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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 30, 2002
Commission File Number 0-20848
UNIVERSAL INSURANCE HOLDINGS, INC.
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(Exact name of registrant)
Delaware 65-0231984
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(State of incorporation) (I.R.S. Employer Identification No.)
2875 N.E. 191st Street, Suite 300
Miami, Florida 33180
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(Address of principal executive offices and zip code)
(305) 792-4200
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(Registrant's telephone number)
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ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
On September 30, 2002, Deloitte & Touche LLP resigned as the independent
auditor for Universal Insurance Holdings, Inc. ("Company"). Effective October
28, 2002, the Company engaged Blackman Kallick Bartelstein LLP as its new
independent auditors.
During the Company's two most recent fiscal years ended December 31,
2001, and the subsequent interim period through September 30, 2002, there were
no disagreements between the Company and Deloitte & Touche LLP on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedures, which disagreements, if not resolved to the satisfaction of
Deloitte & Touche LLP, would have caused Deloitte & Touche LLP to make reference
to the subject matter of the disagreements in connection with its report.
In connection with the audit of the Company's consolidated financial
statements for the year ended December 31, 2001, Deloitte & Touche LLP informed
the Company that a material weakness under standards established by the American
Institute of Certified Public Accountants existed in the design and operation of
the Company's internal control related to the processing of claims payments,
including the duplication of drafts issued and the omission of drafts from the
accounting records. This matter was discussed by Deloitte & Touche LLP with the
Company's Audit Committee. The details of this matter are described in Deloitte
& Touche LLP's report that stated that numerous errors were noted in the
processing of claims payments, including duplication of drafts issued and the
omission of drafts issued from the accounting records. More specifically,
Deloitte & Touche stated that the most significant problem observed was the
issuance of a second draft without properly voiding the original draft in the
subsidiary and general ledgers. It also noted instances of drafts being issued
but never recorded in the subsidiary and general ledgers.
The remedies taken to correct this weakness and actions to correct this
situation began even prior to the Deloitte & Touche LLP letter. The Company
became aware of this problem because it was attributable to errors in processing
data recorded and transferred to the Company by the former policy administrator
in connection with the conversion of administration systems. With the new system
in place since January 15, 2002, the Company believes that it now has better
control over its policy data and claims. In addition, while working with the new
vendor to fully implement the new claims system, the Company has been parallel
processing the data through its own in house claims system. The Company has also
hired a firm, i4 Integrated Services, LLC, to provide professional consulting
services in implementing an online analytical processing and management
reporting system for the Company. The purpose of this system is to enhance the
Company's reporting and analysis of its policy and claims data. Also, the
Company has implemented the recommendations provided by Deloitte & Touche LLP
for elimination of the material weakness. Specifically, drafts are not issued
until the completed and signed proof of loss is obtained from the insured and
the correct payee is verified. This has resulted in fewer drafts being issued.
In addition, the controls over the issuance and recording of drafts has been
evaluated and improved. A listing of voided drafts is prepared and compared to
the outstanding report on a periodic basis. In addition, drafts are not issued
without evidence of being recorded. Finally, an analysis of aged outstanding
drafts is performed on a regular basis to determine that they are valid
outstanding drafts.
The procedures performed by the Company to confirm the information in
the December 31, 2001 financial statements included a comprehensive review of
claim drafts by the Company. The purpose of this review was to ascertain that
claims drafts were properly recorded and that the related drafts outstanding
payable, claims liability and expense and reinsurance balances were properly
stated. More specifically, the Company validated that drafts issued were
recorded in the subsidiary and general ledgers and that in instances where a
second draft was issued, that the original draft was properly voided in the
subsidiary and general ledgers. The Company believes that Deloitte & Touche LLP
selected additional claim files for testing after this matter came to its
attention. The Company believes that Deloitte & Touche LLP performed additional
audit procedures and requested additional information from the Company regarding
claims selection for purposes of its testing.
Except as noted above, during the two most recent years and through the
subsequent interim period through September 30, 2002, there have been no events
of the type described in Item 304(a)(1)(iv) of Regulation S-B.
The audit reports of Deloitte & Touche LLP on the consolidated financial
statements of the Company as of and for the fiscal years ended December 31, 2000
and 2001 did not contain any adverse opinion or disclaimer of opinion, nor were
they qualified or modified as to uncertainty, audit scope or accounting
principles, except that the audit report of Deloitte & Touche LLP for the fiscal
year ended December 31, 2001 contained a separate paragraph regarding the
Company's ability to continue as a going concern.
The Company provided Deloitte & Touche LLP a copy of the foregoing
disclosures. Attached as Exhibit 16 is a copy of a letter from Deloitte & Touche
LLP stating whether or not it agrees with such disclosures.
ITEM 7. EXHIBITS.
Exhibit 16 Letter from Deloitte & Touche LLP to the Securities and Exchange
Commission, dated March 27, 2003.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UNIVERSAL INSURANCE HOLDINGS, INC.
Dated: April 2, 2003 By: /s/ Bradley I. Meier
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Bradley I. Meier
President and Chief Executive Officer