Good day, ladies and gentlemen, and welcome to UVE First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only-mode. Later, we will conduct a question-and-answer session and instruction will follow at that time. [Operator Instructions] As a reminder, today’s conference is being recorded. I would now like to introduce your host for today’s conference Mr. Dean Evans, VP of Investor Relations. Sir, please go ahead.

Thank you, Michael, and good morning everyone. Welcome to the first quarter 2018 earnings conference call for Universal Insurance Holdings, Inc. My name is Dean Evans and I’m the Vice President 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 press 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 May 9, 2018. 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 begin by providing some highlights from the quarter and we will then review our growth initiatives and strategy. Jon will cover several important current topics and Frank will conclude by discussing financing results. We’re pleased with our results for the first quarter. Overall, we reported net income of 40.1 million and diluted EPS of $1.12 for the first quarter of 2018, which equates to an annualized ROE of 34.6% for the quarter. We reported excellent top line growth in the first quarter with 10% growth in direct premiums written including 7.2% growth within Florida and 32.7% growth in other states. Our underwriting profitability was strong, with a 76.5% combined ratio for the quarter. The current year's quarter includes no weather losses beyond plan at a negligible reserve change, and we highlight just because we have taken a conservative approach to our underlying loss pick in light of the increased level of catastrophic activity in recent years, coupled with the impact of current market conditions in Florida, most notably related to the [indiscernible] assignment of veterans claim. Our service company subsidiaries continue to produce benefits in the aftermath of Hurricane Irma, as both Universal Adjusting Corporation and Blue Atlantic Reinsurance Corporation contributed positively to the first quarter results. Lastly, as Frank will discuss in more detail later in the call, our effective tax rate for the quarter benefited from the federal tax reform that was passed in late 2017, which had a meaningful positive impact on net income for the quarter. I like to briefly discuss our growth outlook heading forward. We believe we have positioned Universal well for the future by pursuing various organic growth avenues, which have resulted in a more stable, diversified and…

Thank you, Sean. I would like to first start with an update on Hurricane Irma and then discuss the current reinsurance environment as we're soon approaching our [Technical Difficulty] renewals. By way of background on October 10th roughly one month after landfall, we released a public estimate of 350 million to 450 million in gross losses from Hurricane Irma. We are now 7.5 months removed from when the storm first made landfall in Florida and our information on the event continues to evolve on a daily basis. More importantly, as we advised previously given our reinsurance tower extends to 2.8 billion for UPCIC Hurricane Irma is a retention event. As we advised last quarter, the manner in which our reinsurance program responded, reduced UPCIC is retention for this event to 27.2 million none of that has changed. However, at this time, following a comprehensive review of the event over the past few weeks, we are advising that we are prospectively increasing our estimate of gross losses relating to Hurricane Irma by 50 million. Again to confirm, this change in gross loss estimates will have absolutely no impact on the financials of UPCIC. Our comprehensive reinsurance program performed as it was designed and will continue to limit total net loss and LEA from Hurricane Irma to the 27.2 million for UPCIC and the 2 million for APPCIC, which is below the combined retention of 37 million for both of our insurance subsidiaries due to additional recoveries received from our UPCIC other states reinsurance program. This change in gross loss estimate comes primarily due to the continuation of reported claims. We had 10,173 new claims reported during the first quarter of 2018 and an additional 2,300 in the first three weeks of April, bringing our total claim count to-date to 76,283. We…

Thank you, Jon. For the first quarter of 2018, net income totaled 40.1 million, an increase of 28.4%, compared to the first quarter of '17. Diluted EPS was it was a $1.12, up from $0.86 for the first quarter of 2017. We reported strong total revenue growth of 9.5% for the quarter, driven by growth in premium volume, the statewide rate increase of 3.4% in Florida, net investment income, commission revenue, policy fees and other revenue. Direct premiums earned grew 11% to 262.3 million offset by ceded premiums earned of 79.7 million leading to growth in net earned premiums of 13% to 182.6 million. Ceded premiums earned as a percent of direct premiums earned was 30.4% during the first quarter of 2018, compared to 31.7% in the first quarter of '17. Commission revenue, policy fees and other revenue each posted solid growth versus the prior year's quarter, included within commission revenue was 600,000 of fee income related to the reinstatement commissions received by Blue Atlantic during the first quarter of 2018. We generated a net combined ratio of 76.5% in the first quarter of '18 compared to 78.9% in the first quarter of '17. The net loss in LAE ratio improved to 41.6% from 43.7% in the prior year's quarter. First quarter 2018 includes no impact from weather events above plan, compared to 3 million or 1.9 percentage points of weather losses above plan in the first quarter of 2017. Prior accident year reserve movements were negligible in both the current and prior year's quarters. The first quarter 18 loss adjustment expenses included the benefit of 10.4 million or 5.7 percentage points from additional revenues earned by Universal Adjusting Corporation related to Hurricane Irma. Our underlying loss and LAE ratio increase compared to the prior year, reflecting continued geographic expansion…

[Operator Instructions] Our first question comes from Arash Soleimani with KBW. Your line is now open. Please go ahead.

Just first question was. In terms of the growth it's been pretty strong the premium growth. Is this kind of like 10% level sustainable or should we think of it as more kind mid upper, mid single digits?

Arash, this is Sean. Because of our geographic expansion and our loyal agency force that continues to expand and Universal Direct, I think you should look at as a bracket basically between 7% and 10% going forward that is definitely attainable.

Okay with the -- is commercial residential some of your kind of keeping an eye on, but not really focusing on growing in the near-term because of the rate environment there?

Exactly, I mean we’re definitely putting some business on, but the current rate environment we just don't believe is adequate at this time, and we’re not in the business of chasing premium but we are set and ready to go in case there is a disruption in the marketplace. But at this time, I just don’t think the environment is adequate enough for us to be putting our business.

I don’t know but if Jon has mentioned this, but what are you seeing, I know there are only certain layers you have that are coming up for renewal the others are on the multiyear basis, but what's the I guess pricing environment for layers that were actually hit by losses?

Yes, as I mentioned, Arash in my opening remarks, given that we are literally right in the middle of the process. I don't think it's appropriate for us to comment on specific layers pricing that sort of thing. I made a general comment relative to where our overall reinsurance spent will end up relative to last year, but we’re not going to talk about specific layers.

Okay that’s fair. And then in terms of subrogation, what do you say you've reached the point with subrogation where you're sort of what I guess like a fair run rate going forward as you think there's kind of improvement we had in that in your subrogation operation?

Subrogation unit continues to improve because of the hard work of our employees and the material investments we made over the last three or four years in that space. I think it's little too early to determine basically with the critical math level is and where we would be bottoming out as far as picking a percentage. We are continuing to improve going forward and I believe that we will continue specifically over the next year to two.

And our next question comes from the line of Samir Khare with Capital Returns. Your line is open please go ahead. Samir, your line could be muted.

Just a quick question about Universal Direct. What was the premium volume you guys actually wrote in this quarter? And what was the amount of premium you guys booked Q4 as well?

I believe it's approximately 2 million in Q1 and a little bit under that in Q4 off the top my head Samir.

And then recognizing that there was a benefit in this quarter on the tax rate, what’s the good tax rate you use going forward?

Samir, this is Frank. Good morning. Excluding discrete items, I put a range on the effective -- the underlying effective tax rate between 25% to 27%.

And then any anticipation of more income from adjusting Irma claims coming in Q2?

There will be some but not as great as Q1. Obviously, we're seeing a reduction in the claims that were receiving currently right now. So I would expect anything such as will be put up in Q1.

And the claims that are coming in Q1 and Q2, is there any reason you think that these claims --claims came in much later? I’m just trying to better understand, if there is a different complexion to them say, higher severity if the more complex or if there's higher attorney involvement with notice of loss?

Well, first and foremost you have obviously transient folks in Florida that have two different dwellings little about north et cetera. So sometimes you get situation where folks come down. I realize it had a loss turn it that, that causes the delay. Also some of the AOB situation has to do with it where an individual insured would have had their claims handled and been below deductible. And because of some certain situations that the public adjusters or attorneys et cetera have marketing people then sign up with these folks and the claim would reopen. Our reopen rate is running significantly lower than everybody else approximately right around 14%. So, I could really give you a definite answer, but I think it is a blending of those two situations.

Okay and that 14% number that you excluded, is that -- does that include reopen claims for local supplemental payments or just kind of more of the traditional reopen claims because of adjusters whatnot?

I didn’t hear what you said. I heard you say reopen and then you…

Sorry, I’m wondering about 14% metric. Is that -- does that include claims that are reopened for supplemental payment?

Yes.

Okay

It could be -- couple of bit of application anything at all that’s a supplement all that goes into that same bracket.

And then any update on the number you gave last quarter was 12% of claims you expect to result in AOB from the losses. Any update to that number?

No, it's one about the same rate.

And then I think Jon said that, the gross Irma losses you expect to increase that by 50 million. Should I think of that, the whole range increasing by 50 million? Or is it on top of the range of from 450 million to 500 million?

You should think of it is on top of the 450 million, so 500 million is a new number going forward.

And can you give me the split of the Irma gross losses HO3 versus HO6? What the paid for their reserve for each?

Right now, I can tell you that 25% of the losses are a little bit under is HO6 and the HO6 severity is running right around 4,200 and the H, all of other let's just call it is running right around 7,200.

Thank you and I’m showing no further questions at this time. And I would like to turn the conference back over to Sean Downes for any further remark.

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

Ladies and gentleman, thank you for your participation in today’s conference. This concludes the program and you may all disconnect. Everyone have a great day.