Schedule II - Condensed Financial Information of Registrant

12 Months Ended

Dec. 31, 2018

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, 2018 and 2017. 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,
	2018			2017
ASSETS
Cash and cash equivalents	$	91,374		$	67,509
Investments in subsidiaries and undistributed earnings	401,296			359,847
Available-for-sale debt securities, at fair value	2,986			3,111
Equity securities, at fair value	2,626			5,238
Income taxes recoverable	11,136			9,472
Deferred income taxes	6,512			9,286
Other assets	261			431
Total assets	$	516,191		$	454,894
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
Accounts payable	$	29		$	4
Dividends payable	77			40
Other accrued expenses	14,001			14,862
Total liabilities	14,107			14,906
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	465			458
Authorized shares - 55,000
Issued shares - 46,514 and 45,778
Outstanding shares - 34,783 and 34,735
Treasury shares, at cost - 11,731 and 11,043	(130,399		)	(105,123		)
Additional paid-in capital	86,353			86,186
Accumulated other comprehensive income (loss), net of taxes	(8,010		)	(6,281		)
Retained earnings	553,675			464,748
Total stockholders’ equity	502,084			439,988
Total liabilities and stockholders’ equity	$	516,191		$	454,894

See accompanying notes to condensed financial statements

CONDENSED STATEMENTS OF INCOME

	For the Years Ended December 31,
	2018			2017			2016
REVENUES
Net investment income (expense)	$	1,635		$	259		$	(35	)
Net realized gains (losses) on sale of securities	—			255			667
Net change in unrealized gains (losses) of equity securities	(2,648		)	—			—
Management fee	157			151			138
Other revenue	—			12			80
Total revenues	(856		)	677			850
OPERATING COSTS AND EXPENSES
General and administrative expenses	32,063			30,819			35,342
Total operating cost and expenses	32,063			30,819			35,342
LOSS BEFORE INCOME TAXES AND EQUITY IN NET    EARNINGS OF SUBSIDIARIES	(32,919		)	(30,142		)	(34,492		)
Benefit from income taxes	(10,434		)	(18,296		)	(12,055		)
LOSS BEFORE EQUITY IN NET EARNINGS OF    SUBSIDIARIES	(22,485		)	(11,846		)	(22,437		)
Equity in net income of subsidiaries	139,987			118,781			121,847
CONSOLIDATED NET INCOME	$	117,502		$	106,935		$	99,410

See accompanying notes to condensed financial statements

CONDENSED STATEMENTS OF CASH FLOWS

	For the Years Ended December 31,
	2018			2017			2016
Cash flows from operating activities
Net Income	$	117,502		$	106,935		$	99,410
Adjustments to reconcile net income to net cash provided by (used in)    operating activities:
Equity in net income of subsidiaries	(139,987		)	(118,781		)	(121,847		)
Distribution of income from subsidiaries	96,561			122,156			46,914
Depreciation	11			3			2
Amortization of share-based compensation	12,786			10,515			10,288
Amortization of original issue discount on debt	—			10			149
Accretion of deferred credit	—			—			(149		)
Net realized (gains) losses on sale of securities	—			(255		)	(667		)
Net change in unrealized gains (losses) of equity securities	2,648			—			—
Deferred income taxes	115			1,309			4,724
Excess tax (benefits) shortfall from share-based compensation	(5,427		)	(5,793		)	1,154
Issuance of common stock	—			634			—
Net changes in assets and liabilities relating to operating activities:
Income taxes recoverable	3,763			(417		)	1,004
Other operating assets and liabilities	169			574			(596		)
Other liabilities and accrued expenses	(835		)	778			(2,896		)
Net cash provided by (used in) operating activities	87,306			117,668			37,490
Cash flows from investing activities:
Purchases of equity securities	(35		)	(4,990		)	(2,037		)
Purchase of available-for-sale debt securities	—			(3,000		)	(3,000		)
Proceeds from sales of equity securities	—			3,255			2,456
Proceeds from sales of available-for-sale debt securities	—			—			3,229
Net cash provided by (used in) investing activities	(35		)	(4,735		)	648
Cash flows from financing activities:
Repayment of debt	—			—			—
Preferred stock dividend	(10		)	(10		)	(10		)
Common stock dividend	(25,508		)	(24,001		)	(24,192		)
Issuance of common stock for stock option exercises	102			—			119
Purchase of treasury stock	(25,276		)	(18,141		)	(8,510		)
Sale of treasury stock	—			—			2,965
Payments related to tax withholding for share-based compensation	(12,714		)	(7,223		)	(5,451		)
Excess tax benefits (shortfall) from share-based compensation	—			—			(1,154		)
Net cash provided by (used in) financing activities	(63,406		)	(49,375		)	(36,233		)
Net increase (decrease) in cash and cash equivalents	23,865			63,558			1,905
Cash and cash equivalents at beginning of period	67,509			3,951			2,046
Cash and cash equivalents at end of period	$	91,374		$	67,509		$	3,951

See accompanying notes to condensed financial statementsNOTE 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 year ended December 31, 2018. There were no dividends paid from APPCIC to Universal Insurance Holdings, Inc. for the years ended December 31, 2018 and 2017.

Capitalization of Subsidiaries

During the year ended December 31, 2016, Universal Insurance Holdings, Inc. made a capital contribution of $2.0 million to APPCIC, in conjunction with APPCIC’s plan to begin writing commercial residential products in Florida. There were no capital contributions by Universal Insurance Holdings, Inc. to APPCIC during the years ended December 31, 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, 2018.

On January 31, 2019, the Company declared a quarterly cash dividend of $0.16 per share of common stock payable March 25, 2019, to shareholders of record on March 11, 2019.