,489,216

 

 

$

1,429,685

 

Direct premiums earned

 

$

474,311

 

 

$

452,450

 

 

 

$

1,393,003

 

 

$

1,295,858

 

Net premiums earned

 

$

331,040

 

 

$

290,631

 

 

 

$

916,538

 

 

$

836,756

 

 

 

 

 

 

 

 

 

 

 

Underwriting Ratios - Net

 

 

 

 

 

 

 

 

 

Loss and loss adjustment expense ratio

 

 

87.0

%

 

 

113.7

%

 

 

 

78.3

%

 

 

85.5

%

Policy acquisition cost ratio

 

 

16.1

%

 

 

18.8

%

 

 

 

17.1

%

 

 

19.5

%

Other operating expense ratio

 

 

7.6

%

 

 

6.7

%

 

 

 

8.1

%

 

 

8.2

%

Expense ratio

 

 

23.7

%

 

 

25.5

%

 

 

 

25.2

%

 

 

27.7

%

Combined ratio

 

 

110.7

%

 

 

139.2

%

 

 

 

103.5

%

 

 

113.2

%

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

 

September 30,

 

 

 

2023

 

 

2022

Policies in force

 

 

 

 

Florida

 

 

570,339

 

 

636,883

Other States

 

 

237,214

 

 

236,043

Total

 

 

807,553

 

 

872,926

 

 

 

 

 

Premiums in force

 

 

 

 

Florida

 

$

1,571,600

 

$

1,529,632

Other States

 

 

342,893

 

 

303,402

Total

 

$

1,914,493

 

$

1,833,034

 

 

 

 

 

Total Insured Value

 

 

 

 

Florida

 

$

190,299,057

 

$

203,957,272

Other States

 

 

130,281,463

 

 

120,648,594

Total

 

$

320,580,520

 

$

324,605,866

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands, except for per share data)

GAAP revenue to core revenue

 

Three Months Ended

 

 

Nine Months Ended

 

September 30,

 

 

September 30,

 

 

2023

 

 

 

2022

 

 

 

 

2023

 

 

 

2022

 

GAAP revenue

$

360,048

 

 

$

312,810

 

 

 

$

1,016,126

 

 

$

892,298

 

less: Net realized gains (losses) on investments

 

(431

)

 

 

292

 

 

 

 

(337

)

 

 

(375

)

less: Net change in unrealized gains (losses) of equity securities

 

(1,285

)

 

 

(4,150

)

 

 

 

1,403

 

 

 

(16,430

)

Core revenue

$

361,764

 

 

$

316,668

 

 

 

$

1,015,060

 

 

$

909,103

 

GAAP operating income (loss) to adjusted operating income (loss)

 

Three Months Ended

 

 

Nine Months Ended

 

September 30,

 

 

September 30,

 

 

2023

 

 

 

2022

 

 

 

 

2023

 

 

 

2022

 

GAAP income (loss) before income tax expense (benefit)

$

(7,877

)

 

$

(93,237

)

 

 

$

62,453

 

 

$

(60,086

)

add: Interest and amortization of debt issuance costs

 

1,631

 

 

 

1,630

 

 

 

 

4,896

 

 

 

4,969

 

GAAP operating income (loss)

 

(6,246

)

 

 

(91,607

)

 

 

 

67,349

 

 

 

(55,117

)

less: Net realized gains (losses) on investments

 

(431

)

 

 

292

 

 

 

 

(337

)

 

 

(375

)

less: Net change in unrealized gains (losses) of equity securities

 

(1,285

)

 

 

(4,150

)

 

 

 

1,403

 

 

 

(16,430

)

Adjusted operating income (loss)

$

(4,530

)

 

$

(87,749

)

 

 

$

66,283

 

 

$

(38,312

)

GAAP operating income (loss) margin to adjusted operating income (loss) margin

 

Three Months Ended

 

 

Nine Months Ended

 

September 30,

 

 

September 30,

 

 

2023

 

 

 

2022

 

 

 

 

2023

 

 

 

2022

 

GAAP operating income (loss) (a)

$

(6,246

)

 

$

(91,607

)

 

 

$

67,349

 

 

$

(55,117

)

GAAP revenue (b)

 

360,048

 

 

 

312,810

 

 

 

 

1,016,126

 

 

 

892,298

 

GAAP operating income (loss) margin (a÷b)

 

(1.7

)%

 

 

(29.3

)%

 

 

 

6.6

%

 

 

(6.2

)%

Adjusted operating income (loss) (c)

 

(4,530

)

 

 

(87,749

)

 

 

 

66,283

 

 

 

(38,312

)

Core revenue (d)

 

361,764

 

 

 

316,668

 

 

 

 

1,015,060

 

 

 

909,103

 

Adjusted operating income (loss) margin (c÷d)

 

(1.3

)%

 

 

(27.7

)%

 

 

 

6.5

%

 

 

(4.2

)%

GAAP net income (loss) (NI) to adjusted NI (loss) available to common stockholders

 

Three Months Ended

 

 

Nine Months Ended

 

September 30,

 

 

September 30,

 

 

2023

 

 

 

2022

 

 

 

 

2023

 

 

 

2022

 

GAAP NI (loss)

$

(5,915

)

 

$

(72,275

)

 

 

$

46,824

 

 

$

(47,368

)

less: Preferred dividends

 

3

 

 

 

3

 

 

 

 

8

 

 

 

8

 

GAAP NI (loss) available to common stockholders (e)

 

(5,918

)

 

 

(72,278

)

 

 

 

46,816

 

 

 

(47,376

)

less: Net realized gains (losses) on investments

 

(431

)

 

 

292

 

 

 

 

(337

)

 

 

(375

)

less: Net change in unrealized gains (losses) of equity securities

 

(1,285

)

 

 

(4,150

)

 

 

 

1,403

 

 

 

(16,430

)

add: Income tax effect on above adjustments

 

(422

)

 

 

(949

)

 

 

 

262

 

 

 

(4,134

)

Adjusted NI (loss) available to common stockholders (f)

$

(4,624

)

 

$

(69,369

)

 

 

$

46,012

 

 

$

(34,705

)

 

 

 

 

 

 

 

 

 

Weighted average diluted common shares outstanding (g)

 

29,617

 

 

 

30,604

 

 

 

 

30,378

 

 

 

30,858

 

Diluted earnings (loss) per common share (e÷g)

$

(0.20

)

 

$

(2.36

)

 

 

$

1.54

 

 

$

(1.54

)

Diluted adjusted earnings (loss) per common share (f÷g)

$

(0.16

)

 

$

(2.27

)

 

 

$

1.51

 

 

$

(1.12

)

GAAP stockholders’ equity to adjusted common stockholders’ equity

 

As of

 

September 30,

 

September 30,

 

 

December 31,

 

 

2023

 

 

 

2022

 

 

 

 

2022

 

GAAP stockholders’ equity

$

301,502

 

 

$

260,637

 

 

 

$

287,896

 

less: Preferred equity

 

100

 

 

 

100

 

 

 

 

100

 

Common stockholders’ equity (h)

 

301,402

 

 

 

260,537

 

 

 

 

287,796

 

less: Accumulated other comprehensive (loss), net of taxes

 

(107,115

)

 

 

(115,665

)

 

 

 

(103,782

)

Adjusted common stockholders’ equity (i)

$

408,517

 

 

$

376,202

 

 

 

$

391,578

 

 

 

 

 

 

 

 

Shares outstanding (j)

 

29,186

 

 

 

30,513

 

 

 

 

30,389

 

Book value per common share (h÷j)

$

10.33

 

 

$

8.54

 

 

 

$

9.47

 

Adjusted book value per common share (i÷j)

$

14.00

 

 

$

12.33

 

 

 

$

12.89

 

GAAP return on common equity (ROCE) to adjusted ROCE

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

Year Ended

 

September 30,

 

 

September 30,

 

 

December 31,

 

 

2023

 

 

 

2022

 

 

 

 

2023

 

 

 

2022

 

 

 

 

2022

 

Actual or Annualized NI (loss) available to common stockholders (k)

$

(23,672

)

 

$

(289,112

)

 

 

$

62,421

 

 

$

(63,168

)

 

 

$

(22,267

)

Average common stockholders’ equity (l)

 

317,987

 

 

 

313,494

 

 

 

 

294,599

 

 

 

345,070

 

 

 

 

358,699

 

ROCE (k÷l)

 

(7.4

)%

 

NM*

 

 

 

21.2

%

 

 

(18.3

)%

 

 

 

(6.2

)%

Actual or Annualized adjusted NI (loss) available to common stockholders (m)

$

(18,496

)

 

$

(277,476

)

 

 

$

61,349

 

 

$

(46,273

)

 

 

$

(12,618

)

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted average common stockholders’ equity4 (n)

 

420,120

 

 

 

416,848

 

 

 

 

399,646

 

 

 

417,022

 

 

 

 

423,199

 

Adjusted ROCE (m÷n)

 

(4.4

)%

 

NM*

 

 

 

15.4

%

 

 

(11.1

)%

 

 

 

(3.0

)%

 

 

 

 

 

 

 

 

 

 

 

 

4 Adjusted average common stockholders’ equity excludes current period after-tax net realized gains (losses) on investments and net change in unrealized gains (losses) of equity securities.

*Not meaningful, as it implies full first event hurricane retentions in the first two quarters of 2022, which in actuality were hurricane free, and it similarly implies a full first event retention in the fourth quarter of 2022, which would instead be subject to a smaller subsequent event retention on a consolidated basis.

 

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