By Chris Munro

Feb 25 - (The Insurer) - Universal Insurance Holdings’ combined ratio deteriorated by 4.2 points to 107.9% in Q4 2024 driven by Hurricane Milton losses as the Florida-based insurer booked adjusted diluted earnings per common share of $0.25 that came in well ahead of analysts’ consensus forecast.

• CR deteriorates 4.2 points YoY to 107.9%

• Increase in CR driven by higher weather losses, primarily from Hurricane Milton

• Adj diluted earnings per common share of $0.25 ahead of Wall Street forecast

• DPW up 8.8% YoY to $470.9 million fuelled by ex-Florida growth

• Company “well underway” with placing 2024/25 hurricane reinsurance

The Fort Lauderdale-based company’s fourth-quarter 2024 combined ratio of 107.9% comprised an 82.3% loss ratio, up 40 basis points year on year, and an expense ratio of 25.6%, an increase of 3.8 points from Q4 2023.

The uptick in the loss ratio primarily reflected higher weather losses, largely from Hurricane Milton, partly offset by more favourable prior-year reserve development.

As Universal noted, the expense ratio increase was driven by higher policy acquisition costs associated with growth outside Florida and a rise in other operating costs.

Universal’s adjusted diluted earnings per common share of $0.25 for Q4 2024 was a decrease when compared with the prior-year period’s $0.43.

However, the fourth-quarter 2024 result was ahead of the $0.08 that was the consensus forecast of analysts as compiled by MarketWatch.

The company booked adjusted operating income of $10.6 million for the final three months of 2024, down from the prior-year period’s $17.8 million.

Direct premiums written increased 8.8% year on year to $470.9 million in 2024’s fourth quarter, with the expansion stemming from 0.8% growth in Florida and 38.4% growth in other states.

“Overall growth mostly reflects higher policies in force, higher rates and inflation adjustments,” said Universal.

The insurer’s premiums in force grew by 7.5% from Q4 2023 to $2.08 billion.

Universal’s ceded premium ratio was 32.9% in Q4 2024, up 2.5 points from the prior-year quarter.

“The increase primarily reflects replacement of the Reinsurance to Assist Policyholders $(RAP.AU)$ layer, which was provided by the state of Florida, with private market coverage,” explained Universal.

Net investment income increased $1.9 million year on year to $15.6 million, with the increase primarily reflecting higher fixed income reinvestment yields and greater invested assets.

“In 2024, we experienced three hurricanes, including Debbie, Helene and Milton, and we’re working hard, as we always do, to help our customers restore their lives,” said Stephen Donaghy, Universal’s CEO.

“We continue to see progress relative to claims trends in our Florida book and recently filed a modest rate decrease in the state that’s directly correlated with the legislative changes made in December 2022.

“We’re already well underway negotiating and placing our 2025 reinsurance program with 92% of our first event catastrophe tower already placed as we stand here today, along with significant additional multi-year capacity secured for the 2026 hurricane season,” Donaghy added.