SCHEDULE II – CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Universal Insurance Holdings, Inc. had no long term obligations, guarantees or material contingencies as of December 31, 2014 and 2013. 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,
	2014			2013
ASSETS
Cash and cash equivalents	$	14,890		$	4,878
Investments in subsidiaries and undistributed earnings		216,656			174,068
Equity securities, at fair value		627			10,474
Fixed maturities, at fair value		2,967			750
Other receivables		—			244
Income taxes recoverable		5,675			8,152
Deferred income taxes		11,850			12,052
Other assets		1,040			346
Total assets	$	253,705		$	210,964
LIABILITIES, CONTINGENTLY REDEEMABLE COMMON STOCK AND STOCKHOLDERS' EQUITY
LIABILITIES:
Accounts payable	$	169		$	146
Income taxes payable		1,799			2,566
Long-term debt		13,330			18,490
Other accrued expenses		19,491			14,153
Total liabilities		34,789			35,355

Contingently redeemable common stock		19,000			—
Issued shares - 1,000
Outstanding shares - 1,000
STOCKHOLDERS' EQUITY:
Cumulative convertible preferred stock, $.01 par value		—			—
Authorized shares - 1,000
Issued shares - 12 and 30
Outstanding shares - 12 and 30
Minimum liquidation preference - $8.49 and $6.98 per share
Common stock, $.01 par value		448			436
Authorized shares - 55,000
Issued shares - 43,769 and 43,641
Outstanding shares - 34,102 and 35,366
Treasury shares, at cost - 9,667 and 8,275		(62,153	)		(35,467	)
Additional paid-in capital		40,987			42,282
Accumulated other comprehensive income (loss), net of taxes		(1,835	)		(376	)
Retained earnings		222,469			168,734
Total stockholders' equity		199,916			175,609
Total liabilities, contingently redeemable common stock and stockholders' equity	$	253,705		$	210,964

See accompanying notes to condensed financial statements

CONDENSED STATEMENTS OF INCOME

	For the Years Ended December 31,
	2014			2013			2012
PREMIUMS EARNED AND OTHER REVENUES
Assumed premiums written	$	—		$	—		$	10,686
Premiums earned		—			—			10,686
Net investment income (expense)		(23	)		207			25
Net realized gains (losses) on investments		625			(2,947	)		(1,880	)
Net change in unrealized gains (losses) on investments		—			1,625			1,162
Management fee		121			134			142
Total premiums earned and other revenues		723			(981	)		10,135
OPERATING COSTS AND EXPENSES
General and administrative expenses		39,062			32,476			25,051
Total operating cost and expenses		39,062			32,476			25,051
LOSS BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES		(38,339	)		(33,457	)		(14,916	)
Benefit from income taxes		(16,403	)		(13,834	)		(6,312	)
LOSS BEFORE EQUITY IN NET EARNINGS OF SUBSIDIARIES		(21,936	)		(19,623	)		(8,604	)
Equity in net income of subsidiaries		94,924			78,600			38,916
CONSOLIDATED NET INCOME	$	72,988		$	58,977		$	30,312

See accompanying notes to condensed financial statements

CONDENSED STATEMENTS OF CASH FLOWS

	For the Years Ended December 31,
	2014			2013			2012
Cash flows from operating activities
Net Income	$	72,988		$	58,977		$	30,312
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Equity in net income of subsidiaries		(94,924	)		(78,600	)		(38,916	)
Distribution of income from subsidiaries		55,805			26,898			40,222
Depreciation		2			—			—
Amortization of share-based compensation		12,342			6,417			3,830
Amortization of original issue discount on debt		840			601			—
Accretion of deferred credit		(840	)		(601	)		—
Net realized (gains) losses on investments		(625	)		2,947			1,880
Net change in unrealized (gains) losses on investments		—			(1,625	)		(1,162	)
Deferred income taxes		1,118			7,363			3,813
Excess tax benefits from share-based compensation		(7,006	)		(359	)		1,760
Other		—			—			—
Net changes in assets and liabilities relating to operating activities:
Restricted cash and cash equivalents		—			—			30,220
Purchases of equity securities, trading		—			(3,972	)		(58,836	)
Proceeds from sale of equity securities, trading		—			16,712			60,379
Income taxes recoverable		2,477			(5,558	)		(2,594	)
Income taxes payable		6,239			2,226			(13,801	)
Other operating assets and liabilities		5,752			1,347			2,911
Net cash provided by (used in) operating activities		54,168			32,773			60,018
Cash flows from investing activities:
Capital contributions to subsidiaries		(5,585	)		(1,600	)		(28,555	)
Purchases of equity securities, available for sale		(15,836	)		(10,357	)		—
Purchase of fixed maturities, available for sale		(3,000	)		(750	)		—
Proceeds from sales of equity securities, available for sale		26,060			—			—
Proceeds from sales of fixed maturities, available for sale		770			—			—
Net cash provided by (used in) investing activities		2,409			(12,707	)		(28,555	)
Cash flows from financing activities:
Proceeds from borrowings		—			20,000			—
Repayment of debt		(6,000	)		—			—
Preferred stock dividend		(13	)		(29	)		(287	)
Common stock dividend		(19,240	)		(17,725	)		(18,669	)
Issuance of common stock		73			—			207
Purchase of treasury stock		(29,736	)		(32,365	)		—
Proceeds received from issuance of common and contingently redeemable common stock		19,000			—			—
Payments related to tax withholding for share-based compensation		(17,655	)		(3,161	)		(121	)
Excess tax benefits (shortfall) from share-based compensation		7,006			359			(1,760	)
Net cash provided by (used in) financing activities		(46,565	)		(32,921	)		(20,630	)
Net increase (decrease) in cash and cash equivalents		10,012			(12,855	)		10,833
Cash and cash equivalents at beginning of period		4,878			17,733			6,900
Cash and cash equivalents at end of period	$	14,890		$	4,878		$	17,733

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 originally incorporated as Universal Heights, Inc. in November 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, collectively referred to as the “Insurance Entities”, 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 premiums earned on reinsurance contracts entered into with the Insurance Entities and earnings on investments. 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.