[Management View]
Universal Insurance reported strong performance in Q2 2025, with adjusted return on common equity at 29.4%, driven by favorable underwriting trends. Management emphasized disciplined underwriting and profitability-focused geographic expansion, particularly outside Florida, where premiums grew by 25.4%. The company remains committed to active capital management through share repurchases and dividend declarations.

[Outlook]
Management expressed optimism about the improving Florida market and continued geographic diversification. The reinsurance program costs remain stable despite last year’s storm activity, reflecting market improvements. The company plans to maintain disciplined underwriting and expand into profitable territories.

[Financial Performance]
Key metrics showed positive YoY trends:
- Adjusted diluted EPS: $1.23, up from $1.18.
- Core revenue: $400.9 million, up 5.7%.
- Direct premiums written: $596.7 million, up 3.2%.
- Direct premiums earned: $523.4 million, up 6.7%.
- Net premiums earned: $360.2 million, up 4.4%.
However, the net combined ratio increased to 97.8% (+1.9 points), driven by higher net loss and expense ratios.

[Q&A Highlights]
Question 1: Can you elaborate on the reinsurance seating changes and their drivers?
Answer: The quarter reflects earnings from multiple reinsurance programs. Last year’s Q2 included a legacy wrap program with no cost, while this year’s Q2 reflects the transition to a new program structure. The cost differences stem from these structural changes.

Question 2: Could you review the company’s capital position and share repurchase strategy?
Answer: Holding company capital is abundant. Share repurchases are conducted opportunistically when shares are perceived as undervalued, and this strategy will continue as appropriate.

Question 3: Is the competitive environment incrementally more challenging, particularly in Florida?
Answer: While there are more competitors in Florida, management does not see significant competitive pressure across the state. Decisions are guided by experience and profitability rather than competition. New territories in Florida have been opened, and the business brought in is viewed positively.

Question 4: Was there any prior development or claims handling benefits in the quarter?
Answer: Prior period development was negligible, with no material impact on results.

Question 5: Could you discuss the cost of the new reinsurance program as a percentage of direct earned premium?
Answer: The cost of the new program is not significantly different from the previous period, which is favorable given last year’s storm activity. This stability reflects improvements in the Florida market.

[Sentiment Analysis]
Analysts maintained a neutral to positive tone, focusing on reinsurance costs, competitive dynamics, and capital management. Management conveyed confidence in their strategy, emphasizing disciplined underwriting and geographic diversification.

[Quarterly Comparison]
| Metric | Q2 2025 | Q2 2024 | YoY Change |
|----------------------------|-----------------|-----------------|------------------|
| Adjusted Diluted EPS | $1.23 | $1.18 | +4.2% |
| Core Revenue | $400.9 million | $379.2 million | +5.7% |
| Direct Premiums Written | $596.7 million | $578.5 million | +3.2% |
| Direct Premiums Earned | $523.4 million | $490.7 million | +6.7% |
| Net Premiums Earned | $360.2 million | $344.9 million | +4.4% |
| Net Combined Ratio | 97.8% | 95.9% | +1.9 points |

[Risks and Concerns]
- Competitive pressures in Florida could intensify, potentially impacting profitability.
- Higher ceded premium ratios and policy acquisition costs may continue to weigh on expense ratios.
- Reinsurance costs could rise in future periods, especially following adverse weather events.

[Final Takeaway]
Universal Insurance delivered solid Q2 2025 results, supported by geographic diversification and disciplined underwriting. While competitive dynamics in Florida remain a watchpoint, management’s focus on profitability and capital management positions the company well for sustained growth. Stable reinsurance costs and improving market conditions further bolster the outlook.