Universal Insurance Holdings, Inc. (NYSE:UVE) Files An 8-K Other Events

Item8.01

Universal Property Casualty Insurance Company (UPCIC) and
American Platinum Property and Casualty Insurance Company (APPCIC
and together with UPCIC, the Insurance Entities), each a
wholly-owned subsidiary of Universal Insurance Holdings, Inc.
(Company), have completed the placement of their respective
2017-2018 reinsurance programs, effective June1, 2017.

Below is a description of our 2017-2018 reinsurance program.
Although the terms of the individual contracts vary, the Company
believes the overall terms of the 2017-2018 reinsurance program
are more favorable than the 2016-2017 reinsurance program. There
can be no assurance that our actual results of operations or
financial condition will be positively affected by the 2017-2018
reinsurance program.

The Insurance Entities are responsible for insured losses related
to catastrophic events in excess of coverage provided by their
reinsurance programs. The Insurance Entities also remain
responsible for insured losses notwithstanding the failure of any
reinsurer to make payments otherwise due to the Insurance
Entities. The Insurance Entities inability to satisfy valid
insurance claims resulting from catastrophic events could have a
material adverse effect on the Companys results of operations,
financial condition and liquidity.

UPCICs 2017-2018 Reinsurance Program

Third-Party Reinsurance

Our annual reinsurance program, which is segmented into layers of
coverage, as is industry practice, protects us against excess
property catastrophe losses. Our 2017-2018 reinsurance program
includes the mandatory coverage required by law to be placed with
the Florida Hurricane Catastrophe Fund (FHCF), in which we have
elected to participate at 90%, or the highest level, and also
includes private reinsurance below, alongside and above the FHCF
layer. In placing our 2017-2018 reinsurance program, we obtained
multiple years of coverage for an additional portion of the
program. We believe this multi-year arrangement will allow us to
capitalize on favorable pricing and contract terms and conditions
and allow us to mitigate uncertainty with respect to the price of
future reinsurance coverage, our single largest cost.

The total cost of UPCICs private catastrophe reinsurance program
for all states as described below, effective June1, 2017 through
May31, 2018, is $155.5million. In addition, UPCIC has purchased
reinstatement premium protection as described below, the cost of
which is $25.7million. The largest private participants in UPCICs
reinsurance program include leading reinsurance companies and
providers such as Nephila Capital, Everest Re, RenaissanceRe,
Chubb Tempest Re and Lloyds of London syndicates.

UPCICs Retention

UPCIC has a net retention of $35million per catastrophe event for
losses incurred, in all states, up to a first event loss of
$2.65billion. UPCIC also purchases a separate underlying
catastrophe program to further reduce its retention for all
losses occurring in any state other than Florida (the Other
States Reinsurance Program). UPCIC retains only $5million under
its Other States Reinsurance Program in the first event and only
$1million under its Other States Reinsurance Program for the
second through fourth events. These retention amounts are gross
of any potential tax benefit we would receive in paying such
losses.

First Layer

Immediately above UPCICs net retention, we have $55million of
reinsurance coverage from third-party reinsurers for up to four
separate catastrophic events, for all states. Specifically, we
have purchased reinsurance coverage for the first and third
catastrophic events, and each such coverage allows for one
reinstatement upon the payment of reinstatement premiums, which
would cover the second and fourth catastrophic events. This
coverage has been obtained from three contracts as follows:

For the first two contracts above, to the extent that all of our
coverage or a portion thereof is exhausted in a catastrophic
event, we have purchased reinstatement premium protection to pay
the required premium necessary for the reinstatement of these
coverages.

Second Layer

Above the first layer, for losses exceeding $90million, we have
purchased a second layer of coverage for losses up to $445million
in other words, for the next $355million of losses. This coverage
has been obtained from two contracts as follows:

In this layer, to the extent that all of our coverage or a
portion thereof is exhausted in a catastrophic event, we have
purchased reinstatement premium protection to pay the required
premium necessary for the reinstatement of these coverages. Both
of these contracts extend coverage to all states.

Third Layer

Above the first and second layers, we have purchased a third
layer of coverage for losses up to $540million in other words,
for the next $95million of losses. This coverage was obtained
from two contracts as follows:

In this layer, to the extent that all of our coverage or a
portion thereof is exhausted in a catastrophic event, we have
purchased reinstatement premium protection to pay the required
premium necessary for the reinstatement of these coverages. Both
of these contracts extend coverage to all states.

Fourth, Fifth and Sixth Layers

In the fourth, fifth and sixth layers, we have purchased
reinsurance for $55million of coverage in excess of $540million
in losses incurred by us (net of the FHCF layer), $193million of
coverage in excess of $595million in losses incurred by us (net
of the FHCF layer), and $125million of coverage in excess of
$788million, respectively, for a total of $878million of coverage
(net of the FHCF layer) by third-party reinsurers. With respect
to the fourth layer, to the extent that all of our coverage or a
portion thereof is exhausted in a catastrophic event, we have
purchased reinstatement premium protection to pay the required
premium necessary for the reinstatement of this coverage. All
three layers coverage extends to all states.

UPCIC structures its reinsurance coverage into layers and
utilizes a cascading feature such that the second, third, fourth,
fifth and sixth reinsurance layers all attach at $90million. Any
layers above the $90million attachment point are excess of loss
over the immediately preceding layer. If the aggregate limit of
the preceding layer is exhausted, the next layer cascades down in
its place for future events. This means that, unless losses
exhaust the top layer of our coverage, we are exposed to only
$35million in losses, pre-tax, per catastrophe for each of the
first four events. In addition to tax benefits that could reduce
our ultimate loss, we anticipate that certain fees paid to our
subsidiary service providers by our Insurance Entities and,
indirectly, our reinsurers, would also increase during an active
hurricane season, which could also offset claim-related losses we
would have to pay on our insurance policies.

Other States Reinsurance Program

The total cost of UPCICs private catastrophe reinsurance program
for other states as described below, effective June1, 2017
through May31, 2018, is $8.9million. In addition, UPCIC has
purchased reinstatement premium protection as described below,
the cost of which is $1.85million.

Effective June1, 2017 through June1, 2018, under an excess
catastrophe contract specifically covering risks located outside
the state of Florida and intended to further reduce UPCICs
$35million net retention, as noted above, UPCIC has obtained
catastrophe coverage of $30million in excess of $5million
covering certain loss occurrences, including hurricanes, in
states outside of Florida. This catastrophe coverage has a second
full limit available with additional premium calculated pro rata
as to amount and 50% as to time, as applicable. All catastrophe
layers are placed with a cascading feature so that all capacity
could be made available in excess of $5million under certain loss
scenarios. Further, UPCIC purchased subsequent catastrophe event
excess of loss reinsurance specifically covering risks outside of
Florida to cover certain levels of loss through four catastrophe
events including hurricanes. Specifically, UPCIC obtained
catastrophe coverage that covers 50% of $4,000,000 excess of
$1,000,000 in excess of $4,000,000 otherwise recoverable. This
coverage has two free reinstatements and a total of $12,000,000
of coverage available to UPCIC.

In certain circumstances involving a first catastrophic event
impacting both Florida and other states, UPCICs retention could
result in pre-tax net liability as low as $5,000,000 the
$35million net retention under the all states reinsurance program
could be offset by as much as $30million in coverage under the
Other States Reinsurance Program or 1.5% of UPCICs statutory
policyholders surplus as of March31, 2017.

FHCF

UPCICs third-party reinsurance program supplements the FHCF
coverage we are required to purchase every year. The limit and
retention of the FHCF coverage we receive each year is subject to
upward or downward adjustment based on, among other things,
submitted exposures to the FHCF by all participants. As of June1,
2017, we estimate our FHCF coverage includes a maximum
provisional limit of 90% of $1,930million, or $1,737million, in
excess of $595million. The estimated premium that UPCIC plans to
cede to the FHCF for the 2017 hurricane season is $116.6million.

Coverage purchased from third-party reinsurers, as described
above, adjusts to provide coverage for certain losses not
otherwise covered by the FHCF. The FHCF coverage cannot be
reinstated once exhausted, but it does provide coverage for
multiple events. The FHCF coverage extends only to losses to our
Florida portfolio due to a land falling hurricane.

The third-party reinsurance we purchase for UPCIC is therefore
net of FHCF recovery. When our FHCF and third-party reinsurance
coverages are taken together, UPCIC has reinsurance coverage of
up to $2,650million for the first event, as illustrated by the
graphic below. Should a catastrophic event occur, we would retain
up to $35million pre-tax for each catastrophic
event, and would also be responsible for any additional losses
that exceed our top layer of coverage.