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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________________________________
FORM 10-Q
________________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024

OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number 001-33251
________________________________________________________

Image2.jpg
UNIVERSAL INSURANCE HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
________________________________________________________
Delaware65-0231984
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
1110 W. Commercial Blvd., Fort Lauderdale, Florida 33309
(Address of principal executive offices) (Zip Code)
(954) 958-1200
(Registrant’s telephone number, including area code)
________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 Par ValueUVENew York Stock Exchange
    Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No   

    Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes     No   

    Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”


“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer  
Smaller reporting company
Emerging growth company
                
    If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

    Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)      Yes      No  

    Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 28,759,091 shares of common stock, par value $0.01 per share, outstanding on April 25, 2024.




UNIVERSAL INSURANCE HOLDINGS, INC.
TABLE OF CONTENTS
Page No.

2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders of
Universal Insurance Holdings, Inc.
Fort Lauderdale, Florida

RESULTS OF REVIEW OF INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

We have reviewed the accompanying condensed consolidated balance sheet of Universal Insurance Holdings, Inc. and its wholly-owned subsidiaries (the “Company”) as of March 31, 2024 and the related condensed consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for the three-month periods ended March 31, 2024 and 2023. Based on our review, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheet of Universal Insurance Holdings, Inc. as of December 31, 2023 and the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for the year then ended (not presented herein) and we expressed an unqualified audit opinion on those consolidated financial statements in our report dated February 28, 2024. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2023, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

BASIS FOR REVIEW RESULTS
These interim financial statements are the responsibility of the Company’s management. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
/s/ Plante & Moran, PLLC
East Lansing, Michigan
April 30, 2024

3

PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands, except per share data)

 As of
March 31,December 31,
20242023
ASSETS
Available-for-sale debt securities, at fair value, net of allowance for credit loss of $600 and $566 (amortized cost: $1,209,054 and $1,162,919)
$1,107,058 $1,064,330 
Equity securities, at fair value (cost: $89,110 and $91,052)
81,659 80,495 
Other investments, at fair value (cost: $4,794 and $4,794)
10,434 10,434 
Investment real estate, net5,479 5,525 
Total invested assets1,204,630 1,160,784 
Cash and cash equivalents396,323 397,306 
Restricted cash and cash equivalents2,635 2,635 
Prepaid reinsurance premiums88,499 236,254 
Reinsurance recoverable124,646 219,102 
Premiums receivable, net73,974 77,064 
Property and equipment, net49,416 47,628 
Deferred policy acquisition costs106,632 109,985 
Deferred income tax asset, net49,277 43,175 
Other assets24,112 22,628 
Total assets$2,120,144 $2,316,561 
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
Unpaid losses and loss adjustment expenses$429,629 $510,117 
Unearned premiums954,666 990,559 
Advance premium74,370 48,660 
Book overdraft 14,597 
Reinsurance payable, net97,871 191,850 
Commission payable22,661 20,989 
Income taxes payable24,984 5,886 
Other liabilities and accrued expenses49,484 90,600 
Long-term debt, net101,815 102,006 
Total liabilities1,755,480 1,975,264 
Commitments and Contingencies (Note 12)
STOCKHOLDERS’ EQUITY:
Cumulative convertible preferred stock, $0.01 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, $0.01 par value
472 472 
Authorized shares - 55,000
Issued shares - 47,269 and 47,269
Outstanding shares - 28,758 and 28,966
Treasury shares, at cost - 18,511 and 18,303
(264,918)(260,779)
Additional paid-in capital116,239 115,086 
Accumulated other comprehensive income (loss), net of taxes(76,714)(74,172)
Retained earnings589,585 560,690 
Total stockholders’ equity364,664 341,297 
Total liabilities and stockholders’ equity$2,120,144 $2,316,561 
The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
4

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(in thousands, except per share data)

Three Months Ended
March 31,
20242023
REVENUES
Direct premiums written$446,179 $410,102 
Change in unearned premium35,893 45,266 
Direct premium earned482,072 455,368 
Ceded premium earned(148,047)(173,144)
Premiums earned, net334,025 282,224 
Net investment income13,523 10,698 
Net realized gains (losses) on investments(77)(788)
Net change in unrealized gains (losses) on investments
3,106 957 
Commission revenue11,033 17,282 
Policy fees4,405 4,167 
Other revenue1,944 1,968 
Total revenues367,959 316,508 
OPERATING COSTS AND EXPENSES
Losses and loss adjustment expenses240,187 206,154 
General and administrative expenses78,666 75,927 
Total operating costs and expenses318,853 282,081 
Interest and amortization of debt issuance costs1,622 1,636 
INCOME (LOSS) BEFORE INCOME TAXES47,484 32,791 
Income tax expense (benefit)13,827 8,618 
NET INCOME (LOSS)$33,657 $24,173 
Basic earnings (loss) per common share$1.17 $0.80 
Weighted average common shares outstanding - Basic28,869 30,382 
Diluted earnings (loss) per common share$1.14 $0.79 
Weighted average common shares outstanding - Diluted29,404 30,626 
Cash dividend declared per common share$0.16 $0.16 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Three Months Ended
March 31,
20242023
Net income (loss)$33,657 $24,173 
Other comprehensive income (loss), net of taxes(2,542)13,791 
Comprehensive income (loss)$31,115 $37,964 
The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
5

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023 (unaudited)
(in thousands, except per share data)

Treasury SharesCommon
Shares
Issued
Preferred
Shares
Issued
Common
Stock
Amount
Preferred
Stock
Amount
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Shares,
at Cost
Total
Stockholders’
Equity
Balance, December 31, 2023(18,303)47,269 10 $472 $ $115,086 $560,690 $(74,172)$(260,779)$341,297 
Purchases of treasury stock
(208)— — — — — — (4,139)(4,139)
Share-based compensation— — — — — 2,033 — — — 2,033 
Other (1)
— — — — — (880)— — — (880)
Net income (loss)— — — — — — 33,657 — — 33,657 
Other comprehensive gain (loss), net of taxes— — — — — — — (2,542)— (2,542)
Declaration of dividends
($0.16 per common share and
$0.25 per preferred share)
— — — — — — (4,762)— — (4,762)
Balance, March 31, 2024(18,511)47,269 10 $472 $ $116,239 $589,585 $(76,714)$(264,918)$364,664 
(1)
The Other line within Paid-in Capital includes $511 thousand related to cash settlement of certain restricted share units.

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
6

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (continued)
(in thousands, except per share data)

Treasury SharesCommon
Shares
Issued
Preferred
Shares
Issued
Common
Stock
Amount
Preferred
Stock
Amount
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Shares,
 at Cost
Total
Stockholders’
Equity
Balance, December 31, 2022(16,790)47,179 10 $472 $ $112,509 $517,455 $(103,782)$(238,758)$287,896 
Vesting of performance share units(6)
(1)
16 — — — — — — (64)(64)
Vesting of restricted stock units(16)
(1)
48 — — — — — — (160)(160)
Stock option exercises(54)
(1)
63 — — — 928 — — (90)838 
Retirement of treasury shares76 
(1)
(76)— — — (1,242)— — 314 (928)
Purchases of treasury stock— — — — — — — — —  
Share-based compensation— — — — — 1,230 — — — 1,230 
Net income (loss)— — — — — — 24,173 — — 24,173 
Other comprehensive gain (loss), net of taxes— — — — — — — 13,791 — 13,791 
Declaration of dividends
($0.16 per common share and
$0.25 per preferred share)
— — — — — — (4,970)— — (4,970)
Balance, March 31, 2023(16,790)47,230 10 $472 $ $113,425 $536,658 $(89,991)$(238,758)$321,806 
(1)
All shares acquired represent shares tendered to cover the strike price for options and tax withholdings on the intrinsic value of options exercised, restricted stock vested, performance share units vested, or restricted stock units vested. These shares have been cancelled by the Company.

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
7

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(in thousands)
Three Months Ended
March 31,
20242023
Cash flows from operating activities:
Net cash provided by (used in) operating activities
$82,916 $(50,257)
Cash flows from investing activities:
Proceeds from sale of property and equipment50 9 
Purchases of property and equipment(3,298)(690)
Purchases of equity securities(977)(9,356)
Purchases of available-for-sale debt securities(109,615)(26,236)
Proceeds from sales of equity securities2,910 2,789 
Proceeds from sales of available-for-sale debt securities3,700 3,301 
Maturities of available-for-sale debt securities32,849 27,554 
Net cash provided by (used in) investing activities(74,381)(2,629)
Cash flows from financing activities:
Preferred stock dividend(3)(3)
Common stock dividend(4,639)(4,980)
Purchase of treasury stock inclusive of excise taxes paid
(4,508) 
Payments related to tax withholding for share-based compensation (314)
Repayment of debt(368)(368)
Net cash provided by (used in) financing activities(9,518)(5,665)
Cash and cash equivalents and restricted cash and cash equivalents:
Net increase (decrease) during the period(983)(58,551)
Balance, beginning of period399,941 391,341 
Balance, end of period$398,958 $332,790 
The following table summarizes our cash and cash equivalents and restricted cash and cash equivalents within the Condensed Consolidated Balance Sheets (in thousands):
 March 31,December 31,
20242023
Cash and cash equivalents$396,323 $397,306 
Restricted cash and cash equivalents (1)2,635 2,635 
Total cash and cash equivalents and restricted cash and cash equivalents$398,958 $399,941 
(1)See “—Note 5 (Insurance Operations)” for a discussion of the nature of the restrictions for restricted cash and cash equivalents.

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
8

UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. Nature of Operations and Basis of Presentation
Nature of Operations
Universal Insurance Holdings, Inc. (“UVE,” and together with its wholly-owned subsidiaries, “the Company”) is a Delaware corporation incorporated in 1990. The Company is a vertically integrated insurance holding company performing all aspects of insurance underwriting, distribution, and claims. Through its wholly-owned insurance company subsidiaries, Universal Property & Casualty Insurance Company (“UPCIC”) and American Platinum Property and Casualty Insurance Company (“APPCIC,” and together with UPCIC, the “Insurance Entities”), the Company is principally engaged in the property and casualty insurance business offered primarily through its network of independent agents. Risk from catastrophic losses is managed through the use of reinsurance agreements. The Company’s primary product is residential homeowners’ insurance offered in 18 states as of March 31, 2024, including Florida, which comprises the majority of the Company’s policies in force. See “—Note 5 (Insurance Operations)” for more information regarding the Company’s insurance operations.
The Company generates revenues primarily from the collection of premiums and investment returns on funds on cash flows in excess of those retained and used for claims-paying obligations and insurance operations. Other significant sources of revenue include brokerage commissions collected from reinsurers on certain reinsurance programs placed on behalf of the Insurance Entities, policy fees collected from policyholders by the Company’s wholly-owned managing general agent (“MGA”) subsidiary and payment plan fees charged to policyholders who choose to pay their premiums in installments. The Company’s wholly-owned adjusting company receives claims-handling fees from the Insurance Entities. The Insurance Entities receive reimbursement whenever claims-handling fees are subject to recovery under the Insurance Entities’ respective reinsurance programs. These fees, after expenses, are recorded in the Consolidated Financial Statements as an adjustment to losses and loss adjustment expense (“LAE”).
The consolidated financial statements have been prepared in conformity with: (i) United States (“U.S.”) generally accepted accounting principles (“GAAP”); and (ii) the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The consolidated financial statements include the accounts of UVE and its wholly-owned subsidiaries, as well as variable interest entities (“VIE”) in which the Company is determined to be the primary beneficiary as applicable. All material intercompany balances and transactions have been eliminated in consolidation.
To conform to the current period presentation, certain amounts in the prior periods’ consolidated financial statements and notes have been reclassified. Such reclassifications were of an immaterial amount and had no effect on net income or stockholders’ equity.
Basis of Presentation and Consolidation
The Company has prepared the accompanying unaudited Condensed Consolidated Financial Statements (“Financial Statements”) in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, the Financial Statements do not include all of the information and footnotes required by United States Generally Accepted Accounting Principles (“GAAP”) for annual financial statements. Therefore, the Financial Statements should be read in conjunction with the audited Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 28, 2024. The Condensed Consolidated Balance Sheet at December 31, 2023 was derived from audited financial statements, but does not include all disclosures required by GAAP. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation have been included in the Financial Statements. The results for interim periods do not necessarily indicate the results that may be expected for any interim period or for the full year.
To conform to the current period presentation, certain amounts in the prior periods’ condensed consolidated financial statements and notes have been reclassified. Such reclassifications were of an immaterial amount and had no effect on net income or stockholders’ equity.
The Financial Statements include the accounts of UVE and its wholly-owned subsidiaries, as well as variable interest entities (“VIE”) in which the Company is determined to be the primary beneficiary. All material intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. The Company’s primary use of estimates is in the recognition of liabilities for unpaid losses, loss adjustment expenses, subrogation recoveries, and reinsurance recoveries. Actual results could differ from those estimates.
9

Note 2. Significant Accounting Policies
The Company reported Significant Accounting Policies in its Annual Report on Form 10-K for the year ended December 31, 2023. In June 2022, the Financial Accounting Standards Board (“FASB”) issued ASU 2022-03, Subtopic 820 “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. The ASU amends ASC 820 to clarify that a contractual sales restriction is not considered in measuring an equity security at fair value and to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value. The ASU applies to both holders and issuers of equity and equity-linked securities measured at fair value. The amendments in this ASU are effective for the Company in fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company has adopted all required disclosures. Refer to “Item 1—Note 3 (Investments)” for updated disclosures associated with the adoption of the ASU.
10

Note 3. Investments
Available-for-Sale Securities
The following table provides the amortized cost and fair value of available-for-sale debt securities as of the dates presented (in thousands):
March 31, 2024
Amortized
Cost
Allowance for Expected Credit LossesGross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
Debt Securities:
  U.S. government obligations and agencies$22,434 $ $ $(781)$21,653 
  Corporate bonds807,313 (502)646 (65,515)741,942 
  Mortgage-backed and asset-backed securities353,909  509 (33,714)320,704 
  Municipal bonds15,918 (5) (1,821)14,092 
  Redeemable preferred stock9,480 (93)3 (723)8,667 
Total$1,209,054 $(600)$1,158 $(102,554)$1,107,058 
December 31, 2023
Amortized
Cost
Allowance for Expected Credit LossesGross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
Debt Securities:
  U.S. government obligations and agencies$23,886 $ $49 $(677)$23,258 
  Corporate bonds779,177 (469)1,097 (64,091)715,714 
  Mortgage-backed and asset-backed securities334,460  969 (32,283)303,146 
  Municipal bonds15,916 (4) (1,873)14,039 
  Redeemable preferred stock9,480 (93) (1,214)8,173 
Total$1,162,919 $(566)$2,115 $(100,138)$1,064,330 
The following table provides the credit quality of available-for-sale debt securities with contractual maturities as of the dates presented (dollars in thousands):
March 31, 2024December 31, 2023
Average Credit RatingsFair Value% of Total
 Fair Value
Fair Value% of Total
 Fair Value
AAA$349,025 31.5 %$333,516 31.3 %
AA130,036 11.7 %128,249 12.0 %
A373,361 33.8 %356,090 33.5 %
BBB253,416 22.9 %245,823 23.1 %
No Rating Available1,220 0.1 %652 0.1 %
   Total$1,107,058 100.0 %$1,064,330 100.0 %
The table above includes credit quality ratings by Standard and Poor’s Rating Services, Inc. (“S&P”), Moody’s Investors Service, Inc. and Fitch Ratings, Inc. The Company has presented the highest rating of the three rating agencies for each investment position.
11

The following table summarizes the amortized cost and fair value of mortgage-backed and asset-backed securities as of the dates presented (in thousands):
March 31, 2024December 31, 2023
Amortized
Cost
Fair ValueAmortized
Cost
Fair Value
Mortgage-backed securities:
Agency$175,783 $153,236 $165,507 $145,686 
Non-agency62,078 54,009 63,729 55,102 
Asset-backed securities:
Auto loan receivables60,382 59,651 53,686 52,869 
Credit card receivables5,400 5,386 3,414 3,428 
Other receivables50,266 48,422 48,124 46,061 
Total$353,909 $320,704 $334,460 $303,146 
The following tables summarize available-for-sale debt securities, aggregated by major security type and length of time that individual securities have been in a continuous unrealized loss position, for which no allowance for expected credit losses has been recorded as of the dates presented (in thousands):
March 31, 2024
Less Than 12 Months12 Months or Longer
Fair ValueUnrealized
Losses
Fair ValueUnrealized
Losses
Debt Securities:
U.S. government obligations and agencies$15,169 $(283)$5,986 $(497)
Corporate bonds5,517 (59)347,969 (37,393)
Mortgage-backed and asset-backed securities56,643 (668)209,013 (33,046)
Municipal bonds292 (3)7,070 (1,009)
Redeemable preferred stock  1,101 (108)
Total$77,621 $(1,013)$571,139 $(72,053)
December 31, 2023
Less Than 12 Months12 Months or Longer
Fair ValueUnrealized
Losses
Fair ValueUnrealized
Losses
Debt Securities:
U.S. government obligations and agencies$9,045 $(108)$6,811 $(569)
Corporate bonds1,387 (9)365,893 (37,088)
Mortgage-backed and asset-backed securities18,150 (316)216,220 (31,967)
Municipal bonds293 (1)7,010 (1,069)
Redeemable preferred stock529 (30)1,052 (158)
Total$29,404 $(464)$596,986 $(70,851)
Unrealized losses on available-for-sale debt securities in the above table as of March 31, 2024 have not been recognized into income as credit losses because the issuers are of high credit quality (investment grade securities), management does not intend to sell nor does it believe it is more likely than not it will be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions. There were no material factors impacting any one category or specific security requiring an accrual for credit loss. The issuers continue to make principal and interest payments on the bonds. The fair value is expected to recover as the bonds approach maturity.

12

The following table presents a reconciliation of the beginning and ending balances for expected credit losses on available-for-sale debt securities (in thousands):
Corporate BondsMunicipal BondsRedeemable
 Preferred Stock
Total
Balance, December 31, 2022
$729 $2 $189 $920 
Provision for (or reversal of) credit loss expense(260)2 (96)(354)
Balance, December 31, 2023
469 4 93 566 
Provision for (or reversal of) credit loss expense33 1  34 
Balance, March 31, 2024
$502 $5 $93 $600 
Refer to “Part II—Item 8—Note 2 (Summary of Significant Accounting Policies)” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 for details of accounting policies and reporting in the consolidated financial statements associated with available-for-sale debt securities and allowance for credit losses.
The following table presents the amortized cost and fair value of investments with maturities as of the date presented (in thousands):
March 31, 2024
Amortized CostFair Value
Due in one year or less$88,396 $87,092 
Due after one year through five years654,617 616,104 
Due after five years through ten years431,416 373,897 
Due after ten years31,123 26,718 
Perpetual maturity securities3,502 3,247 
Total$1,209,054 $1,107,058 
All securities, except those with perpetual maturities, were categorized in the table above utilizing years to effective maturity. Effective maturity takes into consideration all forms of potential prepayment, such as call features or prepayment schedules, that shorten the lifespan of contractual maturity dates.
13

The following table provides certain information related to available-for-sale debt securities, equity securities and investment in real estate during the periods presented (in thousands):
Three Months Ended
March 31,
20242023
Proceeds from sales and maturities (fair value):
  Available-for-sale debt securities $36,548 $30,855 
  Equity securities$2,910 $2,789 
Gross realized gains on sale of securities:
  Available-for-sale debt securities $5 $5 
  Equity securities$69 $54 
Gross realized losses on sale of securities:
  Available-for-sale debt securities$(74)$(706)
  Equity securities $(77)$(141)
The following table presents the components of net investment income, comprised primarily of interest and dividends, for the periods presented (in thousands):
Three Months Ended
March 31,
20242023
Available-for-sale debt securities$7,214 $5,870 
Equity securities894 1,053 
Cash and cash equivalents (1)5,823 4,203 
Other (2)177 141 
  Total investment income14,108 11,267 
Less: Investment expenses (3)(585)(569)
  Net investment income$13,523 $10,698 
(1)
Includes interest earned on restricted cash and cash equivalents.
(2)
Includes investment income earned on real estate investments.
(3)
Includes custodial fees, investment accounting and advisory fees, and expenses associated with real estate investments.
Equity Securities
The following table provides the unrealized gains and losses recognized for the periods presented on equity securities still held at the end of the reported period (in thousands):
Three Months Ended
March 31,
20242023
Unrealized gains (losses) recognized during the reported period on equity securities still held at the end of the reported period$2,905 $503 
14

Investment Real Estate
Investment real estate consisted of the following as of the dates presented (in thousands):
March 31,December 31,
20242023
Income Producing:
Investment real estate$7,097 $7,097 
Less: Accumulated depreciation(1,618)(1,572)
Investment real estate, net$5,479 $5,525 
The following table provides the depreciation expense related to investment real estate for the periods presented (in thousands):
Three Months Ended
March 31,
 20242023
Depreciation expense on investment real estate$46 $46 
Other Investments
The Company has an ownership interest in a limited partnership that is not registered or readily tradable on a securities exchange. This partnership is private equity fund managed by general partners who make decisions with regard to financial policies and operations. As such, the Company is not the primary beneficiary and does not consolidate these partnerships.
Other investments consisted of the following as of the dates presented (in thousands):
March 31,December 31,
20242023
Investment in private equity limited partnership
$10,434 $10,434 
The limited partnership investment is subject to a contractual restriction on the transfer or sale by the Company prior to liquidation or dissolution of the partnership agreement by the general partner. This restriction lapses upon the dissolution of the partnership or upon the written consent of the general partner and its Board of Directors. The fair value of this investment was $10.4 million as of March 31, 2024 and December 31, 2023.
The following table provides the unrealized gains (losses) recognized for the periods presented on investment in private equity limited partnership still held at the end of the reported period (in thousands):
March 31,December 31,
20242023
Unrealized gains (losses) recognized during the reported period on investment in private equity limited partnership still held at the end of the reported period$ $5,640 
For the quarter ended March 31, 2024, the Company recognized no net change in unrealized gain or loss on this investment which is recognized in net change in unrealized gains (losses) on investments in the Consolidated Statement of Income. At March 31, 2024 and December 31, 2023 the Company’s net cumulative contributed capital to the partnership was $4.8 million.
15

Note 4. Reinsurance
The Company seeks to reduce its risk of loss by reinsuring certain levels of risk in various areas of exposure with other insurance enterprises or reinsurers, generally as of the beginning of the hurricane season on June 1st of each year. The Company’s current reinsurance programs consist principally of catastrophe excess of loss reinsurance, subject to the terms and conditions of the applicable agreements. Notwithstanding the purchase of such reinsurance, the Company is responsible for certain retained loss amounts before reinsurance attaches and for insured losses related to catastrophes and other events that exceed coverage provided by or otherwise are not within the scope of the reinsurance programs. The Company remains responsible for the settlement of insured losses irrespective of whether any of the reinsurers fail to make payments otherwise due.
To reduce credit risk for amounts due from reinsurers, the Insurance Entities seek to do business with financially sound reinsurance companies and regularly evaluate the financial strength of all reinsurers used.
The following table presents ratings from rating agencies and the unsecured amounts due from the reinsurers whose aggregate balance exceeded 3% of the Company’s stockholders’ equity as of the dates presented (in thousands):
 Ratings as of March 31, 2024Due from as of
ReinsurerAM Best
Company
Standard
and Poor’s
Rating
Services, Inc.
Moody’s
Investors Service, Inc.
March 31, 2024December 31, 2023
Florida Hurricane Catastrophe Fund “FHCF” (1)n/an/an/a$61,517 91,275 
Various Lloyd’s of London Syndicates (2)A
AA-
n/a 22,832 
Total (3)
$61,517 $114,107 
(1)No rating is available, because the fund is not rated.
(2)No rating available for Moody’s Investors Service, Inc.
(3)Amounts represent prepaid reinsurance premiums and net recoverables for paid and unpaid losses, including incurred but not reported reserves, and loss adjustment expenses.

16

The Company’s reinsurance arrangements had the following effect on certain items in the Condensed Consolidated Statements of Income for the periods presented (in thousands):
Three Months Ended March 31,
20242023
Premiums
Written
Premiums
Earned
Losses and Loss
Adjustment
Expenses
Premiums
Written
Premiums
Earned
Losses and Loss
Adjustment
Expenses
Direct$446,179 $482,072 $240,319 $410,102 $455,368 $208,222 
Ceded(291)(148,047)(132)(14,776)(173,144)(2,068)
Net$445,888 $334,025 $240,187 $395,326 $282,224 $206,154 
The following prepaid reinsurance premiums and reinsurance recoverable are reflected in the Condensed Consolidated Balance Sheets as of the dates presented (in thousands):
March 31,December 31,
20242023
Prepaid reinsurance premiums$88,499 $236,254 
Reinsurance recoverable on paid losses and LAE$23,610 $35,667 
Reinsurance recoverable on unpaid losses and LAE101,036 183,435 
Reinsurance recoverable$124,646 $219,102 

17

Note 5. Insurance Operations
Deferred Policy Acquisition Costs
The Company defers certain costs in connection with written premium, called Deferred Policy Acquisition Costs (“DPAC”). DPAC is amortized over the effective period of the related insurance policies.
The following table presents the beginning and ending balances and the changes in DPAC for the periods presented (in thousands):
Three Months Ended
March 31,
20242023
DPAC, beginning of period$109,985 $103,654 
Capitalized Costs50,852 45,994 
Amortization of DPAC(54,205)(51,755)
DPAC, end of period$106,632 $97,893 
Regulatory Requirements and Restrictions
The Insurance Entities are subject to regulations and standards of the Florida Office of Insurance Regulation (“FLOIR”). The Insurance Entities are also subject to regulations and standards of regulatory authorities in other states where they are licensed, although as Florida-domiciled insurers, their principal regulatory authority is the FLOIR. These standards and regulations include a requirement that the Insurance Entities maintain specified levels of statutory capital and restrict the timing and amount of dividends and other distributions that may be paid by the Insurance Entities to the parent company. Except in the case of extraordinary dividends, these standards generally permit dividends to be paid from statutory unassigned funds of the regulated insurance company subsidiary and are limited based on the subsidiary insurer’s level of statutory net income and statutory capital and surplus. The maximum dividend that may be paid by the Insurance Entities to their immediate parent company, Protection Solutions, Inc. (“PSI”), without prior regulatory approval is limited by the provisions of the Florida Insurance Code. These dividends are referred to as “ordinary dividends.” However, if the dividend, together with other dividends paid within the preceding 12 months, exceeds this statutory limit or is paid from sources other than earned surplus, the entire dividend is generally considered an “extraordinary dividend” and must receive prior regulatory approval.
In accordance with Florida Insurance Code, and based on the calculations performed by the Company as of March 31, 2024, UPCIC and APPCIC currently are not able to pay any ordinary dividends during for the three months ended March 31, 2024. For the three months ended March 31, 2024 and 2023, no dividends were paid from the Insurance Entities to PSI.
The Florida Insurance Code requires a residential property insurance company to maintain statutory surplus as to policyholders of at least $15.0 million or ten percent of the insurer’s total liabilities, whichever is greater. The following table presents the amount of capital and surplus calculated in accordance with statutory accounting principles, which differs from GAAP, and an amount representing ten percent of total liabilities for each of the Insurance Entities as of the dates presented (in thousands):
March 31, 2024December 31, 2023
Statutory capital and surplus
  UPCIC $355,633 $350,933 
  APPCIC$26,731 $25,526 
Ten percent of total liabilities
  UPCIC$157,377 $151,367 
  APPCIC$2,543 $2,398 
As of the dates in the table above, the Insurance Entities each exceeded the minimum statutory capitalization requirement. The Insurance Entities also met the capitalization requirements of the other states in which they are licensed as of March 31, 2024.
The following table summarizes combined net income (loss) for the Insurance Entities determined in accordance with statutory accounting practices for the periods presented (in thousands):
Three Months Ended
March 31,
 20242023
Combined net income (loss) $(2,654)$(4,381)
18

The Insurance Entities each are required annually to comply with the NAIC risk-based capital (“RBC”) requirements. RBC requirements prescribe a method of measuring the amount of capital appropriate for an insurance company to support its overall business operations in light of its size and risk profile. NAIC RBC requirements are used by regulators to determine appropriate regulatory actions relating to insurers who show signs of a weak or deteriorating condition. As of March 31, 2024 and December 31, 2023, based on calculations using the appropriate NAIC RBC formula, the Insurance Entities each reported total adjusted capital in excess of the requirements.
The Insurance Entities are required by various state laws and regulations to maintain certain assets in depository accounts. The following table represents assets held by insurance regulators as of the dates presented (in thousands):
March 31, 2024December 31, 2023
Restricted cash and cash equivalents
      Florida
$1,800 $1,800 
     Georgia
35 35 
     North Carolina
800 800 
Total
$2,635 $2,635 
Investments
      Hawaii
$2,783 $2,762 
     Massachusetts
122 121 
     South Carolina
132 131 
     Virginia
316 315 
Total
$3,353 $3,329 
19

Note 6. Liability for Unpaid Losses and Loss Adjustment Expenses
Set forth in the following table is the change in liability for unpaid losses and LAE for the periods presented (in thousands):
Three Months Ended
March 31,
 20242023
Balance at beginning of period$510,117 $1,038,790 
Less: Reinsurance recoverable (183,435)(798,680)
Net balance at beginning of period326,682 240,110 
Incurred related to:  
Current year240,187 202,836 
Prior years 3,318 
Total incurred240,187 206,154 
Paid related to:  
Current year96,333 67,783 
Prior years141,943 178,020 
Total paid238,276 245,803 
Net balance at end of period328,593 200,461 
Plus: Reinsurance recoverable 101,036 669,946 
Balance at end of period$429,629 $870,407 
During the three months ended March 31, 2024, the liability for unpaid losses and loss adjustment expenses, prior to reinsurance, decreased by $80.5 million from $510.1 million as of December 31, 2023 to $429.6 million as of March 31, 2024. The decrease was principally the result of the settlement of Hurricane Ian claims, other prior hurricanes and claims arising in the current and prior accident years.
Prior year development includes changes in previous estimates for unpaid Losses and LAE for all events occurring in prior years including hurricanes, other weather, and non-weather claims affected by pre-reform market conditions in Florida, and in 2023 also included changes in prior estimates resulting from the evaluation of claims in anticipation of the commutation of Hurricane Irma losses with the FHCF. In recent years, the Company has strengthened reserves as a result of adverse development due to Florida homeowners, tenants and condo owners coverages arising from non-weather and weather events. Similar to other carriers operating in the Florida homeowners marketplace, the Company has experienced deterioration in non-weather claims, such as roof claims and other water damage claims, and hurricane claims due to an unfavorable claims environment characterized by increases in policyholder demands and significant attorney representation. In 2023, adverse development was due to represented and litigated claims, and Florida weather claims for accident years 2017 and later. One of management’s objectives in 2023 and continuing into 2024 is to strengthen reserves on those prior period claims, which do not benefit from the new legislation signed in late 2022 that eliminated the one-way attorneys’ fee statute and assignments of benefits, established a one-year post-loss reporting period and made other reforms intended to improve the Florida market.
Losses and LAE experience over the past several years including both the three months ended March 31, 2024 and twelve months ended December 31, 2023, reflects an adverse litigation environment and other market conditions in Florida that the Florida Legislature has been attempting to address with the passage of legislation spanning several years. The most significant changes were made during a special session held in December 2022. Although the market remains early in the implementation phase of the new laws and their ultimate effects will not be known for some time, the Company considered and included the anticipated effects of the enacted legislation on post-reform claims in developing its ultimate loss projections and reserve estimates as of March 31, 2024.
In addition to the actions taken by the Florida legislature, management has been taking actions to improve losses and LAE experience through several means including operational initiatives designed to improve the efficiency and effectiveness of the claims cycle and reduce the impact of litigation; implementing pricing adjustments to reflect the loss experience as well as inflation and the increasing cost of reinsurance; reducing exposures that disproportionately contribute to elevated claims costs and expenses; and securing efficient reinsurance programs to protect against catastrophes.
During the three months ended March 31, 2024, there was adverse prior years’ gross reserve development of $93.0 thousand, and no unfavorable development net of that ceded. During the three months ended March 31, 2023, there was adverse prior years’ reserve development of $5.4 million gross less $2.1 million ceded resulting in $3.3 million net unfavorable development. The direct and net prior years’ reserve development for the quarter ended March 31, 2023 was principally due to gross reserve development for Hurricane Sally.
20

Note 7. Long-term Debt
Long-term debt consists of the following as of the dates presented (in thousands):
March 31,December 31,
20242023
Surplus note$3,676 $4,044 
5.625% Senior unsecured notes
100,000 100,000 
Total principal amount103,676 104,044 
Less: unamortized debt issuance costs(1,861)(2,038)
Total long-term debt, net$101,815 $102,006 
Surplus Note
On November 9, 2006, UPCIC entered into a $25.0 million surplus note with the State Board of Administration of Florida (the “SBA”) under Florida’s Insurance Capital Build-Up Incentive Program (the “ICBUI”). The surplus note has a 20-year term and accrues interest, adjusted quarterly based on the 10-year Constant Maturity Treasury Index. The carrying amount of the surplus note is included in the statutory capital and surplus of UPCIC. UPCIC was in compliance with the terms of the surplus note as of March 31, 2024.
Senior Unsecured Notes
On November 23, 2021, the Company entered into Note Purchase Agreements with certain institutional accredited investors and qualified institutional buyers pursuant to which the Company issued and sold $100.0 million of 5.625% Senior Unsecured Notes due 2026 (the “Notes”). The Note Purchase Agreements contain certain customary representations, warranties and covenants made by the Company.
The Notes were offered and sold by the Company in a private placement transaction in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended. On March 24, 2022, the Registration Statement registering the exchange of Notes for registered Notes was declared effective by the Securities and Exchange Commission, and all of the Notes have since been exchanged for registered Notes with identical financial terms.
The Notes are senior unsecured debt obligations that bear interest at the rate of 5.625% per annum, payable semi-annually in arrears on May 30th and November 30th of each year, beginning on May 30, 2022. The Notes are subject to adjustment from time to time in the event of a downgrade or subsequent upgrade of the rating assigned to the Notes. The Notes mature on November 30, 2026 at which time the entire $100.0 million of principal is due and payable. At any time on or after November 30, 2023, the Company may redeem all or part of the Notes at redemption prices (expressed as percentages of the principal amount) equal to (i) 102.81250% for the twelve-month period beginning on November 30, 2023; (ii) 101.40625% for the twelve-month period beginning on November 30, 2024 and (iii) 100.0% at any time thereafter, plus accrued and unpaid interest up to, but not including the redemption date.
The indenture governing the Notes contains financial covenants, terms, events of default and related cure provisions that are customary in agreements used in connection with similar transactions. As of March 31, 2024, the Company was in compliance with all applicable covenants, including financial covenants.
The Notes are unsecured senior obligations of the Company, are not obligations of, and are not guaranteed by, any subsidiary of the Company. The Notes rank equally in right of payment to the Unsecured Revolving Loan described below.
Unsecured Revolving Loan
On June 30, 2023, the Company entered into a committed and unsecured $40.0 million revolving credit line with JP Morgan Chase Bank, N.A. This agreement succeeded the previous $37.5 million revolving credit line with J.P. Morgan Chase, N.A., entered into on October 31, 2022. As of March 31, 2024, the Company has not borrowed any amount under this revolving loan. The Company must pay an annual commitment of 0.50% of the unused portion of the commitment. Borrowings mature on June 29, 2024, 364 days after the inception date and carry an interest rate of prime rate plus a margin of 2%. The credit line is subject to annual renewals. The credit line contains customary financial and other covenants, with which the Company is in compliance.
21

Interest Expense
The following table provides interest expense related to long-term debt during the periods presented (in thousands):

Three Months Ended
March 31,
20242023
Interest Expense:
Surplus note
$39 $53 
5.625% Senior unsecured notes
1,406 1,406 
Non-cash expense (1)
177 177 
Total
$1,622 $1,636 
(1) Represents amortization of debt issuance costs.
22

Note 8. Stockholders’ Equity

From time to time, the Company’s Board of Directors may authorize share repurchase programs under which the Company may repurchase shares of the Company’s common stock in the open market. The following table presents repurchases of the Company’s common stock for the periods presented (in thousands, except total number of shares repurchased and per share data):
Total Number of SharesAverage
Repurchased During theAggregatePrice PerPlan
Dollar AmountThree Months Ended March 31,PurchaseShareCompleted or
Date AuthorizedExpiration Date
Authorized
20242023Price RepurchasedExpired
March 11, 2024March 11, 2026$20,000 288  $6 $20.42 
June 12, 2023June 10, 2025$20,000 207,722  $4,133 $19.90 March 2024

See the “Condensed Consolidated Statements of Stockholders’ Equity” for a roll-forward of treasury shares.

23

Note 9. Income Taxes
Deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax basis of assets and liabilities at the enacted tax rates. We review our deferred tax assets regularly for recoverability. As of March 31, 2024, we determined that we did not need a valuation allowance on our gross deferred tax assets. Although realization of the deferred tax assets is not assured, management believes that it is more likely than not the deferred tax assets will be realized based on our expectation that we will be able to fully utilize the deductions that are ultimately recognized for tax purposes.

For the three months ended March 31, 2024,there was no current reporting period activity recorded in the operating statement or the balance sheet related to uncertain tax positions.

The effective tax rate for the three months ended March 31, 2024 was 29.1% compared to 26.3% for the period ending March 31, 2023. The provision for income taxes differed from the statutory rate as follows:
Three Months Ended
March 31,
20242023
Expected provision at federal statutory tax rate21.0 %21.0 %
Increases (decrease) resulting from:
State income tax, net of federal tax benefit3.6 %2.3 %
Disallowed compensation1.3 %3.1 %
Equity compensation shortfall
3.3 % %
Nondeductible expenses0.1 %0.2 %
Dividend received deduction(0.2)%(0.3)%
Total income tax expense (benefit)29.1 %26.3 %

24

Note 10. Earnings (Loss) Per Share
Basic earnings (loss) per share (“EPS”) is computed based on the weighted average number of common shares outstanding for the period, excluding any dilutive common share equivalents. Diluted EPS reflects the potential dilution resulting from the impact of common shares issuable upon the exercise of stock options, non-vested performance share units, non-vested restricted stock units, non-vested restricted stock, and conversion of preferred stock. In loss periods, the impact of common shares issuable upon the exercises of stock options, non-vested performance share units, non-vested restricted stock units, non-vested restricted stock, and conversion of preferred stock are excluded from the calculation of diluted loss per share, as the inclusion of common shares issuable upon the exercise of stock options, non-vested performance share units, non-vested restricted stock units, non-vested restricted stocks, and conversion of preferred stock would have an anti-dilutive effect.
The following table reconciles the numerator (i.e., income) and denominator (i.e., shares) of the basic and diluted earnings (loss) per share computations for the periods presented (in thousands, except per share data):
Three Months Ended
March 31,
 20242023
Numerator for EPS:
Net income (loss)$33,657 $24,173 
Less: Preferred stock dividends(3)(3)
Income (loss) available to common stockholders$33,654 $24,170 
Denominator for EPS:  
Weighted average common shares outstanding28,869 30,382 
Plus: Assumed conversion of share-based compensation (1)510 219 
     Assumed conversion of preferred stock25 25 
Weighted average diluted common shares outstanding29,404 30,626 
Basic earnings (loss) per common share$1.17 $0.80 
Diluted earnings (loss) per common share$1.14 $0.79 
(1)
Represents the dilutive effect of common shares issuable upon the exercise of stock options, non-vested performance share units, non-vested restricted stock units and non-vested restricted stock.


25

Note 11. Other Comprehensive Income (Loss)
The following table provides the components of other comprehensive income (loss) on a pre-tax and after-tax basis for the periods presented (in thousands):

 Three Months Ended March 31,
 20242023
 Pre-taxTaxAfter-taxPre-taxTaxAfter-tax
Net changes related to available-for-sale securities:
Unrealized holding gains (losses) arising during the period$(3,442)$(848)$(2,594)$17,593 $4,330 $13,263 
Less: Reclassification adjustments for (gains) losses
 realized in net income (loss)
69 17 52 701 173