Good morning, ladies and gentlemen, and welcome to the UVE Third Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only-mode. After the speakers remarks there will be a question-and-answer session. [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 third quarter 2019 earnings results which we reported yesterday. On the call with me today is Steve Donaghy Chief Executive Officer; Jon Springer, President and Chief Risk 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, Steve, I'll turn it over to you.

Thank you, Rob, and good morning, everyone. Thank you for joining us today.Yesterday, we reported strong third quarter results with non-GAAP adjusted EPS of $0.61 or revenue growth of 11.4% versus the year ago quarter. Year-to-date, total revenue was up 15.2% to 699.9 million.Direct premiums written were up 7.4% due in large part to strong growth outside of Florida, in addition to rate increases within Florida and other states. Year-to-date EPS was $2.82 on a GAAP basis and $2.67 on a non-GAAP adjusted basis.Our year-to-date annualized return on average equity was 23.9%. Book value per share grew 12.7% and our pre-tax income margin was a strong 18.9% year-to-date, all supported by premium volume, pricing, integrated services, and our investment portfolio performance.We believe these results combined with the outstanding work our claim servicing team has done in bringing closer to prior year catastrophe events. And the launch this quarter of our multi-raider quite combine platform on Clovered, where consumers can now receive up to five side-by-side quotes online from different carriers, positions us well to continue to deliver on our strategic priorities.So, with that, in a moment, John will provide an update on some risk management topics. But first, let me now turn it over to Frank to walk through our financial results. Frank?

Thank you, Steve, 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 reinstatement premiums and related commissions.Adjusted operating income also excludes interest expense. Total revenue grew 11.4% for the quarter and 15.2% year-to-date driven primarily by continued organic premium volume growth pricing in our investment portfolio performance. Pre-tax income margin was 12.1% for the quarter, impacted by weather events above plan partially offset by returns on our investment portfolio, and integrated service performance.Year-to-date, pre-tax income produced an 18.9% margin. EPS for the quarter was $0.59 on a GAAP basis and $0.61 on a non-GAAP adjusted EPS basis, and $2.82 and $2.67 year-to-date respectively.These results reflect positive momentum from premium growth, investment performance, and reduced share count offset by a higher core book loss ratio in 2019 when compared to 2018 weather events above plan and a lower benefit from integrated services as prior years claims conclude.In addition, the year-to-date, EPS decline relative to 2018 was driven by a pre-tax 6.5 million non-recurring benefit in policy acquisition costs in the second quarter of 2018. The company produced a strong annualized year-to-date return on average equity of 23.9% and book value per share growth of 12.7% year-over-year.Turning to our underwriting results, premiums in force grew to approximately 1.3 billion, an increase of 8.5% from the prior year. Direct premiums written were up 10.9% for the quarter, led by the full quarter's impact of rate increases in Florida and other states taking effect, as well as strong direct premium growth of 27.6% in states outside of Florida.Year-to-date, direct premiums written were up 7.4% led by the rate increases taking effect as well as strong direct premium written growth…

Thank you, Frank and good morning everyone. I would like to start with some additional color on past cat events and current accident your weather events, and we'll conclude with some comments on the current risk management market dynamics.The third quarter sauce make major progress in closing past catastrophe claims. Our in-house claims staff has done a tremendous job in servicing our policyholders in handling over 100,000 catastrophe claims in the past two years alone.On Hurricane Matthew and Florence, we're nearing the end of the claims handling with approximately 20 claims remaining open on each storm at 930. We did increase the total gross losses just slightly to 47% and 52 million respectively.On Hurricane Michael, total gross loss remains unchanged at 350 million, with approximately 400 claims remaining open at 930. On hurricane Irma, we started the quarter with 5500 open claims and made significant progress during the quarter. As of 930, we increased our total gross loss to 1.25 billion, with just under 2000 claims remaining open.We have made even further progress in October and stand here today with less than 1000 open Irma my claims. From a net exposure standpoint, as we have noted in the past, at this point in the life cycle of Hurricane Irma, the vast majority of any increase in loss is covered by the Florida Hurricane catastrophe fund.In regard to our current accident year weather events for the hailstorm in Brevard County, Florida in Q1, approximately 90% of claims have been closed with incurred losses within our original plan for this event. When looking at the weather events that took place nationally in Q2, we were fortunate to only be exposed to roughly half of the events due to our geographic business footprint.In the third quarter, there were meaningful weather events in Minnesota,…

Thanks, John. I'd like to ask operated and now open the line for questions.

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

Hi, good morning, gentlemen. Congrats on the quarter. I guess I'll start off with the large amount of repurchases this quarter I mean, obviously a big slug there. So, like, how should we view the 25 million or approximately that you bought back this quarter? Is that like a good run rate going forward or how should we think about modeling repurchases?

Yes, so obviously those repurchases were in light of what we believed to be an undervalued price for us, and we took the opportunity with some capital that we had to repurchase that I wouldn't look at that necessarily as the run rate going forward.I think that there are a lot of factors at play going forward, including what the stock price does, capital that we may or may not have available to deploy we look at the best use of our capital than any given point in time.

Got it. And Frank, how much excess capital would you guys estimate that you have right now?

Well, let's not disclose that we make on an interim basis. So, the end of the year, we will have a holding company only financial statements and you'll be able to gauge that from there.

Okay, perfect. And then kind of looking at the commission revenues that rose year-over-year, how should we think about modelling that line item as well?

Well, the amount that we earn went up for a couple reasons, first of all, because our exposures have increased and with that, the amount of reinsurance that we buy, but we also are purchasing a larger percentage of our reinsurance from third parties, which is the portion that earns us that commission. The cap fund is a smaller percentage of our overall program because there's a higher participation rate among other participants in that program.

Okay, got it. So, the way we should be thinking about the main, like drivers behind that should just be on the commission. So that's not like commission revenue that you're getting from the new platform, correct?

No, the vast majority of that is the commission's earned on the reinsurance program?

Okay, so that's the reinsurance that is not like the Commission's you guys get from this new like multi quote platform?

No.

Okay, got it and then looking at the expense ratio that was pretty strong this quarter I mean is like mid-30s like 33 or 34 net expense ratios where we should be thinking about modelling you all?

Yes, I mean, there are a lot -- the answer -- the short answer is yes, there are a lot of variables involved in that equation. There are two sides of the equation there the spend itself, which is your numerator and then there's the net and premium and both are affected by different things.As far as the denominator, supply and demand of the product, primary rates, cost of reinsurance are all going to be at play there. And those things can put pressure or ease pressure depending on which direction they go on the expense ratio.As far as our spend goes our ratio is right within the range that we've been sharing with our folks, although on the lower end of that range, and we feel good about that. We feel that we've been disciplined with our spend. We don't spend it unless we believe that it's going to generate good dividends. So, going forward, it depends on what happens with reinsurance prices depends on what happens with primary rates that are driven by a variety of different factors.

Okay, great. So, you had mentioned reinsurance prices, I go ahead and open up like Pandora's box right for Jon right. Given all of the Japanese typhoons, the potential impact on retro, I guess we're almost through winter season looks like Florida is mostly escaped, the crosshairs of any big storm.So, I guess just how should we be thinking about like maybe a reinsurance renewal, what would be the impact and what would be the potential impact what's happening in Japan. And then how sensitive do you think like next year's reinsurance pricing is going to be to, to the retro market that renews at one?

Yeah, well, there's a lot there. And the short answer to almost all of those is it's really too early to tell and I don't mean to be call with you, Chris. I would give you more if I if I had you. We've talked to a lot of our reinsurance partners, as I said in the in the opening it was or we are on our way,I should say to a well-earned relatively last three year, which our reinsurance partners certainly deserve. Our policyholders could use a year off from a major impact here in Florida as well as well as our claim staff.So, it's everybody has deserved the year that we're on our way to, it is just simply too early to tell in part because of what you just laid out. There are so many factors that play including losses around the globe, including how that impacts the retro market for our reinsurance partners. There's a lot to sort out and, and it's too early.

Got it. And then I guess just like when we're looking at the different renewals, I guess, just like how independent or not or not independent is the Florida renewal versus right, we're going to get a read through on one, there'll be some property stuff there and obviously four one is all like, is mostly Japan.So I guess just when we're looking at that, like what would be like, if you had to, like come up with a growth correlation, like, what would be like, like, how, how reliable would looking at either of those two renewables be in terms of predicting what's going to happen in mid-year. I mean, is it like 10% correlated or yes, I'm trying to think because the last few years within Florida, right,Florida got hit by a lot of cats and then this didn't impact the Japanese renewals. So, it looks like there is kind of some independence between the different areas the way that the reinsurers could be differentiating the pricing?

There is definitely independence and we will watch these things closely as you do see what the experiences of those that by at one, see what happens on the for one Japanese, but at the end of the day Florida renewals stand on their own. And they can they can move directionally like the 11s or 41s or they could do something totally different. They really are independent.

Okay, got it. And then I was looking at slide seven of the deck and it looks like you guys had like I think, Jon, you mentioned a little bit in your script about Irma loss, Irma gross losses now 1.25 billion, but you're holding the Michael, the Michael loss pick. So, it looks like most of the 205 million of gross adverse development was Irma, so I guess just where do you use stand in terms of like your 2017 tower, what's like the breakout between the limit you have available and indemnity versus like what's still available in terms of like the LAE pieces of that?

Yes, even though we've increased Irma loss, my statement is going to be very similar to the one that I made last quarter and that I made in the opening remarks where we are in the life cycle of this storm is that the vast majority of this increases being born by the Florida hurricane cat fund.And when you factor in some of the strategies that we deployed early on in this event with front loading some of the loss adjustment expenses were in a position where we're an even greater share is being covered by the Florida hurricane cap fund then may otherwise be apparent.

Okay, got it. And then I guess just Are you guys starting to see any benefits all I got a core loss ratio from like an AOB reform, are there any like operational metrics that you're seeing within the claims department then things are getting better? And then if so, how is that going to impact your upcoming rate filing?

Hey Chris, this is Steve. From an AOB perspective, we continue to be cautiously optimistic about that legislation. And we have seen benefit, since the run up at six one. You know, one thing that we lose sight of at times, though, is that the AOB legislation in conjunction with our own internal adjusting firm and the fast track process, we have people on-site at many of our claims within 48 hours of the call in on the initial claim.And I think a lot of people get comfort from that and we issue checks on-site. So, I think our process is unique, so we may see benefits that others may not due to our operational structure, and our focus on claims.And again, it's not lawful on all of us here that, we sit here today as Jon had mentioned under 1000 claims on Irma, which was roughly a 95,000-claim event. So organizationally, we have proven that we can manage through the difficult events that occur in any of the states that we do business in.I'll let Jon handle the last portion of your question.

From a rate filing perspective, again, as we said last quarter, we're planning to make a filing by the end of this year. So, we wanted to let a little bit of time pass, so we get some more data and more accurate data to use in this next filing.We also did have a Florida rate filing that just went into effect on renewals at the end of May of this year. So, this upcoming filing will be made so that it time's up with another May effective date.

Got it. And then it's my understanding that the 20 is that the new rate filings and then within 2020 you have to account for like any AOB benefits, is that correct?

Well, I think there's still some details to be sorted out in that space, Chris.

Okay, great. Well, thanks a lot for the answers. Best of luck in a fourth quarter.

Thank you. Have a great day.

Thank you. [Operator Instructions] Our next question comes from the line of Bill Bruma of Burlington Partners [ph]. Your line is open.

Great, thank you. I just had a quick question on the strong growth outside of Florida. Do you mind just telling us kind of giving some overview of where that's coming from where you’re having the most success?

Hi, Bill. Good morning, this is Steve, and thanks for the question. The growth outside of Florida really is predominant from the various agents that we've partnered with. And as we see multiple agencies operate in many of our states. We benefit from their growth relative to their footprint. So, when you look at specific states, some are growing faster than others, and many of them are a direct result of the relationships that we have in that state.So, North Carolina, for example, where we've been for a long time, we grow more than we do in Illinois, we just got into and are kind of spreading our wings, so to say. So, there's really not a particular area that I would say is better than another. It's more a byproduct of the relationships we build and the trust, the agency force and our direct-to-consumer channel can generate in the marketplace.

Okay. Thank you. And maybe talk on a philosophical level about Clovered and how you think about kind of ramping up and getting flow through that platform. Is there kind of a strategy? Obviously, there's a strategy, but maybe you could talk about your strategy to kind of grow that platform?

The Clovered, which was originally universal directed is morphed into Clovered. We continue to learn more and more about that space, every quarter Bill. And the byproduct of that is increased premium growth across the platform.So, we're growing Clovered in every state that we operate in. And as you know, we recently announced the ability to have multiple quotes presented to the consumer, which we see as the next generation of the online efficiency and acquiring and insurance product for an insured.So now and in short, can look at a universal product next to 4 other carriers and make a selection that suits he or she the best. And we feel very optimistic that that will continue to provide a platform for us, and for consumers to kind of exercise their desire to get insurance on their own.

And is the quarter buying capability of bill bond, across all products that are offered to recover, to like auto, home, everything?

Yeah, it’s a great question. A lot of it depends on the carrier, we’ve been the first quote buying carrier that we were aware of that we could do without speaking to anyone. Many of the auto carriers present something similar.But in the home space it’s a bi-product of the technology of the carriers, that we’re trying to kind of pull them along with us, to allow us, to bind online, but we want to make sure we’re following their rules and making sure, they’re going to be kind of risk they like to get within their portfolio.And I think, it’s something that will evolve overtime but being a good partner in that particular venue, we don’t want to do things that they are uncomfortable with. So, we’re kind of work very closely with them and I think overtime more and more products will be presented in a multi-quote ability such as flood and others, to really round out what the insured can acquire at one-time online.So, we like the space, we like the technology and we’ve always benefited from building that on home grown technology rather than buying it from third parties.

Got it, and is the same this covert or core to binding this platform is it covering the same states that Universal directed, so it’s in the all the states that Florida plus, outside of Florida the footprint is…

Yes, it’s in 18 states currently yes.

Good, that’s helpful. And if I could just one maybe two clarifications get, do you see - with forward pension loss, I'm assuming that was I'm just taking that to mean that losses outside of Florida all over the $10 million figure other states program, did I hear that correctly? No?

No, I'm glad you asked for clarification there, Bill. What I said is, it is a retention loss meaning that we would not be anticipating that the loss to reach a point where we would be able to recover.

Got it, got it, okay, I'm sorry. And just for my kind of modeling purposes, when you say $15 million above trend, in your 37% loss how much in Q3 do you kind of build in there for kind of weather events?

Yeah, I’ve got the number here. So, our original plan is set forth at the beginning of the year, we were setting aside a little over $21 million for all weather events in the third quarter. And now with the impact of 0:02:59.4 as well as a rather meaningful event in Minnesota in early August, we’ve decided to add an additional 15 to that number.

Got it, okay. Thank you. That’s very helpful. I think that’s all I had, thank you.

Thank you. At this time, I’d like to turn the call over to CEO, Steve Donaghy for closing remarks. Sir?

In closing, I would like to thank our associates, consumers, agencies, and our stakeholders for their continued support of Universal. Have a great day.

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating, you may now disconnect.