Universal Insurance Holdings, Inc. Reports First-Quarter 2008 Financial Results

FORT LAUDERDALE, FL--(Marketwire - May 12, 2008) - Universal Insurance Holdings, Inc. (AMEX: UVE)

--  Earnings per diluted share grew 16.7 percent in the first quarter of
    2008 versus the 2007 first quarter
--  Stockholders' equity increased to $86.4 million at March 31, 2008, up
    19.1 percent from $72.6 million at December 31, 2007
    

Universal Insurance Holdings, Inc. (the Company) (AMEX: UVE), a vertically integrated insurance holding company, announced first-quarter 2008 net income of $14.3 million, or $0.35 per diluted share, compared to $12.4 million, or $0.30 per diluted share, in the first quarter of 2007.

UPCIC, the Company's wholly-owned regulated insurance subsidiary, saw continued growth in its policy count as the Company was servicing approximately 399,000 homeowners' and dwelling fire insurance policies as of March 31, 2008, up from 374,000 policies at December 31, 2007. The increase in the number of policies in-force is the result of heightened relationships with existing agents, an increase in new agents, a new web-based policy administration platform, and the disruption in the marketplace following the windstorm catastrophes in 2004 and 2005.

Notwithstanding an increase in the policies in-force, in-force premiums were approximately $504.0 million as of March 31, 2008, versus $504.5 million at December 31, 2007, while gross premiums written decreased 3.3 percent to $126.7 million in the first quarter of 2008, as compared to $131.0 million for the same period of 2007, both primarily a result of a decrease in premium rates. As the Company has previously discussed, a government mandated rate decrease by the Florida legislature resulted in rate decreases averaging 11.1 percent statewide on homeowners' policies and 2.3 percent statewide on dwelling fire policies. These reductions were approved by the Florida Office of Insurance Regulation (OIR) and implemented in UPCIC's rates on June 1, 2007. The effect of these rate decreases have been flowing through the Company's book of business as it renews policies such that the full impact of the premium decreases on direct premium written should be completed by May 31, 2008. In addition, the Company believes premium discounts resulting from mitigation efforts implemented by the Florida legislature which became effective June 1, 2007 for new business, and August 1, 2007 for renewal business, should diminish during the third quarter of 2008 as a number of insureds have previously qualified. Also, rate decreases of 4.1 percent statewide for homeowners' policies and 0.2 percent statewide for dwelling fire policies were approved by the OIR and implemented with effective dates in January 2008 for the homeowners' program and March 2008 for the dwelling fire program. The effect of these rate decreases have begun to flow through the Company's book of business such that the full impact of the premium decreases on direct premium written should be completed by January 2009 for the homeowners' program and March 2009 for the dwelling fire program. Importantly, UPCIC saw a reduction in operating costs, which has allowed the Company to continue increasing its in-force policies, as described above, in a rate adequate manner.

In the first quarter of 2008, net premiums earned decreased 11.0 percent to $35.1 million from $39.4 million in the 2007 first quarter, mainly related to a decrease in direct premiums written and an increase in ceded premiums earned related to changes in the reinsurance program, as the Company purchased additional coverage in the 2008 period as compared to the 2007 period.

Net investment income decreased 54.5 percent to $1.2 million for the three-month period ended March 31, 2008, from $2.7 million for the same period ended March 31, 2007. The decrease is primarily a result of a lower interest rate environment during the 2008 period, coupled with lower investable cash balances in the 2008 quarter versus the same period in 2007.

Comparing the first quarter of 2008 with the same period of 2007, commission revenue increased 191.9 percent to $6.9 million from $2.4 million, mainly because of an increase in the managing general agent's policy fee income and a greater amount of reinsurance commission sharing. Greater reinsurance commission sharing is attributable to $3.9 million of the increase, while $600 thousand of the increase is a result of an increase in the managing general agent's policy fee income.

Other revenue increased to $1.1 million for the three-month period ended March 31, 2008, from $52 thousand for the three-month period ended March 31, 2007. The increase in other revenue is primarily attributable to fees earned on new payment plans offered to policyholders, as such payment plans were not available during the 2007 period.

Net losses and loss adjustment expenses (LAE) increased 3.0 percent to $12.7 million in the 2008 first quarter from $12.4 million in the same period in 2007. The Company's net loss ratio, or net losses and LAE as a percentage of net earned premium, for the three-month period ended March 31, 2008, was 36.3 percent compared to 31.3 percent for the three-month period ended March 31, 2007. The increase in the net loss ratio comprises three primary factors: (1) Greater losses and LAE on a direct basis, in the 2008 period as compared to the 2007 period; (2) Lower net earned premium, the denominator of the ratio, because of higher reinsurance costs in the 2008 period as compared to the 2007 period which were mitigated by (3) less prior-year adverse loss and LAE development in the 2008 period as compared to the 2007 period. Although reinsurance rates have decreased, Universal's total reinsurance costs are higher as the Company purchased additional coverage in the 2008 period as compared to the 2007 period.

First-quarter 2008 general and administrative expenses decreased 18.1 percent to $8.2 million from $10.0 million in the 2007 first quarter. The decrease in general and administrative expenses was a result of several factors, including changes in commission expense and ceding commissions. Commission expenses decreased 8.3 percent to $14.3 million for the three-month period ended March 31, 2008, from $15.6 million for the three-month period ended March 31, 2007. Ceding commissions earned increased by approximately $1.6 million to $19.5 million for the three-month period ended March 31, 2008, from $17.9 million for the three-month period ended March 31, 2007. This increase in ceding commissions was a result of an increase in the ceding commission rate to 31.0 percent for the three-month period ended March 31, 2008, as compared to 28.0 percent for the three-month period ended March 31, 2007. The increase in ceding commissions decreased general and administrative expenses by an equal amount.

The Company's net income taxes were 38.7 percent of pretax income for the three-month period ended March 31, 2008, and 44.2 percent for the three-month period ended March 31, 2007. The decrease is primarily due to certain expenses that were not allowed as a tax deductible expense for the three-month period ended March 31, 2007. The disallowance had the effect of increasing taxable income and, therefore, income taxes, during the 2007 period. There were no similar expenses disallowed for income tax purposes for the three-month period ended March 31, 2008.

For the three-month period ended March 31, 2008, stockholders' equity increased to $86.4 million from $72.6 million at December 31, 2007, representing growth of 19.1 percent. As of March 31, 2008, the Company's statutory capital and surplus was $108.5 million versus $98.7 million at December 31, 2007.

As announced on January 23, 2008, Universal's board of directors declared a dividend of $0.10 per share on its common stock. The dividend is payable on August 7, 2008, to stockholders of record as of July 9, 2008. Future cash dividend payments are necessarily subject to business conditions, the Company's financial position, and requirements for working capital and other corporate purposes. The Company's board of directors intends to evaluate the possibility of paying future dividends on a quarter-by-quarter basis.

Management Comments

Bradley I. Meier, president and chief executive officer, commented, "Our results during the first quarter of 2008 included continued growth in policy counts, earnings per share, and stockholders' equity. With respect to our planned expansion to Texas, Hawaii, Georgia, South Carolina and North Carolina, we are optimistic that we will receive our licenses for each state by the third quarter of this year."

About Universal Insurance Holdings, Inc.

The Company is a vertically integrated insurance holding company. Through its subsidiaries, the Company is currently engaged in insurance underwriting, distribution and claims. UPCIC, which generates revenue from the collection and investment of premiums, is one of the top five writers of homeowners' insurance policies in the state of Florida and has aligned itself with well-respected service providers in the industry.

Readers should refer generally to reports filed by the Company with the Securities and Exchange Commission (SEC), and specifically to the Company's Form 10-KSB for the year ended December 31, 2007, for a discussion of the risk factors that could affect its operations. Such factors include, without limitation, exposure to catastrophic losses; reliance on the Company's reinsurance program; underwriting performance on catastrophe and non-catastrophe risks; the ability to maintain relationships with customers, employees or suppliers; and competition and its effect on pricing, spending, third-party relationships and revenues. Additional factors that may affect future results are contained in the Company's filings with the SEC, which are available on the SEC's web site at http://www.sec.gov. The Company disclaims any obligation to update and revise statements contained in this press release based on new information or otherwise.

Cautionary Language Concerning Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "anticipate," and "project," and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Such statements may include, but not be limited to, projections of revenues, income or loss, expenses, plans, and assumptions relating to the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future results could differ materially from those described in forward-looking statements.

            UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                               (Unaudited)

                                                 For the Three-Month
                                               Periods Ended March 31,
                                                 2008            2007
                                             -------------   -------------
PREMIUMS EARNED AND OTHER REVENUES
  Direct premiums written                    $ 126,667,669   $ 130,989,353
  Ceded premiums written                       (89,770,703)    (94,076,043)
                                             -------------   -------------
    Net premiums written                        36,896,966      36,913,310
  (Increase) decrease in net unearned premium   (1,803,571)      2,524,953
                                             -------------   -------------
    Premiums earned, net                        35,093,395      39,438,263
  Net investment income                          1,240,878       2,726,221
  Commission revenue                             6,867,187       2,352,856
  Other revenue                                  1,083,013          51,702
                                             -------------   -------------

    Total premiums earned and other revenues    44,284,473      44,569,042
                                             -------------   -------------

OPERATING COSTS AND EXPENSES
  Losses and loss adjustment expenses           12,725,862      12,355,583
  General and administrative expenses            8,209,374      10,025,226
                                             -------------   -------------

    Total operating costs and expenses          20,935,236      22,380,809
                                             -------------   -------------

INCOME BEFORE INCOME TAXES                      23,349,237      22,188,233

  Income taxes, current                         10,557,716       9,374,434
  Income taxes, deferred                        (1,516,795)        438,970
                                             -------------   -------------
    Income taxes, net                            9,040,921       9,813,404
                                             -------------   -------------

NET INCOME                                   $  14,308,316   $  12,374,829
                                             =============   =============

Basic net income per common share            $        0.39   $        0.35
                                             =============   =============

Weighted average of common shares
 outstanding - Basic                            36,946,000      34,999,000
                                             =============   =============

Fully diluted net income per share           $        0.35   $        0.30
                                             =============   =============

Weighted average of common shares
 outstanding - Diluted                          41,327,000      41,103,000
                                             =============   =============

Cash dividend declared per common share      $        0.10   $        0.07
                                             =============   =============



            UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED BALANCE SHEETS
                             March 31, 2008

                                              (Unaudited)
                                               March 31,     December 31,
                                                 2008            2007
                      ASSETS                 -------------   -------------
Cash and cash equivalents                    $ 263,860,785   $ 214,745,606
Investments                                      1,584,473               0
Real estate, net                                 3,473,542       3,392,827
Prepaid reinsurance premiums                   172,673,955     172,672,795
Reinsurance recoverables                        56,194,811      46,399,265
Premiums and other receivables, net             43,628,725      38,045,097
Property and equipment, net                      1,027,184         874,430
Deferred income taxes                           15,719,750      14,202,956
Other assets                                       792,592         860,389

                                             -------------   -------------
    Total assets                             $ 558,955,817   $ 491,193,365
                                             =============   =============

    LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Unpaid losses and loss adjustment expenses   $  67,281,057   $  68,815,500
Unearned premiums                              256,545,928     254,741,198
Deferred ceding commission, net                  2,220,989       2,122,269
Accounts payable                                 3,248,280       2,972,147
Reinsurance payable, net                        72,963,598      33,888,350
Federal and state income taxes payable           7,059,962               0
Dividends payable                                7,028,319       3,241,145
Other accrued expenses                          17,393,704      16,799,307
Other liabilities                               13,791,639      11,035,444
Loans payable                                            0           2,820
Long-term debt                                  25,000,000      25,000,000

                                             -------------   -------------
    Total liabilities                          472,533,476     418,618,180
                                             -------------   -------------

STOCKHOLDERS' EQUITY:
Cumulative convertible preferred stock, $.01
 par value                                           1,387           1,387
    Authorized shares - 1,000,000
    Issued shares - 138,640
    Outstanding shares - 138,640
    Minimum liquidation preference - $1,419,700
Common stock, $.01 par value                       408,232         393,072
    Authorized shares - 55,000,000
    Issued shares - 40,823,103 and 39,307,103
    Outstanding shares - 37,022,155 and
     36,012,729
Treasury shares at cost - 900,948 and
 394,374 shares                                 (4,381,980)       (974,746)
Common stock held in trust, at cost -
 2,900,000 shares                               (2,349,000)     (2,349,000)
Additional paid-in capital                      31,510,373      24,779,798
Retained earnings                               61,233,329      50,724,674
                                             -------------   -------------
    Total stockholders' equity                  86,422,341      72,575,185
                                             -------------   -------------
    Total liabilities and stockholders'
     equity                                  $ 558,955,817   $ 491,193,365
                                             =============   =============

Contact Information: Investor Contact: Philip Kranz Dresner Corporate Services 312-780-7240 pkranz@dresnerco.com