UNIVERSAL INSURANCE HOLDINGS, INC.UVE
UNIVERSAL INSURANCE HOLDINGS, INC. Income Taxes Disclosure
INCOME TAXES
Significant components of the income tax provision are as follows for the periods presented (in thousands):
| For the Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Current: | ||||||||||||||||||||
| Federal | $ | 47,476 | $ | 23,088 | $ | 13,923 | ||||||||||||||
| State and local | 10,072 | 5,165 | 3,194 | |||||||||||||||||
| Total current expense | 57,548 | 28,253 | 17,117 | |||||||||||||||||
| Deferred: | ||||||||||||||||||||
| Federal | 2,367 | (3,371) | 4,840 | |||||||||||||||||
| State and local | 203 | 801 | (431) | |||||||||||||||||
| Total deferred expense (benefit) | 2,570 | (2,570) | 4,409 | |||||||||||||||||
| Income tax expense (benefit) | $ | 60,118 | $ | 25,683 | $ | 21,526 | ||||||||||||||
The following table reconciles the statutory federal income tax rate to the Company’s effective income tax rate for the periods presented:
| For the Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Federal statutory tax rate | 21.0 | % | 21.0 | % | 21.0 | % | ||||||||||||||
| Increases (decreases) resulting from: | ||||||||||||||||||||
| State income tax, net of federal tax benefit | 3.2 | % | 5.1 | % | 2.2 | % | ||||||||||||||
| Disallowed compensation | 1.0 | % | 2.9 | % | 1.5 | % | ||||||||||||||
| Effect of change in tax rate | 0.1 | % | 0.1 | % | — | % | ||||||||||||||
| Disallowed meals & expenses | 0.1 | % | 0.3 | % | 0.2 | % | ||||||||||||||
| Excess tax (benefit) shortfall | (0.5) | % | 1.4 | % | — | % | ||||||||||||||
| Other, net | (0.2) | % | (0.4) | % | (0.5) | % | ||||||||||||||
| Effective income tax rate | 24.7 | % | 30.4 | % | 24.4 | % | ||||||||||||||
The below table presents the income tax expense/(benefit) reconciliation for the periods below (in thousands):
| For the Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| $ | 51,045 | $ | 17,768 | $ | 18,553 | |||||||||||||||
| Increases (decreases) resulting from: | ||||||||||||||||||||
| State income tax, net of federal tax benefit | 7,779 | 4,292 | 1,963 | |||||||||||||||||
| Disallowed compensation | 2,530 | 2,427 | 1,246 | |||||||||||||||||
| Effect of change in tax rate | 100 | 78 | (30) | |||||||||||||||||
Disallowed meals & expenses | 344 | 286 | 185 | |||||||||||||||||
| Excess tax (benefit) shortfall | (1,109) | 1,204 | (20) | |||||||||||||||||
| Other, net | (571) | (372) | (371) | |||||||||||||||||
| Total income tax expense/(benefit) | $ | 60,118 | $ | 25,683 | $ | 21,526 | ||||||||||||||
The table below presents federal and state income taxes paid during the year (in thousands), with the majority of state income tax payments made in Florida (in thousands):
| For the Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
Federal | $ | 28,179 | $ | 24,550 | $ | 9,645 | ||||||||||||||
State and local | 7,377 | 3,020 | 57 | |||||||||||||||||
Total income taxes paid | $ | 35,556 | $ | 27,570 | $ | 9,702 | ||||||||||||||
The Company recognized an excess income tax benefit of $1.1 million during the year ended December 31, 2025 and an income tax shortfall of $1.2 million during the year ended December 31, 2024 from stock-based compensation awards that vested and/or were exercised.
The Company adopted the standard for Corporate Alternative Minimum Tax (“CAMT”), reflected in the Inflation Reduction Act, enacted on August 16, 2022, for the reporting period beginning January 1, 2023. The Company was not subject to the provisions of the CAMT section of the Inflation Reduction Act of 2022.
The Company accounts for income taxes using a balance sheet approach. As of December 31, 2025 and 2024, the significant components of the Company’s deferred income taxes consisted of the following (in thousands):
| As of December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Deferred income tax assets: | ||||||||||||||
| Unearned premiums | $ | 38,919 | $ | 39,022 | ||||||||||
Advanced premium | 2,915 | 2,210 | ||||||||||||
| Unpaid losses and LAE | 5,525 | 4,812 | ||||||||||||
| Share-based compensation | 1,730 | 2,025 | ||||||||||||
| Accrued wages | 142 | 207 | ||||||||||||
| Allowance for uncollectible receivables | 598 | 190 | ||||||||||||
| Net operating loss carryforwards | 5,225 | 8,000 | ||||||||||||
| Other comprehensive income | 8,408 | 20,483 | ||||||||||||
| Other | 694 | 754 | ||||||||||||
| Total deferred income tax assets | 64,156 | 77,703 | ||||||||||||
| Deferred income tax liabilities: | ||||||||||||||
| Deferred policy acquisition costs, net | (31,348) | (29,749) | ||||||||||||
| Fixed assets | (3,783) | (4,075) | ||||||||||||
| Other comprehensive income | (937) | (1,232) | ||||||||||||
| Unpaid loss and LAE transition adjustment | — | (89) | ||||||||||||
| Other | (430) | (395) | ||||||||||||
| Total deferred income tax liabilities | (36,498) | (35,540) | ||||||||||||
Deferred income tax asset, net | $ | 27,658 | $ | 42,163 | ||||||||||
At each balance sheet date, management assesses the need to establish a valuation allowance that reduces deferred income tax assets when it is more likely than not that all, or some portion, of the deferred income tax assets will not be realized. A valuation allowance would be based on all available information including the Company’s assessment of uncertain tax positions and projections of future taxable income and capital gain from each tax-paying component in each jurisdiction, principally derived from business plans and available tax planning strategies.
Deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax basis of assets and liabilities at the enacted tax rates. The Company reviews its deferred tax assets regularly for recoverability. Management has reviewed all available evidence, both positive and negative, in determining the need for a valuation allowance with respect to the gross deferred tax assets. In determining the manner in which available evidence should be weighted, management has determined that the need for a valuation allowance is not warranted.
The Company has adopted Accounting for Uncertainty in Income Taxes (“ASC 740”) which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. ASC 740 provides a threshold for the financial statement recognition and measurement of an income tax position taken or expected to be taken in an income tax return. The
Company’s policy is to classify interest and penalties related to unrecognized tax positions, if any, in its provision for income taxes. As of December 31, 2025, 2024, and 2023, the Company determined that no uncertain tax liabilities are required.
The Company filed a consolidated federal income tax return for the tax years ended December 31, 2024, 2023 and 2022 and intends to file the same for the tax year ended December 31, 2025. The tax allocation agreement between the Company and the Insurance Entities provides that they will incur income taxes based on a computation of taxes as if they were stand-alone taxpayers. The computations are made utilizing the financial statements of the Insurance Entities prepared on a statutory basis of accounting and prior to consolidating entries which include the conversion of certain balances and transactions of the statutory financial statements to a GAAP basis.
During the 2025 tax year, the Company was subject to audit by the state of New York for the years ending 2021 through 2023. The audit is still ongoing, however management does not anticipate the result of this audit to be material. The Company also concluded its audit with the state of Minnesota resulting in an immaterial adjustment. The Company files its income tax returns as prescribed by the tax laws of the jurisdictions in which it operates. As of December 31, 2025, the Company’s 2022 through 2024 tax years are still subject to examination by the Internal Revenue Service and various tax years remain open to examination in certain state jurisdictions.
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.