thepupil Posted October 31, 2014 Author Share Posted October 31, 2014 I think the 40%+ ROE and company owning a money printing press also may have contributed to the price rise ;D This may take a long time, but eventually the gravy train will stop. The massive spread between property insurance rates (high) and reinsurance costs (low) that UVE is feasting upon will converge when Florida has a decent hurricane season again. But it looks like we are at least another year from that. If you don't mind saying J, what's your other short? Link to comment Share on other sites More sharing options...
JAllen Posted October 31, 2014 Share Posted October 31, 2014 SUNE Check out the value of the two subs it owns in relation to the current market cap of SUNE. Link to comment Share on other sites More sharing options...
oplia Posted November 3, 2014 Share Posted November 3, 2014 I am struggling to understand why would UVE be a better short than HCI? (except for lower short/float ratio mentioned by Pupil above). Could you shed some light on your choice? Cheers. Link to comment Share on other sites More sharing options...
A_Hamilton Posted November 3, 2014 Share Posted November 3, 2014 This company is simply amazing to read about. I've wanted to short for at least a year and have held back (thankfully) because the ROE's are mind bending and if current earnings hold up for any period your face will get ripped off. These guys are incented to be on the bleeding edge of leverage at all times. Below is from the DEF 14A. Simply amazing: "Non-Equity Incentive Plan Compensation Per the Downes New Employment Agreement, Mr. Downes is entitled to an annual performance bonus equal to 3% of the pre-tax income of the Company up to $5 million and 4% of the pre-tax income of the Company in excess of $5 million. Per the Springer Employment Agreement, Mr. Springer is entitled to an annual performance bonus equal to 2.5% of the pre-tax income of the Company. Per the Donaghy Employment Agreement, Mr. Donaghy is entitled to an annual performance bonus equal to 1.5% of the after-tax profit of the Company." Link to comment Share on other sites More sharing options...
oplia Posted December 3, 2014 Share Posted December 3, 2014 How do you like the latest announcement: http://www.universalinsuranceholdings.com/Press-Release/140/Universal-Insurance-Holdings-Inc-Announces-Sale-of-1000000-Treasury-Shares Just two months ago management praised themselves on strong share buybacks. Now they are selling the same shares and it is again a positive thing! Where is the consistency? ;) Link to comment Share on other sites More sharing options...
JAllen Posted December 3, 2014 Share Posted December 3, 2014 Aren't there trading limitations where you can't buy then sell within a certain period? I know there are for insiders, but there aren't for companies? Link to comment Share on other sites More sharing options...
thepupil Posted December 3, 2014 Author Share Posted December 3, 2014 J, you are referring to the rule where owners of 10% or cannot buy and sell stock within six months (well they can but they have to disgorge profits to the company). Since the company is the beneficiary here, i don't think that rule applies. http://www.investopedia.com/terms/s/shortswingprofitrule.asp While I commend Mr. Downes and crew on monetizing their stock a little bit, in the end this is a one time increase in BVPS from $5.50->$5.90 and doesn't change much. It would be concerning if they picked up the pace of transactions like this though. It does make me want to know more about Nephila Akanke though. Takeout insurance common equity investments are pretty risky and i'm curious as to what kind of vehicle it is. This isn't the first time they've invested in the stock of their customers. http://www.artemis.bm/blog/2014/05/16/nephila-capital-investing-in-florida-takeout-insurer-heritages-ipo/ Link to comment Share on other sites More sharing options...
oplia Posted February 26, 2015 Share Posted February 26, 2015 Q4 results out. All as expected so strange to see such a share price reaction. the press release mentions "The proceeds from our recent transaction with Nephila Capital coupled with our healthy balance sheet position us to lower our quota share percentage to zero. This change will enable us to retain 100% of our business, an estimated additional $230 million of our own organically grown premium, and further drive profitability and shareholder value." and then conf call "From a quota share reinsurance perspective this enhanced capital position will afford us the opportunity, as Sean mentioned previously, to retain 100% of our own business effective June 1, 2015 to further drive profitability." Am I reading this correctly - are they dropping reinsurance coverage altogether right before hurricane season? Link to comment Share on other sites More sharing options...
thepupil Posted February 26, 2015 Author Share Posted February 26, 2015 ha, covered in December for tax loss purposes with intent to re-underwrite and re-short. glad i've procrastinated. the money printing and rocketing up of the stock continues I haven't looked at the most recent results in detail, but it definitely looks like they are dialing up the risk-o-meter, just like HCI is by assuming all those coastal policies. $73MM NI on $175MM of starting equity for 2014....sheesh. Link to comment Share on other sites More sharing options...
gfp Posted February 26, 2015 Share Posted February 26, 2015 Yup - totally dropping the reinsurance cover (which was Odyssey Re policy by the way). From Insurance Insider: ------------------- "Floridian insurer Universal Insurance Holdings said that it would drop its quota share reinsurance cover in the June 2015 renewals, as it reported a 24 percent increase in net income in 2014. Universal said it was able to end the arrangement as a result of its healthy balance sheet combined with Nephila Capital's $19mn investment in the company in December. The company had already dropped the cession rate under the arrangement with Odyssey Re from 45 percent to 30 percent last June. A 30 percent share of Universal's book in 2014, allowing for a 29 percent ceding commission, would have amounted to $166mn of premium. The contract represents a significant proportion of Odyssey's Floridian cat book and was a coup for the Fairfax Financial subsidiary when it took the deal from Everest Re in 2012. The company reported what it described as record net profits for the fourth quarter, which were up 35 percent to $21.0mn as direct written premiums increased by 5 percent from $173.7mn to $182.2mn. But the company's net written premium leapt 62 percent from $51.8mn to $84.1mn as it ceded significantly less of its underwriting to reinsurers. For the full year, Universal's top line was relatively stable year-on-year at $789.6mn, as its ceded premiums fell 23 percent to $399.7mn. The insurer also benefited from a 22 percent increase in earned premium income to $326.9mn and an improved investment result, which more than offset a 20 percent rise in operating expenses and losses. "Our decision in 2014 to reduce our quota share reinsurance allowed us to retain a greater portion of our business and increase profitability," he added. "We enter 2015 with a clear opportunity to build on this operational momentum." Keefe, Bruyette & Woods analyst Arash Soleimani said he expected the company's shares to benefit from the announcement about the planned quota share elimination. He noted that the company's better-than-expected loss ratio in the fourth quarter - which came in at 36.3 percent compared to his 41.2 percent forecast - stemmed from improved rate adequacy and enhancements to its claims infrastructure that were resulting in faster claims settlement and reduced loss severity." Link to comment Share on other sites More sharing options...
A_Hamilton Posted February 26, 2015 Share Posted February 26, 2015 ha, covered in December for tax loss purposes with intent to re-underwrite and re-short. glad i've procrastinated. the money printing and rocketing up of the stock continues I haven't looked at the most recent results in detail, but it definitely looks like they are dialing up the risk-o-meter, just like HCI is by assuming all those coastal policies. $73MM NI on $175MM of starting equity for 2014....sheesh. They won't drop the quota share until June 2015. Also, just because they get rid of the quota share doesn't mean they won't reinsure on an excess of loss basis. The leverage here is incredible...Floridians are going to be writing some very large checks for this folly. Link to comment Share on other sites More sharing options...
thepupil Posted June 10, 2015 Author Share Posted June 10, 2015 http://www.universalinsuranceholdings.com/Press-Release/140/Universal-Insurance-Holdings-Inc-Announces-Sale-of-1000000-Treasury-Shares So they sold 1MM shares to Ananke in December 2014 @ $19.00 “By using shares held in treasury from prior repurchases, this transaction will immediately increase our book value per share by 7%. Now they are buying 200K of those shares back at $25.38. "This transaction reduces our outstanding share count and reflects our prudent approach to deploying our capital to enhance shareholder value," said Sean P. Downes, the Company's Chairman, President and Chief Executive Officer. http://finance.yahoo.com/news/universal-insurance-holdings-inc-announces-200100354.html When they issue above book, it's accretive to TBVPS and a great thing. When they buy above book, even better! 8) Knowing how the company operates, I assume they will buy back the majority of nephila ananke's shares over the next few months and put out a nice press release each time. The end result will be they issued shares around $19.00 and bought them back in the $20's and effectively paid one of their reinsurance companies in an unusual manner. I still haven't gotten back on this train, but it is so tempting to short this again. But until a few cat 4's steamroll through Florida, they just print print print. Link to comment Share on other sites More sharing options...
Libs Posted June 12, 2015 Share Posted June 12, 2015 Very interesting thread. I tried to rough up some numbers regarding their exposure to a hurricane- It looks like they are retaining the first $125MM of any loss, now that they've dropped the quota share, but my guess from looking at Pupil's spreadsheet is they are only retaining 30% of losses above that (via cheap excess-of-loss reinsurance.) (Some of this reinsurance, by the way, is bought from Citizens- which blows my mind, I can't understand that. Citizens is offloading this stuff, then re-insuring it?) With 8% market share, a storm would have to cause $1.5 billion in wind damage to blow through that $125MM. That would wipe out half their $250MM equity. Assuming they are 70% reinsured above that 125MM, a $10 billion wind incident would cost them another $200MM by my math. That would finish them off. It looks to me like only one storm has ever caused that much wind damage - Katrina ( and maybe Andrew). Also, although it appears Homer Simpson runs the FLA insurance dep't, I doubt even Homer would let them dump all of their XS reinsurance and get too far out on a limb. But I could be wrong about that. My general sense is, it won't be a hurricane, but increased competition and the eventual end of these takeoff policies that will spell their downfall. Which they richly deserve. If you're inclined to bet on something quick and dramatic, the Nov '15 puts are perfect and pretty cheap ( maybe what JAllen owns 8)) Link to comment Share on other sites More sharing options...
thepupil Posted June 12, 2015 Author Share Posted June 12, 2015 a re-pricing of reinsurance is what kills them since there is no way to insure 8% of Florida with $240MM tangible equity. a reinsurance exec described these guys as "completely price inelastic buyers of reinsurance". The capital flowing into reinsurance is what allows these guys to make such amazing profits. they write a put on 8% of Florida and then go buy very cheap puts from all the reinsurance. what will (eventually) hurt the company is if a big event or season causes people to rethink selling reinsurance or price it more. you're looking at old reinsurance numbers, i posted that spreadsheet over a year ago. I haven't looked at the updated program yet. Link to comment Share on other sites More sharing options...
thepupil Posted November 17, 2015 Author Share Posted November 17, 2015 Down 30% today...Lakewood apparently presented this at Robin Hood and called it a fraud... Link to comment Share on other sites More sharing options...
oplia Posted November 19, 2015 Share Posted November 19, 2015 Anyone seen Lakewood presentation? Link to comment Share on other sites More sharing options...
thepupil Posted November 19, 2015 Author Share Posted November 19, 2015 http://www.valuewalk.com/2015/11/universal-insurance-lakewood/ this is all i have been able to find... Link to comment Share on other sites More sharing options...
Gregmal Posted September 6, 2017 Share Posted September 6, 2017 Anyone follow this? Thinking this is a solid Irma play. There's been some work done by Bozza and I believe Tilson on this company and how they are a 0 waiting to happen in the event of a major FL natural disaster. Looking at ways to structure a potential trade, curious if others have this one on the radar as a hedge or outright short. http://www.businessinsider.com/anthony-bozza-presentation-on-universal-insurance-holdings-2015-11 Link to comment Share on other sites More sharing options...
thepupil Posted September 6, 2017 Author Share Posted September 6, 2017 bump for UVE discussion Link to comment Share on other sites More sharing options...
thepupil Posted September 6, 2017 Author Share Posted September 6, 2017 http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/uve-universal-insurance-holdings-10506/msg308826/?topicseen#msg308826 existing thread Link to comment Share on other sites More sharing options...
Gregmal Posted September 6, 2017 Share Posted September 6, 2017 http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/uve-universal-insurance-holdings-10506/msg308826/?topicseen#msg308826 existing thread My bad. Looked briefly, didn't see it. Thread looks dead. Link to comment Share on other sites More sharing options...
thepupil Posted September 6, 2017 Author Share Posted September 6, 2017 yep it is dead, along with my ill-fated short on which I lost 50% (only to watch it double after that, then halve after that to end up about where I covered today). I was just pointing out that there's some historical context on the forum and that perhaps keeping it all consolidated to one thread would be good. wouldn't touch the stock. Link to comment Share on other sites More sharing options...
Gregmal Posted September 6, 2017 Share Posted September 6, 2017 yep it is dead, along with my ill-fated short on which I lost 50% (only to watch it double after that, then halve after that to end up about where I covered today). I was just pointing out that there's some historical context on the forum and that perhaps keeping it all consolidated to one thread would be good. wouldn't touch the stock. Yea I've wanted to get involved on this one for years. Its interesting because there is certain case for both bull and bear. Its crazy cheap, IF. Its also a 0 in quite few scenarios. It's expensive to short and can whip around quite viciously, so I've been looking into a way to maybe hedge it out. The one thing that seems certain, is that if the bear case plays out, a major catastrophic event will be the catalyst. So jumping in front of one might not be a bad idea if sized right and hedged. Link to comment Share on other sites More sharing options...
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