Good day, ladies and gentlemen, and thank you for standing by. Welcome to UVE First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only-mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Rob Luther, Vice President of Corporate Strategy and Investor Relations.

Thank you, and good morning, everyone. Welcome to our discussion on our first quarter 2019 earnings results which we reported yesterday. On the call with me today is Sean Downes, Chairman and Chief Executive Officer; Jon Springer, President and Chief Risk Officer; Steve Donaghy, Chief Operating Officer; and Frank Wilcox, Chief Financial Officer. Before we begin please note today's discussion may contain forward-looking statements and non-GAAP financial measures. Forward-looking statements involve assumptions, risks and uncertainties that could cause actual results to differ materially from those statements. For more information please see the press release, our earnings presentation and UVE's SEC filings all of which are available on the Investor section of our website at universalinsuranceholdings.com and on the SECs website. A reconciliation of non-GAAP financial measures to comparable GAAP measures is included in the quarterly press release. With that, Sean I'll turn it over to you.

Thank you, Rob, and good morning, everyone. Thank you for joining us today. Yesterday, we reported our first quarter 2019 results, and we're off to a good start to the year. Total revenue was up 23.5% to $237 million, direct premiums written were up 7.1%, due in large part to our strong growth outside of Florida. EPS was $1.14 on a GAAP basis, and $1 on a non-GAAP adjusted basis. Our annualized return on average equity was 30.4%, book value per share grew 17.2% and our pretax income margin was a strong 22.7%, all supported by our premium volume, pricing, integrated services and our investment portfolio performance. Turing to our progress on our strategic initiatives, we received rate increase approvals in Florida and Georgia for new and renewal business with a majority of these changes to take place in the latter half of the second quarter. We continue to proactively expand our addressable market in the first quarter by launching Universal Property and Casualty Insurance Company, as well as Universal Direct, our proprietary platform in Illinois, which is one of the top five largest personal residential homeowner's states in the country by direct premiums written. We also added 9 carrier requirements [ph] to our digital insurance distribution channel Clovered, across homeowners, auto, flood and E&S lines, which include a mix of national and specialty carriers. These milestones show marked progress against our strategic priorities and put us in the position to focus on disciplined growth, maximize earnings stability and continue to strengthen our foundation. Additionally, we continue to monitor the recent developments with the assignment of benefits legislation in Florida, and have continued to make good progress in to our discussion in Q4 on accelerating our operational focus on claims resolutions. These efforts continue to result in a reduction in our outstanding non-cap litigated claims year-over-year, as well as a reduction in our new inbound litigated claims, so it's the changes we implemented. So overall, we're seeing positive momentum across the company on our initiatives to position ourselves for the future. In a moment, Jon will provide an update on our reinsurance progress. But first let me now turn it over to Frank to walk through our financial results. Frank.

Thank you, Sean, and good morning, everyone. As a reminder discussions today on adjusted operating income and adjusted EPS are on a non-GAAP basis and exclude impacts from unrealized and realized gains and losses on investments, and extraordinary reinstating premiums and related commissions. Adjusted operating income also excludes interest expense. Total revenue grew 23.5% for the quarter, driven primarily by higher organic premium volume pricing and our investment portfolio performance, partially offset by realized losses in our investment portfolio. Pretax income margin was 22.7% for the quarter, bolstered by our investment portfolio, and integrated service businesses. EPS for the quarter was $1.14 on a GAAP basis, and $1 on a non-GAAP adjusted basis. Annualized return on average equity was 30.4%, and book value per share grew 17.2% year-over-year. Turning to our underwriting results, in force premium grew to approximately $1.2 billion, an increase a 12% from the prior year. Direct premiums written were up 7.1% for the quarter, led by growth of 31.5% in other states, and 3.4% in Florida. Underlying growth in Florida was tempered by more disciplined underwriting guidelines, while our other states geographic expansion continues to be strong. Ceded premium earned as a percent of direct premium earned decline 1.4 points to 29% for the quarter. On the expense side, the combined ratio increased 10.6 points for the quarter to 87.2% driven by increased losses in connection with the diversified growth in the company's underlying business, increased estimated losses as discussed in Q4, a reduced benefit from our claims adjusting business and the Q1 hail event in Brevard County, Florida, partially offset by a reduction in our expense ratio as set forth in the following. The expense ratio improved 1.7 points for the quarter to 33.3%, driven primarily by a 1.6% point improvement in other operating expense…

Thank you, Frank, and good morning everyone. I first would like to add a few additional comments on the Brevard County Florida hailstorm that occurred at the tail end of Q1. Then I will give an update on our current loss position as relates to the three major catastrophe then in 2017, and 2018, and reserves in general, and finally provide some additional color surrounding our upcoming June 1 reinsurance renewal. On the Brevard County hailstorm, our teams are working diligently to support consumers affected by the hailstorm. At present we have had approximately 250 claims reported and expect that this number may continue to grow in the coming months. While an exact loss number would be difficult to predict at this point, as Frank mentioned, we have elected to add an additional $5 million beyond plan for 1Q weather event in large part due to this late first quarter event. In regards to the three major catastrophe events, Irma, Florence and Michael, our ultimate loss projections disclosed in detail for each of these events at year end remain unchanged as of the end of the first quarter. Our claims team successfully closed another 2,100 of the remaining open catastrophe claims during the first quarter, bringing the total claims closed on these three events to over 97,000. As we noted in Q4, we accelerated our operational focus on litigated claim resolutions in the second half of 2018, particularly in the fourth quarter, which resulted in resolving numerous outstanding claims in a timely, fair and equitable manner. That performance has continued in Q1 with open non-cat litigated claims down meaningfully from Q1 of 2018 and sequentially when compared to Q4 of 2018. This continued progress, along with putting up close to $100 million in reserves in Q4 better positions us going…

Thanks, John. I would like to ask the operator to now open the line for questions.

[Operator Instructions] Our first question or comment comes from the line of Christopher Campbell from KBW. Your line is open.

Hi good morning, gentlemen.

My first question is, can we just get some color on the expense ratio improvement. I guess just how much this quarter was from scale and then how much was from executive comp savings?

Yeah, around 2 million came from executive comp and the balance from scale. There was about a $8 million reduction year-over-year give or take so about $2 million a quarter.

Okay, got it. And then you guys came in I have you pegged at like 33.3 and Frank I think you said in your script that the guidance is going to up to 37 or 34 to 37. So I guess just given your strong growth, what's driving that expense ratio higher, is that like higher ceded premiums from insurance costs increases, trying help understand like why that would be going up.

We're allowing ourselves that range for operational initiatives and many of which would be surrounded or related to the branding initiative specifically Clovered, technological platforms that we would be investing in during the year some of that could lead into the next year's but we just want to allow ourselves that that range to be nimble.

Okay, in that the net range correct, not out of a direct, right?

Correct.

Okay, got it. Okay, and then next one is just, I think John mentioned no change to the gross Irma, Florence or Michael loss estimates. So I guess just could we get an update on what are you reserves for each of the storms, what's the current IBNR and what is like the monthly burn rate? I guess to have idea of kind of what's the survival ratio on those, if I looked at it that way.

Yeah, I will share a few numbers with you Chris, I don't know that I have exactly everything you just asked in that question. But we have disclosed previously that the ultimate we booked for Irma was 960. As of the end of the first quarter, we had incurred loss of 917. So that of course 43-ish million there of IBNR. It's important to understand that we have less than 6,000 open claims and we've already paid partial payments totaling nearly $80 million on those 6,000. So that sometimes gets lost in this equation. So if you factor in that remaining, let's call it 6,000 open claims, nearly $80 million already paid, reserves on those claims totaling nearly $50 million and then $43 million IBNR on top of that. We still have a fair amount of room within that IRMA ultimate.

Got it. And then I guess just there was -- the Senate just -- the Florida senate just passed the AOB bill -- the AOB reform bill yesterday, and I know it's really still too early to kind of go through like everything but I'll ask anyway, right. So I guess it is what are your thoughts -- what would be the biggest impact that you saw from the passage of that bill on UVE’s book and do you think that also create -- is going to create any additional pressure on your mid-year reinsurance renewals, if we see the spike of like AOB related claims coming in that could cause adverse development for you guys or for your reinsurance partners?

This is Sean. I’ll start off. Obviously few of the things after digesting the Senate 122 is number one the correction to the one way attorney fees, obviously looks to us to be the number one most important item, as well as maybe the possibility of limiting AOB depending on how policy will be structured going forward. So those two things jumped out to us the most. Obviously we really appreciate the Insurance Commissioner David Altmaier his help in pushing this and getting this over the finish line. As for the second part of your question I really don’t see that would be an issue as far as us looking at a major increase, as far as litigation is concerned because of the change here. I think a lot of these folks thought there was going to be some sort of change that was going to transpire previously and as John stated in his opening remarks, we’ve seen a consistent reduction quarter-over-quarter in our non-cat litigation. So I think there could be something that may see a spike of people trying to get in some litigation in the last minute but as of right now I don’t foresee anything happening that would affect us from a reinsurance perspective.

Okay, got it and with the plan, what UVE's game plan be to offer like these AOB line or no AOB policies, and any idea of how much cheaper those would actually be for policy holders?

Yeah, the answer to those question it's too early obviously Chris for us to make that determination. Now we obviously have to look at what the verbiage is, directly correlated to this legislation change. And then obviously from an actuarial perspective look at it from a rate perspective and see how it would change our rate indications going forward. So it’s early days for that to make the determination.

Okay got it. And so if we get this AOB reform any impact, any potential impact that you guys think in terms of this year's reinsurance renewals, like maybe less on rate online increase? Or would we expect like maybe a more of a benefit in next year’s reinsurance renewals one slight, new products and all that type of stuff like…?

Yeah, what the Bill is intended once it’s signed by the Governor is intended to be effective July 1. So as reinsurers are evaluating this prospectively it will certainly help, it will lessen their exposure to some of the things that occurred specifically during Hurricane Irma. It is obviously very difficult to quantify. I think the general consensus at this point amongst those in the reinsurance market is that it certainly helps. It’s just -- it remains to be seen exactly how it will be quantified and work its way into the reinsurance pricing.

Okay, great, thanks for the answers. Best of luck, rest of the year.

Thanks Chris.

Thank you. Our next question or comment comes from the line of Samir Khare from Capital Returns. Your line is open.

Hi, good morning. I had a quick question about the expense ratio as well. It was -- in the quarter it was lower and particularly lower compensation accruals. Is this in light of the 2018 results? What’s causing the lower compensation accrual?

No, Sean renegotiated his -- his contract expired on 12/31/18 and he renegotiated a new deal with the compensation committee which resulted -- when you compare to the amount compensation that was reported in the proxy or will be reported in the proxy would represent a reduction of over 55%.

And Sameer to recall I tempted to make some changes to my contract the last two years but we were obviously not able to do so because of the tax change and we would have had to take a large hit in this specific quarter when that contract was changed.

Okay, and so Frank the 34% to 37% translation guidance, does that contemplate a continuation of lower compensation for this?

Yeah, that would naturally include -- not lower compensation but allow for as I pointed out future investment, with a wide range obviously.

Understood, okay. And then the rate increase that is going to affect in Florida, how much is it for?

2.6.

2.6. Okay. And I believe this is a change from -- I guess your late 2018 rate increase 2.9. So can you just talk about how it evolved and if it's incorporating your view and higher loss ratio and when it's pulled [indiscernible] we expect that the loss ratio to come down, that the loss ratio you're booking to come down?

I'm not exactly sure on the 2.9. There is a little bit of work that needs to be done towards the end of a rate filing to get to that final approval by the OIR. So that might have been the difference there. The last part of the question, could you repeat that again, Samir?

Sure. I was just wondering if there's any incorporation into this rate filing of your view and higher loss ratios, things that you guys have reserved charge at the end of the year and then you guys increased your booking, the loss ratio, you’re booking, such that when it's fully earned in, a year or two from now that we could expect a lower loss ratio to be booked.

Well, I think I don't know exactly where it will be a year or two from now. Obviously, when we're asking for a rate increase it is because of our loss experience. So we would hope that the effect of increasing our rates would result in an improved loss ratio.

Okay. And then any guidance on what gross written premium growth might look like throughout the year, whether it will be above or below the 7% level we saw this quarter?

I guess that's how to look at it, mid-single digits, mid to high single digits.

Okay, And just on buybacks, what's your philosophy in buying back during wind season. Is it safe to assume that you guys…

Our buyback during what?

During wind…

Obviously, as we've said it before, we're constantly evaluating our capital needs. And with the help of our Board make a determination when it's -- what's the best interest for us to purchase stock, obviously, during hurricane season, a little bit more conservative with our buybacks. So I think, obviously, we will take a look at that here the next month because of our existing buyback plan right now, I think has remaining roughly $4.4 million and it so, we'll be advising you on that sometime here shortly.

Okay, and how much cash do you have in your unregulated companies that would be available for buyback currently?

We don't report that on an interim basis. The amount is available in the 10-K for the financial statements, the holding company I believe it was 90 something million at that point in time.

Okay, thanks.

Thank you. I'm showing no additional questions in the queue at this time, I would like to turn the conference back over to management for any closing remarks.

As always, in closing, I would personally like to thank all of our consumers, our employees, our agents and our shareholders for their continued support of Universal. This concludes the call, have a nice day. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone have a wonderful day.