Universal Insurance Holdings, the Florida headquartered primary insurance carrier, believes that there are now signs of an improved claims and litigation environment in the state, after the enactment of the legislative property insurance reforms.
While Universal operates across 19 states, Florida remains ground-zero for its underwriting and so the carrier is well-positioned to see trends as they emerge.
In the last quarter, Universal actually grew its Florida portfolio slightly, although growth in other states did outpace that. However, any carrier expansion is positive for insurance in the Florida market at this time, especially when the state needs to shift more risk across to private carriers from its insurer of last resort Citizens.
Universal underwrote direct premiums of $547.1 million in the second-quarter of the year, up 2.7% from the prior year, at a net combined ratio of 99.1%, which is a 1.8 point improvement from the prior year quarter.
In fact, that’s the lowest combined ratio and the first sub-100 CR since Q1 of 2022 for Universal.
Stephen J. Donaghy, Chief Executive Officer commented on the results, “Results were solid, including a 25.3% annualized adjusted return on common equity and 85.1% adjusted diluted EPS growth year-over-year.”
However, it’s worth noting that the loss ratio had risen slightly in Q2, compared to a year ago, although this was down to higher unfavorable prior year reserve development.
But more notable are the comments on the general state of Florida’s property insurance market.
Donaghy said, “While it’s still early days, we’re encouraged by favorable claims and litigation trends that are beginning to emerge as a result of recent legislative reforms and give us optimism as we look forward to 2024 and beyond.
“We continue to benefit from rate-driven premium growth and an improving spread of risk across our geographic footprint.”
Growing with rate behind Universal, into an environment where the claims and litigation trend may prove favourable over-time, could buoy its results going forwards weather and tropical storm activity allowing.
On the reinsurance Donaghy commented, “I’m proud of the reinsurance program we put together for the 2023-2024 treaty year. Our program’s terms, conditions and coverage are consistent with the prior year, but we reduced our consolidated retention and ceded premium ratio.”
Increasingly there does seem to be some more positive commentary coming out of Florida about the property insurance claims and litigation environment, with increasingly positive statements that benefits of the reforms are already being seen.
Time will tell though and it could take years for the true impacts to be seen, while we’ll also need to see how the tail of claims form hurricane Ian runs through the market and how a future hurricane event develops, in terms of its claims, as well.