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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 September 30, 2023

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: 29,185,808 shares of common stock, par value $0.01 per share, outstanding on October 24, 2023.




UNIVERSAL INSURANCE HOLDINGS, INC.
TABLE OF CONTENTS
Page No.
Item 5.
Other Information
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 September 30, 2023 and the related condensed consolidated statements of income, comprehensive income, and stockholders’ equity for the three-month and nine-month periods ended September 30, 2023 and 2022 and the related condensed consolidated statement of cash flows for the nine-month periods ended September 30, 2023 and 2022. 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, 2022 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, 2023. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2022, 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 statements 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
October 30, 2023

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
September 30,December 31,
20232022
ASSETS
Available-for-sale debt securities, at fair value, net of allowance for credit loss of $683 and $920 (amortized cost: $1,173,967 and $1,152,852)
$1,031,558 $1,014,626 
Equity securities, at fair value (cost: $92,554 and $102,431)
76,995 85,469 
Investment real estate, net5,572 5,711 
Total invested assets1,114,125 1,105,806 
Cash and cash equivalents343,532 388,706 
Restricted cash and cash equivalents69,488 2,635 
Prepaid reinsurance premiums379,501 282,427 
Reinsurance recoverable322,986 808,850 
Premiums receivable, net88,536 69,574 
Property and equipment, net48,729 51,404 
Deferred policy acquisition costs114,590 103,654 
Income taxes recoverable2,026 1,528 
Deferred income tax asset, net49,326 57,258 
Other assets26,016 18,312 
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 premiums1,040,067 943,854 
Advance premium76,030 54,964 
Book overdraft12,208  
Reinsurance payable, net388,294 384,504 
Commission payable22,751 18,541 
Other liabilities and accrued expenses64,800 58,836 
Long-term debt, net102,196 102,769 
Total liabilities2,257,353 2,602,258 
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
473 472 
Authorized shares - 55,000
Issued shares - 47,266 and 47,179
Outstanding shares - 29,186 and 30,389
Treasury shares, at cost - 18,080 and 16,790
(257,143)(238,758)
Additional paid-in capital115,922 112,509 
Accumulated other comprehensive income (loss), net of taxes(107,115)(103,782)
Retained earnings549,365 517,455 
Total stockholders’ equity301,502 287,896 
Total liabilities and stockholders’ equity$2,558,855 $2,890,154 

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
September 30,
Nine Months Ended
September 30,
2023202220232022
REVENUES
Direct premiums written$531,988 $500,677 $1,489,216 $1,429,685 
Change in unearned premium(57,677)(48,227)(96,213)(133,827)
Direct premium earned474,311 452,450 1,393,003 1,295,858 
Ceded premium earned(143,271)(161,819)(476,465)(459,102)
Premiums earned, net331,040 290,631 916,538 836,756 
Net investment income12,755 6,074 34,735 15,337 
Net realized gains (losses) on investments(431)292 (337)(375)
Net change in unrealized gains (losses) of equity securities(1,285)(4,150)1,403 (16,430)
Commission revenue10,830 12,592 43,098 35,157 
Policy fees5,111 5,272 14,662 15,991 
Other revenue2,028 2,099 6,027 5,862 
Total revenues360,048 312,810 1,016,126 892,298 
OPERATING COSTS AND EXPENSES
Losses and loss adjustment expenses287,972 330,444 717,853 715,854 
General and administrative expenses78,322 73,973 230,924 231,561 
Total operating costs and expenses366,294 404,417 948,777 947,415 
Interest and amortization of debt issuance costs1,631 1,630 4,896 4,969 
INCOME (LOSS) BEFORE INCOME TAXES(7,877)(93,237)62,453 (60,086)
Income tax expense (benefit)(1,962)(20,962)15,629 (12,718)
NET INCOME (LOSS)$(5,915)$(72,275)$46,824 $(47,368)
Basic earnings (loss) per common share$(0.20)$(2.36)$1.56 $(1.54)
Weighted average common shares outstanding - Basic29,617 30,604 30,087 30,858 
Diluted earnings (loss) per common share$(0.20)$(2.36)$1.54 $(1.54)
Weighted average common shares outstanding - Diluted29,617 30,604 30,378 30,858 
Cash dividend declared per common share$0.16 $0.16 $0.48 $0.48 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023202220232022
Net income (loss)$(5,915)$(72,275)$46,824 $(47,368)
Other comprehensive income (loss), net of taxes(11,258)(27,531)(3,333)(100,097)
Comprehensive income (loss)$(17,173)$(99,806)$43,491 $(147,465)
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 AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022 (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, 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)
Share-based compensation— — — — — 1,230 — — — 1,230 
Net income (loss)— — — — — — 24,173 — — 24,173 
Other comprehensive income (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 
Grants of restricted stock awards— 36 — 1 — (1)— — —  
Purchases of treasury stock(396)— — — — — — — (6,088)(6,088)
Share-based compensation— — — — — 1,261 — — — 1,261 
Net income (loss)— — — — — — 28,566 — — 28,566 
Other comprehensive income (loss), net of taxes— — — — — — — (5,866)— (5,866)
Declaration of dividends
($0.16 per common share and
$0.25 per preferred share)
— — — — — — (5,007)— — (5,007)
Balance, June 30, 2023(17,186)47,266 10 473  114,685 560,217 (95,857)(244,846)334,672 
Purchases of treasury stock(894)— — — — — — — (12,297)(12,297)
Share-based compensation— — — — — 1,237 — — — 1,237 
Net income (loss)— — — — — — (5,915)— — (5,915)
Other comprehensive loss, net of taxes— — — — — — — (11,258)— (11,258)
Declaration of dividends
($0.16 per common share and
$0.25 per preferred share)
— — — — — — (4,937)— — (4,937)
Balance, September 30, 2023(18,080)47,266 10 $473 $ $115,922 $549,365 $(107,115)$(257,143)$301,502 
(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.
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, 2021(15,797)47,018 10 $470 $ $108,202 $563,713 $(15,568)$(227,115)$429,702 
Vesting of performance share units(9)
(1)
33 — 1 — (1)— — (104)(104)
Vesting of restricted stock units(6)
(1)
27 — — — — — — (105)(105)
Retirement of treasury shares15 
(1)
(15)— — — (209)— — 209  
Purchases of treasury stock(320)— — — — — — — (3,879)(3,879)
Share-based compensation— — — — — 1,107 — — — 1,107 
Net income (loss)— — — — — — 17,537 — — 17,537 
Other comprehensive income (loss), net of taxes— — — — — — — (42,910)— (42,910)
Declaration of dividends
($0.16 per common share and
$0.25 per preferred share)
— — — — — — (5,007)— — (5,007)
Balance, March 31, 2022(16,117)47,063 10 471  109,099 576,243 (58,478)(230,994)396,341 
Grants of restricted stock awards— 53 — — — — — — —  
Purchases of treasury stock(283)— — — — — — — (3,502)(3,502)
Share-based compensation— — — — — 990 — — — 990 
Net income (loss)— — — — — — 7,370 — — 7,370 
Other comprehensive income (loss), net of taxes— — — — — — — (29,656)— (29,656)
Declaration of dividends
($0.16 per common share and
$0.25 per preferred share)
— — — — — — (4,992)— — (4,992)
Balance, June 30, 2022(16,400)47,116 10 471  110,089 578,621 (88,134)(234,496)366,551 
Purchases of treasury stock(203)— — — — — — — (2,419)(2,419)
Share-based compensation— — — — — 1,308 — — — 1,308 
Net income— — — — — — (72,275)— — (72,275)
Other comprehensive loss, net of taxes— — — — — — — (27,531)— (27,531)
Declaration of dividends
($0.16 per common share and
$0.25 per preferred share)
— — — — — — (4,997)— — (4,997)
Balance, September 30, 2022(16,603)47,116 10 $471 $ $111,397 $501,349 $(115,665)$(236,915)$260,637 
(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)
Nine Months Ended
September 30,
20232022
Cash flows from operating activities:
Net cash provided by (used in) operating activities$70,631 $223,157 
Cash flows from investing activities:
Proceeds from sale of property and equipment34 65 
Purchases of property and equipment(2,869)(4,388)
Purchases of equity securities(32,558)(67,733)
Purchases of available-for-sale debt securities(103,560)(178,788)
Proceeds from sales of equity securities42,830 26,667 
Proceeds from sales of available-for-sale debt securities3,985 24,855 
Maturities of available-for-sale debt securities77,676 59,291 
Net cash provided by (used in) investing activities(14,462)(140,031)
Cash flows from financing activities:
Debt issuance costs paid (131)
Preferred stock dividend(8)(8)
Common stock dividend(14,679)(14,880)
Purchase of treasury stock(18,385)(9,800)
Payments related to tax withholding for share-based compensation(314)(209)
Repayment of debt(1,104)(1,103)
Net cash provided by (used in) financing activities(34,490)(26,131)
Cash and cash equivalents and restricted cash and cash equivalents:
Net increase (decrease) during the period21,679 56,995 
Balance, beginning of period391,341 253,143 
Balance, end of period$413,020 $310,138 
The following table summarizes our cash and cash equivalents and restricted cash and cash equivalents within the Condensed Consolidated Balance Sheets (in thousands):
As of
 September 30,December 31,
20232022
Cash and cash equivalents$343,532 $388,706 
Restricted cash and cash equivalents (1)69,488 2,635 
Total cash and cash equivalents and restricted cash and cash equivalents$413,020 $391,341 
(1)See “—Note 5 (Insurance Operations)” for a discussion of the nature of the restrictions for restricted cash and cash equivalents and "—Note 14
(Variable Interest Entities)” for a discussion of restricted cash held in a trust account.


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)
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 19 states as of September 30, 2023, 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 invested 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 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 are reimbursed for these fees on claims that are subject to recovery under the Insurance Entities’ respective reinsurance programs. These fees, after expenses, are recorded in the Condensed Consolidated Financial Statements as an adjustment to losses and loss adjustment expense (“LAE”).
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, 2022, filed with the SEC on February 28, 2023. The Condensed Consolidated Balance Sheet at December 31, 2022 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

2. Significant Accounting Policies
The Company reported Significant Accounting Policies in its Annual Report on Form 10-K for the year ended December 31, 2022. There are no new or revised disclosures required on a quarterly basis.

10

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):
September 30, 2023
Amortized
Cost
Allowance for Expected Credit LossesGross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
Debt Securities:
  U.S. government obligations and agencies$25,950 $ $ $(1,193)$24,757 
  Corporate bonds791,691 (537)37 (91,834)699,357 
  Mortgage-backed and asset-backed securities328,327  15 (44,571)283,771 
  Municipal bonds17,139 (4) (2,422)14,713 
  Redeemable preferred stock10,860 (142) (1,758)8,960 
Total$1,173,967 $(683)$52 $(141,778)$1,031,558 
December 31, 2022
Amortized
Cost
Allowance for Expected Credit LossesGross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
Debt Securities:
  U.S. government obligations and agencies$12,602 $ $ $(938)$11,664 
  Corporate bonds788,737 (729)130 (93,077)695,061 
  Mortgage-backed and asset-backed securities327,166  148 (39,707)287,607 
  Municipal bonds14,924 (2) (2,551)12,371 
  Redeemable preferred stock9,423 (189) (1,311)7,923 
Total$1,152,852 $(920)$278 $(137,584)$1,014,626 
The following table provides the credit quality of available-for-sale debt securities with contractual maturities as of the dates presented (dollars in thousands):
September 30, 2023December 31, 2022
Average Credit RatingsFair Value% of Total
 Fair Value
Fair Value% of Total
 Fair Value
AAA$312,769 30.3 %$297,475 29.3 %
AA130,994 12.7 %154,975 15.3 %
A346,486 33.6 %327,427 32.3 %
BBB240,563 23.3 %232,316 22.9 %
No Rating Available746 0.1 %2,433 0.2 %
   Total$1,031,558 100.0 %$1,014,626 100.0 %
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):
September 30, 2023December 31, 2022
Amortized
Cost
Fair ValueAmortized
Cost
Fair Value
Mortgage-backed securities:
Agency$164,291 $135,263 $157,672 $133,928 
Non-agency63,960 53,119 60,328 50,478 
Asset-backed securities:
Auto loan receivables54,287 52,588 62,128 59,370 
Credit card receivables1,657 1,614 657 612 
Other receivables44,132 41,187 46,381 43,219 
Total$328,327 $283,771 $327,166 $287,607 
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):
September 30, 2023
Less Than 12 Months12 Months or Longer
Number of
Issues
Fair ValueUnrealized
Losses
Number of
Issues
Fair ValueUnrealized
Losses
Debt Securities:
U.S. government obligations and agencies8 $20,094 $(457)5 $6,645 $(734)
Corporate bonds17 6,768 (47)296 362,421 (52,225)
Mortgage-backed and asset-backed securities38 60,995 (1,813)186 220,254 (42,762)
Municipal bonds3 1,414 (30)3 6,756 (1,323)
Redeemable preferred stock2 784 (74)4 1,102 (235)
Total68 $90,055 $(2,421)494 $597,178 $(97,279)

December 31, 2022
Less Than 12 Months12 Months or Longer
Number of
Issues
Fair ValueUnrealized
Losses
Number of
Issues
Fair ValueUnrealized
Losses
Debt Securities:
U.S. government obligations and agencies2 $2,721 $(110)5 $8,943 $(828)
Corporate bonds40 26,563 (2,910)247 325,992 (46,451)
Mortgage-backed and asset-backed securities64 52,751 (2,974)146 219,189 (36,733)
Municipal bonds   3 6,621 (1,458)
Redeemable preferred stock1 95 (51)   
Total107 $82,130 $(6,045)401 $560,745 $(85,470)
Unrealized losses on available-for-sale debt securities in the above table as of September 30, 2023 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, 2021$371 $1 $117 $489 
Provision for (or reversal of) credit loss expense358 1 72 431 
Balance, December 31, 2022729 2 189 920 
Provision for (or reversal of) credit loss expense(192)2 (47)(237)
Balance, September 30, 2023
$537 $4 $142 $683 
For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or is more likely than not, that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For available-for-sale debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by rating agencies, market sentiment and trends and adverse conditions specifically related to the security, among other quantitative and qualitative factors utilized for establishing an estimate for credit losses. If the assessment indicates that a credit loss exists, the present values of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.
Changes in the allowance for credit losses are recorded as a provision for (or reversal of) credit loss expense and are reported in general and administrative expenses in the Condensed Consolidated Statements of Income. Losses are charged against the allowance when management believes an available-for-sale debt security is confirmed as uncollected or when either of the criteria regarding intent or requirement to sell is met.
The following table presents the amortized cost and fair value of investments with maturities as of the date presented (in thousands):
September 30, 2023
Amortized CostFair Value
Due in one year or less$110,000 $107,919 
Due after one year through five years593,152 539,398 
Due after five years through ten years434,732 356,024 
Due after ten years32,281 25,091 
Perpetual maturity securities3,802 3,126 
Total$1,173,967 $1,031,558 
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, which 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
September 30,
Nine Months Ended
September 30,
2023202220232022
Proceeds from sales and maturities (fair value):
  Available-for-sale debt securities $34,934 $30,929 $81,661 $84,146 
  Equity securities$5,597 $8,975 $42,830 $26,667 
Gross realized gains on sale of securities:
  Available-for-sale debt securities $29 $ $34 $242 
  Equity securities$18 $571 $1,570 $1,119 
Gross realized losses on sale of securities:
  Available-for-sale debt securities$(39)$(210)$(766)$(1,665)
  Equity securities $(439)$(69)$(1,175)$(71)
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
September 30,
Nine Months Ended
September 30,
2023202220232022
Available-for-sale debt securities$6,325 $4,847 $18,122 $13,791 
Equity securities953 740 2,874 1,965 
Cash and cash equivalents (1)5,961 1,069 15,113 1,324 
Other (2)127 122 395 371 
  Total investment income13,366 6,778 36,504 17,451 
Less: Investment expenses (3)(611)(704)(1,769)(2,114)
  Net investment income$12,755 $6,074 $34,735 $15,337 
(1)
Includes interest earned on restricted cash and cash equivalents.
(2)
Includes investment income earned on real estate investments.
(3)
Includes custodial fees, investment accounting and advisory fees, and expenses associated with real estate investments.
Equity Securities
The following table provides the unrealized gains and losses recognized for the periods presented on equity securities still held at the end of the reported period (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023202220232022
Unrealized gains (losses) recognized during the reported period on equity securities still held at the end of the reported period$(1,129)$(4,150)$(831)$(16,387)
14

Investment Real Estate
Investment real estate consisted of the following as of the dates presented (in thousands):
September 30,December 31,
20232022
Income Producing:
Investment real estate$7,097 $7,097 
Less: Accumulated depreciation(1,525)(1,386)
Investment real estate, net$5,572 $5,711 
The following table provides the depreciation expense related to investment real estate for the periods presented (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
 2023202220232022
Depreciation expense on investment real estate$46 $46 $139 $139 



15

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 September 30, 2023Due from as of
ReinsurerAM Best
Company
Standard
and Poor’s
Rating
Services, Inc.
Moody’s
Investors Service, Inc.
September 30, 2023December 31, 2022
Florida Hurricane Catastrophe Fund “FHCF” (1)n/an/an/a$62,095 $134,411 
Various Lloyd’s of London Syndicates (2)AA+n/a34,367 101,482 
DaVinci Reinsurance Ltd.AA+A328,586 48,115 
Renaissance Reinsurance Ltd.A+A+