Good day, ladies and gentlemen and thank you for standing by. Welcome to Universal Insurance Holdings Inc. UVE Third Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only-mode to prevent background noise. [Operator Instructions] We will have a question-and-answer session and as a reminder, this conference is being recorded. Now I would like to welcome and turn the call to the Vice President of Investor Relations, Mr. Dean Evans. Please go ahead.

Thank you, Carmen and good morning, everyone. Welcome to the third quarter 2017 earnings conference call for Universal Insurance Holdings Inc. My name is Dean Evans, I am the VP of Investor Relations here at Universal. With me in the room today are Chairman and Chief Executive Officer, Sean Downes; President and Chief Risk Officer, Jon Springer; and Chief Financial Officer, Frank Wilcox. Following Sean's opening remarks, Jon will provide an update on several important current topics and Frank will review financial results. The call will then be reopened for questions. Yesterday afternoon we issued our earnings release, which is available under the press release’s section of our website at www.universalinsurancehodlings.com. A replay of this presentation will be available on the homepage of our website until November 24, 2017. Before we begin, please note that this presentation may contain forward-looking statements about our business and financial results. Forward-looking statements reflect our current view of future events and are typically associated with words such as believe, expect and anticipate or similar expressions. We caution those listening, including investors, not to rely solely on forward-looking statements as they imply risks and uncertainties, some of which cannot be predicted or quantified and future results can differ materially from our expectations. We encourage you to carefully consider the risks described in our filings with the Securities and Exchange Commission, which are available on the SEC's website or SEC filing section of our website. We do not undertake any obligation to update or correct any forward-looking statements. With that, I would like to turn the presentation over to our Chairman and Chief Executive Officer, Sean Downes.

Thank you Dean, and thank you everyone for joining us today. As usual I will by providing some highlights from the quarter, we will then review our work initiatives and strategies. Jon will cover several important current topics and Frank will conclude by discussing financial results. With that let’s turn to our results for the quarter. We are pleased to have reported a positive net income in a quarter that included the most Hurricane to make [indiscernible] reported in the past decade Hurricane Irma. Hurricane Irma produced approximately 57,000 in claims. To-date, we are pleased to report that we've already closed more than 80% of them. This is a result, a direct testament to our outstanding claims infrastructure and more importantly our exceptional employees. This storm has also had a fundamental strength of our business model including the benefits of our vertically integrated structure, our conservative insurance program focused on maintaining high underwriting standards, our superior claims handling abilities and our catastrophe response team. We also reported excellent topline growth during the third quarter with a 10.3% increase in total revenues and 9.4% increase in net earned premiums. With direct return premium growth reaching double digits in both our Florida book and other state book. Overall, we reported net income of 10 million and diluted EPS of $0.28 for the third quarter of 2017, which equates to ROE of 9.2% for the quarter. Through the first nine months of 2017, we have generated 23% ROE. We build Universal in a conservative manner, so we’re withstanding events like Hurricane Irma. And as our third quarter results show this strategy is proving to be sound. Additionally, we believe we have positioned Universal well for the future by pursuing various organic growth avenues These include further growth in our own state of Florida,…

Thank you, Sean. I would like to start with some more color on our loss from Hurricane Irma and then talk a little bit about our reinsurance program. In total, our third quarter results included gross losses related to Hurricane Irma of 452 million, although the net impact on our financial results was held to 37 million due to our comprehensive reinsurance program. At UPCIC, we have taken a conservative approach and booked our initial loss pick for Irma at the top end of our pre-announced range of 350 to 450 million of gross losses. UPCIC will incur $35 million net retention loss for the event. In addition to the extent UPCIC experiences any additional reinsurance recoveries from its supplemental non-Florida reinsurance program, those recoveries would serve to further reduce its $35 million retention. At APPCIC, we also took a conservative approach and booked losses at the top end of our pre-announced range of 1 million to 2 million gross losses which will be entirely retained by APPCIC. To-date we have held over 57,000 reported claims with current paid loss, loss adjustment expense and case reserve of 285 million. At present 97% of these reported claims have been inspected and as Sean mentioned, over 80% are already closed. From a severity perspective, on the over 45,000 closed claims to date, we are averaging $3,740 of loss and loss adjustment expense per claim. These numbers include 21,000 claims that have been adjusted, reviewed and closed with no indemnity payment primarily due to the loss following below the policy. Turning now to our UPCIC reinsurance program. We are pleased to report that the program has responded planned as planned. As a reminder, our reinsurance is 100% placed traditionally with reinsurance partners that all carry an 8 or higher rating from A.M. Best.…

Thank you, John. For the third quarter of 2017, net income totaled 10 million, a decrease of 62.9% compared to 2016, primarily reflecting the impact of Hurricane Irma. Diluted EPS was $0.28 down from $0.75 for the third quarter of 2016 due to the decrease in net income. Despite a decline in net income and diluted EPS resulting from Hurricane Irma, we continue to experience topline growth with increases in every major category of revenue compared to the prior year’s quarter. Direct premiums earned of 254.8 million offset by senior premiums earned of 80.3 million generated 174.5 million of net earned premiums for the third quarter of 2017 compared to 159.5 million in the third quarter of ‘16. The increase was the result of organic growth from both Florida and other state growth initiatives. Ceded premiums earned as a percent of direct premiums earned was 31.5% during the third quarter of ’17 compared to 32% in a third quarter of ‘16. Commission revenue of 5.3 million for the quarter grew 15.2% compared to the same quarter in 2016, reflecting the differences in our reinsurance programs in effect during those periods, including an increase in our exposures covered by reinsurance. Policy fees of 4.9 million for the quarter grew 15% year-over-year from an increase in the number policies written during the third quarter of ’17 compared to the prior-year quarter. Other revenues were 1.7 million flat with the prior year’s quarter. This line item is comprised primarily of financing fees and charges, and despite high-single digit topline growth in the quarter, has remained relatively flat reflecting a shift in consumer behavior in our expansion outside of the Florida market which tends to produce a higher level of financing fees and charges than our other state’s portfolio. Net investment income for the…

[Operator Instructions] And our first question is from Anthony To with KBW.

Looking forward, can you give us additional color about what you're seeing in the reinsurance market and what you're thinking about in terms of rate increases for 2018?

Sure. Thanks, Anthony. This is Jon. I'll take the reinsurance part. Obviously, reinsurers have incurred significant losses when you factor in, not only hurricane Irma that we've been talking about, but also hurricanes Harvey and Maria. There still is a considerable amount of time before we get to the negotiation of reinsurance for next June 1. We would of course expect that reinsurers would attempt to increase prices on loss affected layers, but very importantly, as I said in my opening remarks, nearly 60% of the capacity in those layers for us already has pricing levels fixed at 2017 or prior. And in fact, overall, only 32% of our reinsurance spend is up for pricing changes. So we'll see how things play out here in the coming weeks and months in terms of reinsurance, but we feel like we've insulated ourselves quite well. I'll turn it to Sean to talk about the rate filing.

As far as the primary rates and how we envision that going forward, getting back to what Jon said, it's a little too early right now to determine. We think there will be some hardening in the market and of course that will translate to primary rates at a later time, but I think it is a little too early right now to try to quantify what that number would be.

And I guess getting into the company specifics, does the additional Florida written premiums in 3Q result in a higher loss ratio in 4Q, since you’ve kept policies that would have otherwise non renewed? And I guess in that same respect, how should we think about Florida homeowners growth in 4Q?

Yeah. Well, that's a two-fold question. Number one, I think the growth that we saw in quarter three was number one, because as I mentioned earlier, the trajectory of our universal direct platform, we’re starting to gain some ground there and just getting better at it actually. Number two, I think because of these storms that were swirling around during quarter three, I think you saw a lot more people who were buying insurance who didn't have it before. Those would be the two key drivers that I think of our -- that would directly relate to our growth in Q3. And the second part of your question is how that would relate to our loss ratio going forward. I don't think that would impact that at all. And as far as our growth in the fourth quarter, you may have some of the policies that did come on for the secondary reason I mentioned, people seeking to have insurance who normally didn't have it fall off a little bit in the fourth quarter, but I don't think to an extent that would be anything drastic.

In terms of losses excluding cats compared to the last year, can we get a breakdown of how much of that was relating to the higher loss picks that you’ve put on for your non-Florida book? And then I guess can you elaborate on the drivers of the remainder of the year-over-year increase?

Yeah. So going forward, we expect that our underlying non-cat loss ratio will remain at 30.8 on a gross basis and this covers both the adjustments that covers weather activity about what we have been putting at plan, in addition to the strength that we’ve seen lately on assignment benefits. So I would look at 30.8 going forward.

Okay. And it looks like you have about 366 million in cash. I guess post storms, is there any impact to how you're kind of thinking about your capital initiatives?

No. We’re constantly evaluating our capital needs. Obviously, we mentioned that we’ve -- the board just recently approved another share buyback. We have a small amount left on the first one that we will go ahead and close out here very shortly. And then as it relates to the capital needs of the company, the board and ourselves are constantly evaluating that determining dividends, determining buybacks. So we'll continue that process.

Okay. And any update on your 2017 Florida rate filings?

Yeah. As I mentioned earlier, we filed for 3.4% rate increase, but due to the emergency order, we will not hear anything back into at least December 4 when that emergency order expires. But in the dialog that we have had with the folks at the OAR, we remain confident that our rate will be approved and hopefully for new business in December and then renewal in January.

And lastly, I guess there's some discussion around the possibility of the risk of late notice of claims. Can you provide any thoughts on that?

Late notice of claims as it relates to Irma?

Yeah.

No. There’s nothing that we have seen. Obviously, we are vetting every claim that comes in the door, making sure that it is a traditional non-cat claim as of now compared to a catastrophe claim. That’s something that we do routinely. Obviously, we're matching these losses up to determine when we think the data loss was. So as far as late reported claims are concerned, you're going to have that as it relates to the loss assessment portion of the policy, but from a regular claim, we're vetting all those to make sure that they are traditional cat claims and not non-cat claims.

[Operator Instructions] And our next question is from Samir Khare with Capital Returns.

Just for the rate increase you guys have pending, curious if it makes sense to withdraw and reapply, just to reflect any experience that you guys have had since initially applying for it?

Yeah. I don't think that makes sense for us to do that right now, Samir. I mean obviously, you know the work that goes into doing -- getting the rate increases and going through the whole process. So I think right now, if our rate increase of 3.4% is in fact approved as we believe it will be, it makes sense to go ahead to receive that rate increase now and then to reassess later on after reinsurance pricing is set. Again though, I don't think that this is going to be a large of an issue as some other folks have stated in their calls. Like I said, we purchase a lot of our reinsurance multi-year specifically in those layers where Irma was applicable. So I don't – again right now, it's too early to determine what we think that rate increase could be directly attributed to reinsurance costs, but no, we won't withdraw this rate filing

Okay. And it sounds like you would only be able to reflect the increase in reinsurance cost, you wouldn’t be able to necessarily reflect I guess experience that reflects heightened cat losses below your retention.

Well, to the extent that they were not already incorporated, but a portion of that is really incorporated into rate filings, we had expected loss. So yes, there would be some ability to recuperate, but it's not a straight line item.

And then I was little surprised to hear that you had some insurers come by a way of the hurricanes rolling around and they sought coverage from you. Just generally, when there is a hurricane in the Atlantic, at what point do you stop writing your business.

It's additional box that most companies use when it reaches a certain parallel. Obviously, we, at that point, obviously shut down and close down depending on where the storm is going to be affecting a specific area. So that's something that we've always done and most companies do. The department does, et cetera. So we follow that logic. But I think because there were so many storms coming around during that timeframe, I think you saw some folks who maybe self-insured themselves who were looking to go ahead to get some relief in the event that a storm was going to make landfall where they reside and get some insurance. Again, that's one piece as I said before. The other piece I believe is the trajectory that we're seeing in a positive manner as it relates to Universal direct.

Okay. And you may have covered this before, how many policies do you guys have in Universal direct now?

We’re in excess of 7000 policies right now for approximately 8.6 million in premium.

And during Irma, can you just talk about the environment and the competition for adjusters and how the resulting loss of adjusting expense in proportion to total losses compares to previous terms.

Yes. [indiscernible] this is a direct result of obviously the other hurricanes that were taking place prior to specifically one in Texas and then the one afterwards in Puerto Rico. But the demand for adjusters was significant. One thing that separates us from a lot of our competitors is that our ability that we have such a large claims path, if we were to utilize a lot of our internal folks to handle work claims. As I said earlier, we closed over 80% of our claims. We have expected every claim that has come in uptil this weekend, last weekend. And so bottom line is there definitely was an increase in demand for adjuster. There is lot of money being thrown at adjustment companies and individual adjusters to get them on board, specifically for just the adjusters, but that’s kind of something that we prepare for on a consistent basis and have done so for many years. So I think that experience led us to be ahead of the curve if you will.

Samir, I just like to add I mentioned in my opening remarks that on a closed claims, we’re averaging $3740. So we’re making every effort to try to keep the severity of those claims down as low as possible.

Okay. And any losses that we would expect from Tropical Storm, Philippe.

Nothing minimal. We've received a few, but nothing that’s worth talking about.

Okay. And in terms of new markets, would you consider Puerto Rico as a potential market to enter?

Not at this time.

Okay. And just your stat surplus and holdco cash at 9/30?

Statutory surplus at the end of 9/30 was 336 million. On an interim basis, we don't disclose cash held at the holdco. We will be publishing financial statements at the end of the year that will appear in our 10-K filing including cash balance.

Okay. And do you feel that there is a need to put some cash in to the insurance subsidiaries?

No. Not at this time.

Thank you. And ladies and gentlemen, this concludes our Q&A. I will turn the call back to Mr. Sean Downes for his final remarks.

As always in closing, I would personally like to thank all of our shareholders, employees, board of directors, policy holders and my management team for their hard work and loyalty to Universal. This concludes the call. Thank you.

And ladies and gentlemen, with that, we close the conference. Thank you for dialing. You may all disconnect. Have a wonderful day.