KBRA Affirms Ratings for Universal Insurance Holdings, Inc. and Subsidiaries

KBRA affirms the insurance financial strength ratings (IFSRs) of A- for Universal Property & Casualty Insurance Company (UPCIC) and American Platinum Property and Casualty Insurance Company (APPCIC), the BBB issuer rating for Universal Insurance Holdings, Inc. (UVE) and the BBB long-term credit rating on UVE’s $100 million fixed-rate senior unsecured notes (Notes) due 2031. The Outlook for all ratings is Stable.

Key Credit Considerations

The ratings reflect Universal’s well-structured reinsurance program, strong market presence with efficient large-scale operations, seasoned and well-established management team, conservative investment portfolio, diverse distribution channels, and favorable holding company financial flexibility. Universal benefits from significant brand recognition and is a leading property writer in Florida, while ranking among the top 15 homeowners’ writers nationally based on direct written premium. The company maintains a sound catastrophe reinsurance program that provides robust protection against historical event recasts as well as multiple events, supported by management’s extensive reinsurance expertise and long-standing relationships with high-quality reinsurers. Universal’s conservative investment portfolio consists predominantly of high-quality fixed income securities and cash, with no exposure to below investment grade securities. The ratings also benefit from UVE’s recurring cash flow from its non-insurance service entities, including its agency, claims management, reinsurance brokerage, and distribution operations. These largely fee-based earnings provide a meaningful source of cash flow outside of the regulated insurance subsidiaries and support holding company liquidity, debt service, shareholder distributions, and the ability to provide capital support to UPCIC and APPCIC when needed. UVE also maintains modest financial leverage and strong debt service coverage.

Balancing these strengths are Universal’s geographic concentration, dependence on reinsurance, exposure to natural catastrophe event risk, adverse reserve development, and elevated premium leverage at UPCIC. As a property writer with significant exposure in catastrophe-prone geographies, particularly Florida, Universal’s business model necessitates substantial use of reinsurance and leaves results susceptible to hurricanes and other named storms. UPCIC has also experienced adverse reserve development on both catastrophe and non-catastrophe claims, although increasingly conservative initial loss selections and higher carried reserve levels has improved development on more recent accident years. Premium leverage remains elevated, while UPCIC’s risk-adjusted capitalization remains below Florida benchmarks. UPCIC reported significant underwriting losses in recent years due to catastrophe activity and, prior to Florida’s 2022 legislative reforms, the state’s challenging claims and litigation environment. More recently, underwriting performance has improved materially, reflecting cumulative rate actions, disciplined exposure management, improved Florida claims and litigation trends, and more favorable catastrophe experience. UPCIC returned to statutory underwriting profitability in 2025 and maintained profitable underwriting results on an LTM basis through 2Q26. While results remain susceptible to catastrophe volatility, KBRA believes the improved market environment and underlying profitability support targeted exposure growth.

Rating Sensitivities

Factors that could positively impact the ratings include a trend of sustained profitability at the insurance operating companies, including reversal of adverse development trend, improved underwriting leverage and risk-adjusted capitalization, and/or a favorable change in risk profile.

Factors that could negatively impact the ratings include significant deterioration in risk-adjusted capitalization and/or underwriting leverage, weather events negatively impacting earnings and/or the balance sheet, a trend of statutory operating losses, elevated financial leverage or reduced service-entity earnings or distributions, and/or an unfavorable change in risk profile.

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Methodology