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KBRA assigned a BBB issuer rating to Universal Insurance Holdings, Inc. (NYSE: UVE) and a BBB preliminary long-term credit rating (LTCR) to UVE’s proposed $100 million fixed-rate senior unsecured notes due 2031. The Outlook for both ratings is Stable.
UVE plans to use the net proceeds from the proposed offering to refinance its existing $100 million 5.625% senior unsecured notes due November 30, 2026, extending UVE’s debt maturity profile to 2031. UVE also expects to use proceeds for general corporate purposes.
KBRA said the notes are expected to be senior unsecured obligations of UVE, ranking equally with UVE’s current and future senior unsecured indebtedness. The notes are expected to remain structurally subordinated to policyholder obligations and other liabilities of UVE’s subsidiaries.
KBRA’s BBB issuer rating reflects a two-notch differential from the A- insurance financial strength ratings (IFSRs) assigned to Universal Property & Casualty Insurance Company (UPCIC) and American Platinum Property and Casualty Insurance Company (APPCIC).
The rating reflects UVE’s structural subordination to its regulated insurance subsidiaries and regulatory limits on insurance subsidiary dividends. These factors are partially offset by holding company liquidity resources, substantial recurring non-insurance subsidiary cash flow, modest financial leverage, strong debt service capacity, and demonstrated support of the operating companies.
KBRA said UVE’s holding company financial flexibility is supported by substantial recurring dividends and distributions from non-insurance subsidiaries that are not subject to ordinary insurance subsidiary dividend limitations. From 2016 through 2025, UVE received approximately $1.3 billion of dividends and distributions from non-insurance consolidated subsidiaries.
KBRA added that recent holding company liquidity and debt service have not relied on ordinary dividends from UPCIC or APPCIC. KBRA characterized this recurring, largely fee-based cash flow as supporting holding company liquidity, debt service, shareholder distributions, and the ability to provide capital support to the regulated insurance subsidiaries.
KBRA noted that UVE’s FY2025 operating company statutory results and consolidated GAAP results improved materially.
KBRA said the preliminary BBB debt rating reflects the notes’ expected senior unsecured position in UVE’s capital structure, modest leverage, and very strong debt service capacity. KBRA also stated its view that the contemplated refinancing would not materially weaken UVE’s leverage or liquidity profile.
KBRA said the ratings could be upgraded if the IFSRs of UVE’s key operating subsidiaries are upgraded.
The ratings could be downgraded if the IFSRs of UVE’s key operating subsidiaries are downgraded, if financial leverage becomes elevated, or if service-entity earnings or distributions decline.
KBRA referenced its “Insurance: Insurer & Insurance Holding Company Global Rating Methodology.” Disclosures regarding substantially material sources used to prepare the credit rating and information on the methodology, including material models and sensitivity analyses of key rating assumptions, are available in the Information Disclosure Form(s) referenced by KBRA.
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