##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from ______________ to ______________
 Commission File Number 001-33251
 UNIVERSAL INSURANCE HOLDINGS, INC.
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    65-0231984
(I.R.S. Employer
Identification No.)
 
   Title of each class
    
    Name of each exchange on which registeredCommon Stock, $.01 Par Value
    
    NYSE Amex LLC
  o þ
 o þ
 þ o
 o o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




---



##### Table of Contents



UNIVERSAL INSURANCE HOLDINGS, INC.
 TABLE OF CONTENTS
 Page No.PART IItem 1. Business
    
    4Item 1A. Risk Factors
    
    16Item 1B. Unresolved Staff Comments
    
    22Item 2. Properties
    
    22Item 3. Legal Proceedings
    
    22Item 4. Reserved
    
    22PART IIItem 5. Market for Registrants Common Equity, Released Stockholder Matters and Issuer
Purchases of Equity Securities
    
    22Item 6. Selected Financial Data
    
    25Item 7. Management Discussion and Analysis of Financial Condition and Results of
Operations
    
    25Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    43Item 8. Financial Statements and Supplementary Data
    
    45Item 9. Changes in Disagreements with Accountants on Accounting and Financial Disclosure
    
    85Item 9A. Controls and Procedures
    
    85Item 9B. Other Information
    
    86PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    86Item 11. Executive Compensation
    
    86Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    87Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    87Item 14. Principal Accounting Fees and Services
    
    87PART IVItem 15. Exhibits and Financial Statement Schedules
    
    87Signatures
    
    91Exhibit 21: List of SubsidiariesExhibit 23.1: CONSENT OF INDEPENDENT REGISTERD PUBLIC ACCOUNTING FIRMExhibit 31.1: CERTIFICATIONExhibit 31.2: CERTIFICATIONExhibit 32: CERTIFICATION
 2




---



##### Table of Contents



DOCUMENTS INCORPORATED BY REFERENCE
  3




---



##### Table of Contents



PART I
 
 ITEM 1. BUSINESS
 THE COMPANY
        INSURANCE BUSINESS
   4




---



##### Table of Contents



Competition
   Geographical area
    
    Policies-In-Force
    
    
    %

    
    Total Insured Value
    
    
    %Florida CountiesMiami-Dade, Broward
& Palm Beach
    
    
    184,486
    
    
    
    31.6
    %
    
    $
    40,319,049,846
    
    
    
    31.4
    %Pinellas &
Hillsborough
    
    
    72,596
    
    
    
    12.5
    %
    
    
    15,800,306,880
    
    
    
    12.3
    %Lee & Collier
    
    
    65,207
    
    
    
    11.2
    %
    
    
    12,707,136,792
    
    
    
    9.9
    %Brevard &
Indian River
    
    
    31,653
    
    
    
    5.4
    %
    
    
    6,547,873,339
    
    
    
    5.1
    %Manatee & Sarasota
    
    
    36,753
    
    
    
    6.3
    %
    
    
    7,020,463,634
    
    
    
    5.4
    %Escambia
    
    
    24,100
    
    
    
    4.1
    %
    
    
    6,592,853,082
    
    
    
    5.1
    %St. Lucie & Martin
    
    
    28,977
    
    
    
    5.0
    %
    
    
    6,295,296,072
    
    
    
    4.9
    %Duval
    
    
    13,623
    
    
    
    2.3
    %
    
    
    2,863,557,920
    
    
    
    2.2
    %All Other Counties
    
    
    116,964
    
    
    
    20.0
    %
    
    
    26,976,468,284
    
    
    
    21.0
    %Florida-Totals
    
    
    574,359
    
    
    
    98.4
    %
    
    $
    125,123,005,848
    
    
    
    97.3
    %All other states
    
    
    9,519
    
    
    
    1.6
    %
    
    
    3,428,605,294
    
    
    
    2.7
    %Total
    
    
    583,878
    
    
    
    100.0
    %
    
    $
    128,551,611,142
    
    
    
    100.0
    %
   OPERATIONS
  5




---



##### Table of Contents



AGENCY OPERATIONS
  FACTORS AFFECTING OPERATING RESULTS AND MARKET PRICE OF STOCK
  Nature of the Companys Business
   6




---



##### Table of Contents



Insurance Operations
   Reduction of in-force premium (only policies including wind coverage)Percentage of UPCIC
    
    
    
    
    
    
    
    
    
    
    Percentagepolicyholders
    
    
    
    
    
    
    
    
    
    
    reduction ofDate
    
    receiving credits
    
    
    Total credits
    
    
    In-force premium
    
    
    in-force premium6/1/2007
    
    
    1.9
    %
    
    $
    6,284,697
    
    
    $
    487,866,319
    
    
    
    1.3
    %12/31/2007
    
    
    11.8
    %
    
    $
    31,951,623
    
    
    $
    500,136,287
    
    
    
    6.0
    %3/31/2008
    
    
    16.9
    %
    
    $
    52,398,215
    
    
    $
    501,523,343
    
    
    
    9.5
    %6/30/2008
    
    
    21.3
    %
    
    $
    74,185,924
    
    
    $
    508,411,721
    
    
    
    12.7
    %9/30/2008
    
    
    27.3
    %
    
    $
    97,802,322
    
    
    $
    515,560,249
    
    
    
    16.0
    %12/31/2008
    
    
    31.1
    %
    
    $
    123,524,911
    
    
    $
    514,011,138
    
    
    
    19.4
    %3/31/2009
    
    
    36.3
    %
    
    $
    158,229,542
    
    
    $
    530,029,572
    
    
    
    23.0
    %6/30/2009
    
    
    40.4
    %
    
    $
    188,053,342
    
    
    $
    544,646,437
    
    
    
    25.7
    %9/30/2009
    
    
    43.0
    %
    
    $
    210,291,783
    
    
    $
    554,378,761
    
    
    
    27.5
    %12/31/2009
    
    
    45.2
    %
    
    $
    219,974,130
    
    
    $
    556,577,449
    
    
    
    28.3
    %3/31/2010
    
    
    47.8
    %
    
    $
    235,717,892
    
    
    $
    569,870,173
    
    
    
    29.3
    %6/30/2010
    
    
    50.9
    %
    
    $
    281,386,124
    
    
    $
    620,276,858
    
    
    
    31.2
    %9/30/2010
    
    
    52.4
    %
    
    $
    291,306,407
    
    
    $
    634,285,246
    
    
    
    31.5
    %12/31/2010
    
    
    54.2
    %
    
    $
    309,858,168
    
    
    $
    648,408,227
    
    
    
    32.3
    %
  Management of Exposure to Catastrophic Losses
  7




---



##### Table of Contents



Reliance on Third Parties and Reinsurers
  Reinsurance
  8




---



##### Table of Contents



Florida Administrative Weekly
  Adequacy of Liabilities for Losses
     9




---



##### Table of Contents



Year Ended
    
    
    Year EndedDecember 31, 2010
    
    
    December 31, 2009Balance at beginning of year
    
    $
    127,197,753
    
    
    $
    87,947,774Less reinsurance recoverable
    
    
    (62,900,913
    )
    
    
    (43,384,469
    )Net balance at beginning of year
    
    
    64,296,840
    
    
    
    44,563,305Incurred related to:Current year
    
    
    107,424,191
    
    
    
    97,630,002Prior years
    
    
    5,931,284
    
    
    
    8,503,133Total incurred
    
    
    113,355,475
    
    
    
    106,133,135Paid related to:Current year
    
    
    54,216,243
    
    
    
    52,388,374Prior years
    
    
    43,621,652
    
    
    
    34,011,226Total paid
    
    
    97,837,896
    
    
    
    86,399,600Net balance at end of year
    
    
    79,814,419
    
    
    
    64,296,840Plus reinsurance recoverable
    
    
    79,114,418
    
    
    
    62,900,913Balance at end of year
    
    $
    158,928,837
    
    
    $
    127,197,753
   10




---



##### Table of Contents



Years EndedDecember 31, 2010
    
    
    December 31, 2009Unpaid Loss and LAE, net
    
    $
    23,385,670
    
    
    $
    15,164,583IBNR loss and LAE, net
    
    
    56,428,749
    
    
    
    49,132,256Total unpaid loss and LAE, net
    
    $
    79,814,419
    
    
    $
    64,296,840Reinsurance recoverable on unpaid loss and LAE
    
    
    22,973,458
    
    
    
    15,810,646Reinsurance recoverable on IBNR loss and LAE
    
    
    56,140,960
    
    
    
    47,090,267Total reinsurance recoverable on unpaid loss
and LAE
    
    $
    79,114,418
    
    
    $
    62,900,913
  11




---



##### Table of Contents



Years Ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000Balance Sheet Liability
    
    
    158,929
    
    
    
    127,198
    
    
    
    87,948
    
    
    
    68,806
    
    
    
    49,454
    
    
    
    66,866
    
    
    
    57,823
    
    
    
    7,521
    
    
    
    6,962
    
    
    
    5,795
    
    
    
    2,516Cumulative paid as of:One year later
    
    
    
    
    
    
    88,364
    
    
    
    70,066
    
    
    
    52,666
    
    
    
    42,546
    
    
    
    79,374
    
    
    
    66,213
    
    
    
    4,195
    
    
    
    4,113
    
    
    
    7,311
    
    
    
    3,073Two years later
    
    
    
    
    
    
    
    
    
    
    91,264
    
    
    
    71,207
    
    
    
    54,815
    
    
    
    103,362
    
    
    
    81,025
    
    
    
    5,470
    
    
    
    5,156
    
    
    
    7,263
    
    
    
    3,720Three years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78,321
    
    
    
    64,781
    
    
    
    111,799
    
    
    
    92,616
    
    
    
    6,074
    
    
    
    5,447
    
    
    
    7,798
    
    
    
    3,773Four years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69,262
    
    
    
    118,509
    
    
    
    95,087
    
    
    
    6,883
    
    
    
    5,731
    
    
    
    7,991
    
    
    
    4,066Five years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    122,575
    
    
    
    97,757
    
    
    
    7,176
    
    
    
    5,860
    
    
    
    8,139
    
    
    
    4,099Six years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99,219
    
    
    
    7,356
    
    
    
    5,897
    
    
    
    8,152
    
    
    
    4,112Seven years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,384
    
    
    
    6,015
    
    
    
    8,180
    
    
    
    4,167Eight years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,017
    
    
    
    8,188
    
    
    
    4,194Nine years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,189
    
    
    
    4,200Ten years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,200Balance Sheet Liability
    
    
    158,929
    
    
    
    127,198
    
    
    
    87,948
    
    
    
    68,806
    
    
    
    49,454
    
    
    
    66,866
    
    
    
    57,823
    
    
    
    7,521
    
    
    
    6,962
    
    
    
    5,795
    
    
    
    2,516One year later
    
    
    
    
    
    
    142,999
    
    
    
    107,656
    
    
    
    80,123
    
    
    
    68,075
    
    
    
    118,656
    
    
    
    73,897
    
    
    
    6,674
    
    
    
    5,762
    
    
    
    8,294
    
    
    
    4,005Two years later
    
    
    
    
    
    
    
    
    
    
    115,486
    
    
    
    87,289
    
    
    
    69,623
    
    
    
    125,112
    
    
    
    95,165
    
    
    
    5,907
    
    
    
    6,154
    
    
    
    7,797
    
    
    
    4,167Three years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    90,868
    
    
    
    73,612
    
    
    
    124,092
    
    
    
    101,182
    
    
    
    6,536
    
    
    
    5,585
    
    
    
    8,319
    
    
    
    4,158Four years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    77,767
    
    
    
    125,249
    
    
    
    100,823
    
    
    
    7,149
    
    
    
    5,856
    
    
    
    8,056
    
    
    
    4,328Five years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    129,914
    
    
    
    101,435
    
    
    
    7,394
    
    
    
    5,993
    
    
    
    8,158
    
    
    
    4,110Six years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    101,242
    
    
    
    7,530
    
    
    
    6,012
    
    
    
    8,241
    
    
    
    4,112Seven years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,436
    
    
    
    6,067
    
    
    
    8,244
    
    
    
    4,207Eight years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,019
    
    
    
    8,230
    
    
    
    4,209Nine years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,189
    
    
    
    4,203Ten years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,200Cumulative redundancy
(deficiency)
    
    
    
    
    
    
    (15,801
    )
    
    
    (27,538
    )
    
    
    (22,062
    )
    
    
    (28,313
    )
    
    
    (63,048
    )
    
    
    (43,419
    )
    
    
    85
    
    
    
    943
    
    
    
    (2,394
    )
    
    
    (1,684
    )
  12




---



##### Table of Contents



Years Ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000Gross Reserves for UnpaidClaims and Claims Expense
    
    
    158,929
    
    
    
    127,198
    
    
    
    87,948
    
    
    
    68,806
    
    
    
    49,454
    
    
    
    66,866
    
    
    
    57,823
    
    
    
    7,521
    
    
    
    6,962
    
    
    
    5,795
    
    
    
    2,516Reinsurance Recoverable
    
    
    79,114
    
    
    
    62,901
    
    
    
    43,385
    
    
    
    37,583
    
    
    
    32,314
    
    
    
    60,792
    
    
    
    56,266
    
    
    
    6,249
    
    
    
    5,502
    
    
    
    3,091
    
    
    
    1,591Balance Sheet Liability
    
    
    79,814
    
    
    
    64,297
    
    
    
    44,563
    
    
    
    31,223
    
    
    
    17,140
    
    
    
    6,074
    
    
    
    1,557
    
    
    
    1,272
    
    
    
    1,460
    
    
    
    2,704
    
    
    
    925Cumulative paid as of:One year later
    
    
    
    
    
    
    43,860
    
    
    
    34,171
    
    
    
    23,709
    
    
    
    20,023
    
    
    
    12,886
    
    
    
    1,210
    
    
    
    935
    
    
    
    631
    
    
    
    3,586
    
    
    
    1,124Two years later
    
    
    
    
    
    
    
    
    
    
    44,015
    
    
    
    31,751
    
    
    
    23,362
    
    
    
    23,795
    
    
    
    11,497
    
    
    
    1,132
    
    
    
    941
    
    
    
    3,557
    
    
    
    1,377Three years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,472
    
    
    
    26,956
    
    
    
    25,469
    
    
    
    21,732
    
    
    
    1,298
    
    
    
    1,058
    
    
    
    3,774
    
    
    
    1,399Four years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,585
    
    
    
    27,993
    
    
    
    23,118
    
    
    
    1,407
    
    
    
    1,192
    
    
    
    3,867
    
    
    
    1,502Five years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,450
    
    
    
    25,446
    
    
    
    1,444
    
    
    
    1,232
    
    
    
    3,940
    
    
    
    1,518Six years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,721
    
    
    
    1,475
    
    
    
    1,244
    
    
    
    3,937
    
    
    
    1,523Seven years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,479
    
    
    
    1,269
    
    
    
    3,948
    
    
    
    1,542Eight years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,270
    
    
    
    3,951
    
    
    
    1,552Nine years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,952
    
    
    
    1,554Ten years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,554Balance Sheet Liability
    
    
    79,814
    
    
    
    64,297
    
    
    
    44,563
    
    
    
    31,223
    
    
    
    17,140
    
    
    
    6,074
    
    
    
    1,557
    
    
    
    1,272
    
    
    
    1,460
    
    
    
    2,704
    
    
    
    925One year later
    
    
    
    
    
    
    70,468
    
    
    
    53,226
    
    
    
    37,573
    
    
    
    29,167
    
    
    
    25,246
    
    
    
    4,056
    
    
    
    1,442
    
    
    
    1,134
    
    
    
    4,032
    
    
    
    1,425Two years later
    
    
    
    
    
    
    
    
    
    
    55,005
    
    
    
    39,948
    
    
    
    30,501
    
    
    
    30,943
    
    
    
    22,644
    
    
    
    1,209
    
    
    
    1,295
    
    
    
    3,785
    
    
    
    1,555Three years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,441
    
    
    
    31,285
    
    
    
    31,178
    
    
    
    28,169
    
    
    
    1,395
    
    
    
    1,105
    
    
    
    4,010
    
    
    
    1,553Four years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,303
    
    
    
    31,482
    
    
    
    28,524
    
    
    
    1,482
    
    
    
    1,254
    
    
    
    3,898
    
    
    
    1,608Five years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,645
    
    
    
    28,594
    
    
    
    1,509
    
    
    
    1,293
    
    
    
    3,950
    
    
    
    1,522Six years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,568
    
    
    
    1,510
    
    
    
    1,298
    
    
    
    3,976
    
    
    
    1,523Seven years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,530
    
    
    
    1,292
    
    
    
    3,978
    
    
    
    1,556Eight years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,271
    
    
    
    3,971
    
    
    
    1,557Nine years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,952
    
    
    
    1,555Ten years later
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,554Cumulative
redundancy (deficiency)
    
    
    
    
    
    
    (6,171
    )
    
    
    (10,442
    )
    
    
    (8,218
    )
    
    
    (14,163
    )
    
    
    (25,571
    )
    
    
    (27,011
    )
    
    
    (258
    )
    
    
    189
    
    
    
    (1,248
    )
    
    
    (629
    )Percent
    
    
    
    
    
    
    -9.6
    %
    
    
    -23.4
    %
    
    
    -26.3
    %
    
    
    -82.6
    %
    
    
    -421.0
    %
    
    
    -1734.8
    %
    
    
    -20.3
    %
    
    
    12.9
    %
    
    
    -46.2
    %
    
    
    -68.0
    %Gross
Reestimated Liability-Latest
    
    
    
    
    
    
    142,999
    
    
    
    115,486
    
    
    
    90,868
    
    
    
    77,767
    
    
    
    129,914
    
    
    
    101,242
    
    
    
    7,436
    
    
    
    6,019
    
    
    
    8,189
    
    
    
    4,200Reestimated Recovery-Latest
    
    
    
    
    
    
    72,531
    
    
    
    60,481
    
    
    
    51,427
    
    
    
    46,464
    
    
    
    98,269
    
    
    
    72,674
    
    
    
    5,906
    
    
    
    4,748
    
    
    
    4,237
    
    
    
    2,646Net Reestimated Liability-Latest
    
    
    
    
    
    
    70,468
    
    
    
    55,005
    
    
    
    39,441
    
    
    
    31,303
    
    
    
    31,645
    
    
    
    28,568
    
    
    
    1,530
    
    
    
    1,271
    
    
    
    3,952
    
    
    
    1,554Gross cumulative redundancy
(deficiency)
    
    
    
    
    
    
    (15,801
    )
    
    
    (27,538
    )
    
    
    (22,062
    )
    
    
    (28,313
    )
    
    
    (63,048
    )
    
    
    (43,419
    )
    
    
    85
    
    
    
    943
    
    
    
    (2,394
    )
    
    
    (1,684
    )
    13




---



##### Table of Contents



Years Ended December 31,2010
    
    
    2009Loss Ratio
    
    
    73
    %
    
    
    83
    %Expense Ratio
    
    
    40
    %
    
    
    56
    %Combined Ratio
    
    
    113
    %
    
    
    139
    %
  Government Regulation
    Legislative Initiatives
  Product Pricing
  14




---



##### Table of Contents



Dependence on Key Individuals
  Competition
  Financial Stability Rating
  Guidance on Financial Stability Ratings and Catastrophe Reinsurance
Program Reporting for Florida Property Insurers.
 15




---



##### Table of Contents



Employees
  Available Information
  
 ITEM 1A. RISK FACTORS
    Risks Relating to the Property-Casualty business
 As a property and casualty insurer, we may face significant losses from catastrophes and severe
weather events
  16




---



##### Table of Contents



Unanticipated increases in the severity or frequency of claims may adversely affect our
profitability and financial condition
   Actual claims incurred may exceed current reserves established for claims and may adversely affect
our operating results and financial condition
  Predicting claim expense relating to environmental liabilities is inherently uncertain and may have
a material adverse effect on our operating results and financial condition
  The failure of the risk mitigation strategies we utilize could have a material adverse effect on
our financial condition or results of operations
  17




---



##### Table of Contents




    
    engaging in rigorous underwriting;
    
    carefully evaluating terms and conditions of our policies; and
    
    ceding reinsurance.
   Regulation limiting rate increases and requiring us to participate in loss sharing may decrease our
profitability
   The potential benefits of implementing our profitability model may not be fully realized
  UPCICs financial condition and operating results may be adversely affected by the cyclical nature
of the property and casualty business
  Risks Relating to Investments
 We may experience reduced returns or losses on our investments especially during periods of
heightened volatility, which could have a material adverse effect on our results of operations or
financial condition.
  18




---



##### Table of Contents



We are subject to market risk which may adversely impact investment income
  Concentration of our investment portfolios in any particular segment of the economy may have
adverse effects on our operating results and financial condition
  Risks Relating to the Insurance Industry
 Our future results are dependent in part on our ability to successfully operate in an insurance
industry that is highly competitive
  Difficult conditions in the economy generally could adversely affect our business and operating
results
   19




---



##### Table of Contents



There can be no assurance that actions of the U.S. federal government, Federal Reserve and other
governmental and regulatory bodies for the purpose of stabilizing the financial markets and
stimulating the economy will achieve the intended effect
  We are subject to extensive regulation and potential further restrictive regulation may increase
our operating costs and limit our growth
   Reinsurance may be unavailable at current levels and prices, which may limit our ability to write
new business
  Reinsurance subjects us to the credit risk of our reinsurers and may not be adequate to protect us
against losses arising from ceded insurance, which could have a material adverse effect on our
operating results and financial condition
  20




---



##### Table of Contents



The continued threat of terrorism and ongoing military actions may adversely affect the level of
claim losses we incur and the value of our investment portfolio
  A downgrade in our financial strength ratings may have an adverse effect on our competitive
position, the marketability of our product offerings, and our liquidity, operating results and
financial condition
  Adverse capital and credit market conditions may significantly affect our ability to meet liquidity
needs or our ability to obtain credit on acceptable terms
  Changing climate conditions may adversely affect our financial condition, profitability or cash
flows
   Loss of key executives could affect our operations
 21




---



##### Table of Contents



ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
    
 ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. RESERVED
 
 PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
  22




---



##### Table of Contents



For year ended December 31, 2010
    
    High
    
    
    Low
    
    
    Dividends DeclaredFirst Quarter
    
    $
    6.72
    
    
    $
    4.59
    
    
    $
    0.12Second Quarter
    
    $
    5.30
    
    
    $
    4.01
    
    
    $
    0.10Third Quarter
    
    $
    4.75
    
    
    $
    3.98
    
    
    $
    0.00Fourth Quarter
    
    $
    5.15
    
    
    $
    4.17
    
    
    $
    0.10
 For year ended December 31, 2009
    
    High
    
    
    Low
    
    
    Dividends DeclaredFirst Quarter
    
    $
    4.58
    
    
    $
    2.40
    
    
    $
    0.22Second Quarter
    
    $
    5.96
    
    
    $
    3.65
    
    
    $
    0.12Third Quarter
    
    $
    5.70
    
    
    $
    4.45
    
    
    $
    0.00Fourth Quarter
    
    $
    6.45
    
    
    $
    4.90
    
    
    $
    0.20
     Equity Compensation Plan Information
  Number ofsecuritiesNumber of
    
    
    
    
    
    
    remaining availablesecurities to be
    
    
    
    
    
    
    for issuance underissued upon
    
    
    Weighted-average
    
    
    equity compensationexercise of
    
    
    exercise price of
    
    
    plans (excludingoutstanding
    
    
    outstanding
    
    
    securitiesoptions, warrants
    
    
    options, warrants
    
    
    reflected in firstPlan Category
    
    and rights
    
    
    and rights
    
    
    column)Equity compensation
plans
approved by
security holders
    
    
    1,665,000
    
    
    $
    5.07
    
    
    
    135,000Equity
compensation
plans not
approved by
security holders
    
    
    3,720,000
    
    
    $
    4.50
    
    
    
    N/ATotal
    
    
    5,385,000
    
    
    $
    4.68
    
    
    
    135,000
 23




---



##### Table of Contents



Stock Performance Graph
  
 Period EndingIndex
    
    12/31/05
    
    
    12/31/06
    
    
    12/31/07
    
    
    12/31/08
    
    
    12/31/09
    
    
    12/31/10Universal Insurance Holdings, Inc.
    
    
    100.00
    
    
    
    393.76
    
    
    
    1085.47
    
    
    
    411.72
    
    
    
    1117.46
    
    
    
    989.91SNL Insurance P&C
    
    
    100.00
    
    
    
    116.57
    
    
    
    125.86
    
    
    
    97.42
    
    
    
    105.33
    
    
    
    125.60Amex Composite
    
    
    100.00
    
    
    
    119.94
    
    
    
    145.36
    
    
    
    86.56
    
    
    
    117.36
    
    
    
    147.40
  Future Dividend Policy
  Stock Repurchases
 24




---



##### Table of Contents



Maximum Number (orTotal Number of
    
    
    Approximate DollarShares Purchased as
    
    
    Value) of Shares ThatTotal Number of
    
    
    
    
    
    
    Part of Publicly
    
    
    May Yet be PurchasedShares Purchased
    
    
    Average Price Paid
    
    
    Announced Plans or
    
    
    Under the Plans orPeriod
    
    (1)
    
    
    per Share
    
    
    Programs
    
    
    ProgramsOctober 1-31, 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    November 1-30, 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    December 1-31, 2010
    
    
    173,035
    
    
    
    4.82
    
    
    
    
    
    
    
    Total
    
    
    173,035
    
    
    $
    4.82
    
    
    
    
    
    
    $
    
 
 (1)
    
    All shares acquired represent shares tendered in connection with cashless exercises of
stock options and vested shares of restricted stock. Amounts tendered were to cover either the
strike price for option exercises or tax withholdings on the intrinsic value of stock option
exercises and fair value of vested shares of restricted stock. These shares were subsequently
cancelled by the Company. 
 ITEM 6. SELECTED FINANCIAL DATA
  Years Ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Income statement data:Direct premiums written
    
    $
    666,309,262
    
    
    $
    562,671,620
    
    
    $
    511,369,676
    
    
    $
    498,748,778
    
    
    $
    371,754,514Ceded premiums written
    
    
    (466,694,053
    )
    
    
    (428,384,278
    )
    
    
    (360,581,696
    )
    
    
    (358,405,016
    )
    
    
    (230,718,709
    )Net premiums written
    
    
    199,615,209
    
    
    
    134,287,342
    
    
    
    150,787,980
    
    
    
    140,343,762
    
    
    
    141,035,805(Increase) decrease in net unearned premium
    
    
    (29,172,312
    )
    
    
    7,366,383
    
    
    
    (3,374,283
    )
    
    
    14,074,690
    
    
    
    (86,899,853
    )Premiums earned, net
    
    
    170,442,897
    
    
    
    141,653,725
    
    
    
    147,413,697
    
    
    
    154,418,452
    
    
    
    54,135,952Total revenue
    
    
    239,923,232
    
    
    
    210,642,129
    
    
    
    182,667,296
    
    
    
    188,514,481
    
    
    
    65,147,750Total expenses
    
    
    177,645,429
    
    
    
    164,479,305
    
    
    
    116,660,531
    
    
    
    98,964,692
    
    
    
    38,426,441Income from continuing operations before
income taxes
    
    
    62,277,803
    
    
    
    46,162,824
    
    
    
    66,006,765
    
    
    
    89,549,789
    
    
    
    26,721,309Income taxes, net
    
    
    25,294,041
    
    
    
    17,375,526
    
    
    
    25,969,442
    
    
    
    35,547,501
    
    
    
    9,477,240Discontinued Operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (57,209
    )Net Income
    
    $
    36,983,762
    
    
    $
    28,787,298
    
    
    $
    40,037,323
    
    
    $
    54,002,288
    
    
    $
    17,186,860Balance sheet data:Total assets
    
    $
    766,230,240
    
    
    $
    678,247,300
    
    
    $
    544,636,912
    
    
    $
    491,193,365
    
    
    $
    481,610,424Total liabilities
    
    $
    626,440,612
    
    
    $
    564,972,843
    
    
    $
    443,083,257
    
    
    $
    418,618,180
    
    
    $
    459,562,506Unpaid losses and loss adjustment expenses
    
    $
    158,928,837
    
    
    $
    127,197,753
    
    
    $
    87,947,774
    
    
    $
    68,815,500
    
    
    $
    49,564,514Unearned premiums
    
    $
    328,334,547
    
    
    $
    278,370,544
    
    
    $
    258,489,460
    
    
    $
    254,741,198
    
    
    $
    230,346,266Long-term debt
    
    $
    23,161,764
    
    
    $
    24,632,353
    
    
    $
    25,000,000
    
    
    $
    25,000,000
    
    
    $
    25,057,266Total stockholders equity
    
    $
    139,789,628
    
    
    $
    113,274,457
    
    
    $
    101,553,655
    
    
    $
    72,575,185
    
    
    $
    22,047,918Earnings per share dataBasic net income per common share from
continuing operations
    
    $
    0.95
    
    
    $
    0.76
    
    
    $
    1.07
    
    
    $
    1.52
    
    
    $
    0.50Fully diluted net income per common share from
continuing operations
    
    $
    0.92
    
    
    $
    0.71
    
    
    $
    0.99
    
    
    $
    1.31
    
    
    $
    0.44Dividends declared per common share
    
    $
    0.32
    
    
    $
    0.54
    
    
    $
    0.40
    
    
    $
    0.24
    
    
    $
    0.18
 
 ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 A number of statements contained in this report are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and
uncertainties that could cause actual results
 25




---



##### Table of Contents



to differ materially from those expressed or implied
in the applicable statements. These risks and uncertainties include but are not limited to the
costs and the uncertainties associated with the Risk Factors set forth in Item 1 above. Investors
are cautioned that these forward-looking statements are not guarantees of future performance or
results.
 OVERVIEW
   ® ® ® ®
 CRITICAL ACCOUNTING POLICIES AND ESTIMATES
 Use of Estimates
 Recognition of Premium Revenues Revenue Recognition in Financial Statements
 Insurance Liabilities.
 Characteristics of Reserves.
  26




---



##### Table of Contents



The Actuarial Methods used to Develop Reserve Estimates.
      27




---



##### Table of Contents



28




---



##### Table of Contents



Cost of Repair
    
    Adjusting Fee$0 to $1,500
    
    $
    318$1,501 to $2,500
    
    $
    426$2,501 to $3,500
    
    $
    534$3,501 to $5,000
    
    $
    607$5,001 to $7,500
    
    $
    715$7,501 to $10,000
    
    $
    783
  Category
    
    FeeNon-Clerical
    
    $70/hourClerical
    
    $45/hourMileage
    
    $0.45/milePhotographs
    
    $2.25/each
    How Reserve Estimates are Established and Updated.
  29




---



##### Table of Contents



Factors Affecting Reserve Estimates.
     30




---



##### Table of Contents




    
    adverse changes in loss cost trends, including inflationary pressures in home repair
costs;
    
    judicial expansion of policy coverage and the impact of new theories of liability; and
    
    plaintiffs targeting property and casualty insurers, in purported class action
litigation related to claims-handling and other practices.
  Causes of Reserve Estimate Uncertainty.
  Reserves for Catastrophe Losses.
  Key Actuarial Assumptions That Affect the Loss and LAE Estimate.
  31




---



##### Table of Contents



The Actuarial
Methods used to Develop Reserve Estimates
  Potential Reserve Estimate Variability.
    32




---



##### Table of Contents



Adequacy of Reserve Estimates
    Deferred Policy Acquisition Costs/Deferred Ceding Commissions
 Provision for Premium Deficiency
 Reinsurance
 New Accounting Pronouncements Issued But Not Yet Adopted
  33




---



##### Table of Contents



OFF-BALANCE SHEET ARRANGEMENTS
  RELATED PARTIES
   RESULTS OF OPERATIONS
 YEAR ENDED DECEMBER 31, 2010 COMPARED TO YEAR ENDED DECEMBER 31, 2009
        34




---



##### Table of Contents



Year ended December 31, 2010Direct
    
    
    Ceded
    
    
    NetLoss and loss adjustment
expenses
    
    $
    229,044,188
    
    
    $
    115,688,713
    
    
    $
    113,355,475Premiums earned
    
    $
    616,345,258
    
    
    $
    445,902,361
    
    
    $
    170,442,897Loss & LAE ratios
    
    
    37.2
    %
    
    
    25.9
    %
    
    
    66.5
    %
 Year ended December 31, 2009Direct
    
    
    Ceded
    
    
    NetLoss and loss adjustment
expenses
    
    $
    214,981,546
    
    
    $
    108,848,411
    
    
    $
    106,133,135Premiums earned
    
    $
    542,790,538
    
    
    $
    401,136,813
    
    
    $
    141,653,725Loss & LAE ratios
    
    
    39.6
    %
    
    
    27.1
    %
    
    
    74.9
    %
     35




---



##### Table of Contents



YEAR ENDED DECEMBER 31, 2009 COMPARED TO YEAR ENDED DECEMBER 31, 2008
      36




---



##### Table of Contents



37




---



##### Table of Contents



38




---



##### Table of Contents



Year ended December 31, 2009Direct
    
    
    Ceded
    
    
    NetLoss and loss adjustment
expenses
    
    $
    214,981,546
    
    
    $
    108,848,411
    
    
    $
    106,133,135Premiums earned
    
    $
    542,790,538
    
    
    $
    401,136,813
    
    
    $
    141,653,725Loss & LAE ratios
    
    
    39.6
    %
    
    
    27.1
    %
    
    
    74.9
    %
 Year ended December 31, 2008Direct
    
    
    Ceded
    
    
    NetLoss and loss adjustment
expenses
    
    $
    160,615,643
    
    
    $
    79,277,517
    
    
    $
    81,338,126Premiums earned
    
    $
    507,621,388
    
    
    $
    360,207,691
    
    
    $
    147,413,697Loss & LAE ratios
    
    
    31.6
    %
    
    
    22.0
    %
    
    
    55.2
    %
      39




---



##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
 Liquidity
       Florida Administrative Weekly
 40




---



##### Table of Contents



FHCFs estimate
  Capital Resources
        41




---



##### Table of Contents



Ratings
   Contractual Obligations and Off-Balance Sheet Arrangements
  ($ in thousands)Total
    
    
    Less than 1 year
    
    
    1-3 years
    
    
    4-5 years
    
    
    Over 5 yearsUnpaid losses and LAE, direct
    
    $
    158,929
    
    
    $
    125,554
    
    
    $
    20,661
    
    
    $
    11,125
    
    
    $
    1,589Long-term debt
    
    
    27,977
    
    
    
    1,541
    
    
    
    4,007
    
    
    
    3,858
    
    
    
    18,571Operating leases
    
    
    1,569
    
    
    
    535
    
    
    
    742
    
    
    
    292
    
    
    
    Employment Agreements (1)
    
    
    34,882
    
    
    
    10,386
    
    
    
    23,978
    
    
    
    528
    
    
    
    Total contractual obligations
    
    $
    223,357
    
    
    $
    138,016
    
    
    $
    49,388
    
    
    $
    15,803
    
    
    $
    20,160
 
 (1)
    
    The Company has entered into employment agreements with certain employees which are
in effect as of December 31, 2010. The agreements provide for minimum salaries, which
may be subject to annual percentage increases, and non-equity incentive compensation
for certain executives based on pre-tax or net income levels attained by the Company.  IMPACT OF INFLATION AND CHANGING PRICES
   42




---



##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   Interest Rate Risk
   At December 31, 2010 (Trading)Total2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    2015
    
    
    Thereafter
    
    
    Amortized Cost
    
    
    Fair ValueUS government and agency obligations
    
    $
    
    
    
    $
    173,933
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    137,792,085
    
    
    $
    137,966,018
    
    
    $
    130,116,007average interest rate
    
    
    
    
    
    
    2.6
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.3
    %
    
    
    3.9
    %
    
    
    3.9
    %
 At December 31, 2009 (Available for sale)Total2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    Thereafter
    
    
    Amortized Cost
    
    
    Fair ValueUS government and agency obligations
    
    $
    
    
    
    $
    
    
    
    $
    176,350
    
    
    $
    
    
    
    $
    
    
    
    $
    42,120,377
    
    
    $
    42,296,727
    
    
    $
    41,389,008average interest rate
    
    
    
    
    
    
    0.0
    %
    
    
    2.6
    %
    
    
    
    
    
    
    
    
    
    
    1.8
    %
    
    
    4.4
    %
    
    
    4.4
    %
  Equity and Commodity Price Risk
  43




---



##### Table of Contents



December 31, 2010 (Trading)
    
    
    December 31, 2009 (Available for Sale)Fair Value
    
    
    Percent of Total
    
    
    Fair Value
    
    
    Percent of TotalCommon stock:Metals and mining
    
    
    25,751,909
    
    
    
    27.3
    %
    
    
    7,597,419
    
    
    
    10.3
    %Energy
    
    
    
    
    
    
    
    
    
    
    256,053
    
    
    
    0.3
    %Other
    
    
    362,520
    
    
    
    0.4
    %
    
    
    221,760
    
    
    
    0.3
    %Exchange-traded and mutual
funds:
    
    
    
    
    
    
    Metals and mining
    
    
    42,209,279
    
    
    
    44.7
    %
    
    
    38,753,742
    
    
    
    52.8
    %Agriculture
    
    
    14,876,584
    
    
    
    15.8
    %
    
    
    11,754,630
    
    
    
    16.0
    %Energy
    
    
    5,559,296
    
    
    
    5.9
    %
    
    
    3,306,815
    
    
    
    4.5
    %Indices
    
    
    4,613,105
    
    
    
    4.9
    %
    
    
    7,963,094
    
    
    
    10.8
    %Other
    
    
    1,043,704
    
    
    
    1.1
    %
    
    
    3,554,489
    
    
    
    4.8
    %Total equities securities
    
    $
    94,416,397
    
    
    
    100.0
    %
    
    $
    73,408,002
    
    
    
    100.0
    %
  44




---



##### 



Item 8. Financial Statements and supplementary data
  
 PAGEReport of Independent Registered Certified Public Accounting Firm
    
    
    46Consolidated Balance Sheets as of December 31, 2010 and 2009
    
    
    47Consolidated Statements of Income for the Years Ended December 31, 2010, 2009 and 2008
    
    
    48Consolidated Statements of Stockholders Equity for the Years Ended December 31, 2010, 2009 and 2008
    
    
    49Consolidated Statements of Cash Flows for the Years Ended December 31, 2010, 2009 and 2008
    
    
    52Notes to Consolidated Financial Statements
    
    
    53EX-21EX-23.1EX-31.1EX-31.2EX-32EX-99.1
  45




---



##### Table of Contents



Report of Independent Registered Certified Public Accounting Firm
 
 Universal Insurance Holdings, Inc.
and Subsidiaries Internal
Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO)
    Universal Insurance Holdings, Inc. and Subsidiaries Internal ControlIntegrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)
  
 46




---



##### Table of Contents



UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 December 31,
    
    
    December 31,2010
    
    
    2009ASSETSCash and cash equivalents
    
    $
    147,585,464
    
    
    $
    192,924,291Investment securities:Trading securities, at fair value (amortized cost -
$222,519,390 in 2010 and $0 in 2009)
    
    
    224,532,404
    
    
    
    Available-for-sale securities, at fair value (amortized cost
- $0 in 2010 and $113,832,760 in 2009)
    
    
    
    
    
    
    114,797,010Prepaid reinsurance premiums
    
    
    221,085,933
    
    
    
    200,294,241Reinsurance recoverables
    
    
    79,551,875
    
    
    
    91,816,433Premiums receivable, net
    
    
    43,622,606
    
    
    
    37,363,110Receivable from securities
    
    
    17,555,961
    
    
    
    6,259,973Other receivables
    
    
    2,863,757
    
    
    
    5,068,367Income taxes recoverable
    
    
    
    
    
    
    3,211,874Property and equipment, net
    
    
    5,406,766
    
    
    
    4,535,751Deferred policy acquisition costs, net
    
    
    9,445,679
    
    
    
    9,464,624Deferred income taxes
    
    
    13,447,953
    
    
    
    11,894,289Other assets
    
    
    1,131,842
    
    
    
    617,337Total assets
    
    $
    766,230,240
    
    
    $
    678,247,300LIABILITIES AND STOCKHOLDERS EQUITYLIABILITIES:Unpaid losses and loss adjustment expenses
    
    $
    158,928,837
    
    
    $
    127,197,753Unearned premiums
    
    
    328,334,547
    
    
    
    278,370,544Advance premium
    
    
    19,839,740
    
    
    
    17,078,558Accounts payable
    
    
    3,767,293
    
    
    
    3,172,626Bank overdraft
    
    
    23,030,315
    
    
    
    20,297,061Reinsurance payable, net
    
    
    37,946,484
    
    
    
    73,104,595Income taxes payable
    
    
    8,282,030
    
    
    
    368,968Other accrued expenses
    
    
    23,149,602
    
    
    
    20,750,385Long-term debt
    
    
    23,161,764
    
    
    
    24,632,353Total liabilities
    
    
    626,440,612
    
    
    
    564,972,843Commitments and Contigencies (Note 16)STOCKHOLDERS EQUITY:Cumulative convertible preferred stock, $.01 par value
    
    
    1,077
    
    
    
    1,087Authorized shares - 1,000,000Issued shares - 107,690 and 108,640Outstanding shares - 107,690 and 108,640Minimum liquidation preference  $287,240 and $288,190Common stock, $.01 par value
    
    
    404,069
    
    
    
    402,146Authorized shares - 55,000,000Issued shares - 40,406,751 and 40,214,884Outstanding shares - 39,387,998 and 37,774,765Treasury shares, at cost - 1,018,753 and 1,809,119 shares
    
    
    (3,109,255
    )
    
    
    (7,948,606
    )Common stock held in trust, at cost - 0 and 631,000 shares
    
    
    
    
    
    
    (511,110
    )Additional paid-in capital
    
    
    33,674,697
    
    
    
    36,666,914Accumulated other comprehensive income, net of taxes
    
    
    
    
    
    
    563,654Retained earnings
    
    
    108,819,040
    
    
    
    84,100,372Total stockholders equity
    
    
    139,789,628
    
    
    
    113,274,457Total liabilities and stockholders equity
    
    $
    766,230,240
    
    
    $
    678,247,300
  47




---



##### Table of Contents



UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
 For the Years Ended December 31,2010
    
    
    2009
    
    
    2008PREMIUMS EARNED AND OTHER REVENUESDirect premiums written
    
    $
    666,309,262
    
    
    $
    562,671,620
    
    
    $
    511,369,676Ceded premiums written
    
    
    (466,694,053
    )
    
    
    (428,384,278
    )
    
    
    (360,581,696
    )Net premiums written
    
    
    199,615,209
    
    
    
    134,287,342
    
    
    
    150,787,980(Increase) decrease in net unearned premium
    
    
    (29,172,312
    )
    
    
    7,366,383
    
    
    
    (3,374,283
    )Premiums earned, net
    
    
    170,442,897
    
    
    
    141,653,725
    
    
    
    147,413,697Net investment income
    
    
    992,235
    
    
    
    1,453,599
    
    
    
    3,721,029Net realized gains on investments
    
    
    27,691,623
    
    
    
    24,175,045
    
    
    
    Net unrealized gains on investments
    
    
    1,753,919
    
    
    
    
    
    
    
    Net foreign currency gains on investments
    
    
    1,122,603
    
    
    
    6,808,419
    
    
    
    Commission revenue
    
    
    17,894,967
    
    
    
    16,984,447
    
    
    
    14,626,733Policy Fees
    
    
    15,149,369
    
    
    
    14,174,000
    
    
    
    12,188,345Other revenue
    
    
    4,875,619
    
    
    
    5,392,894
    
    
    
    4,717,492Total premiums earned and other revenues
    
    
    239,923,232
    
    
    
    210,642,129
    
    
    
    182,667,296OPERATING COSTS AND EXPENSESLosses and loss adjustment expenses
    
    
    113,355,475
    
    
    
    106,133,135
    
    
    
    81,338,126General and administrative expenses
    
    
    64,289,954
    
    
    
    58,346,170
    
    
    
    35,322,405Total operating costs and expenses
    
    
    177,645,429
    
    
    
    164,479,305
    
    
    
    116,660,531INCOME BEFORE INCOME TAXES
    
    
    62,277,803
    
    
    
    46,162,824
    
    
    
    66,006,765Income taxes, current
    
    
    26,854,322
    
    
    
    15,494,732
    
    
    
    25,895,545Income taxes, deferred
    
    
    (1,560,281
    )
    
    
    1,880,794
    
    
    
    73,897Income taxes, net
    
    
    25,294,041
    
    
    
    17,375,526
    
    
    
    25,969,442NET INCOME
    
    $
    36,983,762
    
    
    $
    28,787,298
    
    
    $
    40,037,323Basic net income per common share
    
    $
    0.95
    
    
    $
    0.76
    
    
    $
    1.07Weighted average of common shares
outstanding  Basic
    
    
    39,113,302
    
    
    
    37,617,885
    
    
    
    37,418,253Fully diluted net income per share
    
    $
    0.92
    
    
    $
    0.71
    
    
    $
    0.99Weighted average of common shares
outstanding  Diluted
    
    
    40,249,677
    
    
    
    40,471,524
    
    
    
    40,274,507Cash dividend declared per common share
    
    $
    0.32
    
    
    $
    0.54
    
    
    $
    0.40
 For the Years Ended December 31,2010
    
    
    2009
    
    
    2008Comprehensive Income:Net income
    
    $
    36,983,762
    
    
    $
    28,787,298
    
    
    $
    40,037,323Change in net unrealized gains on
investments, net of tax
    
    
    (563,654
    )
    
    
    538,820
    
    
    
    24,834Comprehensive Income
    
    $
    36,420,108
    
    
    $
    29,326,118
    
    
    $
    40,062,157
  48




---



##### Table of Contents



UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 and 2008
 For the Year Ended December 31, 2010AccumulatedCommon
    
    
    Preferred
    
    
    Additional
    
    
    
    
    
    
    Other
    
    
    SGT
    
    
    
    
    
    
    TotalCommon
    
    
    Preferred
    
    
    Stock
    
    
    Stock
    
    
    Paid-In
    
    
    Retained
    
    
    Comprehensive
    
    
    Common
    
    
    Treasury
    
    
    Stockholders'Shares
    
    
    Shares
    
    
    Amount
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income
    
    
    Stock
    
    
    Stock
    
    
    EquityBalance,December 31, 2009
    
    
    40,214,884
    
    
    
    108,640
    
    
    $
    402,146
    
    
    $
    1,087
    
    
    $
    36,666,914
    
    
    $
    84,100,372
    
    
    $
    563,654
    
    
    $
    (511,110
    )
    
    $
    (7,948,606
    )
    
    $
    113,274,457Stock option exercises
    
    
    1,995,206
    
    
    
    
    
    
    
    19,952
    
    
    
    
    
    
    
    2,934,935
    
    
    
    
    
    
    
    
    
    
    
    511,110
    
    
    
    (7,878,150
    )
    
    
    (4,412,153
    )Restricted stock
awards
    
    
    300,000
    
    
    
    
    
    
    
    3,000
    
    
    
    
    
    
    
    (3,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Preferred stock
conversion
    
    
    1,187
    
    
    
    (950
    )
    
    
    12
    
    
    
    (10
    )
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Retirement of
treasury shares
    
    
    (2,104,526
    )
    
    
    
    
    
    
    (21,041
    )
    
    
    
    
    
    
    (12,696,460
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,717,501
    
    
    
    Stock option expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,108,705
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,108,705Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,983,762
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,983,762Excess tax benefit on
exercise of stock
options and vesting
of restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,099,145
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,099,145Prior year adjustment
tax benefit on
exercise of stock
options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (288,232
    )
    
    
    288,232
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of
deferred compensation
in connection with
restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    852,692
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    852,692Declaration of
dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,553,326
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,553,326
    )Reclassification of
investments to
trading portfolio-net
of tax effect of $253,170
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    403,137
    
    
    
    
    
    
    
    
    
    
    
    403,137Change in net
unrealized gains on
investments-net of
tax effect of $603,732
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (966,791
    )
    
    
    
    
    
    
    
    
    
    
    (966,791
    )Balance,
December 31, 2010
    
    
    40,406,751
    
    
    
    107,690
    
    
    $
    404,069
    
    
    $
    1,077
    
    
    $
    33,674,697
    
    
    $
    108,819,040
    
    
    $
    
    
    
    $
    
    
    
    $
    (3,109,255
    )
    
    $
    139,789,628
  49




---



##### Table of Contents



UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 For the Year Ended December 31, 2009AccumulatedCommon
    
    
    Preferred
    
    
    Additional
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    TotalCommon
    
    
    Preferred
    
    
    Stock
    
    
    Stock
    
    
    Paid-In
    
    
    Retained
    
    
    Comprehensive
    
    
    Stock Held in
    
    
    
    
    
    
    Stockholders'Shares
    
    
    Shares
    
    
    Amount
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income
    
    
    Trust
    
    
    Treasury Stock
    
    
    EquityBalance,
December 31, 2008
    
    
    40,158,019
    
    
    
    138,640
    
    
    $
    401,578
    
    
    $
    1,387
    
    
    $
    33,587,414
    
    
    $
    75,654,070
    
    
    $
    24,834
    
    
    $
    (733,860
    )
    
    $
    (7,381,768
    )
    
    $
    101,553,655Stock option exercises
    
    
    20,000
    
    
    
    
    
    
    
    200
    
    
    
    
    
    
    
    365,050
    
    
    
    
    
    
    
    
    
    
    
    222,750
    
    
    
    (756,375
    )
    
    
    (168,375
    )Preferred stock conversion
    
    
    75,000
    
    
    
    (30,000
    )
    
    
    750
    
    
    
    (300
    )
    
    
    (450
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Retirement of treasury shares
    
    
    (38,135
    )
    
    
    
    
    
    
    (382
    )
    
    
    
    
    
    
    (189,155
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    189,537
    
    
    
    Stock option expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,520,647
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,520,647Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,787,298
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,787,298Excess tax benefit on exercise
of stock
options and vesting of
restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    728,584
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    728,584Amortization of deferred
compensation in
connection with restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    654,824
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    654,824Declaration of dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,340,996
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,340,996
    )Net unrealized gains on
investments, net of
tax effect of $353,976
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    538,820
    
    
    
    
    
    
    
    538,820Balance,
December 31, 2009
    
    
    40,214,884
    
    
    
    108,640
    
    
    $
    402,146
    
    
    $
    1,087
    
    
    $
    36,666,914
    
    
    $
    84,100,372
    
    
    $
    563,654
    
    
    $
    (511,110
    )
    
    $
    (7,948,606
    )
    
    $
    113,274,457
  50




---



##### Table of Contents



UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 For the Year Ended December 31, 2008Common
    
    
    Preferred
    
    
    
    
    
    
    Accumulated Other
    
    
    
    
    
    
    
    
    
    
    TotalCommon
    
    
    Preferred
    
    
    Stock
    
    
    Stock
    
    
    Additional Paid-
    
    
    Retained
    
    
    Comprehensive
    
    
    Stock Held in
    
    
    
    
    
    
    Stockholders'Shares
    
    
    Shares
    
    
    Amount
    
    
    Amount
    
    
    In Capital
    
    
    Earnings
    
    
    Income
    
    
    Trust
    
    
    Treasury Stock
    
    
    EquityBalance,
December 31, 2007
    
    
    39,307,103
    
    
    
    138,640
    
    
    $
    393,072
    
    
    $
    1,387
    
    
    $
    24,779,798
    
    
    $
    50,724,674
    
    
    $
    
    
    
    $
    (2,349,000
    )
    
    $
    (974,746
    )
    
    $
    72,575,185Stock option exercises
    
    
    1,816,000
    
    
    
    
    
    
    
    15,160
    
    
    
    
    
    
    
    2,530,700
    
    
    
    
    
    
    
    
    
    
    
    1,615,140
    
    
    
    (7,448,939
    )
    
    
    (3,287,939
    )Restricted stock awards
    
    
    
    
    
    
    
    
    
    
    3,000
    
    
    
    
    
    
    
    (3,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Repurchase of common shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,999,788
    )
    
    
    (2,999,788
    )Retirement of treasury shares
    
    
    (965,084
    )
    
    
    
    
    
    
    (9,654
    )
    
    
    
    
    
    
    (4,032,051
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,041,705
    
    
    
    Stock option expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,271,230
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,271,230Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,037,323
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,037,323Excess tax benefit on exercise
stock options
and vesting of restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,706,778
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,706,778Amortization of deferred
compensation in
connection with restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    333,959
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    333,959Declaration of dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,107,927
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,107,927
    )Net unrealized gains on
investments, net of
tax effect $15,595 of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,834
    
    
    
    
    
    
    
    
    
    
    
    24,834Balance,
December 31, 2008
    
    
    40,158,019
    
    
    
    138,640
    
    
    $
    401,578
    
    
    $
    1,387
    
    
    $
    33,587,414
    
    
    $
    75,654,070
    
    
    $
    24,834
    
    
    $
    (733,860
    )
    
    $
    (7,381,768
    )
    
    $
    101,553,655
  51




---



##### Table of Contents



UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Years Ended December 31,2010
    
    
    2009
    
    
    2008Cash flows from operating activities:Net Income
    
    $
    36,983,762
    
    
    $
    28,787,298
    
    
    $
    40,037,323Adjustments to reconcile net income to net cash provided by operating
activities:Bad debt expense
    
    
    1,314,800
    
    
    
    1,353,662
    
    
    
    2,134,106Depreciation
    
    
    831,159
    
    
    
    490,059
    
    
    
    480,313Amortization of cost of stock options
    
    
    2,108,705
    
    
    
    1,520,647
    
    
    
    4,271,230Amortization of restricted stock grants
    
    
    852,692
    
    
    
    654,824
    
    
    
    333,959Net realized gains on investments
    
    
    (27,691,623
    )
    
    
    (24,175,045
    )
    
    
    Net unrealized gains on investments
    
    
    (1,753,919
    )
    
    
    
    
    
    
    Foreign currency gains on investments, net
    
    
    (1,143,058
    )
    
    
    (6,759,586
    )
    
    
    Amortization of premium / accretion of discount, net
    
    
    544,837
    
    
    
    235,842
    
    
    
    35,095Deferred income taxes
    
    
    (1,333,361
    )
    
    
    1,880,794
    
    
    
    73,898Other
    
    
    (626,792
    )
    
    
    130,118
    
    
    
    137,571Net change in assets and liabilities relating to operating activities:Prepaid reinsurance premiums
    
    
    (20,791,692
    )
    
    
    (27,247,465
    )
    
    
    (373,981
    )Reinsurance recoverables
    
    
    12,264,558
    
    
    
    (47,806,586
    )
    
    
    2,389,418Premiums receivable, net
    
    
    (7,574,296
    )
    
    
    1,641,948
    
    
    
    (6,298,004
    )Other receivables
    
    
    2,810,472
    
    
    
    (2,551,005
    )
    
    
    (467,097
    )Income taxes recoverable
    
    
    3,211,874
    
    
    
    (728,952
    )
    
    
    (2,482,923
    )Deferred policy acquisition costs, net
    
    
    18,945
    
    
    
    (9,056,678
    )
    
    
    (407,946
    )Deferred ceding commission, net
    
    
    
    
    
    
    
    
    
    
    (2,122,269
    )Purchase of fixed maturities, trading
    
    
    (486,695,452
    )
    
    
    
    
    
    
    Proceeds from sales of fixed maturities, trading
    
    
    408,983,414
    
    
    
    
    
    
    
    Purchase of equity securities, trading
    
    
    (131,298,910
    )
    
    
    
    
    
    
    Proceeds from sale of equity securities, trading
    
    
    140,322,216
    
    
    
    
    
    
    
    Other assets
    
    
    (778,983
    )
    
    
    28,656
    
    
    
    (292,448
    )Unpaid losses and loss adjustment expenses
    
    
    31,731,084
    
    
    
    39,249,979
    
    
    
    19,132,274Unearned premiums
    
    
    49,964,003
    
    
    
    19,881,084
    
    
    
    3,748,262Accounts payable
    
    
    594,667
    
    
    
    25,366
    
    
    
    175,113Reinsurance payable
    
    
    (35,158,111
    )
    
    
    49,120,347
    
    
    
    (9,904,102
    )Income taxes payable
    
    
    7,913,062
    
    
    
    368,968
    
    
    
    Other accrued expenses
    
    
    2,399,217
    
    
    
    6,069,942
    
    
    
    (2,118,864
    )Advance premium
    
    
    2,761,182
    
    
    
    4,218,357
    
    
    
    1,824,757Net cash (used in) provided by operating activities
    
    
    (9,235,548
    )
    
    
    37,332,574
    
    
    
    50,305,685Cash flows from investing activities:Proceeds from sale of property
    
    
    32,608
    
    
    
    
    
    
    
    2,500Purchase of property, plant and equipment
    
    
    (1,713,848
    )
    
    
    (762,075
    )
    
    
    (486,742
    )Purchases of fixed maturities, held-to-maturity
    
    
    
    
    
    
    
    
    
    
    (4,369,500
    )Purchases of fixed maturities, available-for-sale
    
    
    (129,140,469
    )
    
    
    (325,673,805
    )
    
    
    Proceeds from sales of fixed maturities, available-for-sale
    
    
    116,237,712
    
    
    
    299,033,089
    
    
    
    Purchases of equity securities, available for sale
    
    
    (80,730,225
    )
    
    
    (206,053,904
    )
    
    
    Proceeds from sales of equity securities, available for sale
    
    
    70,680,944
    
    
    
    147,635,080
    
    
    
    Net cash used in investing activities
    
    
    (24,633,278
    )
    
    
    (85,821,615
    )
    
    
    (4,853,742
    )Cash flows from financing activities:Bank overdraft
    
    
    2,733,254
    
    
    
    4,597,131
    
    
    
    15,699,930Preferred stock dividend
    
    
    (19,950
    )
    
    
    (27,450
    )
    
    
    (49,950
    )Common stock dividend
    
    
    (12,533,376
    )
    
    
    (20,313,547
    )
    
    
    (18,299,123
    )Issuance of common stock
    
    
    14,000
    
    
    
    55,000
    
    
    
    130,530Repurchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    (2,999,788
    )Treasury shares on option exercise
    
    
    (4,292,485
    )
    
    
    (223,376
    )
    
    
    (3,418,469
    )Excess tax benefits from stock-based compensation
    
    
    4,099,145
    
    
    
    728,584
    
    
    
    5,706,778Repayments of loans payable
    
    
    (1,470,589
    )
    
    
    (367,647
    )
    
    
    (2,820
    )Net cash used in financing activities
    
    
    (11,470,001
    )
    
    
    (15,551,305
    )
    
    
    (3,232,912
    )Net (decrease) increase in cash and cash equivalents
    
    
    (45,338,827
    )
    
    
    (64,040,346
    )
    
    
    42,219,031Cash and cash equivalents at beginning of period
    
    
    192,924,291
    
    
    
    256,964,637
    
    
    
    214,745,606Cash and cash equivalents at end of period
    
    $
    147,585,464
    
    
    $
    192,924,291
    
    
    $
    256,964,637Supplemental cashflow disclosures:Interest
    
    $
    804,898
    
    
    $
    740,118
    
    
    $
    1,549,292Income taxes
    
    $
    11,163,437
    
    
    $
    15,609,000
    
    
    $
    22,266,491
  52




---



##### Table of Contents



UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Nature of Operations
     Basis of Presentation and Consolidation
  Use of Estimates
 Cash and Cash Equivalents.
 Investments
  53




---



##### Table of Contents



Premiums Receivable.
 Property and Equipment.
 Recognition of Premium Revenues.
 Recognition of Commission Revenue.
 Recognition of Policyholder Payment Plan Fee Revenue.
 Deferred Policy Acquisition Costs
 54




---



##### Table of Contents



Insurance Liabilities
  Provision for Premium Deficiency
 Reinsurance
 Income Taxes.
 Income (Loss) Per Share of Common Stock
 Fair Value Measurements
   Concentrations of Credit Risk.
 55




---



##### Table of Contents



As of December 31, 2010Institution
    
    Cash
    
    
    Money Market Funds
    
    
    Total
    
    
    %U. S. Bank IT&C
    
    $
    
    
    
    $
    41,454,392
    
    
    $
    41,454,392
    
    
    
    28.1
    %SunTrust Bank
    
    
    1,241,149
    
    
    
    
    
    
    
    1,241,149
    
    
    
    0.7
    %SunTrust Bank Institutional Asset Services
    
    
    
    
    
    
    92,323,784
    
    
    
    92,323,784
    
    
    
    62.6
    %Wachovia Bank a division of Wlss Fargo Bank N.A.
    
    
    780,180
    
    
    
    
    
    
    
    780,180
    
    
    
    0.5
    %Bank of New York Trust Fund
    
    
    
    
    
    
    11,340,000
    
    
    
    11,340,000
    
    
    
    7.7
    %All Other Banking Institutions
    
    
    443,050
    
    
    
    2,909
    
    
    
    445,959
    
    
    
    0.3
    %$
    2,464,379
    
    
    $
    145,121,085
    
    
    $
    147,585,464
    
    
    
    100.0
    %
 As of December 31, 2009Institution
    
    Cash
    
    
    Money Market Funds
    
    
    Total
    
    
    %U. S. Bank IT&C (1)
    
    $
    
    
    
    $
    71,977,371
    
    
    $
    71,977,371
    
    
    
    37.3
    %Evergreen Investment
Management Company, L.L.C.
    
    
    
    
    
    
    26,909
    
    
    
    26,909
    
    
    
    0.0
    %SunTrust Bank
    
    
    1,063,785
    
    
    
    
    
    
    
    1,063,785
    
    
    
    0.5
    %SunTrust Bank Institutional
Asset Services
    
    
    
    
    
    
    102,257,833
    
    
    
    102,257,833
    
    
    
    53.0
    %Wachovia Bank, N.A.
    
    
    489,051
    
    
    
    
    
    
    
    489,051
    
    
    
    0.3
    %Bank of New York Trust Fund
    
    
    
    
    
    
    16,515,181
    
    
    
    16,515,181
    
    
    
    8.6
    %All Other Banking Institutions
    
    
    594,161
    
    
    
    
    
    
    
    594,161
    
    
    
    0.3
    %$
    2,146,997
    
    
    $
    190,777,294
    
    
    $
    192,924,291
    
    
    
    100.0
    %
 
 (1)
    
    Funds invested with Evergreen Investment Management Company, L.L.C.    56




---



##### Table of Contents



As of December 31,Reinsurer
    
    2010
    
    
    2009Everest Reinsurance Company
    
    $
    227,941,896
    
    
    $
    208,129,753Florida Hurricane Catastrophe Fund
    
    
    32,848,543
    
    
    
    24,888,534Total
    
    $
    260,790,439
    
    
    $
    233,018,287
 Stock-based Compensation.
 Statutory Accounting.
 Other New Accounting Pronouncements
     57




---



##### Table of Contents



Year Ended December 31, 2010Loss and LossPremiums
    
    
    Premiums
    
    
    AdjustmentWritten
    
    
    Earned
    
    
    ExpensesDirect
    
    $
    666,309,262
    
    
    $
    616,345,258
    
    
    $
    229,044,188Ceded
    
    
    (466,694,053
    )
    
    
    (445,902,361
    )
    
    
    (115,688,713
    )Net
    
    $
    199,615,209
    
    
    $
    170,442,897
    
    
    $
    113,355,475
 58




---



##### Table of Contents



Year Ended December 31, 2009Loss and LossPremiums
    
    
    Premiums
    
    
    AdjustmentWritten
    
    
    Earned
    
    
    ExpensesDirect
    
    $
    562,671,620
    
    
    $
    542,790,538
    
    
    $
    214,981,546Ceded
    
    
    (428,384,278
    )
    
    
    (401,136,813
    )
    
    
    (108,848,411
    )Net
    
    $
    134,287,342
    
    
    $
    141,653,725
    
    
    $
    106,133,135
 Year Ended December 31, 2008Loss and LossPremiums
    
    
    Premiums
    
    
    AdjustmentWritten
    
    
    Earned
    
    
    ExpensesDirect
    
    $
    511,369,676
    
    
    $
    507,621,412
    
    
    $
    160,615,643Ceded
    
    
    (360,581,696
    )
    
    
    (360,207,715
    )
    
    
    (79,277,517
    )Net
    
    $
    150,787,980
    
    
    $
    147,413,697
    
    
    $
    81,338,126
   As of December 31,
    
    
    As of December 31,2010
    
    
    2009Prepaid reinsurance premiums
    
    $
    221,085,933
    
    
    $
    200,294,241Reinsurance
recoverable on unpaid losses and LAE
    
    $
    79,114,418
    
    
    $
    62,900,913Reinsurance recoverable on paid losses
    
    
    437,457
    
    
    
    28,915,520Reinsurance recoverables
    
    $
    79,551,875
    
    
    $
    91,816,433
  As of December 31,
    
    
    As of December 31,2010
    
    
    2009Reinsurance payable, net of ceding commissions
due from reinsurers
    
    $
    75,553,629
    
    
    $
    114,286,847Inuring premiums receivable
    
    
    (37,607,145
    )
    
    
    (41,182,252
    )Reinsurance payable, net
    
    $
    37,946,484
    
    
    $
    73,104,595
 2010 Reinsurance Program
   59




---



##### Table of Contents



2ndEvent
    
    3rdEventCoverage
    
    $123,700,000 in excess
of $36,300,000 each
loss occurrence
subject to an
otherwise recoverable
amount of $123,700,000
(placed 50%)
    
    $130,000,000 in excess
of $30,000,000 each
loss occurrence
subject to an
otherwise
recoverable amount of
$260,000,000
(placed 100%)Deposit premium (100%)
    
    $22,266,000
    
    $9,100,000Minimum premium (100%)
    
    $17,812,800
    
    $7,280,000Premium rate -% of
total insured value
    
    0.020088%
    
    0.00821%
  60




---



##### Table of Contents



Florida Administrative Weekly
    61




---



##### Table of Contents



2009 Reinsurance Program
 Quota Share
  Excess Per Risk
    Excess Catastrophe
    62




---



##### Table of Contents



2nd Event
    
    3rd EventCoverage
    
    $118,000,000 in
excess of $42,000,000
each loss occurrence
subject to an
otherwise recoverable
amount of
$118,000,000 (placed
50%)
    
    $128,000,000 in
excess of $32,000,000
each loss occurrence
subject to an
otherwise recoverable
amount of
$256,000,000
(placed 100%)Deposit premium (100%)
    
    $21,240,000
    
    $10,240,000Minimum premium (100%)
    
    $16,992,000
    
    $8,192,000Premium rate -% of
total insured value
    
    0.019309%
    
    0.009309%
   Florida Administrative Weekly
  63




---



##### Table of Contents



2008 Reinsurance Program
 Quota Share
  Excess Per Risk
    Excess Catastrophe
 64




---



##### Table of Contents



First Layer
    
    Second Layer
    
    Third LayerCoverage
    
    $140,000,000 in excess of $150,000,000 each loss occurrence (placed 100%)
    
    $134,000,000 in excess of $290,000,000 each loss occurrence (placed 100%)
    
    $125,000,000 in excess of $424,000,000 each loss occurrence (placed 100%)Deposit premium
    
    $48,300,000
    
    $24,120,000
    
    $14,375,000Minimum premium
    
    $38,640,000
    
    $19,296,000
    
    $11,500,000Premium rate -% of
total insured value
    
    0.050837%
    
    0.025387%
    
    0.015130%
    2nd Event
    
    3rd EventCoverage
    
    $110,400,000 in excess of $39,600,000 each loss occurrence subject to an otherwise recoverable amount of $110,400,000 (placed 50%)
    
    $120,000,000 in excess of $30,000,000 each loss occurrence subject to an otherwise recoverable amount of $240,000,000 (placed 50%)Deposit premium (100%)
    
    $16,560,000
    
    $7,800,000Minimum premium (100%)
    
    $13,248,000
    
    $6,240,000Premium rate -% of
total insured value
    
    0.017430%
    
    0.008210%
   65




---



##### Table of Contents



66




---



##### Table of Contents



Years Ended December 31,2010
    
    
    2009
    
    
    2008Cash and cash equivalents
    
    $
    99,697
    
    
    $
    312,317
    
    
    $
    3,951,161Debt securities
    
    
    968,905
    
    
    
    1,269,216
    
    
    
    64,213Equity securities
    
    
    557,698
    
    
    
    650,739
    
    
    
    Total investment income
    
    
    1,626,300
    
    
    
    2,232,272
    
    
    
    4,015,374Less investment expenses
    
    
    (634,065
    )
    
    
    (778,673
    )
    
    
    (294,345
    )Net investment income
    
    $
    992,235
    
    
    $
    1,453,599
    
    
    $
    3,721,029
  For the Year Ended
    
    
    For the Year EndedDecember 31, 2010
    
    
    December 31, 2009Realized
    
    
    Proceeds
    
    
    Realized
    
    
    ProceedsGains (Losses)
    
    
    (Fair Value at Sale)
    
    
    Gains(Losses)
    
    
    (Fair Value at Sale)Debt securities
    
    $
    5,120,559
    
    
    $
    472,699,451
    
    
    $
    5,542,936
    
    
    $
    278,212,228Equity securities
    
    
    26,701,193
    
    
    
    198,010,939
    
    
    
    26,722,120
    
    
    
    121,930,068Total
    
    
    31,821,752
    
    
    
    670,710,390
    
    
    
    32,265,056
    
    
    
    400,142,296Debt securities
    
    
    (467,325
    )
    
    
    52,521,675
    
    
    
    (8,248
    )
    
    
    20,820,861Equity securities
    
    
    (3,610,804
    )
    
    
    24,288,208
    
    
    
    (8,081,763
    )
    
    
    31,964,985Other Investments
    
    
    (52,000
    )
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    (4,130,129
    )
    
    
    76,809,883
    
    
    
    (8,090,011
    )
    
    
    52,785,846Net
    
    $
    27,691,623
    
    
    $
    747,520,273
    
    
    $
    24,175,045
    
    
    $
    452,928,142
  December 31, 2010 (Trading)
    
    
    December 31, 2009 (Available for Sale)Fair Value
    
    
    Percent of Total
    
    
    Fair Value
    
    
    Percent of TotalDebt Securities:US government agency obligations
    
    $
    130,116,007
    
    
    
    57.9
    %
    
    $
    41,389,008
    
    
    
    36.1
    %Equity Securities:Common stockMetals and mining
    
    
    25,751,909
    
    
    
    11.5
    %
    
    
    7,597,419
    
    
    
    6.6
    %Energy
    
    
    
    
    
    
    
    
    
    
    256,053
    
    
    
    0.2
    %Other
    
    
    362,520
    
    
    
    0.2
    %
    
    
    221,760
    
    
    
    0.2
    %Exchange-traded and mutual funds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Metals and mining
    
    
    42,209,279
    
    
    
    18.8
    %
    
    
    38,753,742
    
    
    
    33.8
    %Agriculture
    
    
    14,876,584
    
    
    
    6.6
    %
    
    
    11,754,630
    
    
    
    10.2
    %Energy
    
    
    5,559,296
    
    
    
    2.5
    %
    
    
    3,306,815
    
    
    
    2.9
    %Indices
    
    
    4,613,105
    
    
    
    2.1
    %
    
    
    7,963,094
    
    
    
    6.9
    %Other
    
    
    1,043,704
    
    
    
    0.5
    %
    
    
    3,554,489
    
    
    
    3.1
    %Total equity securities
    
    
    94,416,397
    
    
    
    42.1
    %
    
    
    73,408,002
    
    
    
    63.9
    %Total investment securities
    
    $
    224,532,404
    
    
    
    100.0
    %
    
    $
    114,797,010
    
    
    
    100.0
    %
 67




---



##### Table of Contents



Trading
   Available- for- sale
   December 31, 2009Amortized Cost /
    
    
    Gross Unrealized
    
    
    Gross UnrealizedCost
    
    
    Gains
    
    
    Losses
    
    
    Estimated Fair ValueDebt securities:US government and agency obligations
    
    $
    42,296,727
    
    
    $
    37,623
    
    
    $
    (945,342
    )
    
    $
    41,389,008Equity securities:Common stockMetals and mining
    
    
    7,733,822
    
    
    
    190,079
    
    
    
    (326,483
    )
    
    
    7,597,418Energy
    
    
    237,153
    
    
    
    18,901
    
    
    
    
    
    
    
    256,054Other
    
    
    155,696
    
    
    
    66,064
    
    
    
    
    
    
    
    221,760Exchange-traded and mutual funds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Metals and mining
    
    
    36,520,270
    
    
    
    2,521,237
    
    
    
    (287,765
    )
    
    
    38,753,742Agriculture
    
    
    10,920,621
    
    
    
    834,009
    
    
    
    
    
    
    
    11,754,630Energy
    
    
    3,141,106
    
    
    
    165,708
    
    
    
    
    
    
    
    3,306,814Indices
    
    
    9,712,302
    
    
    
    43,007
    
    
    
    (1,792,215
    )
    
    
    7,963,094Other
    
    
    3,115,062
    
    
    
    439,426
    
    
    
    
    
    
    
    3,554,488Total equity securities
    
    
    71,536,032
    
    
    
    4,278,431
    
    
    
    (2,406,463
    )
    
    
    73,408,000Total investment securities
    
    $
    113,832,759
    
    
    $
    4,316,054
    
    
    $
    (3,351,805
    )
    
    $
    114,797,008
 68




---



##### Table of Contents



Unrealized Investment LossesLess than 12 months
    
    
    12 months or longerNumber of issues
    
    
    Fair value
    
    
    Unrealized losses
    
    
    Number of issues
    
    
    Fair value
    
    
    Unrealized lossesDebt securities:US government and agency obligations
    
    
    4
    
    
    $
    39,246,052
    
    
    $
    (945,342
    )
    
    
    
    
    
    $
    
    
    
    $
    Equity securities:Common Stock:Metals and mining
    
    
    11
    
    
    
    4,166,010
    
    
    
    (326,483
    )
    
    
    
    
    
    
    
    
    
    
    Exchange trades and mutual funds:Metals and mining
    
    
    10
    
    
    
    9,613,290
    
    
    
    (287,765
    )
    
    
    
    
    
    
    
    
    
    
    Indices
    
    
    6
    
    
    
    7,015,844
    
    
    
    (1,792,215
    )
    
    
    
    
    
    
    
    
    
    
    Total equity securities
    
    
    27
    
    
    
    20,795,144
    
    
    
    (2,406,463
    )
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    31
    
    
    $
    60,041,196
    
    
    $
    3,351,805
    
    
    
    
    
    
    $
    
    
    
    $
    
     2010
    
    
    2009Land
    
    $
    1,287,000
    
    
    $
    270,000Building
    
    
    1,410,000
    
    
    
    1,410,000Capital Improvements
    
    
    2,116,612
    
    
    
    2,157,389Computers
    
    
    155,782
    
    
    
    54,184Furniture
    
    
    930,485
    
    
    
    513,579Automobiles and other vehicles
    
    
    1,105,680
    
    
    
    1,080,886Software
    
    
    1,374,366
    
    
    
    1,239,280Total cost
    
    
    8,379,925
    
    
    
    6,725,318Less: accumulated depreciation
    
    
    (2,973,159
    )
    
    
    (2,189,567
    )Property, plant and equipment, net
    
    $
    5,406,766
    
    
    $
    4,535,751
    69




---



##### Table of Contents



For the years ended December 31,2010
    
    
    2009
    
    
    2008DPAC, beginning of year
    
    $
    43,971,286
    
    
    $
    40,155,150
    
    
    $
    37,018,747Capitalized Costs
    
    
    100,615,240
    
    
    
    88,333,192
    
    
    
    79,438,929Amortization of DPAC
    
    
    94,458,987
    
    
    
    84,517,056
    
    
    
    76,302,526DPAC, end of year
    
    $
    50,127,539
    
    
    $
    43,971,286
    
    
    $
    40,155,150DCC, beginning of year
    
    $
    34,506,662
    
    
    $
    39,747,203
    
    
    $
    39,141,016Ceding Commissions Written
    
    
    82,567,947
    
    
    
    68,566,674
    
    
    
    78,654,864Earned Ceding Commissions
    
    
    76,392,749
    
    
    
    73,807,215
    
    
    
    78,048,676DCC, end of year
    
    $
    40,681,860
    
    
    $
    34,506,662
    
    
    $
    39,747,203DPAC (DCC), net, beginning of year
    
    $
    9,464,624
    
    
    $
    407,946
    
    
    $
    (2,122,269
    )Capitalized Costs, net
    
    
    18,047,293
    
    
    
    19,766,518
    
    
    
    784,064Amortization of DPAC (DCC), net
    
    
    18,066,238
    
    
    
    10,709,840
    
    
    
    (1,746,151
    )DPAC (DCC), net, end of year
    
    $
    9,445,679
    
    
    $
    9,464,624
    
    
    $
    407,946
     70




---



##### Table of Contents



Year Ended
    
    
    Year EndedDecember 31, 2010
    
    
    December 31, 2009Balance at beginning of year
    
    $
    127,197,753
    
    
    $
    87,947,774Less reinsurance recoverable
    
    
    (62,900,913
    )
    
    
    (43,384,469
    )Net balance at beginning of year
    
    
    64,296,840
    
    
    
    44,563,305Incurred related to:Current year
    
    
    107,424,191
    
    
    
    97,630,002Prior years
    
    
    5,931,284
    
    
    
    8,503,133Total incurred
    
    
    113,355,475
    
    
    
    106,133,135Paid related to:Current year
    
    
    54,216,243
    
    
    
    52,388,374Prior years
    
    
    43,621,652
    
    
    
    34,011,226Total paid
    
    
    97,837,896
    
    
    
    86,399,600Net balance at end of year
    
    
    79,814,419
    
    
    
    64,296,840Plus reinsurance recoverable
    
    
    79,114,418
    
    
    
    62,900,913Balance at end of year
    
    $
    158,928,837
    
    
    $
    127,197,753
    Surplus Note
  71




---



##### Table of Contents



2011
    
    
    1,470,5882012
    
    
    1,470,5882013
    
    
    1,470,5882014
    
    
    1,470,5882015
    
    
    1,470,588Thereafter
    
    
    15,808,824Total
    
    $
    23,161,764
    Finance Facility
  72




---



##### Table of Contents



Interest Expense
    2010
    
    
    2009
    
    
    2008Statutory federal income tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %Increases (decreases) resulting from:Disallowed meals & entertainment
    
    
    0.3
    %
    
    
    0.3
    %
    
    
    0.1
    %Disallowed compensation
    
    
    1.3
    %
    
    
    
    
    
    
    State income tax, net of federal tax
benefit (1)
    
    
    3.6
    %
    
    
    3.6
    %
    
    
    3.6
    %Other, net
    
    
    0.4
    %
    
    
    -1.3
    %
    
    
    0.6
    %Effective tax rate
    
    
    40.6
    %
    
    
    37.6
    %
    
    
    39.3
    %
 
 (1)
    
    Included in income tax is State of Florida income tax at a statutory tax rate of 5.5%.  73




---



##### Table of Contents



As of December 31,2010
    
    
    2009Deferred income tax
assets:Unearned premiums
    
    $
    8,274,231
    
    
    $
    6,023,587Advanced premiums
    
    
    1,459,933
    
    
    
    1,266,152Unpaid losses
    
    
    2,193,958
    
    
    
    1,836,061Regulatory
assessments
    
    
    182,198
    
    
    
    1,605,884Executive
compensation
    
    
    1,311,946
    
    
    
    509,545Stock option expense
    
    
    3,466,936
    
    
    
    3,037,961Accrued wages
    
    
    357,259
    
    
    
    423,190Allowance for
uncollectible
receivables
    
    
    42,994
    
    
    
    1,042,228Additional tax
basis of securities
    
    
    171,852
    
    
    
    140,878Restricted stock
grant
    
    
    
    
    
    
    9,882Recognition of OTTI
    
    
    306,897
    
    
    
    Other
    
    
    
    
    
    
    3,876Total deferred
income tax assets
    
    
    17,768,204
    
    
    
    15,899,244Deferred income tax
liabilities:Deferred policy
acquisition costs,
net
    
    
    (3,643,671
    )
    
    
    (3,650,979
    )Market value gains
on trading
securities
    
    
    (676,574
    )
    
    
    Unrealized gains on
investments
    
    
    (6
    )
    
    
    (353,976
    )Total deferred
income tax
liabilities
    
    
    (4,320,251
    )
    
    
    (4,004,955
    )Net deferred income
tax asset
    
    $
    13,447,953
    
    
    $
    11,894,289
      Cumulative Convertible Preferred Stock
  74




---



##### Table of Contents



As of December 31, 2010
    
    
    As of December 31, 2009Series A
    
    
    Series M
    
    
    Total
    
    
    Series A
    
    
    Series M
    
    
    TotalShares
    
    
    19,950
    
    
    
    87,740
    
    
    
    107,690
    
    
    
    19,950
    
    
    
    88,690
    
    
    
    108,640Conversion factor
    
    
    2.5
    
    
    
    1.25
    
    
    
    
    
    
    
    2.5
    
    
    
    1.25Number of common
shares resulting
if converted
    
    
    49,875
    
    
    
    109,675
    
    
    
    159,550
    
    
    
    49,875
    
    
    
    110,863
    
    
    
    160,738
  Common Stock
  Issued Shares
    
    
    Treasury Shares
    
    
    Shares Held in Trust
    
    
    Outstanding SharesBalance, as of January 1, 2008
    
    
    39,307,103
    
    
    
    (394,374
    )
    
    
    (2,900,000
    )
    
    
    36,012,729Warrants exercised
    
    
    600,000
    
    
    
    (81,081
    )
    
    
    
    
    
    
    518,919Options exercised
    
    
    916,000
    
    
    
    (1,390,575
    )
    
    
    1,994,000
    
    
    
    1,519,425Shares cancelled
    
    
    (965,084
    )
    
    
    965,084
    
    
    
    
    
    
    
    Restricted stock grant
    
    
    300,000
    
    
    
    
    
    
    
    
    
    
    
    300,000Repurchase of shares
    
    
    
    
    
    
    (808,901
    )
    
    
    
    
    
    
    (808,901
    )Balance, as of December 31, 2008
    
    
    40,158,019
    
    
    
    (1,709,847
    )
    
    
    (906,000
    )
    
    
    37,542,172Preferred stock conversion
    
    
    75,000
    
    
    
    
    
    
    
    
    
    
    
    75,000Options exercised
    
    
    20,000
    
    
    
    (137,407
    )
    
    
    275,000
    
    
    
    157,593Shares cancelled
    
    
    (38,135
    )
    
    
    38,135
    
    
    
    
    
    
    
    Balance, as of December 31, 2009
    
    
    40,214,884
    
    
    
    (1,809,119
    )
    
    
    (631,000
    )
    
    
    37,774,765Preferred stock conversion
    
    
    1,187
    
    
    
    
    
    
    
    
    
    
    
    1,187Options exercised
    
    
    1,995,206
    
    
    
    (1,314,160
    )
    
    
    631,000
    
    
    
    1,312,046Shares cancelled
    
    
    (2,104,526
    )
    
    
    2,104,526
    
    
    
    
    
    
    
    Restricted stock grant
    
    
    300,000
    
    
    
    
    
    
    
    
    
    
    
    300,000Balance, as of December 31, 2010
    
    
    40,406,751
    
    
    
    (1,018,753
    )
    
    
    
    
    
    
    39,387,998
 Dividends Declared
  For the year ended December 31, 2010Per Share
    
    
    AggregateAmount
    
    
    AmountFirst Quarter
    
    $
    0.12
    
    
    $
    4,699,926Second Quarter
    
    $
    0.10
    
    
    $
    3,916,724Third Quarter
    
    $
    
    
    
    $
    Fourth Quarter
    
    $
    0.10
    
    
    $
    3,916,724
 75




---



##### Table of Contents



For the year ended December 31, 2009Per Share
    
    
    AggregateAmount
    
    
    Amount|
    
    |First Quarter
    
    $
    0.22
    
    
    $
    8,268,278Second Quarter
    
    $
    0.12
    
    
    $
    4,516,461Third Quarter
    
    $
    
    
    
    $
    Fourth Quarter
    
    $
    0.20
    
    
    $
    7,528,808
 For the year ended December 31, 2008Per Share
    
    
    AggregateAmount
    
    
    AmountFirst Quarter
    
    $
    0.10
    
    
    $
    3,791,617Second Quarter
    
    $
    
    
    
    $
    Third Quarter
    
    $
    0.10
    
    
    $
    3,724,217Fourth Quarter
    
    $
    0.20
    
    
    $
    7,448,435
 Company Stock Repurchase
  Stock -Based Compensation
  Equity Compensation Plan
    76




---



##### Table of Contents



Stock Options
   2010
    
    
    2009
    
    
    2008Weighted-average risk-free interest rate
    
    
    0.91
    %
    
    
    N/A
    
    
    
    1.80
    %Expected term of option in years
    
    
    2.13
    
    
    
    N/A
    
    
    
    2.27Weighted-average volatility
    
    
    59.6
    %
    
    
    N/A
    
    
    
    83.5
    %Dividend yield
    
    
    9.8
    %
    
    
    N/A
    
    
    
    8.6
    %Fair Value
    
    $
    1.4593
    
    
    
    N/A
    
    
    $
    1.4289
  Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageNumber of
    
    
    Exercise
    
    
    Aggregate
    
    
    RemainingShares
    
    
    Price
    
    
    Intrinsic Value
    
    
    TermOutstanding December 31, 2009
    
    
    6,345,000
    
    
    $
    3.21
    
    
    $
    17,888,900
    
    
    
    2.14Granted
    
    
    1,665,000
    
    
    $
    5.07Exercised
    
    
    (2,625,000
    )
    
    $
    1.37Outstanding December 31, 2010
    
    
    5,385,000
    
    
    $
    4.68
    
    
    $
    3,927,150
    
    
    
    2.76Exercisable at December 31, 2010
    
    
    4,527,500
    
    
    $
    4.60
    
    
    $
    3,927,150
    
    
    
    2.47
      77




---



##### Table of Contents



Restricted Stock Grants
   WeightedAverageNumber of
    
    
    Grant DateShares
    
    
    Fair ValueNonvested shares outstanding as of December 31, 2009
    
    
    150,000
    
    
    $
    2.31Granted
    
    
    300,000
    
    
    $
    5.84Vested
    
    
    150,000
    
    
    $
    2.31Forfeited
    
    
    
    
    
    
    n/aNonvested shares outstanding as of December 31, 2010
    
    
    300,000
     Warrants
   78




---



##### Table of Contents



Stock Grantor Trust
            79




---



##### Table of Contents



Year Ended
    
    
    
    
    
    
    
    
    
    
    Year Ended
    
    
    
    
    
    
    
    
    
    
    Year EndedDecember 31, 2010
    
    
    
    
    
    
    
    
    
    
    December 31, 2009
    
    
    
    
    
    
    
    
    
    
    December 31, 2008Income
    
    
    
    
    
    
    
    
    
    
    Income
    
    
    
    
    
    
    
    
    
    
    IncomeAvailable to
    
    
    
    
    
    
    
    
    
    
    Available to
    
    
    
    
    
    
    
    
    
    
    Available toCommon
    
    
    
    
    
    
    Per-
    
    
    Common
    
    
    
    
    
    
    Per-
    
    
    Common
    
    
    
    
    
    
    Per-Stockholders
    
    
    
    
    
    
    Share
    
    
    Stockholders
    
    
    
    
    
    
    Share
    
    
    Stockholders
    
    
    
    
    
    
    ShareAmount
    
    
    Shares
    
    
    Amount
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Amount
    
    
    Shares
    
    
    AmountNet income
    
    $
    36,983,762
    
    
    
    
    
    
    
    
    
    
    $
    28,787,298
    
    
    
    
    
    
    
    
    
    
    $
    40,037,323Less: preferred stocks dividends
    
    
    (19,950
    )
    
    
    
    
    
    
    
    
    
    
    (27,450
    )
    
    
    
    
    
    
    
    
    
    
    (49,950
    )Income available to common
stockholders
    
    $
    36,963,812
    
    
    
    39,113,302
    
    
    $
    0.95
    
    
    $
    28,759,848
    
    
    
    37,617,885
    
    
    $
    0.76
    
    
    $
    39,987,373
    
    
    
    37,418,253
    
    
    $
    1.07Effect of dilutive securities:Stock options and warrants
    
    
    
    
    
    
    976,542
    
    
    
    (0.03
    )
    
    
    
    
    
    
    2,679,134
    
    
    
    (0.05
    )
    
    
    
    
    
    
    2,287,929
    
    
    
    (0.06
    )Preferred stock
    
    
    19,950
    
    
    
    159,833
    
    
    
    
    
    
    
    27,450
    
    
    
    174,505
    
    
    
    
    
    
    
    49,950
    
    
    
    568,325
    
    
    
    (0.02
    )Income available to common
stockholders and assumed
conversion
    
    $
    36,983,762
    
    
    
    40,249,677
    
    
    $
    0.92
    
    
    $
    28,787,298
    
    
    
    40,471,524
    
    
    $
    0.71
    
    
    $
    40,037,323
    
    
    
    40,274,507
    
    
    $
    0.99
   80




---



##### Table of Contents



For the Year Ended
    
    
    
    
    
    
    
    
    
    
    For the Year Ended
    
    
    
    
    
    
    
    
    
    
    For the Year EndedDecember 31, 2010
    
    
    
    
    
    
    
    
    
    
    December 31, 2009
    
    
    
    
    
    
    
    
    
    
    December 31, 2008Pretax
    
    
    Tax
    
    
    After-tax
    
    
    Pretax
    
    
    Tax
    
    
    After-tax
    
    
    Pretax
    
    
    Tax
    
    
    After-taxUnrealized (losses) gains on
available-for-sale securities
    
    $
    (1,570,523
    )
    
    $
    603,732
    
    
    $
    (966,791
    )
    
    $
    31,860,665
    
    
    $
    (12,290,251
    )
    
    $
    19,570,414
    
    
    $
    40,429
    
    
    $
    (15,595
    )
    
    $
    24,834Reclassification of
unrealized gains on
available-for-sale-securities
to earnings
    
    
    656,307
    
    
    
    (253,170
    )
    
    
    403,137
    
    
    
    30,983,465
    
    
    
    (11,951,871
    )
    
    
    19,031,594
    
    
    
    
    
    
    
    
    
    
    
    Other
comprehensive income (loss)
    
    $
    (914,216
    )
    
    $
    350,562
    
    
    $
    (563,654
    )
    
    $
    877,200
    
    
    $
    (338,380
    )
    
    $
    538,820
    
    
    $
    40,429
    
    
    $
    (15,595
    )
    
    $
    24,834
  As of December 31,2010
    
    
    2009
    
    
    2008Net unrealized gains:Fixed maturities, available for sale
    
    $
    
    
    
    $
    (907,720
    )
    
    $
    Equity securities
    
    
    
    
    
    
    1,871,969
    
    
    
    40,429Other
    
    
    
    
    
    
    (46,619
    )
    
    
    Net unrealized gains
    
    
    
    
    
    
    917,630
    
    
    
    40,429Deferred income taxes
    
    
    
    
    
    
    (353,976
    )
    
    
    (15,595
    )Accumulated other comprehensive income, net of taxes
    
    $
    
    
    
    $
    563,654
    
    
    $
    24,834
  Employment Agreements and Potential Payments Upon Certain Events
  81




---



##### Table of Contents



As of December 31, 2010Salaries
    
    

Non-equity
incentivecompensationCommitments
    
    $
    19,134,851
    
    
    $
    15,747,225Contingent payments upon certain events:Termination
    
    $
    6,679,746
    
    
    $
    Change in control
    
    $
    14,704,676
    
    
    $
    9,353,762Death
    
    $
    7,461,515
    
    
    $
    9,979,031Disability
    
    $
    1,751,787
    
    
    $
    2,868,656
 Operating Leases
  2011
    
    $
    255,5922012
    
    
    222,5542013
    
    
    117,0492014 and later
    
    
    119,816$
    715,011
 Litigation
    
    
    Level 1  Observable inputs that reflect unadjusted quoted prices for identical assets
or liabilities in active markets as of the reporting date. Active markets are those in
which transactions for the asset or liability occur in sufficient frequency and volume to
provide pricing information on an ongoing basis.
    
    Level 2  Observable market-based inputs or unobservable inputs that are corroborated by
market data.
    
    Level 3  Unobservable inputs that are not corroborated by market data. These inputs
reflect managements best estimate of fair value using its own assumptions about the
assumptions a market participant would use in pricing the asset or liability.
 82




---



##### Table of Contents



Summary of significant valuation techniques for assets measured at fair value on a recurring basis
  U.S government obligations and agencies:
 Common stock:
 Exchange traded and mutual funds:
  U.S government obligations and agencies:
 Exchange-traded derivatives
  December 31, 2010Fair Value MeasurementsLevel 1
    
    Level 2
    
    
    Level 3
    
    
    TotalAssets:Debt securities (trading):US government obligations and agencies
    
    $
    179,263
    
    
    $
    129,936,744
    
    
    $
    
    
    
    $
    130,116,007Equity securities (trading):Common stockPrecious metals and mining
    
    
    25,751,909
    
    
    
    
    
    
    
    
    
    
    
    25,751,909Other
    
    
    362,520
    
    
    
    
    
    
    
    
    
    
    
    362,520Exchange traded and mutual fundsPrecious metals and mining
    
    
    42,209,279
    
    
    
    
    
    
    
    
    
    
    
    42,209,279Agriculture
    
    
    14,876,584
    
    
    
    
    
    
    
    
    
    
    
    14,876,584Energy
    
    
    5,559,296
    
    
    
    
    
    
    
    
    
    
    
    5,559,296Indices
    
    
    4,613,105
    
    
    
    
    
    
    
    
    
    
    
    4,613,105Other
    
    
    1,043,704
    
    
    
    
    
    
    
    
    
    
    
    1,043,704Total equity securities
    
    
    94,416,397
    
    
    
    
    
    
    
    
    
    
    
    94,416,397Exchange-traded derivatives (other
assets)
    
    
    
    
    
    
    181,988
    
    
    
    
    
    
    
    181,988Total
    
    $
    94,595,660
    
    
    $
    130,118,732
    
    
    $
    
    
    
    $
    224,714,392
 83




---



##### Table of Contents



December 31, 2009Fair Value MeasurementsLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAssets:Debt securities (available for sale):US government obligations and
agencies
    
    $
    41,389,008
    
    
    $
    
    
    
    $
    
    
    
    $
    41,389,008Equity securities (available for sale):
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Precious Metals and Mining
    
    
    7,597,419
    
    
    
    
    
    
    
    
    
    
    
    7,597,419Energy
    
    
    256,053
    
    
    
    
    
    
    
    
    
    
    
    256,053Other
    
    
    221,760
    
    
    
    
    
    
    
    
    
    
    
    221,760Exchange traded and mutual fundsPrecious metals and mining
    
    
    38,753,742
    
    
    
    
    
    
    
    
    
    
    
    38,753,742Agriculture
    
    
    11,754,630
    
    
    
    
    
    
    
    
    
    
    
    11,754,630Energy
    
    
    3,306,815
    
    
    
    
    
    
    
    
    
    
    
    3,306,815Indices
    
    
    7,963,094
    
    
    
    
    
    
    
    
    
    
    
    7,963,094Other
    
    
    3,554,489
    
    
    
    
    
    
    
    
    
    
    
    3,554,489Total equity securities
    
    
    73,408,002
    
    
    
    
    
    
    
    
    
    
    
    73,408,002Total
    
    $
    114,797,010
    
    
    $
    
    
    
    $
    
    
    
    $
    114,797,010
   December 31, 2010Fair Value MeasurementsNet unrealized
    
    
    Estimated FairCarrying value
    
    
    Gains/(Losses)
    
    
    ValueAssets:Cash and cash equivalents
    
    $
    147,585,464
    
    
    $
    
    
    
    $
    147,585,464$
    147,585,464
    
    
    $
    
    
    
    $
    147,585,464Liabilities:Bonds payable
    
    $
    23,161,764
    
    
    $
    (4,062,514
    )
    
    $
    19,099,250$
    23,161,764
    
    
    $
    (4,062,514
    )
    
    $
    19,099,250
 December 31, 2009Fair Value MeasurementsNet unrealized
    
    
    Estimated FairCarrying value
    
    
    Gains/(Losses)
    
    
    ValueAssets:Cash and cash equivalents
    
    $
    192,924,291
    
    
    $
    
    
    
    $
    192,924,291$
    192,924,291
    
    
    $
    
    
    
    $
    192,924,291Liabilities:Bonds payable
    
    $
    24,632,353
    
    
    $
    (6,332,464
    )
    
    $
    18,299,889$
    24,632,353
    
    
    $
    (6,332,464
    )
    
    $
    18,299,889
   84




---



##### Table of Contents



First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterFor the year
ended December 31, 2010Total revenues
    
    $
    45,219,924
    
    
    $
    55,860,022
    
    
    $
    70,735,701
    
    
    $
    68,107,585Total expenses
    
    
    33,840,361
    
    
    
    38,224,224
    
    
    
    49,423,153
    
    
    
    56,157,691Net Income
    
    
    6,944,248
    
    
    
    10,766,330
    
    
    
    13,077,210
    
    
    
    6,195,575Basic earnings per share
    
    
    0.18
    
    
    
    0.27
    
    
    
    0.33
    
    
    
    0.16Diluted earnings per share
    
    
    0.17
    
    
    
    0.27
    
    
    
    0.32
    
    
    
    0.15For the year
ended December 31, 2009Total revenues
    
    $
    48,117,800
    
    
    $
    47,549,345
    
    
    $
    60,983,047
    
    
    $
    53,991,937Total expenses
    
    
    27,935,892
    
    
    
    35,105,355
    
    
    
    42,443,473
    
    
    
    58,994,585Net Income
    
    
    12,437,830
    
    
    
    7,638,558
    
    
    
    11,514,520
    
    
    
    (2,803,610
    )Basic earnings per share
    
    
    0.33
    
    
    
    0.20
    
    
    
    0.31
    
    
    
    (0.08
    )Diluted earnings per share
    
    
    0.31
    
    
    
    0.19
    
    
    
    0.28
    
    
    
    (0.07
    )
     
 ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A.
    
    CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
   Managements Report on Internal Control over Financial

Reporting
     85




---



##### Table of Contents



Enhancing Controls
    Changes in Internal Control Over Financial Reporting
  
 ITEM 9B.
    
    OTHER INFORMATION
  
 PART III
 
 ITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 Code of Business Conduct and Ethics
   
 ITEM 11.
    
    EXECUTIVE COMPENSATION
  86




---



##### Table of Contents



ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
  
 ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE
  
 ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
  
 PART IV
 
 ITEM 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
           PageSchedules required to be filed under the provisions of Regulation S-X Article 7:Schedule II Condensed Financial Information of Registrant
    
    
    S-1Schedule V Valuation Allowances and Qualifying Accounts
    
    
    S-4Schedule VI Supplementary Information Concerning
Consolidated Property-Casualty Insurance
Operations
    
    
    S-4Report of Independent Registered Certified Public Accounting Firm
    
    
    S-5
 87




---



##### Table of Contents



(3) EXHIBITS3.1
    
    Registrants Amended and Restated Certificate of Incorporation, as amended (1)3.2
    
    Registrants Bylaws (1)3.3
    
    Certificate of Designation for Series A Convertible Preferred Stock dated October 11, 1994 (4)3.4
    
    Certificate of Designations, Preferences, and Rights of Series M Convertible Preferred Stock dated
August 13, 1997 (2)3.5
    
    Certificate of Amendment of Amended and Restated Certificate of Incorporation dated October 19, 1998 (4)3.6
    
    Certificate of Amendment of Amended and Restated Certificate of Incorporation dated December 18, 2000
(4)3.7
    
    Certificate of Amendment of Certificate of Designations of the Series A Convertible Preferred Stock
dated October 29, 2001 (4)4.1
    
    Form of Common Stock Certificate (1)4.2
    
    Form of Warrant Certificate (1)4.3
    
    Form of Warrant Agency Agreement (1)4.4
    
    Form of Underwriter Warrant (1)4.5
    
    Affiliate Warrant (1)4.6
    
    Form of Warrant to purchase 100,000 shares of Common Stock at an exercise price of $2.00 per share
issued to Steven Guarino dated as of April 24, 1997. (Substantially similar in form to two additional
warrants to purchase 100,000 shares of Common Stock issued to Mr. Guarino dated as of April 24, 1997,
with exercise prices of $2.75 and $3.50 per share, respectively) (2)10.1
    
    Form of Indemnification Agreement between the Registrant and each of its directors and executive
officers (1)10.2
    
    Management Agreements by and between Universal Property & Casualty Insurance Company and Universal P&C
Management, Inc. dated as of June 2, 1997 (2)10.3
    
    Employment Agreement dated as of May 1, 1997 between Universal Heights, Inc. and Bradley I. Meier (2)*10.4
    
    Employment Agreement, dated October 11, 2006, between James M. Lynch and Universal Insurance
Holdings, Inc. (8)*10.5
    
    Employment Agreement, dated as of January 1, 2005, between Sean Downes and Universal Insurance
Holdings, Inc. (9)*10.6
    
    Amendment to Employment Agreement of Bradley I. Meier, dated March 21, 2007 (10)*10.7
    
    Amendment to Employment Agreement of Sean P. Downes, dated March 21, 2007 (10)*10.8
    
    Addendum No. 8 to the Employment Agreement by and between the Company and Bradley I. Meier, dated July
12, 2007 (11)*
 88




---



##### Table of Contents



10.9
    
    Addendum No. 2 to the Employment Agreement by and between the Company and Sean P. Downes, dated
July 12, 2007 (11)*10.10
    
    Addendum No. 1 to the Employment Agreement by and between the Company and James M. Lynch, dated
July 12, 2007 (11)*10.11
    
    Addendum No. 9 to Meier Employment Agreement, dated December 5, 2008 (12)*10.12
    
    Addendum No. 3 to Downes Employment Agreement, dated December 5, 2008 (12)*10.13
    
    Addendum No. 4 to Downes Employment Agreement, dated February  4, 2010  (15)10.14
    
    Employment  Agreement, by and between the Company and George De Heer, dated as of September 30, 2010 (16)10.15
    
    Addendum No.10 to Meier Employment  Agreement, dated December 6, 2010 (17)10.16
    
    Florida Insurance Capital Build-Up Incentive Program Surplus Note (Surplus Note) between the
Company and The State Board of Administration of Florida (SBA). (13)10.17
    
    Addendum No. 1 to the Surplus Note between the Company and SBA. (13)10.18
    
    Multiple Line Quota Share Reinsurance Contract between the Company and Everest Reinsurance
Company. (13)10.19
    
    Independent Adjusting Firm Agreement between the Company and Downes and Associates. (13)10.20
    
    The Universal Insurance Holdings, Inc. 2009 Omnibus Incentive Plan (14)11.1
    
    Statement Regarding Computation of Per Share Income (9)14.1
    
    Code of Business Conduct and Ethics (7)16.1
    
    Letter on change in certifying accountants from Millward & Co. CPAs dated February 12, 1999, and
as amended February 26, 1999 (3)16.2
    
    Letter on change in certifying accountants from Deloitte & Touche LLP dated October 7, 2002(5)16.3
    
    Letter on change in certifying accountants from Deloitte & Touche LLP dated March 27, 2003(6)21
    
    List of Subsidiaries23.1
    
    Consent of Independent Registered Public Accounting Firm31.1
    
    Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
    
    Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to Title 18,
United States Code, Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
200299.1
    
    Schedule of Investments
 
 *
    
    Exhibit Numbers 10.6-10.15 are management contracts or compensatory plans required to be filed as
Exhibits to this Form 10-K. (1)
    
    Incorporated by reference to the Registrants Registration Statement on
Form S-1 (File No. 33-51546) declared effective on December 14, 1992(2)
    
    Incorporated by reference to the Registrants Annual Report on Form 10-KSB
for the year ended April 30, 1997 filed with the Securities and Exchange
Commission on August 13, 1997, as amended(3)
    
    Incorporated by reference to the Registrants Current Report on Form 8-K
and Current Report on Form 8-K/A, filed with the Securities and Exchange
Commission on February 12, 1999 and February 26, 1999, respectively(4)
    
    Incorporated by reference to the Registrants Annual Report on Form 10-KSB
for the year ended December 31, 2002 filed with the Securities and Exchange
Commission on April 9, 2003
 89




---



##### Table of Contents



(5)
    
    Incorporated by reference to the Registrants Current Report on Form 8-K,
filed with the Securities and Exchange Commission on October 7, 2002(6)
    
    Incorporated by reference to the Registrants Current Report on Form 8-K,
filed with the Securities and Exchange Commission on April 2, 2003(7)
    
    Incorporated by reference to the Registrants Annual Report on Form 10-KSB,
filed with the Securities and Exchange Commission on March 30, 2007(8)
    
    Incorporated by reference to the Registrants Annual Report on Form
10-KSB/A for the year ended December 31, 2006 filed with the Securities and
Exchange Commission on August 24, 2007(9)
    
    Incorporated by reference to the Registrants Annual Report on Form 10-KSB,
filed with the Securities and Exchange Commission on March 17, 2007(10)
    
    Incorporated by reference to the Registrants Current Report on Form 8-K,
filed with the Securities and Exchange Commission on March 22, 2007(11)
    
    Incorporated by reference to the Registrants Current Report on Form 8-K,
filed with the Securities and Exchange Commission on August 10, 2007(12)
    
    Incorporated by reference to the Registrants Current Report on Form 8-K,
filed with the Securities and Exchange Commission on December 9, 2008(13)
    
    Incorporated by reference to the Registrants Current Report on Form 8-K,
filed with the Securities and Exchange Commission on November 10, 2009(14)
    
    Incorporated by reference to Exhibit 4.10 of the Registrants Registration
Statement on Form S-8 (File No. 333-163564) filed with the Securities and
Exchange Commission on December 8, 2009.(15)
    
    Incorporated by reference to the Registrants Current Report on Form 8-K,
filed with the Securities and Exchange Commission on February 4, 2010(16)
    
    Incorporated by reference to the Registrants Current Report on Form 8-K,
filed with the Securities and Exchange Commission on October 5, 2010(17)
    
    Incorporated by reference to the Registrants Current Report on Form 8-K,
filed with the Securities and Exchange Commission on December 7, 2010
 90




---



##### Table of Contents



SIGNATURES
  UNIVERSAL INSURANCE HOLDINGS, INC.
 Dated: March 31, 2011
    By:
    /s/ Bradley I. MeierBradley I. Meier, President and Chief Executive OfficerBy:
    /s/ George R. De HeerGeorge R. De Heer, Chief Financial Officer and
 Principal Accounting Officer  /s/ Bradley I. Meier

Bradley I. Meier
    
    President, Chief Executive Officer and Director
    
    March 31, 2011/s/ Sean P. Downes

Sean P. Downes
    
    Senior Vice President, Chief Operating Officer and
Director
    
    March 31, 2011/s/ George R. De Heer

George R. De Heer
    
    Chief Financial Officer
    
    March 31, 2011Norman M. Meier
    
    Director
    
    March 31, 2011/s/ Michael Pietrangelo

Michael Pietrangelo
    
    Director
    
    March 31, 2011/s/ Ozzie A. Schindler

Ozzie A. Schindler
    
    Director
    
    March 31, 2011/s/ Reed J. Slogoff

Reed J. Slogoff
    
    Director
    
    March 31, 2011/s/ Joel M. Wilentz

Joel M. Wilentz
    
    Director
    
    March 31, 2011
 91




---



##### Table of Contents



SCHEDULE II  CONDENSED FINANCIAL INFORMATION OF REGISTRANT
  CONDENSED BALANCE SHEETS
 December 31,2010
    
    
    2009ASSETSCash and cash equivalents
    
    $
    19,796,850
    
    
    $
    18,988,540Investments in subsidiaries and undistributed earnings
    
    
    112,001,070
    
    
    
    70,589,972Equity securities
    
    
    9,500,586
    
    
    
    13,089,692Premiums receivable, assumed
    
    
    
    
    
    
    8,720,833Receivable from securities
    
    
    
    
    
    
    473,627Other receivables
    
    
    4,554
    
    
    
    380,045Income taxes recoverable
    
    
    
    
    
    
    3,211,874Property and equipment, net
    
    
    5,365
    
    
    
    21,461Deferred income taxes
    
    
    13,447,953
    
    
    
    11,894,289Other assets
    
    
    190,297
    
    
    
    148,208Total assets
    
    $
    154,946,675
    
    
    $
    127,518,541LIABILITIES AND STOCKHOLDERS EQUITYLIABILITIES:Unearned premiums, assumed
    
    $
    
    
    
    $
    7,291,667Accounts payable
    
    
    164,282
    
    
    
    272,390Income taxes payable
    
    
    8,282,030
    
    
    
    368,967Other accrued expenses
    
    
    6,710,735
    
    
    
    6,311,060Total liabilities
    
    
    15,157,047
    
    
    
    14,244,084STOCKHOLDERS EQUITY:Cumulative convertible preferred stock, $.01 par value
    
    
    1,077
    
    
    
    1,087Authorized shares - 1,000,000Issued shares - 107,690 and 108,640Outstanding shares - 107,690 and 108,640Minimum liquidation preference  $287,240 and $288,190Common stock, $.01 par value
    
    
    404,069
    
    
    
    402,146Authorized shares - 55,000,000Issued shares   40,877,088 and 40,214,884Outstanding shares - 39,166,033 and 37,774,765Treasury shares, at cost - 1,711,054 and 1,809,118 shares
    
    
    (3,109,255
    )
    
    
    (7,948,606
    )Common stock held in trust, at cost - 0 and 631,000 shares
    
    
    
    
    
    
    (511,110
    )Additional paid-in capital
    
    
    33,674,697
    
    
    
    36,666,914Accumulated other comprehensive income, net of taxes
    
    
    
    
    
    
    563,654Retained earnings
    
    
    108,819,040
    
    
    
    84,100,372Total stockholders equity
    
    
    139,789,628
    
    
    
    113,274,457Total liabilities and stockholders equity
    
    $
    154,946,675
    
    
    $
    127,518,541




---



##### Table of Contents



CONDENSED
STATEMENTS OF INCOME
 For the Years Ended December 31,2010
    
    
    2009
    
    
    2008PREMIUMS EARNED AND OTHER REVENUESAssumed premiums written
    
    $
    4,534,500
    
    
    $
    17,500,000
    
    
    $
    (decrease) increase in unearned assumed premiums
    
    
    7,291,667
    
    
    
    (7,291,667
    )
    
    
    Premiums earned, net
    
    
    11,826,167
    
    
    
    10,208,333
    
    
    
    Net investment income
    
    
    42,531
    
    
    
    36,761
    
    
    
    108,294Net realized gains on investments
    
    
    1,378,724
    
    
    
    1,241,868
    
    
    
    Net unrealized gains on investments
    
    
    222,576
    
    
    
    
    
    
    
    Net foreign currency gains on investments
    
    
    
    
    
    
    115,307
    
    
    
    Management fee
    
    
    40,750
    
    
    
    
    
    
    
    Commission revenue
    
    
    154
    
    
    
    1,003
    
    
    
    74Total premiums earned and other revenues
    
    
    13,510,902
    
    
    
    11,603,272
    
    
    
    108,368OPERATING COSTS AND EXPENSESGeneral and administrative expenses
    
    
    20,417,087
    
    
    
    21,586,218
    
    
    
    22,652,177Total operating cost and expenses
    
    
    20,417,087
    
    
    
    21,586,218
    
    
    
    22,652,177LOSS BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES
    
    
    (6,906,185
    )
    
    
    (9,982,946
    )
    
    
    (22,543,809
    )Benefit from income taxes
    
    
    (2,664,061
    )
    
    
    (3,494,031
    )
    
    
    (8,696,275
    )LOSS BEFORE EQUITY IN NET EARNINGS OF SUBSIDIARIES
    
    
    (4,242,124
    )
    
    
    (6,488,915
    )
    
    
    (13,847,534
    )Equity in net income of subsidiaries
    
    
    41,225,886
    
    
    
    35,276,213
    
    
    
    53,884,857CONSOLIDATED NET INCOME
    
    $
    36,983,762
    
    
    $
    28,787,298
    
    
    $
    40,037,323




---



##### Table of Contents



CONDENSED STATEMENTS OF CASH FLOWS
 For the Years Ended December 31,2010
    
    
    2009
    
    
    2008Cash flows from operating activitiesNet Income
    
    $
    36,983,762
    
    
    $
    28,787,298
    
    
    $
    40,037,323Adjustments to reconcile net income to net cash provided by operating activities:Equity in net income of subsidiaries
    
    
    (41,225,886
    )
    
    
    (35,276,213
    )
    
    
    (53,884,857
    )Dividends received from subsidiaries
    
    
    
    
    
    
    
    
    
    
    23,000,000Amortization of cost of stock options
    
    
    2,108,705
    
    
    
    1,520,647
    
    
    
    4,271,230Amortization of restricted stocks grants
    
    
    852,692
    
    
    
    654,825
    
    
    
    333,960Net realized gains on investments
    
    
    (1,378,724
    )
    
    
    (1,241,868
    )
    
    
    Net unrealized gains on investments
    
    
    (222,576
    )
    
    
    
    
    
    
    Foreign currency gains on investments, net
    
    
    
    
    
    
    (115,307
    )
    
    
    Deferred income taxes
    
    
    (1,333,362
    )
    
    
    1,880,794
    
    
    
    73,897Other
    
    
    16,096
    
    
    
    16,097
    
    
    
    16,097Net changes in assets and liabilities relating to operating activities:Premiums receivable
    
    
    8,720,833
    
    
    
    (8,720,833
    )
    
    
    Purchases of equity securities, trading
    
    
    (12,759,757
    )
    
    
    
    
    
    
    Proceeds from sale of equity securities, trading
    
    
    10,897,316
    
    
    
    
    
    
    
    Income taxes recoverable
    
    
    3,211,874
    
    
    
    (728,951
    )
    
    
    (2,237,183
    )Income taxes payable
    
    
    7,913,063
    
    
    
    368,968
    
    
    
    Unearned premiums
    
    
    (7,291,667
    )
    
    
    7,291,667
    
    
    
    Other operating assets and liabilities
    
    
    604,095
    
    
    
    (567,667
    )
    
    
    (924,272
    )Net cash provided by (used in) operating activities
    
    
    7,096,464
    
    
    
    (6,130,543
    )
    
    
    10,686,195Cash flows from investing activities:Capital contributions to subsidiaries
    
    
    (39,160,902
    )
    
    
    
    
    
    
    (127,750
    )Purchases of equity securities, available for sale
    
    
    (3,578,274
    )
    
    
    (36,317,995
    )
    
    
    Proceeds from sale of equity securities, available for sale
    
    
    10,701,986
    
    
    
    24,536,211
    
    
    
    Net cash used in investing activities
    
    
    (32,037,190
    )
    
    
    (11,781,784
    )
    
    
    (127,750
    )Cash flows from financing activities:Preferred stock dividend
    
    
    (19,950
    )
    
    
    (27,450
    )
    
    
    (49,950
    )Common stock dividend
    
    
    (12,533,376
    )
    
    
    (20,313,547
    )
    
    
    (18,299,123
    )Issuance of common stock
    
    
    14,000
    
    
    
    55,000
    
    
    
    130,530Treasury shares on option exercise
    
    
    (4,292,485
    )
    
    
    (223,376
    )
    
    
    (3,418,469
    )Repurchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    (2,999,788
    )Excess tax benefits from stock-based compensation
    
    
    4,099,145
    
    
    
    728,584
    
    
    
    5,706,778Transfers from subsidiaries
    
    
    38,481,702
    
    
    
    54,493,020
    
    
    
    9,427,516Net cash provided by (used in) financing activities
    
    
    25,749,036
    
    
    
    34,712,231
    
    
    
    (9,502,506
    )Net increase in cash and cash equivalents
    
    
    808,310
    
    
    
    16,799,904
    
    
    
    1,055,939Cash and cash equivalents at beginning of period
    
    
    18,988,540
    
    
    
    2,188,636
    
    
    
    1,132,697Cash and cash equivalents at end of period
    
    $
    19,796,850
    
    
    $
    18,988,540
    
    
    $
    2,188,636Supplemental cashflow disclosures:Dividends accrued
    
    $
    
    
    
    $
    
    
    
    
    
 S-3




---



##### Table of Contents



SCHEDULE V  VALUATION ALLOWANCES AND QUALIFYING ACCOUNTS
 AdditionsBalance at
    
    
    Charged to
    
    
    Charged to
    
    
    
    
    
    
    Balance atbeginning
    
    
    costs and
    
    
    other
    
    
    
    
    
    
    end ofDescription
    
    of period
    
    
    expenses
    
    
    accounts
    
    
    Deductions
    
    
    periodYear Ended December 31, 2010:Allowance for doubtful account
    
    $
    2,701,822
    
    
    $
    1,304,856
    
    
    
    
    
    
    $
    3,895,222
    
    
    $
    111,456Year Ended December 31, 2009:Allowance for doubtful account
    
    $
    1,399,997
    
    
    $
    1,353,662
    
    
    $
    
    
    
    $
    51,837
    
    
    $
    2,701,822Year Ended December 31, 2008:Allowance for doubtful account
    
    $
    832,660
    
    
    $
    2,134,106
    
    
    $
    
    
    
    $
    1,566,769
    
    
    $
    1,399,997
 
 SCHEDULE VI  SUPPLEMENTAL INFORMATION CONCERNING CONSOLIDATED PROPERTY
AND CASUALTY INSURANCE OPERATIONS
 Reserves for
    
    
    Incurred loss andunpaid losses
    
    
    LAE - current
    
    
    Incurred loss and
    
    
    Paid losses and
    
    
    Net investmentand LAE
    
    
    year
    
    
    LAE - prior year
    
    
    LAE
    
    
    income2010
    
    $
    158,928,837
    
    
    $
    107,424,191
    
    
    $
    5,931,284
    
    
    $
    97,837,851
    
    
    $
    992,2352009
    
    $
    127,197,753
    
    
    $
    97,630,002
    
    
    $
    8,503,132
    
    
    $
    86,399,754
    
    
    $
    1,453,5992008
    
    $
    87,947,774
    
    
    $
    75,118,459
    
    
    $
    6,219,667
    
    
    $
    68,002,876
    
    
    $
    3,721,029
 Amortization ofDeferred policy
    
    
    deferred policyacquisition
    
    
    acquisition costs,
    
    
    Net premiums
    
    
    Net premiums
    
    
    Unearnedcosts, net
    
    
    net
    
    
    written
    
    
    earned
    
    
    premiums2010
    
    $
    9,445,679
    
    
    $
    18,066,238
    
    
    $
    199,615,209
    
    
    $
    170,442,897
    
    
    $
    328,334,5472009
    
    $
    9,464,624
    
    
    $
    10,709,840
    
    
    $
    134,287,342
    
    
    $
    141,653,725
    
    
    $
    278,370,5442008
    
    $
    407,946
    
    
    $
    (1,746,151
    )
    
    $
    150,787,980
    
    
    $
    147,413,697
    
    
    $
    258,489,460
 S-4




---



##### Table of Contents



Report of Independent Registered Certified Public Accounting Firm
 
 Universal Insurance Holdings, Inc.
and Subsidiaries Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)
 /s/ Blackman Kallick LLPChicago, Illinois
March 31, 2011 S-5