Universal Insurance Holdings' (UVE) CEO Sean Downes on Q2 2016 Results - Earnings Call Transcript

| About: Universal Insurance (UVE)
This article is now exclusive for PRO subscribers.

Universal Insurance Holdings Inc. (NYSEMKT:UVE) Q2 2016 Earnings Conference Call July 28, 2016 4:45 PM ET

Executives

Matt Palmieri - SVP of Finance & Statutory Controller

Sean Downes - Chairman & Chief Executive Officer

Jon Springer - Director, President & Chief Risk Officer

Frank Wilcox - Chief Financial Officer

Analysts

Lincoln Bransbury - Private Investor

Rosh Rahmani - KBW

Samir Khare - Capital Returns Management

Operator

Good day ladies and gentlemen and welcome to the Universal Insurance Holdings Inc, second quarter 2016 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 call maybe recorded. I would like to introduce your host for today's conference, Matt Palmieri, Senior Vice President. Sir, you may begin.

Matt Palmieri

Thank you, and good afternoon, welcome to the second quarter 2016, earnings conference call for Universal Insurance Holdings Inc. With me today are Sean Downes, Chairman & Chief Executive Officer; Jon Springer our Director, President & Chief Risk officer; and Frank Wilcox, Chief Financial Officer. Following Sean's opening remarks, Jon will provide an operational update and Frank will review financial results for the second quarter of 2016. The call will then be reopened for questions.

Before we begin, please note that this presentation may contain forward-looking statements about our business and financial results. Forward-looking statements reflect our current view of future events and are typically associated with the words such as believe, expect, anticipate and similar expressions. We caution those listening including investors not to rely solely on forward-looking statements as they can imply risks and uncertainties, some of which cannot be predicted or quantified and future results can differ materially from our expectations. We encourage you to carefully consider the risks described in our SEC filings with the SEC, which are available on the SECs website or the SEC filing section of our website. We do not undertake any obligation to update or correct any forward-looking statements.

With that said, I’d like to turn the presentation over to Sean Downes. Sean?

Sean Downes

Thank you, Matt. And thank you for joining us this afternoon. I will like to begin by providing some highlights from the quarter and then take a moment to review our strategy and growth initiatives. Jon will then discuss our operational highlights and Frank will conclude by discussing our financial results.

As many of your saw on our press release, we delivered another record quarter of strong financial performance. In the second quarter, we achieved net income of $33.6 million, an increase of 36.2% over the same period last year. And deluded EPS of $0.94. Both net income and EPS were higher than any other quarter in the company's history, which we believe is a testament to our consistent operational execution, the merit of our growth strategy and the continued hard work and dedication by a more than 400 employees.

The key differentiator for Universal is our focus on organically driven growth. This approach is supporting our continued expansion geographically as well as deepening our penetration of the Florida market. With the recent addition of Alabama, Universal is now operating in 13 states, including Florida. In fact, thanks to our organic growth strategy and initiatives we have in place, we have seen a consistent increase in policy count and premium value in all states in which we operate over the past two years.

At Universal, our uncompromising focus on providing high quality customer service continuous to drive our success and we continue to invest in our business areas including agency relationships, underwriting policy issuance, general administration and claims processing and settlement. We are always looking for ways to improve our customer experience and offer new innovative solutions to simplify the process of purchasing home owners insurance, which we believe we have successfully accomplished with the launch of Universal Direct; our Direct-to-Consumer online platform for Universal Property & Casualty.

We’re still in the early stages of ruling out this exciting new product, we are already making positive headway. In June we announced that Universal Direct orders first home owners policy in Minnesota and in Alabama. We then announced recently that Universal Direct went live in South Carolina and in Indiana bringing the total number of states in which it is available, to five. We intend to continue to build scale by adding additional states in the coming months. We are proud to announce that we have written an excess of a 100 policies, thus proving that this platform works and is another avenue for us to write organic profitable business. We have many joint venture opportunities available to us as we continue to evaluate the power of Universal Direct. We are excited about the future for this new unique platform.

Turning briefly to our reinsurance program which Jon will discuss in more detail. As we announced in June, we completed the 2016 '17 reinsurance programs for our subsidiaries UPCIC and APPCIC; a critical component of our broader risk management strategy. As we note at the time, our main goal was to add additional conservatism to the UPCIC reinsurance program which we believe we successfully achieved by reducing our retention for catastrophe losses in building states other than Florida, to $5 million. It's a curing over a $100 million of additional multi-year catastrophe capacity. We believe that our current reinsurance program and our focus on continuously reviewing our reinsurance coverage has allowed us to capitalize on attractive reinsurance pricing in terms between a 100% of our profitable business and effectively managed risk.

Turning now to our capital allocation strategy. We remain committed to paying an attractive dividend which we increased by $0.02 earlier this year. We also remain committed to delivering value to shareholders and in June our board authorized a $20 million share repurchase program. We will continue to pursue our balance capital allocation approach which includes dividend and share repurchases while maintaining the flexibility to execute on our strategy priorities and position the company for sustainable long term growth. Our long-term growth strategy remains disciplined and focused. We continue to see opportunity to drive further organic growth and we remain optimistic about Universal's long term prospects as we look ahead toward the second half of the year and beyond. With that, let me turn the call over to Jon.

Jon Springer

Thank you, Sean. I’d like to comment further on two items you briefly mentioned. Recent growth trends in UPCIC and the successful completion of its June 1, 2016 reentrance program. First, regarding recent growth. As Sean mentioned, we continued to see positive growth in each and every one of our active states. For 2Q '16, from a peer policy count growth standpoint, our total portfolio experienced net growth of 17,000 policies, 8500 of which came in Florida. Outside of Florida, Georgia and North Carolina led the way each experiencing net growth of 2000 policies in the quarter. It was also strong quarter for Pennsylvania and Indiana with each growing net by more than 1000 policies.

It's important to remember that we continue with our strategy of adding business organically one policy at a time. As of 06/30/16, 13.7% of UPCIC's policies in force and 18.6% of its insured values now reside outside of the state of Florida. These diversification ratios have improved in the past three months from 12.8% of policies and 17.3% of insured values. Lastly, as announced in early June the UPCIC reinsurance program was completed with an effective date of June 1, 2016. The details were contained within the 8K but I want to further highlight a few important features.

As Sean mentioned, the over arching theme of this year's reinsurance placement was conservatism and we accomplished it in several different ways. First, was maintaining a $35 million catastrophe retention for Florida despite a nearly 9% year-over-year growth in Florida exposures. A $35 million pre-tax retention now represents less than 12% of UPCIC's current policy holder surplus, were 16.4% at this time last year. Second, we increased the top of our vertical tower for a single Florida event to 2.4 billion as of 06/30/16, this represents coverage to nearly one in 250 year event as modeled by RMS RiskLink v15.

Third, we successfully added in a new underlying catastrophe program that covers all states other than Florida. The new retention for states outside of Florida is now just 5 million. Fourth, to further insulate ourselves from a potential industry wide increase in reinsurance pricing in 2017 '18 we added over $100 million of additional multi-year capacity into our program, bringing the total capacity with secured pricing for 2017 '18 to over 300 million. And lastly, all of these changes were accomplished while maintaining a consistent percent of projected premium spent on catastrophe reentrance. With that I will now turn the discussion over to Frank Wilcox for our financial highlights.

Frank Wilcox

Thank you, Jon. As Sean stated, we achieved another record quarter with the highest net income and earnings per share in company history. Net income for the second quarter of 2016, totaled 33.6 million; an increase of 36.2%, compared to 24.7 million in 2015.

Diluted EPS for the second quarter was $0.94, which was also up 36.2% from the same quarter in 2015. Rate adequate organic growth combined with our decision to keep all our profits by eliminating use of quota share reinsurance effective June 2015 were the primary drivers behind these results. Earned premiums, total revenues, net income and diluted EPS were higher than any other quarter in the company's history. We maintained our combined ratio in the low 70 percentile range with 73.4% for the second quarter of 2016 compared to 73% for the same quarter in 2015.

The increase in net earned premiums of $43.6 million or 38.6% for the second quarter compared to the same period in 2015 was the result of both an increase in direct earned premiums of $22 million, driven purely from organic growth and a net decrease in ceded earned premiums of $21.5 million. The net decrease in the ceded earned premiums is comprised of the absence of ceded earned premiums to quota share reinsurers for the second quarter of 2016, partially offset by an increase in ceded earned premiums to catastrophe and excess of loss reinsurers due to an increase in exposures from organic growth.

Net investment income for the quarter of $2.1 million was 935,000 greater than the second quarter of 2015. Cash flows generated from operations has fueled the growth in the investment portfolio which also reached an all time high for the end of any quarter of 626.5 million as of June 30, 2016. Total average investments were 574.2 million during the second quarter of 2016 compared to 454.4 million for the same period in 2015; an increase of 26.3%. We've increased deal by taking these new funds along with maturities and invested them in higher yielding securities while maintaining high credit quality.

We also took the opportunity to realize 576,000 in gains from the sale of securities in second quarter of 2016 compared to 110,000 for the same period in 2015. Commission revenue of 4.2 million for the quarter was up 736,000 as a result of overall changes and the structure of our reinsurance programs including the amount of premiums paid for reinsurance and the type of reinsurance contracts used in each program. Policy fees of 4.8 million for the quarter were up 401,000 or 9.2% year-over-year from an increase in the number of policies written during the second quarter of 2016 compared to the same period in 2015.

Losses amd LAE were 60.1 million for the three months ended June 30, 2016 compared to 39.7 million during the same period in 2015. A large portion of the $20.4 million increase in net losses and LAE was driven by the absence of losses and LAE ceded to quarter share reinsurers during the quarter, resulting from the elimination of quarter share in June of 2015. During the three months ended June 30th, 2015, we ceded 10 million to quarter share insurers not in the current quarter. Our direct loss ratio for the second quarter of 2016 was 25.8% which is in line with indications into the most recent actuarial study performed at the end of 2015.

General and administrative expenses were 54.8 million for the second quarter 2016, compared to 42.6 million for the same quarter in 2015; an increase of 12.2 million. The majority of the increase resulted from additional amortization of net deferred acquisition costs, a 12.1 million, 7.1 million of which represents the absence of ceding commission from the elimination of quarter share. The remaining increase and amortization of 5 million was driven by organic growth. Our expense ratio which is G&A as a percentage of net earned premiums for the second quarter of 2016 was 35% compared to 37.8% for the same period of 2015.

The effective income tax rate decreased to 38.7 in the second quarter of 2016 compared to 40.1% for the same period in 2015. Our effective tax rate has been decreasing from reductions and the amount of non-deductible executive compensation lower state income taxes as we diversify outside of Florida in economies of scale. Our balance sheet is strong and continues to grow with total assets reaching an all-time high of 1.1 billion. Stock holders' equity reaching an all-time-high of 351.4 million and book value per common share, reaching an all-time high of $10.02 per share as of June 30th, 2016. At this point I'd like to turn the call back to the operator.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Our first question comes from Lincoln Bransbury, Private Investor. Your line is now open.

Lincoln Bransbury

Hi gentlemen, congratulations on a fantastic quarter. I was wondering if you could help me out, could you tell if your company had any exposures to the recent storm in Hawaii.

Sean Downes

Hi, Yes. We do have business in Hawaii but luckily the hurricane that was downgraded to the tropical storm on the 23rd and the footprint of storm really did not affect our portfolio at all. We've had two claims and that have come in, most of this was flash flooding so we don't foresee us getting any more claims really attributed to Darby.

Lincoln Bransbury

Well, thank you very much. I appreciate the information and again congratulations on a great quarter.

Sean Downes

Thanks again.

Operator

Thank you. Our next question comes from the line of Rosh Rahmani [ph] of KBW. Your line is now open.

Rosh Rahmani

Hi, thanks and good afternoon. Few questions here. First, can you just probably for Frank's couple of number questions. What were direct premiums earned in the quarter?

Frank Wilcox

Direct premiums earns were 226 million 819 thousand.

Rosh Rahmani

Thanks. And was there any prior period development in the quarter on a GAAP basis?

Frank Wilcox

We were flat for the quarter. We had some redundancy in older accident years that we pushed up to 2015 but they are offsetting.

Rosh Rahmani

Okay, thanks. And was the number you mentioned before for the direct loss ratio, I just want to make sure I have that right, was it 25.8?

Frank Wilcox

That's correct.

Rosh Rahmani

Okay. And do you have last year's number for comparison: 2Q, '15?

Frank Wilcox

2Q, '15, Yes. 25.6.

Rosh Rahmani

Okay. Thanks for those answers. So, my next question so the rate on line of year 2016 2017 reinsurance program, how does that compare to 2015 2016?

Jon Springer

Thanks Rosh, this is Jon. We look at it as a rate on line across the whole program because as I alluded to my opening remarks, one of the things that we did this year was to maintain $35 million retention within the program. So, you can sort of see some misleading results. If what you are getting at is how do we do year-over-year in terms of pricing changes, we can tell you that from our risk adjusted apples-to-apples basis, we feel we saved 8% year-over-year.

To answer your question regarding the rate online, in 2015 our core cat tower the rate online was 11.1% and that same number for the core cat tower in 2016 was or is 10.7% so you see some savings there but you can also appreciate that we reinvested some of those savings into the additional conservative that I was talking about earlier.

Rosh Rahmani

Thanks. On a similar note how should we expect the seated premium ratio to trend over the next several quarters?

Jon Springer

We would expect the seated premium ratio to stabilize. It should continue in the low 30s. Subject of course to the seasonality of our direct written premium as you know and you can look at historically the second quarter is our largest quarter from a direct written premium standpoint so that seeded ratio one being a little bit lower in the second quarter and then slightly higher in the other three quarters depending on the seasonality of the business.

Rosh Rahmani

Thanks and I know you touched on some of this near prepared remarks. But I just want to take a circle back on some of the key differences and coverage and newly insurance program versus your old so it sounds like the retention has stayed the same but you are able to secure more multi-year coverage and also reduce the retention for the state outside Florida. Are there any other I guess differences that you think would be helpful for investors to be aware of?

Jon Springer

Yes, I think I touched on you reiterated them obviously the entire other state cat program is new so we purchased 30 million excess of 5 million buying that retention for any losses outside of Florida down to 5 million. It's probably worth mentioning too that the manner in which that program works is it effectively functions as a supplement to our core program so our core program has a $35 million retention any losses that we pick up outside of Florida in an advance they are single invented impacts Florida and some other states this program would serve to reduce our retention. It would not be on top of so it's not 35 plus 5, it's 35 minus whatever we could recover within the other state program. So we could be in a scenario if an event impacted Florida and say Georgia and the Carolina's we could end up with retention as low as $5 million for the entire event.

In addition you touched on the multi-year we purchased now 318 million of limit on a true multi-year basis and all of that is below the attachment of the Florida hurricane cat fund so that secures the pricing of over 60% of the capacity that we buy below the Florida hurricane cat fund to give us some nice pricing stability in the event if there any sort of industry wide pricing changes on reinsurance. Then lastly more vertical limit at the top in buying up to 2.4 billion for a first Florida event that gets us to nearly the want in 250 year level definitely an expansion at the top end of the program as well.

Rosh Rahmani

Okay thanks for the thorough answer. And then in terms of I know the retention is 35 million I know we have got a couple of million at I guess American platinum but in one in one hundred event scenario if you include reinstatements what would the one in one hundred net retention be in that scenario?

Jon Springer

Well, we buy reinstatement premium protection for all of the layers below the Florida hurricane cat fund so our exposure to reinstatement would only be the portion involved alongside the Florida hurricane cat fund getting us up to one in one hundred year event I would estimate that exposure to be approximately $10 million.

Rosh Rahmani

Okay. And then just adding on to that what was your net retention be when you take into account claims handling or brokerage income that you would be able to generate as well? And that same one in one hundred scenario.

Jon Springer

That's an interesting question. Let me start by saying obviously one in hundred year event we are talking about $1.6 billion that's a very large event. Our claims operation would of course extremely busy andling claims. So, revenues will be up, profits would be up. We've estimated that a storm that would take us to the enter point of the Florida hurricane cat fund which is 540 million, would be roughly the break point where we would recoup enough through the claims operation and through blue Atlantic to offset the retention.

So, I don't have a number exactly on a $1.6 billion event but I can tell you that 540 million is enough to replace the $35 million retention.

Rosh Rahmani

Okay, that's great, thanks. Moving on to a different topic. Has the frequency or severity of they'll be changed at all in the last few months?

Sean Downes

It's been relative flat Rosh. We've seen a slight reduction in Q2. We had 720 AOB claims in quarter one, 698 in quarter two. But if you compare that to 2015, we had approximately 4633 claims in there were AOB claims compared to this first two quarters. So, it seems to be that the frequency is decreasing, the severity is down by closest numbers that we looked at about four points. So, a slight decrease in severity and a decent decrease overall as far as frequency is concerned.

Rosh Rahmani

Okay, thanks. And does Fast Track, the new claims program you put in place, does that seem to be helping in terms of combating AOB and on top of that what percentage of your claims are going through Fast Track now?

Sean Downes

Yes, it's really a total claims operation more than a fast track situation. We have our SIU division and our Fast Track team as well as our water extraction experts which I spoke about on our last quarter call. Together right now, those three groups really are handling between 70% and 74% of all of our claims that come in-house. Fast track when we say fast track, that's claims that gets noted as fast track when it being handled within a five day period and closed out. That's about 40% of that 70% number. So, we have seen a definitive positive trend with our SIU division and our fast track division handling our AOB claims as well as all claims.

Rosh Rahmani

Okay, great. And do you still feel comfortable with your initial action year 2015 loss pick being below action year 2014 loss pick?

Sean Downes

We do because that we stated previously, a lot these efficiency that we put into place more mid-year 2015, so we are really starting to see all the different efficiencies work together to work in a positive manner as it relates to our loss ratio. It's still green we understand that but we think that moving forward these numbers are going to continue to improve.

Rosh Rahmani

Okay, great. And have you filed or received approval to meet two citizens new policy language regarding AOB and if not when do you plan to do that?

Sean Downes

Yes we have actually and it's already been approved. It's approved for new business starting on 08/01/16 and 09/06/16 for renewal business.

Rosh Rahmani

09/01/16, okay.

Sean Downes

09/06/16 for renewal, 08/01/16 for new.

Rosh Rahmani

Okay, thank you. And in terms of the rating environment in Florida have you filed any rate changes there and is there the indication up and down?

Sean Downes

Yes we have actually filed an aggregate 2.6 rate increase. We have received some questions from the department in normal due course of business and we should get some finality on that within the next 30 day.

Rosh Rahmani

Okay, great. And it looks like you are still obviously growing well in Florida. Does the market there you still find it attractive?

Sean Downes

Yes, we do. I think obviously you can look at our market share, I think there is a plenty of good rate adequate business in Florida. So, I think there is some up side and I think there is some room for us to grow definitely in Florida.

Rosh Rahmani

Great. And can you talk little bit more about the direct program, the traction you are getting there and your expectations for Florida Direct?

Sean Downes

Yes. You know, we are pleasantly surprised this initiative has really only been in place for three four months. We've really started in Pennsylvania and then we added a few others; Alabama; and we added South Carolina recently; and Indiana and Minnesota. So, obviously we think we have written in excess of a 100 policies really with very limited marketing expense. We have been obviously using SEO search engine optimization, to drive as much traffic as we can to our website.

We think that overtime that the acquisition costs could be significantly lower than what it is right now and traditionally with our agents but as we stated previously, the difference between really what our marketing cost are and the traditional commission, we are pulling that money together and giving the difference back to our agents who are specifically in a territory who are appointed with us and are meeting certain criteria.

So, we are really pleased by this process. We believe we are the first insurance company to offer a policy where you can buy coverage and pay for it on one transaction and we have got a lot of good results from it and good feedback. So, we are definitely encouraged.

Rosh Rahmani

Okay, great. Lastly, how should we think about your loss and expense ratios relative to 2015 as we look forward?

Frank Wilcox

Yes. Rosh, this is Frank. I think the best way to look at those ratios would be to put a range on that and not withstanding any unforeseen events in the remainder of the year and excluding the $8.4 million severe weather events, I would be looking at range of 25 to 27 in the direct loss ratio including the 8.5 severe weather losses that we had in the first quarter be 27 to 29. And then your expense ratio, I would look at that somewhere between 36 and 38. Now, just at the point of clarification --.

Rosh Rahmani

Was that number --?

Frank Wilcox

Pardon me?

Rosh Rahmani

Was that number used on a net basis or direct?

Frank Wilcox

It's on the net basis, the expense ratio on net basis. 36.

Rosh Rahmani

Okay.

Frank Wilcox

And just as a point of clarification, I told you that the second quarter of 2015 was 25.6 that was actually the full year. The second quarter of 2015 was 24.3 and as you recall on the fourth quarter we strengthen the reserve, so the full year was 25.6.

Rosh Rahmani

Okay, great. Thank you very much and congrats for the quarter.

Frank Wilcox

Thanks again, appreciate it.

Rosh Rahmani

Thank you.

Operator

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

Samir Khare

Hi, good afternoon guys. Congratulations on the quarter. I have some follow-ups on the direct initiative. In the states you launched, in well, have you guys started your direct initiative in Florida yet?

Sean Downes

No we have not. We anticipate launching Florida end of Q3 early Q4.

Samir Khare

Okay, perfect. And just a follow-up on the AOB question that Rosh asked, you actually had 4600 claims, was that for the full year of 2015 or was that just the first two quarters 2015?

Sean Downes

No, that was for full 2015.

Samir Khare

Okay, got it. Do you have the comparison for the first two quarters by chance?

Sean Downes

Yes, give me one second. First two quarters; 720 quarter one; 698 quarter two.

Samir Khare

Do you have that for 2015?

Sean Downes

I don't have 2015 but I will get that for you.

Samir Khare

Okay, all right, fine. And then you said there was a 4 point lower severity and before is that 4 percentage points, 4 points in the loss ratio what is the measure there?

Sean Downes

It is a 4% decrease in severity.

Samir Khare

4% okay, perfect. And when you guys look at potentially in doing a buyback versus declaring special dividend, you tell me what goes with that decision process and how you guys use evaluation in that decision?

Sean Downes

You said buyback it will deliver, I'm sorry?

Samir Khare

Versus a potential special dividend.

Sean Downes

Yes. Obviously, it just comes down to really analyzing our capital. Really where is our stocks rating at an individual moment time and figuring out what is the best way is to deploy that capital. Obviously our board is heavily involved in that as well as management team but it's not an exact science, Samir, but I will tell you that the share price obviously has a direct correlation to it and that's kind of how we look at it.

Samir Khare

Okay. And then last year Q2, 2015, that still have the quarter share in effect, so the expense in that quarter would have benefited from the sitting commissions, is that right?

Sean Downes

Yes, for two months of the three.

Samir Khare

Okay. So then in fact this Q2 expense ratio on [indiscernible] and is there any…go ahead.

Sean Downes

Yes, I mean if you were to roll the expense ratios from last year to this year, last year we had 37.8% and the absence of the seeding commissions added 3.2% to that but we also had economy of scale and that brought it down by 4.1% and then we also had last quarter we talked about some initiatives that the company and its compensation committee has taken to address executive compensation in addition to attaching performance measures to certain restricted stock awards that were included in the 2013 agreements with the new agreements effective January 1 of 2016 the replace restricted stock with performance stock units. And rather than having a fix number of shares that are awarded at future date, which could have an impact on future earnings as the price goes up, it's a fixed dollar amount. So what is variable would be the number of shares. So that brought down the expense ratio in the second quarter by 1.9% so that's how you get from 37.8 down to the 35%.

Samir Khare

That's great color. Thank you. And then on fast track is there a benefit to the general and admin expense from business initiatives as well?

Sean Downes

I am sorry repeat the question.

Samir Khare

On the fast track initiative that you guys are going is there also benefit to the general and admin expense from…

Sean Downes

Yes, the fast track is part of the claims group and those expenses are included in LAE so that would not be reflected in your general administrative expenses. So there is efficiencies that would ultimately flow through the LAE ratio.

Samir Khare

Okay and as of now have you guys changed your current loss pick on the claims that are going to fast track?

Sean Downes

No, we have not. As I said earlier Samir, obviously it's a little too green. We see all of the efficiencies in place. We see lot of the improvements in place but we didn't feel like it makes a lot of sense we are now to change that currently and then we will judge it as we continue going through the rest of the year and take a look at it.

Samir Khare

Alright, great, thank you very much.

Operator

Thank you and our next question comes from the line [indiscernible] a private investor. Your line is now open.

Unidentified Analyst

Hi guys, congratulations on a good quarter. I have got couple of question. On Florida versus other states where you operate you have given percentages in number of policies in force in short value can you provide the percentage on the premium and around the total revenue that percentage how much you are running it in Florida and how much is rest of states together?

Sean Downes

Give us one second.

Frank Wilcox

I have got that number here for you. So premium is for other states portfolio one second, 79 million expressed as a percentage it would be 8.6% of our enforce premium as of import premiums as of…

Unidentified Analyst

My second question is - yes.

Frank Wilcox

I was just going to say obviously the cost of policies outside of the state of Florida is lower.

Unidentified Analyst

Okay, thank you. My second question is on this investment income, could you give me some idea how much did the UVE on this entire portfolio on the investment side. What was the total investment income contribution?

Sean Downes

The contribution on what I am sorry?

Unidentified Analyst

No, how much the UVE earned on its portfolio which is invested in fixed income equities every year taken together?

Sean Downes

Yes, well I mean the investment income for the quarter was 2.1 million and the book yield on the fixed income portfolio is 1.47.

Unidentified Analyst

Okay. My last question is how much number of employees on 30 June working in UVE _ total headcount?

Sean Downes

We have 426 employees.

Unidentified Analyst

Okay, thank you. Thank you on a good quarter. Congratulations. Thank you.

Operator

Thank you. And that concludes the Q&A session today. I would now turn the call back over Sean Downes, Chairman & Chief Executive Officer for any closing remarks.

Sean Downes

We are pleased of our performance in the second quarter and I believe we have the right strategy in place to drive continued profitable growth and shareholder value creation. Our experience and dedicated team focused underwriting discipline, robust internal capabilities, superior claims operations and strong independent agent distribution network coupled with our new universal direct platform are all competitive advantages that we believe will allow us to capitalize on the future growth prospects. In closing I would like to thank our independent agents and our employees for their hard work and dedication, as well as all of our shareholders, our Board of Directors and of course our Management Team. Thank you.

Operator

Ladies and gentlemen, thank you for participating in today’s conference. This concludes today’s conference. You may now all disconnect. Have a great day everyone.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!