U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934
                  For the fiscal year ended December 31, 2003

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934

                         Commission file number 0-20848

                       UNIVERSAL INSURANCE HOLDINGS, INC.
                 (Name of small business issuer in its charter)

                Delaware                                 65-0231984
     (State or other jurisdiction of        (I.R.S. Employer Identification No.)
     incorporation or organization)

    2875 N.E. 191st Street, Suite 300                    33180
                Miami, Florida                         (Zip Code)
 (Address of principal executive offices)

Company's telephone number, including area code: (305) 792-4200

Securities registered pursuant to Section 12(g) of the Exchange Act:

COMMON STOCK, $.01 PAR VALUE                         OTC BULLETIN BOARD
REDEEMABLE COMMON STOCK PURCHASE WARRANTS            OTC BULLETIN BOARD
     (Title of each class)                   (Name of exchange where registered)

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the Exchange  Act during the  preceding 12 months (or for
such shorter period that the registrant was required to file such reports),  and
(2) has been subject to such filing  requirements for the past 90 days: YES X
NO___

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

     State issuer's revenues for its most recent fiscal year: $ 6,966,553

     State the aggregate market value of the voting and non-voting common equity
held by  non-affiliates  computed by  reference to the price at which the common
equity was sold as of January 31, 2004: $1,761,615.

     State the number of shares of Common Stock of Universal Insurance Holdings,
Inc. outstanding as of March 1, 2004: 32,183,775

     Transitional Small Business Disclosure Format: YES ___  NO  X
                                                                ---



                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

THE COMPANY

     Universal Insurance Holdings,  Inc. ("UIH" or the "Company") was originally
organized as Universal  Heights,  Inc. in 1990. The Company  changed its name to
Universal  Insurance  Holdings,  Inc. on January 12,  2001.  In April 1997,  the
Company organized a subsidiary,  Universal Property & Casualty Insurance Company
("UPCIC"), as part of its strategy to take advantage of what management believed
to be profitable business and growth opportunities in the marketplace. UPCIC was
formed to participate in the transfer of homeowner  insurance  policies from the
Florida  Residential  Property  and  Casualty  Joint  Underwriting   Association
("JUA").  The Company has since evolved into a vertically  integrated  insurance
holding company,  which, through its various subsidiaries,  covers substantially
all aspects of insurance underwriting, distribution and claims processing.

     The  Company  was  incorporated  under the laws of the State of Delaware on
November 13, 1990 and its principal  executive  offices are located at 2875 N.E.
191st Street, Suite 300, Miami, Florida 33180, and its telephone number is (305)
792-4200.

INSURANCE BUSINESS

     On October 29, 1997, the Office of Insurance  Regulation  ("OIR")  approved
UPCIC's application for a permit to organize as a domestic property and casualty
insurance  company in the State of  Florida.  On  December  4, 1997,  UIH raised
approximately  $6.7 million in a private  placement of common stock with various
institutional and other accredited investors.  The proceeds of the offering were
used to meet the minimum regulatory  capitalization  requirements ($5.3 million)
of the OIR to  obtain an  insurance  company  license  and for  general  working
capital purposes. UPCIC received a license to engage in underwriting homeowners'
insurance  in the State of Florida on December 31,  1997.  In 1998,  UPCIC began
operations through the assumption of homeowner  insurance policies issued by the
JUA.

     The JUA was established in 1992 as a temporary measure to provide insurance
coverage for  individuals  who could not obtain  coverage from private  carriers
because of the impact on the private  insurance  market of  Hurricane  Andrew in
1992. Rather than serving as a temporary source of emergency  insurance coverage
as was  originally  intended,  the JUA became a major  provider of original  and
renewal insurance  coverage for Florida  residents.  In an attempt to reduce the
number  of  policies  in the JUA,  and  thus  the  exposure  of the  program  to
liability,   the  Florida  legislature  approved  a  number  of  initiatives  to
depopulate the JUA. The Florida legislature  subsequently  approved, and the OIR
implemented, a Market Challenge/Takeout Bonus Program ("Takeout Program"), which
provided  additional  incentives  to  private  insurance  companies  to  acquire
policies from the JUA.

     UPCIC's initial business and operations consisted of providing property and
casualty coverage through homeowners'  insurance policies acquired from the JUA.
The  insurance  business  acquired  from the JUA  provided  a base  for  renewal
premiums.  The majority of these policies subsequently renewed with UPCIC. In an
effort to further  grow its  insurance  operations,  in 1998 UPCIC also began to
solicit  business  actively in the open market through  independent  agents.  In
determining  appropriate  guidelines  for such open market policy  sales,  UPCIC
employs  standards  similar  to those  used in its  selection  of JUA  policies.
Through  renewal of the JUA business  combined  with  business  solicited in the
market through  independent agents,  UPCIC is currently servicing  approximately
40,000 homeowners' insurance policies covering homes and condominium units.

     The  Company's  primary  product is  homeowners  insurance.  The  Company's
criteria for selecting  insurance  policies  includes the use of specific policy
forms, limitations on coverage amounts on buildings and contents,  acceptance of
policies  with low  frequency  of claims,  and  required  compliance  with local
building  codes.  Also,  to improve  underwriting  and manage risk,  the Company
utilizes  standard  industry  modeling  techniques  for  hurricane and windstorm
exposure.  UPCIC's  portfolio  as of December  31, 2003  includes  approximately
34,000  policies  with coverage for wind risks and 6,000  policies  without wind
risks.  The average wind premium is  approximately  $775 and the average ex-wind

                                       2


premium is approximately $455.  Approximately 27% of the policies are located in
Dade, Broward and Palm Beach counties.

OPERATIONS

     All underwriting,  rating, policy issuance and administration functions for
UPCIC are  performed by UPCIC,  Universal  Risk  Advisors,  Inc., a wholly owned
subsidiary of the Company, and unaffiliated third parties.

     Claims  handling  functions  for UPCIC were  initially  administered  by an
independent  claims  adjustment  firm licensed in Florida.  In 1999, the Company
formed  Universal  Adjusting  Corporation,  a  wholly  owned  subsidiary,  which
currently  performs claims  adjustment for UPCIC. This gives the Company greater
command over its loss control and expenditures.

     The earnings of UPCIC from policy premiums are supplemented to an extent by
the  generation of investment  income from  investment  policies  adopted by the
Board of Directors of UPCIC.  UPCIC's principal investment goals are to maintain
safety and  liquidity,  enhance  equity values and achieve an increased  rate of
return consistent with regulatory requirements.

MANAGEMENT OPERATIONS

     The Company has developed into a vertically  integrated  insurance  holding
company performing various aspects of insurance  underwriting,  distribution and
claims.  Universal  Risk  Advisors,  Inc.,  the Company's  wholly owned Managing
General Agent ("MGA"),  was  incorporated  in Florida on July 2, 1998 and became
licensed by the OIR on  September  28,  1998.  Through the MGA,  the Company has
underwriting  and claims  authority  for UPCIC as well as third party  insurance
companies.  In addition,  Universal Risk Life Advisors, Inc. was incorporated in
Florida on June 1, 1999 as the Company's wholly owned managing general agent for
life insurance  products.  The MGA seeks to generate  revenue through policy fee
income  and other  administrative  fees from the  marketing  of UPCIC as well as
third party insurance products through the Company's  distribution  network. The
Company markets and distributes UPCIC's products and services in Florida through
a network of approximately 640 active independent agents.

AGENCY OPERATIONS

     Universal  Florida  Insurance Agency was incorporated in Florida on July 2,
1998, U.S.  Insurance  Solutions,  Inc. was incorporated in Florida on August 4,
1998 and Coastal  Homeowner  Insurance  Specialists,  Inc. was  incorporated  in
Florida on July 2, 2001,  each as wholly  owned  subsidiaries  of the Company to
solicit  voluntary  business.  These entities are a part of the Company's agency
operations,  which seek to generate income from  commissions,  premium financing
referral fees and the marketing of ancillary services. U.S. Insurance Solutions,
Inc. was sold back to its former  agency  principal on May 21, 2003 for $100 and
the assumption of certain obligations in the aggregate amount of $16,000.

DIRECT SALES OPERATIONS

     The Company has formed subsidiaries that specialize, or will specialize, in
selling   insurance   and   generating   insurance   leads  via  the   Internet.
Tigerquote.com Insurance & Financial Services Group, Inc. ("Tigerquote.com") and
Tigerquote.com  Insurance Solutions,  Inc. were incorporated in Delaware on June
6,  1999 and  August  23,  1999,  respectively.  Tigerquote.com  is an  Internet
insurance lead generating network while Tigerquote.com Insurance Solutions, Inc.
is a network of Internet  insurance  agencies.  These  entities seek to generate
income from the selling of leads and commissions on policies  written.  To date,
insurance  agencies  have  been  established  in 22 states  and are  active in 5
states. Separate legal entities have been formed for each state and are governed
by the respective states' departments of insurance.

                                       3


OTHER OPERATIONS

     On June 2,  2000  Capital  Resources  Group,  LTD.  was  incorporated  as a
subsidiary of UIH to participate in the international  insurance and reinsurance
markets. On January 3, 2000, Universal  Inspection  Corporation was incorporated
in Florida as a subsidiary of UIH.  Universal  Inspection  Corporation  performs
property  inspections for  homeowners'  policies  underwritten by UPCIC.  During
2001,  the Company  formed  Tiger Home  Services,  Inc.,  which  furnishes  pool
services and  landscaping to homeowners.  The services are currently  offered to
commercial and  residential  customers in certain areas in the state of Florida.
Various plans are offered to fit customer needs.

FACTORS AFFECTING OPERATION RESULTS AND MARKET PRICE OF STOCK

     The Company and its subsidiaries  operate in a rapidly changing environment
that involves a number of uncertainties,  some of which are beyond the Company's
control.   This  report   contains  in  addition  to   historical   information,
forward-looking  statements  that  involve  risks and  uncertainties.  The words
"expect,"  "estimate,"  "anticipate,"  "believe,"  "intend,"  "plan" and similar
expressions  and  variations  thereof are  intended to identify  forward-looking
statements.  The Company's actual results could differ materially from those set
forth in or implied by any forward-looking statements.  Factors that could cause
or  contribute  to such  differences  include,  but are not  limited  to,  those
uncertainties  discussed  below as well as  those  discussed  elsewhere  in this
report.

NATURE OF THE COMPANY'S BUSINESS

     Factors  affecting  the  sectors  of the  insurance  industry  in which the
Company  operates  may  subject  the  Company  to  significant  fluctuations  in
operating  results.  These factors include  competition,  catastrophe losses and
general  economic  conditions  including  interest  rate  changes,  as  well  as
legislative initiatives,  the frequency of litigation, the size of judgments and
severe weather conditions.  Specifically the homeowners  insurance market, which
comprises the bulk of the Company's  current  operations,  is influenced by many
factors,  including  state and federal laws,  market  conditions  for homeowners
insurance and residential plans. Additionally, an economic downturn could result
in fewer homeowner sales and less demand for new homeowners seeking insurance.

     Historically,  the  financial  performance  of the  property  and  casualty
insurance  industry has tended to fluctuate in cyclical patterns of soft markets
followed by hard markets.  Although an individual  insurance company's financial
performance  is  dependent  on its own specific  business  characteristics,  the
profitability of most property and casualty insurance  companies tends to follow
this cyclical market pattern.

     The Company  believes that a substantial  portion of its future growth will
depend on its  ability,  among  other  things,  to  successfully  implement  its
business  strategy,  including  expanding  the  Company's  product  offering  by
underwriting and marketing  additional  insurance  products and programs through
its  distribution   network  and  further  penetrating  the  Florida  market  by
establishing relationships with additional independent agents in order to expand
its  distribution  network.  Any future growth is contingent on various factors,
including the availability of adequate  capital,  the Company's  ability to hire
and train  additional  personnel,  regulatory  requirements  and  rating  agency
considerations.  There is no assurance  that the Company will be  successful  in
expanding its business, that the existing infrastructure will be able to support
additional expansion or that any new business will be profitable.  Moreover,  as
the Company expands its insurance products and programs and the Company's mix of
business  changes,  there can be no  assurance  that the Company will be able to
improve  its profit  margins or other  operating  results.  There can also be no
assurance  that the  Company  will be able to  obtain  the  required  regulatory
approvals  to offer  additional  insurance  products.  UPCIC also is required to
maintain  minimum  surplus to support  its  underwriting  program.  The  surplus
requirement affects UPCIC's potential growth.

LIMITED INSURANCE COMPANY OPERATING HISTORY

     UPCIC was incorporated in April 1997 and began operations in February 1998.
Accordingly,  UPCIC did not generate  significant revenue until 1998 when it had
completed the acquisition of, and received  premiums for, policies from the JUA.
UPCIC's  growth to date may not be an accurate  indication of future  results of
operations in light of UPCIC's short operating  history,  the competitive nature
of the insurance  industry,  and the effects,  if any, of seasonality on UPCIC's
results of operations.

                                       4


     Because of UPCIC's  limited  operating  history,  there can be no assurance
that UPCIC will achieve or sustain profitability or significant revenues.  There
can be no assurance that management's  efforts will  successfully  address these
risks or that UPCIC and the Company will attain profitability.

MANAGEMENT OF EXPOSURE TO CATASTROPHIC LOSSES

     UPCIC  is  exposed  to  multiple  insured  losses  arising  out of a single
occurrence,  such as a natural  catastrophe.  As with all  property and casualty
insurers,  UPCIC will incur some losses related to  catastrophes  and will price
its  policies  accordingly.  UPCIC's  exposure  to  catastrophic  losses  arises
principally  out of  hurricanes  and  windstorms.  Through  the use of  standard
industry modeling  techniques that are susceptible to change,  UPCIC manages its
exposure to such losses on an ongoing basis from an underwriting perspective. In
addition,  UPCIC  protects  itself  against  the  risk of  catastrophic  loss by
obtaining reinsurance coverage up to approximately the 100 year Probable Maximum
Loss ("PML").  UPCIC's  reinsurance  program  consists of excess of loss,  quota
share and catastrophe reinsurance.

RELIANCE ON THIRD PARTIES AND REINSURERS

     UPCIC  is  dependent  upon  third  parties  to  perform  certain  functions
including,  but not limited to the purchase of reinsurance  and risk  management
analysis.  UPCIC also relies on  reinsurers to limit the amount of risk retained
under its  policies  and to  increase  its  ability to write  additional  risks.
UPCIC's  intention is to limit its exposure and  therefore  protect its capital,
even in the event of catastrophic  occurrences,  through reinsurance  agreements
that  currently  transfer  the  risk  of  loss  in  excess  of  $200,000  up  to
approximately the 100 year PML. This amount may change in the future.

REINSURANCE

     The  property  and  casualty  reinsurance  industry  is subject to the same
market  conditions as the direct  property and casualty  insurance  market,  and
there can be no  assurance  that  reinsurance  will be available to UPCIC to the
same extent and at the same cost as  currently  in place for UPCIC.  Reinsurance
does not legally  discharge an insurer from its primary  liability  for the full
amount of the risks it insures,  although it does make the  reinsurer  liable to
the primary insurer.  Therefore, UPCIC is subject to credit risk with respect to
its reinsurers.  Management  evaluates the financial condition of its reinsurers
and monitors  concentrations  of credit risk  arising  from  similar  geographic
regions,  activities,  or economic characteristics of the reinsurers to minimize
its exposure to significant  losses from reinsurer  insolvencies.  A reinsurer's
insolvency or inability to make payments under a reinsurance treaty could have a
material adverse effect on the financial condition and profitability of UPCIC.

ADEQUACY OF LIABILITIES FOR LOSSES

     The  liabilities  for  losses  and loss  adjustment  expenses  periodically
established  by UPCIC  are  estimates  of  amounts  needed to pay  reported  and
unreported   claims  and  related  loss  adjustment   expenses.   The  estimates
necessarily will be based on certain assumptions related to the ultimate cost to
settle such claims.  There is an inherent degree of uncertainty  involved in the
establishment  of liabilities for losses and loss adjustment  expenses and there
may be substantial  differences  between  actual losses and UPCIC's  liabilities
estimates.  In the case of UPCIC,  this  uncertainty  is  compounded  by UPCIC's
limited historical claims experience.  UPCIC relies on industry data, as well as
the expertise and experience of independent  actuaries in an effort to establish
accurate estimates and adequate liabilities. Furthermore, factors such as storms
and  weather  conditions,  inflation,  claim  settlement  patterns,  legislative
activity  and  litigation  trends  may have an impact  on  UPCIC's  future  loss
experience. Accordingly, there can be no assurance that UPCIC's liabilities will
be adequate to cover  ultimate  loss  developments.  UPCIC's  profitability  and
financial  condition  could  be  adversely  affected  to  the  extent  that  its
liabilities are inadequate.

     UPCIC is  directly  liable for loss and loss  adjustment  expenses  ("LAE")
payments  under the terms of the  insurance  policies  that it  writes.  In many
cases,  several years may elapse  between the occurrence of an insured loss, the
reporting of the loss to the Company and the Company's  payment of that loss. As
required by insurance regulations and accounting rules, the Company reflects its
liability  for  the  ultimate   payment  of  all  incurred  losses  and  LAE  by

                                       5


establishing  a liability  for those unpaid losses and LAE for both reported and
unreported  claims,  which  represent  estimates of future amounts needed to pay
claims and related expenses.

     When a claim involving a probable loss is reported, the Company establishes
a liability  for the  estimated  amount of the  Company's  ultimate loss and LAE
payments.  The  estimate of the amount of the  ultimate  loss is based upon such
factors as the type of loss,  jurisdiction of the  occurrence,  knowledge of the
circumstances surrounding the claim, severity of injury or damage, potential for
ultimate  exposure,  estimate  of  liability  on the part of the  insured,  past
experience with similar claims and the applicable policy provisions.

     All newly  reported  claims  received  are set up with an  initial  average
liability.  That claim is then evaluated and the liability is adjusted upward or
downward according to the facts and damages of that particular claim.

     In addition,  management  provides for a liability on an aggregate basis to
provide for losses  incurred but not  reported  ("IBNR").  The Company  utilizes
independent actuaries to help establish its liability for unpaid losses and LAE.
The  Company  does not  discount  the  liability  for unpaid  losses and LAE for
financial statement purposes.

     The estimates of the liability for unpaid losses and LAE are subject to the
effect of trends in claims severity and frequency and are continually  reviewed.
As part of this  process,  the Company  reviews  historical  data and  considers
various factors, including known and anticipated legal developments,  changes in
social attitudes,  inflation and economic conditions. As experience develops and
other data become available, these estimates are revised, as required, resulting
in increases or decreases to the existing  liability  for unpaid losses and LAE.
Adjustments  are  reflected in results of operations in the period in which they
are made and the liabilities may deviate substantially from prior estimates.

     Among the classes of insurance underwritten by the Company, the homeowner's
liability  claims  historically  tend to have  longer  time  lapses  between the
occurrence of the event, the reporting of the claim to the Company and the final
settlement than do homeowners  property  claims.  Liability claims often involve
parties  filing suit and  therefore  may result in  litigation.  By  comparison,
property  damage  claims tend to be reported in a relatively  shorter  period of
time and settle in a shorter time frame with less occurrence of litigation.

     There can be no assurance  that the  Company's  liability for unpaid losses
and LAE will be adequate to cover actual losses. If the Company's  liability for
unpaid losses and LAE proves to be  inadequate,  the Company will be required to
increase the  liability  with a  corresponding  reduction in the  Company's  net
income  in the  period  in which  the  deficiency  is  identified.  Future  loss
experience  substantially  in excess of established  liability for unpaid losses
and LAE could have a material adverse effect on the Company's business,  results
of operations and financial condition.

     The  following  table sets forth a  reconciliation  of beginning and ending
liability  for  unpaid  losses  and LAE as shown in the  Company's  consolidated
financial statements for the periods indicated.

                                       6

                                                Year Ended         Year Ended
                                            December 31, 2003  December 31, 2002
                                            -----------------  -----------------

Balance at beginning of year                    $ 7,224,755       $ 6,246,867

Less reinsurance recoverable                     (5,634,455)       (3,278,316)
                                                -----------       -----------

Net balance at beginning of year                  1,590,330         2,968,551
                                                -----------       -----------
Incurred related to:
  Current years                                   1,174,437         3,908,724
  Prior years                                      (199,948)          729,436
                                                -----------       -----------
Total incurred                                      974,489         4,638,160
                                                -----------       -----------

Paid related to:
  Current year                                      786,430         2,894,786
  Prior year                                        427,359         3,121,625
                                                -----------       -----------
Total paid                                        1,213,789         6,016,411
                                                -----------       -----------

Net balance at end of year                        1,351,000         1,590,300
  Plus reinsurance recoverable                    6,329,872         5,634,455
                                                -----------       -----------

Balance at end of year                          $ 7,680,872       $ 7,224,755
                                                ===========       ===========

     As shown above,  as a result of the  Company's  review of its liability for
losses and LAE, which includes a re-evaluation of the adequacy of reserve levels
for prior year's  claims,  the Company  decreased its liability for loss and LAE
for claims  occurring in prior years by $199,948 for the year ended December 31,
2003 and increased its liability for loss and LAE for claims  occurring in prior
years  by  $729,436  in  2002.  There  can  be no  assurance  concerning  future
adjustments of reserves,  positive or negative,  for claims through December 31,
2003.

     Based  upon   consultations  with  the  Company's   independent   actuarial
consultants  and their  statement  of  opinion on losses  and LAE,  the  Company
believes that the  liability for unpaid losses and LAE is currently  adequate to
cover all claims and related  expenses which may arise from  incidents  reported
and IBNR.

     The  following  table  presents  total  unpaid loss and LAE,  net,  and the
corresponding total reinsurance recoverables shown in the Company's consolidated
financial statements for the periods indicated.

                                                    YEARS ENDED DECEMBER 31,
                                                     2003           2002
                                                     ----           ----
                                                    (DOLLARS IN THOUSANDS)

Loss and LAE, net                                    $ 655            $939
IBNR, net                                              696             651
                                                     ------         ------
Total unpaid loss and LAE, net                       $1,351         $1,590
                                                     ======         ======
Reinsurance recoverable                              $2,693         $3,133
IBNR recoverable                                      2,286          2,501
                                                     ------         ------
 Total reinsurance recoverable                       $6,330         $5,634
                                                     =====          ======

                                       7


     The  following  table  presents the liability for unpaid losses and LAE for
the Company since  inception.  The top line of the table shows the estimated net
liabilities  for unpaid losses and LAE at the balance sheet date for each of the
periods indicated. These figures represent the estimated amount of unpaid losses
and LAE for claims  arising in all prior  years that were  unpaid at the balance
sheet date,  including  losses that had been incurred but not yet reported.  The
portion of the table labeled  "Cumulative  paid as of" shows the net  cumulative
payments for losses and LAE made in succeeding  years for losses  incurred prior
to the balance sheet date. The lower portion of the table shows the re-estimated
amount of the previously recorded liability based on experience as of the end of
each succeeding year.



YEARS ENDED DECEMBER 31,

                                           2003       2002         2001          2000         1999         1998
                                           ----       ----         ----          ----         ----         ----

                                                                (DOLLARS IN THE THOUSANDS)
                                                                                         
Balance Sheet liability                    $1,351     $1,590       $2,969        $1,373       $1,532       $1,253
Cumulative paid as of:
One year later                                  -        668        3,659         1,308          897          939
Two years later                                 -          -        3,667         1,634        1,081          904
Three years later                               -          -            -         1,692        1,115        1,010
Four years later                                -          -            -             -        1,151        1,024
Five years later                                -          -            -             -            -          999
Re-estimated liability as of:
End of year                                $1,351     $1,590       $2,969        $1,373       $1,532       $1,253
One year later                                  -      1,250        4,235         1,797        1,344        1,067
Two years later                                 -          -        3,973         1,943        1,269        1,089
Three years later                               -          -            -         1,925        1,286        1,071
Four years later                                -          -            -             -        1,270        1,024
Five years later                                -          -            -             -            -        1,013
Cumulative redundancy (deficiency)              -        340       (1,004)         (552)         262          240


     The cumulative  redundancy or deficiency represents the aggregate change in
the  estimates  over all prior  years.  A deficiency  indicates  that the latest
estimate of the liability  for losses and LAE is higher than the liability  that
was originally estimated and a redundancy indicates that such estimate is lower.
It should be  emphasized  that the table  presents a run-off  of  balance  sheet
liability  for the  periods  indicated  rather  than  accident  or  policy  loss
development for those periods.  Therefore, each amount in the table includes the
cumulative effects of changes in liability for all prior periods. Conditions and
trends that have affected  liabilities in the past may not necessarily  occur in
the future.

     Underwriting  results of insurance  companies  are  frequently  measured by
their combined  ratios.  However,  investment  income,  federal income taxes and
other  non-underwriting  income or expense  are not  reflected  in the  combined
ratio. The profitability of property and casualty insurance companies depends on
income  from  underwriting,  investment  and  service  operations.  Underwriting
results are  considered  profitable  when the  combined  ratio is under 100% and
unprofitable when the combined ratio is over 100%.

     The  following  table sets forth loss ratios,  expense  ratios and combined
ratios  for the  periods  indicated  for the  insurance  business  of  Universal
Insurance  Holdings,  Inc. The ratios,  inclusive of unallocated loss adjustment
expenses  ("ULAE"),  are shown in the table below,  and are computed  based upon
Statutory  Accounting  Principles (`SAP"). The expense ratio includes management
fees paid to the  Company in the amount of $660,613  in 2003 and  $1,374,492  in
2002.

                                       8




                             YEARS ENDED DECEMBER 31,
                                  2003        2002
                                  ----        ----
Loss Ratio                         62%        116%
Expense Ratio                      51          35
                                   ---        ---
Combined Ratio                    113%        151%
                                   ===        ===

     In order to  reduce  losses  and  thereby  reduce  the loss  ratio  and the
combined ratio, the Company has taken several steps. These include  implementing
rate  increases  for new and renewal  business,  restructuring  the  homeowners'
coverage offered,  restructuring the catastrophic reinsurance coverage to reduce
cost and working to reduce general and administrative expenses.

GOVERNMENT REGULATION

     Florida  insurance  companies are subject to regulation and  supervision by
the OIR. The OIR has broad regulatory,  supervisory and  administrative  powers.
Such powers  relate,  among other  things,  to the  granting and  revocation  of
licenses to  transact  business;  the  licensing  of agents;  the  standards  of
solvency to be met and maintained; the nature of and limitations on investments;
approval  of policy  forms and rates;  periodic  examination  of the  affairs of
insurance companies;  and the form and content of required financial statements.
Such  regulation and supervision are primarily for the benefit and protection of
policyholders and not for the benefit of investors.

     In  addition,  the Florida  legislature  and the  National  Association  of
Insurance  Commissioners  from time to time consider  proposals that may affect,
among other  things,  regulatory  assessments  and reserve  requirements.  UPCIC
cannot predict the effect that any proposed or future  legislation or regulatory
or administrative  initiatives may have on the financial condition or operations
of UPCIC.

DEPENDENCE ON KEY INDIVIDUALS

     UPCIC's operations depend in large part on the efforts of Bradley I. Meier,
who serves as President of UPCIC. Mr. Meier has also served as President,  Chief
Executive  Officer and Director of the Company  since its  inception in November
1990. In addition, UPCIC's operations are materially dependent on the efforts of
Sean P. Downes,  who serves as Chief Operating  Officer of UPCIC. Mr. Downes has
also  served as a Director  of UPCIC  since May 2003.  The loss of the  services
provided by Mr.  Meier or Mr.  Downes  could have a material  adverse  effect on
UPCIC's financial condition and results of operations.

COMPETITION

     The insurance industry is highly  competitive and many companies  currently
write homeowners property and casualty insurance.  Additionally, the Company and
its subsidiaries must compete with companies that have greater capital resources
and longer  operating  histories.  Increased  competition  from other  insurance
companies  could  adversely   affect  the  Company's   ability  to  do  business
profitably.  Although the  Company's  pricing is  inevitably  influenced to some
degree by that of its competitors, management of the Company believes that it is
generally  not in the  Company's  best  interest  to  compete  solely  on price,
choosing  instead  to  compete  on  the  basis  of  underwriting  criteria,  its
distribution network and high quality service to its agents and insureds.

EMPLOYEES

     As of March 1, 2004,  the Company had 58 full-time  employees.  None of the
Company's  employees  is  represented  by a  labor  union.  The  Company  has an
employment  agreement  with its  President  and  Chief  Executive  Officer.  See
"Executive Compensation--Employment Agreement."

                                       9


ITEM 2.  DESCRIPTION OF PROPERTY

     The Company leases  approximately 9,200 square feet of office space for its
corporate  headquarters  in Miami,  Florida  under a three-year  lease  expiring
December 31, 2004.

ITEM 3.  LEGAL PROCEEDINGS

     The Company is involved in certain lawsuits.  In the opinion of management,
none of these  lawsuits  (1)  involve  claims for damages  exceeding  10% of the
current  assets  of the  Company,  (2)  involve  matters  that  are not  routine
litigation incidental to the business,  (3) involve bankruptcy,  receivership or
similar proceedings, (4) involve material Federal, state, or local environmental
laws, (5) potentially involve more than $100,000 in sanctions and a governmental
authority is a party,  or (6) are material  proceedings  to which any  director,
officer, affiliate of the Company, beneficial owner of more than 5% of any class
of voting  securities of the Company,  or security  holder is a party adverse to
the Company or has a material interest adverse to the Company.

     Universal Property and Casualty Management,  Inc. ("Universal Management"),
an outside management company,  performed various services with respect to UPCIC
insurance  policies and received fees for  performing  these services based upon
policies  written  pursuant to an  agreement  originally  executed in 1997.  The
parties agreed to terminate the agreement effective January 15, 2002.  Universal
Management communicated to UPCIC that all management services would cease on the
date of termination  rather than continuing through the life of the policies for
which fees were paid on a premiums  written  basis.  As a result,  UPCIC  ceased
remittance  of the  management  fees to Universal  Management as of September 1,
2001. On November 6, 2001, UPCIC filed a Complaint against Universal  Management
in the United States District Court for The Southern District of Florida,  Miami
Division,  alleging  breach of contract and demanding  specific  performance and
unspecified  damages.  On  December  28,  2001,  Universal  Management  filed  a
counterclaim  for breach of contract,  alleging that it was entitled to fees for
policies  written from  September 2001 through the date of  termination.  During
2003,  the  parties  settled  the  matter  out of  court  and a  settlement  was
finalized. Accordingly, the Company has no further liability with respect to the
management fees claimed by the Universal Management. The terms of the settlement
included a cash payment of $250,000 by the Company to Universal Management. This
amount was recorded as an expense and paid during the year.

     Since  December  1997,  as a condition of the  licensing  of the  Company's
subsidiary,  the  Company's  outside  counsel has held $290,000 in trust for the
benefit of the Company in the counsel's  escrow account pending  resolution of a
claim against a Company director and an unrelated  entity.  Such funds have been
included in the Company's financial statements as cash and cash equivalents.  In
October  2003,  the  dispute  was  resolved  and the claim was  settled on terms
including  a cash  payment  of  $201,000,  which  the  Company  paid  under  and
indemnification  arrangement  with  the  director.  Legal  fees  related  to the
settlement  were $37,036.  These amounts were recorded as an expense  during the
fourth quarter of 2003. The remaining funds, net of settlement cost and attorney
fees, were returned to the Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The Company's $.01 par value Common Stock ("Common Stock") is quoted on the
OTC Bulletin Board under the symbol UVIH. The following  table sets forth prices
of the Common Stock, as reported by the OTC Bulletin  Board.  The following data
reflects  inter-dealer prices,  without retail mark-up,  mark-down or commission
and may not necessarily represent actual transactions.

Year ended December 31, 2002            High                          Low
----------------------------            ----                          ---
     First Quarter                     $ 0.25                      $ 0.10

                                       10


     Second Quarter                      0.13                        0.07
     Third Quarter                       0.10                        0.04
     Fourth Quarter                      0.15                        0.01

Year ended December 31, 2003            High                          Low
----------------------------            ----                          ---
     First Quarter                     $ 0.05                      $ 0.02
     Second Quarter                      0.04                        0.02
     Third Quarter                       0.14                        0.02
     Fourth Quarter                      0.11                        0.03


     At March 1, 2004,  there were 41  shareholders  of record of the  Company's
Common Stock. There were 425 beneficial owners of its Common Stock. In addition,
there were three  shareholders of the Company's  Series A and Series M Preferred
Stock ("Preferred Stock").

     In October 1994,  49,950 shares of Series A Preferred  Stock were issued in
repayment  of  $499,487  of related  party  debt and  88,690  shares of Series M
Preferred  Stock were  issued  during  fiscal  year ended  April 30,  1997,  for
repayment of $88,690 of related  party debt.  Each share of  Preferred  Stock is
convertible  into 2.5  shares  of Common  Stock  and 5 shares  of Common  Stock,
respectively, into an aggregate of 568,326 common shares. Beginning May 1, 1998,
the Series A Preferred  Stock paid a  cumulative  dividend of $.25 per  quarter.
During 2003,  dividends on the Preferred Stock of $49,948 were declared.  During
2002, dividends on the Preferred Stock of $49,950 were declared.

     Applicable  provisions of the Delaware  General  Corporation Law may affect
the ability of the Company to declare and pay dividends on its Common Stock.  In
particular,  pursuant to the Delaware General Corporation Law, a company may pay
dividends  out of its surplus,  as defined,  or out of its net profits,  for the
fiscal year in which the dividend is declared and/or the preceding year. Surplus
is  defined  in the  Delaware  General  Corporation  Law to be the excess of net
assets of the company over  capital.  Capital is defined to be the aggregate par
value of shares issued.  Moreover,  the ability of the Company to pay dividends,
if and when declared by its Board of Directors,  may be restricted by regulatory
limits on the amount of  dividends  which UPCIC is permitted to pay the Company.
Section  628.371 of the Florida  statutes sets forth  limitations,  based on net
income and statutory  capital,  on the amount of dividends that UPCIC may pay to
the Company without approval from the Department.

     During 2003, the Company did not pay a dividend to common stockholders.

OTHER STOCK ISSUANCES

     During the year ended  December  31,  2003,  the Company  issued  4,708,332
shares of Common Stock in conjunction  with amendments  approved by the Board of
Directors to the employment  agreement between the Company and Bradley I. Meier,
the Company's President, whereby Mr. Meier converted salary and accrued vacation
into  shares of common  stock.  An  additional  2,823,529  shares were issued on
February 25, 2004.  The shares were issued to Mr. Meier in private  transactions
performed in accordance with the terms of the amendments and pursuant to section
4(2) of the Securities  Act of 1933, as amended.  During the year ended December
31,  2003,  the Company  issued  75,000  shares of Common  Stock to the Board of
Directors as board compensation.

EQUITY COMPENSATION PLANS

     See  Item  11,  "Security   Ownership  of  Certain  Beneficial  Owners  and
Management - Equity  Compensation Plan  Information," for a discussion of shares
of Common Stock issued under the Company's equity compensation plans.

                                       11


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

     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 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.

OVERVIEW

     UPCIC's  application  to become a Florida  licensed  property  and casualty
insurance company was filed with the OIR on May 14, 1997 and approved on October
29,  1997.  UPCIC's  proposal to begin  operations  through the  acquisition  of
homeowner  insurance  policies  issued by the JUA was approved by the JUA on May
21, 1997, subject to certain minimum capitalization and other requirements.  One
of the requirements imposed by the OIR was to limit the number of policies UPCIC
could assume from the JUA to 30,000.

     The OIR  requires  applicants  to  have a  minimum  capitalization  of $5.3
million  to be  eligible  to  operate  as an  insurance  company in the State of
Florida.  Upon  being  issued an  insurance  license,  companies  must  maintain
capitalization of at least $4 million. If an insurance company's  capitalization
falls below $4 million,  then the company will be deemed out of compliance  with
OIR requirements,  which could result in revocation of the participant's license
to operate as an insurance company in the State of Florida.

     The  Company  has  continued  to  implement  its plan to become a financial
services  company and,  through its  wholly-owned  insurance  subsidiaries,  has
sought to position  itself to take advantage of what  management  believes to be
profitable business and growth opportunities in the marketplace.

     The Company  entered  into an agreement  with the JUA whereby  during 1998,
UPCIC assumed  approximately  30,000  policies from the JUA. In addition,  UPCIC
received bonus incentive funds from the JUA for assuming the policies. The bonus
funds were maintained in an escrow account for three years. These bonus payments
were not  included  in the  Company's  assets  until  receipt  at the end of the
three-year  period.  UPCIC could not cancel the  policies  from the JUA for this
three-year  period at which point UPCIC  received the bonus  funds.  The Company
will not be receiving any additional bonus payments.

     The Company  expects that  premiums  from renewals and new business will be
sufficient to meet the Company's  working capital  requirements  beyond the next
twelve months.

     UPCIC  does not  expect to obtain  additional  policies  from the JUA.  The
policies  obtained  from the JUA provided the  opportunity  for UPCIC to solicit
future  renewal  premiums.  The majority of the policies  obtained  from the JUA
subsequently  renewed  with UPCIC.  In an effort to further  grow its  insurance
operations,  in 1998 the Company began to solicit business  actively in the open
market.  Through renewal of JUA business combined with business solicited in the
market through  independent agents,  UPCIC is currently servicing  approximately
40,000 homeowners insurance policies. In determining  appropriate guidelines for
such open market policy sales,  UPCIC employs standards similar to those used in
its selection of JUA policies.  Also, to improve  underwriting  and manage risk,
the Company utilizes  standard  industry  modeling  techniques for hurricane and
windstorm  exposure.  To  diversify  UPCIC's  product  lines,  UPCIC  has  begun
underwriting inland marine policies.  Management may consider underwriting other
types of policies in the future. Any such program will require DOI approval. See
Competition  under  "Factors  Affecting  Operation  Results and Market  Price of
Stock" for a discussion of the material  conditions and  uncertainties  that may
affect UPCIC's ability to obtain additional policies.

CRITICAL ACCOUNTING POLICIES

USE OF ESTIMATES.  The  preparation of financial  statements in conformity  with
accounting  principles  generally  accepted  in the  United  States  of  America
("GAAP")  requires  management to make estimates and assumptions that affect the
reported  amounts of assets and liabilities and disclosure of contingent  assets

                                       12


and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses  during the reporting  periods.  The Company's  primary
areas of estimate are described below.

RECOGNITION OF PREMIUM REVENUES.  Property and liability premiums are recognized
as revenue on a pro rata basis over the policy  term.  The  portion of  premiums
that will be  earned  in the  future  are  deferred  and  reported  as  unearned
premiums.  The Company believes that its revenue recognition policies conform to
Staff Accounting Bulletin 101, Revenue Recognition in Financial Statements.

INSURANCE LIABILITIES.  Claims and claim adjustment expenses are provided for as
claims  are  incurred.  The  provision  for unpaid  claims and claim  adjustment
expenses includes:  (1) the accumulation of individual case estimates for claims
and claim  adjustment  expenses  reported  prior to the close of the  accounting
period;  (2) estimates for  unreported  claims based on industry  data;  and (3)
estimates  of expenses  for  investigating  and  adjusting  claims  based on the
experience of the Company and the industry.

Inherent  in the  estimates  of  ultimate  claims are  expected  trends in claim
severity,  frequency and other factors that may vary as claims are settled.  The
amount of  uncertainty in the estimates for casualty  coverage is  significantly
affected  by such  factors as the amount of claims  experience  relative  to the
development  period,  knowledge  of the actual facts and  circumstances  and the
amount of insurance risk  retained.  In the case of UPCIC,  this  uncertainty is
compounded by UPCIC's limited history of claims experience. In addition, UPCIC's
policyholders are currently concentrated in South Florida, which is periodically
subject to adverse weather  conditions  such as hurricanes and tropical  storms.
The  methods  for making  such  estimates  and for  establishing  the  resulting
liability  are  continually  reviewed,  and any  adjustments  are  reflected  in
earnings currently.

DEFERRED  POLICY  ACQUISITION  COSTS.  Commissions  and other costs of acquiring
insurance that vary with and are primarily  related to the production of new and
renewal  business are deferred and  amortized  over the terms of the policies or
reinsurance  treaties to which they are  related.  Determination  of costs other
than commissions  that vary with and are primarily  related to the production of
new and  renewal  business  requires  estimates  to allocate  certain  operating
expenses.  When  determining the maximum amount of deferred  policy  acquisition
costs,  investment  income  to be earned  over the  remaining  policy  period is
estimated  and taken  into  consideration.  Estimates  of the  costs of  losses,
catastrophic  reinsurance  and  policy  maintenance  are  also  required  in the
determination  of the  maximum  amount of  deferred  policy  acquisition  costs.
Deferred  reinsurance  commissions have reduced net deferred policy  acquisition
costs to $0 as of December 31, 2003.

PROVISION FOR PREMIUM  DEFICIENCY.  It is the  Company's  policy to evaluate and
recognize  losses on  insurance  contracts  when  estimated  future  claims  and
maintenance  costs under a group of existing  contracts will exceed  anticipated
future premiums and investment  income.  The  determination of the provision for
premium  deficiency  requires  estimation  of the costs of losses,  catastrophic
reinsurance  and policy  maintenance to be incurred and investment  income to be
earned over the remaining policy period.

REINSURANCE.  In the normal course of business,  the Company seeks to reduce the
risk of loss  that may  arise  from  catastrophes  or other  events  that  cause
unfavorable underwriting results by reinsuring certain levels of risk in various
areas of  exposure  with other  insurance  enterprises  or  reinsurers.  Amounts
recoverable  from  reinsurers  are  estimated  in a manner  consistent  with the
provisions of the reinsurance agreement and consistent with the establishment of
the liability of the Company. The Company's  reinsurance policies do not relieve
the Company from its  obligations  to  policyholders.  Failure of  reinsurers to
honor their  obligations  could result in losses to the  Company;  consequently,
allowances are established for amounts deemed uncollectible.

OFF-BALANCE SHEET ARRANGEMENTS

The Company had no off-balance sheet arrangements during 2003.

RELATED PARTIES

All underwriting, rating, policy issuance and administration functions for UPCIC
were  previously  performed  by  Universal  Management  pursuant to a Management
Agreement dated June 2, 1997 and Addenda thereto dated June 12, 1997 and June 1,

                                       13


1998.  UPCIC  and  Universal  Management  terminated  the  management  agreement
effective  as of January 15,  2002.  Services  previously  provided by Universal
Management to UPCIC under the  management  agreement are now performed by UPCIC,
Universal Risk Advisors and unaffiliated third parties.

RESULTS OF OPERATIONS - YEAR ENDED DECEMBER 31, 2003 AND YEAR ENDED DECEMBER 31,
2002.

     Gross premiums  written  decreased  7.3% to $30,745,878  for the year ended
December 31, 2003 from  $33,160,567  for the year ended  December 31, 2002.  The
decrease in gross premiums  written is primarily  attributable  to a decrease in
new business mitigated by premium rate increases.

     Net  premiums  written  increased  60.6% to  $3,127,502  for the year ended
December 31, 2003 from  $1,947,182  for the year ended  December  31, 2002.  The
increase in net  premiums  written  reflects  the impact of  reinsurance,  since
$27,618,376  or 89.8% of premiums  written were ceded to reinsurers for the year
ended  December 31, 2003 as compared to  $31,213,385 or 94.1% for the year ended
December 31, 2002. This fluctuation was a result of the Company's election under
its quota share reinsurance treaty to cede 50% of gross written premiums, losses
and loss  adjustment  expenses  during the first five months of 2002, 80% during
the  subsequent  four months and 90% during the remaining  three months of 2002,
versus 90% during  2003 except for new and renewal  without  wind risk  business
with policy  effective  dates of June 1, 2003 and after.  The Company  ceded the
additional  amounts commencing in 2002 in order to limit its loss exposure while
it further stabilized  operations.  The increase in net premiums written is also
attributable to premium rate increases.

     Net  premiums  earned  decreased  45.0% to  $2,694,170  for the year  ended
December 31, 2003 from  $4,895,623  for the year ended  December  31, 2002.  The
decrease in net premiums earned is attributable to the Company's  election under
its quota share reinsurance treaty to cede 90% of gross written premiums, losses
and loss adjustment expenses during 2003 except for new and renewal without wind
risk business with policy  effective  dates of June 1, 2003 and after versus 50%
of gross written premiums,  losses and loss adjustment expenses during the first
five months of 2002,  80% during the  subsequent  four months and 90% during the
remaining three months of 2002.

     Commission  revenue  decreased  17.9%  to  $1,167,606  for the  year  ended
December  31,  2003  from  $1,421,906  for the year  ended  December  31,  2002.
Commission income is comprised mainly of the Managing General Agent's policy fee
income on all new and renewal insurance policies and commissions  generated from
agency  operations.  The decrease is primarily due to reduced  policy fee income
attributable to a decrease in new and renewal business.

     Investment  income consists of net investment income and net realized gains
(losses).  Investment  income  decreased  76.9% to  $82,458  for the year  ended
December  31, 2003 from  $357,623  for the year ended  December  31,  2002.  The
decrease is primarily due to lower investment balances and a lower interest rate
environment during 2003.

     Transaction  fees consist of revenue  from the selling of insurance  leads.
Transaction  fee  revenue  increased  44.7% to  $1,379,211  for the  year  ended
December  31, 2003 from  $953,389  for the year ended  December  31,  2002.  The
increase is  primarily  due to increased  sales of insurance  leads to insurance
agents. In 2002, leads were primarily sold to insurance companies.

     Other revenue decreased 29.2% to $1,156,571 for the year ended December 31,
2003 from  $1,633,567  for the year ended  December 31, 2002.  Other  revenue is
comprised  of fee revenue  from  direct  sales and  service  revenue  from other
operations.  The  decrease is primarily  attributable  to the fact that there is
less activity in the direct sales and service operations this year.

     Losses and loss adjustment  expenses  ("LAE")  incurred  decreased 79.0% to
$974,489 for the year ended December 31, 2003 from $4,638,160 for the year ended
December 31, 2002 as compared to net premiums  earned which  decreased  45.0% to
$2,694,170  for the year ended  December 31, 2003 from  $4,895,623  for the year
ended December 31, 2002. Losses and LAE, the Company's most significant expense,
represent  actual  payments made and changes in estimated  future payments to be
made to or on behalf of its policyholders, including expenses required to settle
claims and losses. Losses and LAE are influenced by loss severity and frequency.

                                       14


Losses and LAE  decreased  due to the lower  frequency and severity of claims in
2003 and  because of  changes to the  Company's  reinsurance  program  discussed
above.  The Company's direct loss ratio for the year ended December 31, 2003 was
46.2%  compared to 62.5% for the year ended  December  31, 2002.  The  Company's
direct loss ratio decreased  principally due to the lower frequency and severity
of claims in 2003 and also  because  of  premium  rate  increases  in 2003.  The
Company's net loss ratio for the year ended December 31, 2003 was 36.2% compared
to 94.7% for the year ended December 31, 2002. The net loss ratio  decreased due
to a decrease in direct  losses  incurred  in  conjunction  with  changes to the
Company's reinsurance program.  During 2003 and 2002, Florida did not experience
windstorm catastrophes.

     Catastrophes  are an  inherent  risk  of the  property-liability  insurance
business which may contribute to material  year-to-year  fluctuations in UPCIC's
results of operations  and financial  position.  The level of  catastrophe  loss
experienced in any year cannot be predicted and could be material to the results
of operations and financial position.  While management believes its catastrophe
management strategies will reduce the severity of future losses, UPCIC continues
to be exposed to similar or greater catastrophes.

     The reserve for unpaid losses and loss adjustment  expenses at December 31,
2003 is  $7,680,872.  Based upon  consultations  with the Company's  independent
actuarial  consultants  and  their  statement  of  opinion  on  losses  and loss
adjustment  expenses,  the Company believes that the liability for unpaid losses
and loss  adjustment  expenses  is  adequate  to cover all  claims  and  related
expenses  which may arise  from  incidents  reported.  The range of direct  loss
reserve  estimates  as  determined  by  the  Company's   independent   actuarial
consultants is a low of $7,130,000 and a high of $8,714,000.  The key assumption
used to arrive at management's best estimate of loss reserves in relation to the
actuary's range and the specific factors that led to management's  best estimate
is that the liability is based on management's  estimate of the ultimate cost of
settling each loss and an amount for losses incurred but not reported.

     As a result of the  Company's  review of its  liability for losses and loss
adjustment  expenses,  which includes a re-evaluation of the adequacy of reserve
levels for prior year claims,  the Company's  liabilities  for unpaid losses and
LAE,  net of related  reinsurance  recoverables,  as of  December  31, 2003 were
decreased  in the current  year by $199,948  for claims that had  occurred on or
before the prior year balance sheet date. This favorable loss emergence resulted
principally from settling  homeowners'  losses established in the prior year for
amounts  that were less than  expected.  The  Company's  liabilities  for unpaid
losses and LAE, net of related reinsurance recoverables, as of December 31, 2002
were  increased  by  $729,436  for  claims  that had  occurred  on or before the
previous year balance  sheet date.  This  unfavorable  loss  emergence  resulted
principally from settling  homeowners'  losses established in the prior year for
amounts  that were more than  expected.  As of December  31,  2002,  the Company
changed a key  assumption to estimate  reserves since the last reporting date by
reserving the coverage limit for certain potentially large claims,  specifically
sinkhole claims. Changes of this nature were made in 2002 on related outstanding
claims, primarily for conservative reasons.  Recognition of this change occurred
in 2002 in light of the Company's  experience with claims of this nature,  which
occurred  primarily in 2001 due to  contributing  weather  conditions.  Reported
claims of this nature were less  frequent in 2002 and 2003.  Nonetheless,  there
can be no assurance  concerning  future  adjustments  of  reserves,  positive or
negative, for claims through December 31, 2003.

     General and  administrative  expenses increased 27.1% to $5,787,055 for the
year ended  December 31, 2003 from  $4,552,897  for the year ended  December 31,
2002. General and administrative  expenses have increased primarily due to lower
ceding  commissions  on premiums  ceded to reinsurers  due to ceding  commission
recognized  in  2002  as a  result  of the  change  in the  quota  share  ceding
percentage  from 50%  during  the first  five  months of 2002,  80%  during  the
subsequent  four months and 90% during the remaining three months of 2002 versus
90% during 2003  except for new and  renewal  without  wind risk  business  with
policy  effective  dates  of  June  1,  2003  and  after.  In  addition,  ceding
commissions  were lower in 2003 due to a decrease in the dollar  amount of ceded
premiums written to quota share reinsurers.

LIQUIDITY AND CAPITAL RESOURCES

     The Company's primary sources of cash flow are premium revenues, commission
income and investment income.

     For the year ended  December  31,  2003,  cash flows  provided by operating
activities were $3,586,586. Cash flows from operating activities are expected to
be  positive  in both the  short-term  and  reasonably  foreseeable  future.  In
addition,  the  Company's  investment  portfolio is highly liquid as it consists
almost  entirely of readily  marketable  securities.  Cash flows from  investing
activities  are  primarily  comprised of purchases  and sales of debt and equity
securities.  Cash flows from financing  activities  primarily  relate to Company
borrowings.

     During 2002, the Company became a party to a senior  Promissory Note with a
reinsurer for $750,000 payable in 12 monthly  installments  through July 2003 at
an annual interest rate of 9%. The funds were used to make an additional capital
contribution to UPCIC.  The remaining  balance of the loan was paid off in 2003.
During 2003, the Company purchased  software for $520,000.  Management  believes
this will result in reducing  overall  management  expenses  versus the previous
outside  vendor  agreement.  Of the remaining  purchase  price of $480,000 as of
December 31, 2003,  $30,000 was payable on January 5, 2004 and the  remainder is
payable in 5 monthly  installments  of $10,000  through May 2004  followed by 10
monthly installments of $40,000 through March 2005. In addition, the Company has
outstanding  loans in the amount of $277,936 to finance  several  vehicles and a
boat, all acquired for business use and $83,333 for working  capital needs.  The
amounts will become due during the years 2004 through 2011.

     The  balance  of cash and cash  equivalents  as of  December  31,  2003 was
$8,011,278. This amount along with readily marketable debt and equity securities
aggregating  $250,039  would  be  available  to pay  claims  in the  event  of a
catastrophic  event pending  reimbursement for any aggregate amount in excess of
$200,000  up to  the  100  year  PML  which  would  be  covered  by  reinsurers.
Catastrophic  reinsurance is recoverable  upon  presentation to the reinsurer of
evidence of claim payment.

     Accounting  principles  generally  accepted in the United States of America
differ in some respects from reporting practices  prescribed or permitted by the
Florida Office of Insurance Regulation.  To retain its certificate of authority,
the Florida  insurance laws and regulations  require that UPCIC maintain capital
surplus equal to the statutory minimum capital and surplus  requirement  defined
in the  Florida  Insurance  Code.  The  Company  is also  required  to adhere to
prescribed  premium-to-capital surplus ratios. The Company is in compliance with
these requirements.

     The  maximum  amount of  dividends  which can be paid by Florida  insurance
companies  without  prior  approval  of the Florida  Commissioner  is subject to
restrictions  relating to statutory  surplus.  The maximum  dividend that may be
paid by UPCIC to the Company  without prior approval is limited to the lesser of
statutory net income from operations of the preceding  calendar year or 10.0% of
statutory unassigned capital surplus as of the preceding year end.

IMPACT OF INFLATION AND CHANGING PRICES

     The  consolidated  financial  statements and related data presented  herein
have been prepared in accordance with generally accepted  accounting  principles
which require the  measurement  of financial  position and operating  results in
terms  of  historical  dollars  without  considering  changes  in  the  relative
purchasing power of money over time due to inflation.  The primary assets of the
Company  are  monetary  in  nature.  As a  result,  interest  rates  have a more
significant impact on the Company's  performance than the effects of the general
levels  of  inflation.  Interest  rates  do not  necessarily  move  in the  same
direction or with the same magnitude as the cost of paying losses and LAE.

     Insurance  premiums are established  before the Company knows the amount of
loss and LAE and the  extent  to  which  inflation  may  affect  such  expenses.
Consequently,  the Company attempts to anticipate the future impact of inflation
when  establishing  rate levels.  While the Company  attempts to charge adequate
rates,  the Company may be limited in raising its premium levels for competitive
and regulatory reasons. Inflation also affects the market value of the Company's
investment  portfolio and the  investment  rate of return.  Any future  economic
changes which result in prolonged and increasing levels of inflation could cause
increases in the dollar amount of incurred  loss and LAE and thereby  materially
adversely affect future liability requirements.

ITEM 7.  FINANCIAL STATEMENTS

     The financial  statements of the Company are annexed to this report and are
referenced as pages F-1 to F-25.

                                       16


ITEM 8.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         FINANCIAL DISCLOSURE

     On October 7, 2002,  the Company filed a Form 8-K with the  Securities  and
Exchange  Commission  reporting  that  Deloitte  & Touche  LLP  resigned  as the
independent  auditor for the Company  effective  as of September  30,  2002.  On
November 4, 2002,  the Company filed a Form 8-K with the Securities and Exchange
Commission  reporting that the Company engaged Blackman Kallick  Bartelstein LLP
as the Company's new independent  accountants  effective as of October 28, 2002.
On April  4,  2003,  the  Company  filed an  amended  Form  8-K  which  provided
additional information to its October 7, 2002 Form 8-K.

     During the  Company's  two 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 reports.  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 Company also authorized Deloitte & Touche LLP to
respond to Blackman  Kallick  Bartelstein  LLP's  inquiries.  In  addition,  the
Company  took a number of steps to  address  Deloitte  & Touche  LLP's  concerns
regarding the material control weakness.

     Except as noted above,  during the two fiscal years ended December 31, 2001
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.

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(A) OF THE EXCHANGE ACT

     The directors and executive officers of the Company as of December 31, 2003
are as follows:

Name                            Age      Position
----                            ---      --------
Bradley I. Meier                36       President, Chief Executive Officer,
                                         Secretary and Director
Norman M. Meier                 64       Director, Secretary
Reed J. Slogoff                 35       Director
Joel M. Wilentz, M.D.           69       Director
James M. Lynch                  49       Executive Vice President and Chief
                                         Financial Officer
Sean P. Downes                  33       Chief Operating Officer of UPCIC


     BRADLEY I. MEIER has been President, Chief Executive Officer and a Director
of the Company since its inception in November  1990. He has served as President
of UPCIC, a wholly-owned subsidiary of the Company, since its formation in April
1997. In 1990,  Mr. Meier  graduated  from the Wharton School of Business with a
B.S. in Economics.
                                       17


     NORMAN M. MEIER has been a Director  of the Company  since July 1992.  From
December 1986 until  November 1999,  Mr. Meier was  President,  Chief  Executive
Officer  and a  Director  of  Columbia  Laboratories,  Inc.,  a  publicly-traded
corporation in the  pharmaceuticals  business.  From 1971 to 1977, Mr. Meier was
Vice President of Sales and Marketing for Key  Pharmaceuticals.  From 1977 until
1986, Mr. Meier served as a consultant to Key Pharmaceuticals.

     REED J. SLOGOFF has  been a Director of the Company  since March 1997.  Mr.
Slogoff is currently a principal with Pearl  Properties  Commercial  Management,
LLC,  a  commercial  real  estate   investment  and  management  firm  based  in
Philadelphia,   Pennsylvania.   Mr.   Slogoff   was   formerly   with   Entercom
Communications  Corp.,  a publicly  traded  radio  broadcasting  company and was
previously  a member of the  corporate  and real estate group of the law firm of
Dilworth,  Paxson,  LLP.  Mr.  Slogoff  received  a B.A.  with  Honors  from the
University of  Pennsylvania  in 1990,  and a J.D.  from the  University of Miami
School of Law in 1993.

     JOEL M. WILENTZ,  M.D. has been a Director of the Company since March 1997.
Dr. Wilentz is one of the founding members of Dermatology Associates in Florida,
founded  in 1970.  He is a  member  of the  boards  of the  Neurological  Injury
Compensation   Associate  for  Florida,   the  Broward  County  Florida  Medical
Association,  and the American Arm of the Israeli  Emergency Medical Service for
the southeastern United States, of which he is also President.  Dr. Wilentz is a
past member of the Board of Overseers of the Nova Southeastern University School
of Pharmacy.

     JAMES M. LYNCH has been Vice President and Chief  Financial  Officer of the
Company since August 1998.  Before joining the Company in August 1998, Mr. Lynch
was Chief  Financial  Officer of Florida  Administrators,  Inc., an organization
specializing  in property  and casualty  insurance.  Prior to working at Florida
Administrators,  Inc.,  Mr. Lynch held the position of Senior Vice  President of
Finance and Comptroller of Trust Group, Inc., which also specialized in property
and casualty  insurance.  Before his  position at Trust  Group,  Mr. Lynch was a
Manager with the accounting and auditing firm of Coopers & Lybrand,  which later
became PricewaterhouseCoopers LLC.

     SEAN P. DOWNES has been Chief Operating Officer and a Director of Universal
Property & Casualty  Insurance  Company  since July 2003.  Mr.  Downes was Chief
Operating  Officer of  Universal  Adjusting  Corporation  from July 1999 to July
2003. During that time Mr. Downes created the Company's claims operation. Before
joining the Company in July 1999, Mr. Downes was Vice President of Dennis Downes
and Associates, a multi-line insurance adjustment corporation.

     Norman M. Meier and  Bradley  I.  Meier are  father and son,  respectively.
There are no other family  relationships  among the Company's executive officers
and directors.

     All directors hold office until the next annual meeting of stockholders and
the  election  and  qualification  of their  successors.  Officers  are  elected
annually by the Board of Directors and serve at the discretion of the Board.

     The Company has entered into indemnification  agreements with its executive
officers  and  directors  pursuant to which the Company has agreed to  indemnify
such  individuals,  to the  fullest  extent  permitted  by law,  for claims made
against them in connection with their positions as officers, directors or agents
of the Company.

AUDIT COMMITTEE

     The Company has a separately designated audit committee,  whose members are
Bradley I. Meier and Reed J.  Slogoff.  The  Company's  Board of  Directors  has
determined  that the Company does not have an audit committee  financial  expert
serving  on its audit  committee  because  the  Company  has not  identified  an
individual with the required expertise and experience.

CODE OF ETHICS

     The  Company  had not  adopted a code of ethics  for senior  executive  and
financial officers because it has not expended the resources  necessary for such
adoption.

                                       18


SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     All  required  disclosures  of  Forms  3,  4 and 5  were  timely  filed  by
directors, officers and 10% beneficial owners.

ITEM 10.  EXECUTIVE COMPENSATION

     The tables and  descriptive  information  set forth  below are  intended to
comply with the  Securities  and  Exchange  Commission  compensation  disclosure
requirements  applicable to, among other reports and filings,  annual reports on
Form  10-KSB.  This  information  is  furnished  with  respect to the  Company's
executive officers who earned in excess of $100,000 during the fiscal year ended
December 31, 2003.



                                                   SUMMARY COMPENSATION TABLE

                                                       ANNUAL COMPENSATION
                                                       -------------------

Name and                           Year Ended                                             Long-Term Compensation
Principal Position                December 31         Salary           Bonus          Securities Underlying Options
------------------                -----------         ------           -----          -----------------------------
                                                                                    
Bradley I. Meier                      2003           $ 381,150              $  0                       0
President and CEO                     2002             346,500                 0                       0
                                      2001             315,000                 0                 150,000

James M. Lynch                        2003           $ 155,000              $  0                       0
Executive Vice President and          2002             149,250            15,000                       0
CFO                                   2001             140,500             5,000                 100,000

Sean P. Downes                        2003           $ 109,167              $  0                       0
Chief Operating Officer of            2002              81,250                 0                 200,000
UPCIC                                 2001              73,050                 0                 100,000


                        OPTION GRANTS IN LAST FISCAL YEAR
None.


                  AGGREGATED OPTION EXERCISES AND OPTION VALUES
                      FOR THE YEAR ENDED DECEMBER 31, 2003
None.


             LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR

None.

EMPLOYMENT AGREEMENT

     As of August 11,  1999,  the Company  entered  into a four-year  employment
agreement  with Bradley I. Meier,  the Company's  President and Chief  Executive
Officer, amending and restating the previous employment agreement of May 1, 1997
between the Company and Mr. Meier. Under the terms of the employment  agreement,
Mr. Meier will devote  substantially  all of his time to the Company and will be
paid a base salary of $250,000 per year which shall be increased by 5% each year

                                       19


beginning  with the  first  anniversary  of the  effective  date.  Additionally,
pursuant to the employment  agreement,  and during each year thereof,  Mr. Meier
will be entitled  to a bonus equal to 3% of pretax  profits up to $5 million and
4% of pretax profits in excess of $5 million.  On May 4, 2001, Addendum No. 3 to
the  employment  agreement was approved by the Board of  Directors,  whereby Mr.
Meier was entitled to receive an additional  fifteen  percent (15%)  increase in
his base  compensation  in  addition to the  cumulative  base  compensation  and
increase calculated at the beginning of 2001, retroactive to January 1, 2001 and
under  Addendum No. 3, for each  successive  year of the term of the  employment
agreement,  the base  compensation as adjusted by previous  increase(s)  will be
increased by ten (10%) percent. The employment agreement with Mr. Meier contains
non-competition and non-disclosure  covenants.  In addition, the agreement shall
be extended  automatically  for one year at each  anniversary of the date of the
agreement up to the fourth year of the  agreement,  at the option of Mr.  Meier.
Under the terms of the  employment  agreement  dated May 1, 1997,  Mr. Meier was
granted  ten-year stock options to purchase  1,500,000 shares of Common Stock at
$1.06 per share,  of which 500,000 options vested  immediately,  500,000 options
vested after one year and the remaining options vested after two years. On March
4, 2004,  Mr. Meier was granted  ten-year  stock  options to purchase  1,000,000
shares of Common Stock at $0.06 per share, which vested immediately. The Company
issued  4,708,332  and  6,782,330  shares of Common Stock during the  respective
years ended December 31, 2003 and 2002 in conjunction  with amendments  approved
by the Board of Directors to the  employment  agreement  between the Company and
Mr. Meier whereby Mr. Meier converted salary and accrued vacation into shares of
common stock. An additional  2,823,529  shares were issued on February 25, 2004.
The  shares  were  issued to Mr.  Meier in  private  transactions  performed  in
accordance  with the terms of the amendments and pursuant to Section 4(2) of the
Securities Act of 1933, as amended.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

EQUITY COMPENSATION PLAN INFORMATION

     The following table provides certain information with respect to all of the
Company's equity compensation plans in effect as of December 31, 2003:


                                                Equity Compensation Plan Information

 -----------------------------------------------------------------------------------------------------------------------------------
                                                                                                  Number of securities
                                                                                                  remaining available for
                                    Number of securities to be          Weighted-average          issuance under equity
                                    issued upon exercise of             exercise price of         compensation plans
                                    outstanding options, warrants       outstanding options,      (excluding securities reflected
 Plan Category                      and rights                          warrants and rights       in column (a))

 -----------------------------------------------------------------------------------------------------------------------------------

                                                                                                  
 Equity compensation plans                 10,261,651                         $1.57                        N/A
 approved by security holders
 -----------------------------------------------------------------------------------------------------------------------------------
 Equity compensation plans
 not approved by security                      -                                -                            -
 holders
 -----------------------------------------------------------------------------------------------------------------------------------
 Total                                     10,261,651                         $1.57                        N/A
 -----------------------------------------------------------------------------------------------------------------------------------


Descriptions of the plans are contained in Note 12 to the Consolidated Financial
Statements.

                                       20


SERIES M PREFERRED STOCK

     As of March 1, 2004,  directors and named executive officers,  individually
and as a group, beneficially owned Series M Preferred Stock as follows:

Name and Address of Beneficial  Amount and Nature of Beneficial Percent of Class
         Owner(1)                           Ownership           ----------------
         -----                              --------

Bradley I. Meier*(2)                        48,890                   48.0%
Norman M. Meier* (3)                        53,000                   52.0%
Officers and directors as a group
   (2 persons) (4)                          86,890                   98.0%

*     Director

(1)   Unless otherwise indicated, the Company believes that each person has sole
      voting  and  investment  rights  with  respect  to the  shares of Series M
      Preferred  Stock  of the  Company  specified  opposite  his  name.  Unless
      otherwise  indicated,  the  mailing  address  of each  shareholder  is c/o
      Universal  Insurance  Holdings,  Inc., 2875 N.E. 191st Street,  Suite 300,
      Miami, Florida 33180.

(2)   Consists of (i) 33,890 shares of Series M Preferred  Stock and (ii) 15,000
      shares of Series M Preferred Stock  beneficially owned by Belmer Partners,
      a Florida General Partnership ("Belmer"),  of which Mr. Meier is a general
      partner.  Excludes all shares of Series M Preferred  Stock owned by Norman
      M. Meier and Phylis R. Meier, Mr. Meier's father and mother, respectively,
      as to which Mr. Meier disclaims beneficial ownership.

(3)   Consists of (i) 38,000 shares of Series M Preferred  Stock and (ii) 15,000
      shares of Series M Preferred Stock  beneficially owned by Belmer, of which
      Mr. Meier is a general partner.  Excludes all shares of Series M Preferred
      Stock owned by Bradley I. Meier and Phylis R. Meier,  Mr.  Meier's son and
      former spouse,  respectively,  as to which Mr. Meier disclaims  beneficial
      ownership.

(4)   See footnotes (1) - (3) above.

SERIES A PREFERRED STOCK

     As of March 1, 2004,  directors and named executive officers,  individually
and as a group, beneficially owned Series A Preferred Stock as follows:

Name and Address of Beneficial  Amount and Nature of Beneficial Percent of Class
         Owner(1)                           Ownership           ----------------
         -----                              --------

Norman M. Meier* (2)                          9,975                   20%
Officers and directors as a group
   (1 person) (3)

                                       21


*     Director

(1)   Unless otherwise indicated, the Company believes that each person has sole
      voting  and  investment  rights  with  respect  to the  shares of Series M
      Preferred  Stock  of the  Company  specified  opposite  his  name.  Unless
      otherwise  indicated,  the  mailing  address  of each  shareholder  is c/o
      Universal  Insurance  Holdings,  Inc., 2875 N.E. 191st Street,  Suite 300,
      Miami, Florida 33180.

(2)   Consists of 9,975 shares of Series A Preferred Stock beneficially owned by
      Belmer,  of which Mr. Meier is a general  partner.  Excludes all shares of
      Series A  Preferred  Stock  owned by Bradley I. Meier and Phylis R. Meier,
      Mr.  Meier's son and former  spouse,  respectively,  as to which Mr. Meier
      disclaims beneficial ownership.

(3)   See footnotes (1) - (2) above.

COMMON STOCK

         As  of  March  1,  2004,   directors  and  named  executive   officers,
individually and as a group, beneficially owned Common Stock as follows:

Name and Address of Beneficial  Amount and Nature of Beneficial Percent of Class
         Owner(1)                           Ownership           ----------------
         -----                              --------

Bradley I. Meier (3)                       20,051,110               62.3%
Norman M. Meier (4)                         2,665,654                8.3%
Sean P. Downes (5)                            315,000                1.0%
Reed J. Slogoff (6)                           255,000                 .8%
Joel M. Wilentz (7)                           255,000                 .8%
James M. Lynch (8)                            175,000                 .5%

Officers and directors as a group
    (6 people) (9)                         23,716,764               73.7%


(1)   Unless otherwise indicated, the Company believes that each person has sole
      voting and investment rights with respect to the shares of Common Stock of
      the Company specified opposite his name. Unless otherwise  indicated,  the
      mailing address of each shareholder is c/o Universal  Insurance  Holdings,
      Inc., 2875 N.E. 191st Street, Suite 300, Miami, Florida 33180.

(2)   A person is deemed to be the beneficial  owner of Common Stock that can be
      acquired  by such  person  within  60 days of the  date  hereof  upon  the
      exercise of warrants or stock  options or conversion of Series A Preferred
      Stock,  Series M Preferred Stock or convertible  debt. Except as otherwise
      specified,  each beneficial owner's percentage  ownership is determined by
      assuming that warrants,  stock options, Series A Preferred Stock, Series M
      Preferred Stock and convertible  debt that is held by such person (but not
      those held by any other person) and that are  exercisable  or  convertible
      within 60 days from the date hereof, have been exercised or converted.

(3)   Consists  of (i) (a)  15,330,243  shares of Common  Stock,  (b) options to
      purchase  1,875 shares of Common  Stock at an exercise  price of $9.00 per
      share,  options to purchase  1,875  shares of Common  Stock at an exercise
      price of $12.50 per share,  ten-year  options to purchase 90,000 shares at
      an  exercise  price of  $2.88  as to  45,000  shares  and  $3.88 as to the
      remaining  45,000  shares  granted  pursuant  to  Mr.  Meier's  employment
      agreement,  options  to  purchase  90,000  shares  of  Common  Stock at an
      exercise  price of $1.13 per share and options to purchase  500,000 shares
      of Common Stock at an exercise  price of $1.25 per share,  (c) warrants to
      purchase  15,429 shares of Common Stock at an exercise  price of $1.75 per
      share,  warrants to purchase 339,959 shares of Common Stock at an exercise
      price of $3.00 per share,  warrants  to purchase  82,000  shares of Common
      Stock at an  exercise  price of $1.00 per share and  warrants  to purchase
      131,700 shares of Common Stock at an exercise price of $.75 per share, (d)

                                       22


      169,450  shares of  Common  Stock  issuable  upon  conversion  of Series M
      Preferred Stock, (e) options to purchase 250,000 shares of Common Stock at
      an exercise price of $1.06 per share which vested on November 2, 1997, (f)
      options to purchase 500,000 shares of Common Stock at an exercise price of
      $1.06  per share  which  vested on May 1,  1997  granted  pursuant  to Mr.
      Meier's employment agreement, options to purchase 500,000 shares of Common
      Stock at $1.06 per share which vested on May 1, 1998  granted  pursuant to
      Mr. Meier's employment agreement and options to purchase 500,000 shares of
      Common  Stock at an exercise  price of $1.06 per share which vested on May
      1, 1999 granted pursuant to Mr. Meier's employment agreement,  (g) options
      to purchase  250,000  shares of Common Stock at an exercise price of $1.63
      per share,  (h) options to purchase  150,000  shares of Common Stock at an
      exercise  price of $1.10 per share which vested on December 23, 1999,  (i)
      options to purchase 150,000 shares of Common Stock at an exercise price of
      $0.60 per share which vested on December  21, 2001,  and (ii) an aggregate
      of  331,761  shares  of Common  Stock  (including  shares of Common  Stock
      issuable upon exercise of warrants and conversion of Series A and Series M
      Preferred Stock) beneficially owned by Belmer Partners, of which Mr. Meier
      is a general  partner.  Excludes  options to  purchase  625,000  shares of
      Common  Stock of  Tigerquote.com  at an exercise  price of $.50 per share.
      Also  excludes  all  securities  owned by Norman M.  Meier and  Phyllis R.
      Meier, Mr. Meier's father and mother, respectively,  as to which Mr. Meier
      disclaims beneficial ownership.  Includes 416,666 and 250,225 shares owned
      by Lynda  Meier  and Eric  Meier,  respectively,  who are the  sister  and
      brother,  respectively,  of Bradley I. Meier,  which shares are subject to
      proxies granting voting rights for such shares to Bradley I. Meier.

(4)   Consists  of (i) (a)  482,371  shares  of Common  Stock,  (b)  options  to
      purchase  3,750 shares of Common Stock at an exercise  price of $12.50 per
      share,  options to purchase  3,750  shares of Common  Stock at an exercise
      price of $9.00 per share and options to purchase  250,000 shares of Common
      Stock at an exercise  price of $1.25 per share,  (c)  warrants to purchase
      3,082  shares of Common  Stock at an  exercise  price of $22.00 per share,
      warrants to purchase  2,494 shares of Common Stock at an exercise price of
      $4.25 per share,  warrants to purchase 28,538 shares of Common Stock at an
      exercise price of $1.50 per share,  warrants to purchase 120,000 shares of
      Common  Stock at an  exercise  price of $3.00 per share  and  warrants  to
      purchase  129,970 shares of Common Stock at an exercise price of $1.00 per
      share,  (d) 214,938  shares of Common Stock  issuable  upon  conversion of
      Series A and Series M Preferred  Stock,  (e)  options to purchase  500,000
      shares  of Common  Stock at an  exercise  price of $1.06  per share  which
      vested on November 2, 1997,  (f)  options to  purchase  500,000  shares of
      Common  Stock at an  exercise  price of $1.63 per  share,  (g)  options to
      purchase  75,000 shares of Common Stock at an exercise  price of $1.10 per
      share,  (h)  options  to  purchase  25,000  shares of  Common  Stock at an
      exercise  price of $0.60 per share and (ii) an aggregate of 331,761 shares
      of Common Stock  (including  shares of Common Stock issuable upon exercise
      of  warrants  and  conversion  of Series A and Series M  Preferred  Stock)
      beneficially  owned by Belmer,  of which Mr.  Meier is a general  partner.
      Excludes   options  to  purchase   100,000   shares  of  Common  Stock  of
      Tigerquote.com  at an  exercise  price of $.50  per  share.  Excludes  all
      securities owned by Bradley I. Meier or Phyllis Meier, Mr. Meier's son and
      former spouse,  respectively,  as to which Mr. Meier disclaims  beneficial
      ownership.

(5)   Consists of (i) options to purchase  15,000  shares of Common  Stock at an
      exercise price of $1.10 per share, (ii) options to purchase 100,000 shares
      of Common Stock at an exercise  price of $0.50 per share and (iii) options
      to purchase  200,000  shares of Common Stock at an exercise price of $0.04
      per share.

(6)   Consists of (i) 25,000  shares of Common  Stock,  (ii) options to purchase
      100,000  shares of Common  Stock at an exercise  price of $1.06 per share,
      (iii)  options to purchase  100,000  shares of Common Stock at an exercise
      price of $1.63 per share, of which 50,000 are held in a custodial  account
      for Mr.  Slogoff's  minor son,  (iv) options to purchase  20,000 shares of
      Common  Stock at an  exercise  price of $1.10 per share and (v) options to
      purchase  10,000 shares of Common Stock at an exercise  price of $0.60 per
      share.  Excludes  options to  purchase  20,000  shares of Common  Stock of
      Tigerquote.com at an exercise price of $.50 per share.

(7)   Consists of (i) 25,000  shares of Common  Stock,  (ii) options to purchase
      100,000  shares of Common  Stock at an exercise  price of $1.06 per share,
      (iii)  options to purchase  100,000  shares of Common Stock at an exercise

                                       23


      price of $1.63 per share, (iv) options to purchase 20,000 shares of Common
      Stock at an exercise  price of $1.10 per share and (v) options to purchase
      10,000  shares of Common  Stock at an  exercise  price of $0.60 per share.
      Excludes   options  to  purchase   20,000   shares  of  Common   Stock  of
      Tigerquote.com at an exercise price of $.50 per share.

(8)   Consists of (i) options to purchase  50,000  shares of Common  Stock at an
      exercise  price of $1.87 per share and (ii)  options  to  purchase  25,000
      shares of Common Stock at an exercise price of $1.10 per share and options
      to purchase  100,000  shares of Common Stock at an exercise price of $0.50
      per share.  Excludes  options to purchase 20,000 shares of Common Stock of
      Tigerquote.com at an exercise price of $.50 per share.

(9)   See footnotes (1) - (8) above.

SERIES M PREFERRED STOCK

     As of March 1, 2004, the following table sets forth  information  regarding
the number and percentage of Series M Preferred Stock held by all persons, other
than those persons  listed  immediately  above,  who are known by the Company to
beneficially  own or exercise  voting or dispositive  control over 5% or more of
the Company's outstanding Series M Preferred Stock:

                                       Amount and Nature of
Name and Address (1)                   Beneficial Ownership     Percent of Class
----------------                       --------------------     ----------------

Phyllis R. Meier (2)                          16,800                  18.9%
Universal Insurance Holdings, Inc.
2875 N.E. 191st Street
Suite 300
Miami, Florida  33180

Belmer Partners (3)                           15,000                  16.9%
c/o Phyllis R. Meier
Managing General Partner
Universal Insurance Holdings, Inc.
2875 N.E. 191st Street
Suite 300
Miami, Florida 33180

                                       24


(1)   Unless otherwise indicated, the Company believes that each person has sole
      voting  and  investment  rights  with  respect  to the  shares of Series M
      Preferred Stock specified opposite her or its name.

(2)   Consists of (i) 1,800  shares of Series M Preferred  Stock and (ii) 15,000
      shares of Series M Preferred Stock  beneficially owned by Belmer, of which
      Ms. Meier is the managing general  partner.  Excludes all securities owned
      by  Bradley  I. Meier and  Norman M.  Meier,  the son and  former  spouse,
      respectively, as to which Ms. Meier disclaims beneficial ownership.

(3)   Belmer Partners is a Florida general  partnership in which Phylis R. Meier
      is managing  general  partner and Bradley I. Meier and Norman M. Meier are
      general partners.

SERIES A PREFERRED STOCK

     As of March 1, 2004, the following table sets forth  information  regarding
the number and percentage of Series A Preferred Stock held by all persons, other
than those persons  listed  immediately  above,  who are known by the Company to
beneficially  own or exercise  voting or dispositive  control over 5% or more of
the Company's outstanding Series A Preferred Stock:



                                        Amount and Nature of
Name and Address (1)                    Beneficial Ownership    Percent of Class
----------------                        --------------------    ----------------
Phyllis R. Meier (2)                            9,975                 20.0%
Universal Insurance Holdings, Inc.
2875 N.E. 191st Street
Suite 300
Miami, Florida  33180

Belmer Partners (3)                            30,000                 60.0%
c/o Phyllis R. Meier
Managing General Partner
Universal Insurance Holdings, Inc.
2875 N.E. 191st Street
Suite 300
Miami, Florida 33180


(1)   Unless otherwise indicated, the Company believes that each person has sole
      voting  and  investment  rights  with  respect  to the  shares of Series A
      Preferred Stock specified opposite her or its name.

(2)   Consists of 9,975 shares of Series A Preferred Stock  beneficially  owned.
      Excludes all securities owned by Bradley I. Meier and Norman M. Meier, the
      son and  former  spouse,  respectively,  as to which Ms.  Meier  disclaims
      beneficial ownership.

(3)   Belmer Partners is a Florida general  partnership in which Phylis R. Meier
      is managing  general  partner and Bradley I. Meier and Norman M. Meier are
      general partners

COMMON STOCK

     As of March 1, 2004, the following table sets forth  information  regarding
the number and percentage of Common Stock held by all persons,  other than those
persons listed  immediately  above, who are known by the Company to beneficially
own or exercise  voting or dispositive  control over 5% or more of the Company's
outstanding Common Stock:

                                       25



                                         Amount and Nature of
Name and Address(1)                    Beneficial Ownership(2)  Percent of Class
----------------                       --------------------     ----------------
Martin Steinberg, Esq., as the                 6,518,004              20.3%
receiver for Lancer Offshore Inc.(3)
c/o David E. Wells, Esq.
Hunton & Williams LLP
1111 Brickell Avenue,  Suite 2500
Miami, FL 33131

(1)   Unless otherwise indicated, the Company believes that each person has sole
      voting and investment rights with respect to the shares of Common Stock of
      the Company specified opposite its name.

(2)   A person is deemed to be the beneficial  owner of Common Stock that can be
      acquired  by such  person  within  60 days of the  date  hereof  upon  the
      exercise of warrants or stock options or conversion of Series A and Series
      M Preferred Stock or convertible debt. Except as otherwise specified, each
      beneficial  owner's  percentage  ownership is  determined by assuming that
      warrants,  stock  options,  Series A and  Series  M  Preferred  Stock  and
      convertible debt that are held by such a person (but not those held by any
      other  person)  and  that are  exercisable  within  60 days  from the date
      hereof, have been exercised or converted.

(3)      Consists of 6,518,004 shares of Common Stock as indicated on Schedule
         13D dated July 10, 2003 filed with the Securities and Exchange
         Commission.


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Since  December  1997,  as a condition to the  licensing  of the  Company's
subsidiary,  the  Company's  outside  counsel has held $290,000 in trust for the
benefit of the Company in the Counsel's  escrow account pending  resolution of a
claim against a Company director and an unrelated  entity.  Such funds have been
included in the Company's financial statements as cash and cash equivalents.  In
October  2003,  the  dispute  was  resolved  and the claim was  settled on terms
including  a  cash  payment  of  $201,000,  which  the  Company  paid  under  an
indemnification  arrangement  with  the  director.  Legal  fees  related  to the
settlement  were $37,036.  These amounts were recorded as an expense  during the
fourth quarter of 2003. The remaining funds, net of settlement cost and attorney
fees, were returned to the Company.

     Transactions  between the Company and its  affiliates  are on terms no less
favorable  to the Company  than can be obtained  from third  parties on an arms'
length basis. Transactions between the Company and any of its executive officers
or directors require the approval of a majority of disinterested directors.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

EXHIBITS

3.1   Registrant's  Restated  Amended and Restated  Certificate of Incorporation
      (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)

                                       26


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  Registrant's 1992 Stock Option Plan (1)

10.2  Form of  Indemnification  Agreement between the Registrant and each of its
      directors and executive officers (1)

10.5  Management  Agreements  by  and  between  Universal  Property  &  Casualty
      Insurance  Company and Universal P&C Management,  Inc. dated as of June 2,
      1997 (2)

10.6  Employment  Agreement dated as of May 1, 1997 between  Universal  Heights,
      Inc. and Bradley I. Meier (2)

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 Subsidiaries

31.1  Certification  of Chief Executive  Officer  Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002

31.2  Certification  of Chief Financial  Officer  Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002

32    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 2002

(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

                                       27


(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

(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

REPORTS ON FORM 8-K

     Form 8-K/A,  filed April 2, 2003,  reporting  under Items 4 and 7.

ITEM 14.  CONTROLS AND PROCEDURES.

Based on the  evaluation  by the Chief  Executive  Officer  and Chief  Financial
Officer of the  Company as of a date  within 90 days of the filing  date of this
annual report, the Company's  disclosure  controls and procedures are adequately
designed to ensure that the  information  required to be included in this report
has been recorded,  processed,  summarized and reported on a timely basis. There
have not been any significant  changes in the Company's  internal controls or in
any other factors that could significantly  affect these controls and there have
been no corrective  actions taken with regard to  significant  deficiencies  and
material weaknesses subsequent to the date of such officers' evaluation.

ITEM 15.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.

AUDIT FEES

Audit fees for the fiscal years ended December 31, 2003 and December 31, 2002
were $115,000 and $110,000, respectively.

AUDIT RELATED FEES

Audit related fees for the fiscal years ended December 31, 2003 and December 31,
2002 were $0.

TAX FEES

Tax fees for the fiscal years ended December 31, 2003 and December 31, 2002 were
$25,000 and $30,000, respectively.

ALL OTHER FEES

All other fees for  products and services  provided by the  Company's  principal
accountant  for the fiscal  years ended  December 31, 2003 and December 31, 2002
were $0.

                                       28


                                   SIGNATURES

     In accordance  with Section 13 or 15(d) of the  Securities  Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, hereunto duly authorized.


                       UNIVERSAL INSURANCE HOLDINGS, INC.


Dated: March 25, 2004        By:  /s/ Bradley I. Meier
                                  ----------------------------------------
                                  Bradley I. Meier, President and Chief
                                  Executive Officer

     In  accordance  with the Exchange Act, this report has been signed below by
the following  persons on behalf of the  registrant and in the capacities and on
the dates indicated.


/s/ Bradley I. Meier          President, Chief Executive       March 25, 2004
--------------------          Officer and Director
Bradley I. Meier

/s/ James M. Lynch            Chief Financial Officer          March 25, 2004
------------------
James M. Lynch

/s/ Norman M. Meier           Director                         March 25, 2004
-------------------
Norman M. Meier

/s/ Reed J. Slogoff           Director                         March 25, 2004
-------------------
Reed J. Slogoff

/s/ Joel M. Wilentz           Director                         March 25, 2004
-------------------
Joel M. Wilentz

                                       29




               UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                            Page
                                                                            ----

Independent Auditor's Report.................................................F-2

Consolidated Balance Sheet - December 31, 2003...............................F-3

Consolidated Statements of Operations for the Years Ended December 31, 2003
and 2002.....................................................................F-4

Consolidated Statements of Stockholders' Equity and Comprehensive
Income (Loss) for the Years Ended December 31, 2003 and 2002.................F-5

Consolidated Statements of Cash Flows for the Years Ended December 31,
2003 and 2002................................................................F-6

Notes to Consolidated Financial Statements............................F-7 - F-25

                                      F-1



INDEPENDENT AUDITOR'S REPORT



To the Board of Directors and Stockholders
Universal Insurance Holdings, Inc.

We have  audited  the  accompanying  consolidated  balance  sheet  of  Universal
Insurance  Holdings,  Inc. and  subsidiaries  (the "Company") as of December 31,
2003,  and the related  consolidated  statements  of  operations,  stockholders'
equity and comprehensive income (loss), and cash flows for each of the two years
in the period then ended.  These financial  statements are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of Universal Insurance
Holdings,  Inc. and  subsidiaries  as of December  31, 2003,  and the results of
their  operations  and their  cash flows for each of the two years in the period
then ended, in conformity with accounting  principles  generally accepted in the
United States of America.


/s/ Blackman Kallick Bartelstein LLP


Chicago, Illinois
March 5, 2004

                                      F-2




               UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                December 31, 2003


                                     ASSETS


Cash and cash equivalents                                        $   8,011,278
Debt securities held-to-maturity (fair value of $103,335)              100,243
Equity securities available for sale (cost of $175,453)                149,796
Investments in real estate                                             204,743
Prepaid reinsurance premiums and reinsurance recoverables           24,837,539
Premiums and other receivables                                         536,586
Property and equipment, net                                          1,211,643
Other assets                                                           183,661
                                                                 --------------
Total Assets                                                     $  35,235,489
                                                                 ==============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:
Unpaid losses and loss adjustment expenses                       $   7,680,872
Unearned premiums                                                   16,105,576
Accounts payable                                                     1,176,654
Reinsurance payable                                                  5,135,834
Other accrued expenses                                                 822,018
Loans payable                                                          841,269
                                                                 --------------
Total Liabilities                                                   31,762,223
                                                                 --------------

COMMITMENTS AND CONTINGENCIES (Notes 13 and 14)

STOCKHOLDERS' EQUITY:
Cumulative convertible preferred stock, $.01 par value, 1,000,000 shares
  authorized, 138,640 shares issued and outstanding, minimum liquidation
  preference of $1,419,700                                               1,387
Common stock, $.01 par value 40,000,000 shares authorized, 29,360,246
  shares issued and 26,251,601 shares outstanding                      215,008
Common stock in treasury, at cost - 208,645 shares                    (101,820)
Additional paid-in capital                                          15,024,142
Accumulated deficit                                                (11,639,794)
Accumulated other comprehensive loss                                   (25,657)
                                                                 --------------
Total stockholders' equity                                           3,473,266
                                                                 --------------
Total liabilities and stockholders' equity                       $   35,235,489
                                                                 ==============

   The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                      F-3


                 UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
                             CONSOLIDATED STATEMENTS OF OPERATIONS

                                                Year Ended         Year Ended
                                            December 31, 2003  December 31, 2002
                                            -----------------  -----------------

PREMIUMS EARNED AND OTHER REVENUES:
   Premium income, net                          $ 2,694,170       $  4,895,623
   Net investment income                             82,458            357,623
   Commission revenue                             1,167,606          1,421,906
   Transaction fees                               1,379,211            953,389
   Other revenue                                  1,156,571          1,633,567
                                                -----------       ------------

       Total revenues                             6,480,016          9,262,108
                                                -----------       ------------

OPERATING COSTS AND EXPENSES
   Losses and loss adjustment expenses              974,489          4,638,160
   General and administrative expenses            5,787,055          4,552,897
                                                -----------       ------------
       Total operating costs and expenses         6,761,544          9,191,057
                                                -----------       ------------

NET (LOSS) INCOME                               $  (281,528)      $     71,051
                                                ===========       ============

(LOSS) INCOME PER COMMON SHARE:
   Basic                                        $     (0.01)      $       0.00
                                                ===========       ============

WEIGHTED AVERAGE COMMON SHARES
   OUTSTANDING - BASIC                           23,777,515        15,600,921
                                                ===========       ============

(LOSS) INCOME PER COMMON SHARE
   Diluted                                      $     (0.01)      $      0.00
                                                ===========       ===========
WEIGHTED AVERAGE COMMON SHARES
   OUTSTANDING - DILUTED                         23,777,515        16,173,956
                                                ===========       ===========


    The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                      F-4







                                         UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

                                         CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND
                                                     COMPREHENSIVE INCOME (LOSS)

                                               YEARS ENDED DECEMBER 31, 2003 AND 2002





                    PREFERRED                COMMON              TREASURY        ADDITIONAL                ACCUMULATED
                       STOCK                  STOCK               STOCK           PAID-IN     ACCUMULATED  OTHER COMP
               SHARES       AMOUNT     SHARES     AMOUNT   SHARES     AMOUNT     CAPITAL       DEFICIT   INCOME (LOSS)    TOTAL
               ------       -------    ------     ------   ------     ------     -------       -------   -------------    -----
                                                                                          
BALANCE
 January 1,
 2002               138,640  $1,387  14,894,584  $148,946  208,645  $(101,820) $14,977,297  $(11,329,419)  $(39,836)   $3,656,555

Net Income                -       -           -         -        -          -            -        71,051          -        71,051

Net change in
 unrealized
 losses
 on available
 for sale
 securities               -       -           -         -        -          -            -             -    (34,835)      (34,835)
                                                                                                                      -----------
Comprehensive
 income                                                                                                                    36,216

Preferred stock
 dividend                 -       -           -         -        -          -            -       (49,950)         -       (49,950)

Issuance of
 common stock             -       -   6,782,330    18,229        -          -       26,679             -          -        44,908
                   --------  ------  ----------  --------  -------  ---------  -----------  ------------   --------   -----------
BALANCE,
 December 31,
 2002               138,640   1,387  21,676,914   167,175  208,645   (101,820)  15,003,976   (11,308,318)   (74,671)    3,687,729
                   --------  ------  ----------  --------  -------  ---------  -----------  ------------   --------   -----------

Net loss                  -       -           -         -        -          -            -      (281,528)         -      (281,528)

Net change in
 unrealized
 gains
 on available
 for sale
 securities               -       -           -         -        -          -            -             -     49,014        49,014
                                                                                                                      -----------
Comprehensive
 loss                                                                                                                    (232,514)

Preferred stock
 dividend                 -       -           -         -        -          -            -       (49,948)         -       (49,948)

Issuance of
 common stock             -       -   4,783,332    47,833        -          -       20,166             -          -        67,999
                   --------  ------  ----------  --------  -------  ---------  -----------  ------------   --------   -----------
BALANCE,
 December 31,
 2003               138,640  $1,387  26,460,246  $215,008  208,645  $(101,820) $15,024,142  $(11,639,794)  $(25,657)  $ 3,473,266
                   ========  ======  ==========  ========  =======  =========  ===========  ============   ========   ===========


                        The accompanying notes are an integral part of the consolidated financial statements.

                                                                 F-5





                                         UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES

                                                CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                              Year Ended                 Year Ended
                                                                           December 31, 2003         December 31, 2002
                                                                           -----------------         -----------------
                                                                                                    
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income                                                            $ (281,528)                  $71,051
   Adjustments to reconcile net (loss) income
       to cash provided by (used in) operations:
   Amortization and depreciation                                                268,953                   236,316
   Loss on disposal of assets                                                   (40,503)
   Issuance of common stock as compensation                                      67,999                    44,908
   Net accretion of bond premiums and discounts                                  (5,793)                   (2,161)
Net change in assets and liabilities relating to operating activities:
     Prepaid reinsurance premiums and reinsurance recoverable                   996,780               (11,674,228)
     Premiums and other receivables                                             664,988                     7,345
     Deferred policy acquisition costs                                             -                      529,942
     Reinsurance payable                                                      4,089,021                (3,327,902)
     Accounts payable                                                          (158,565)                  (28,505)
     Other accrued expenses                                                    (151,430)                  282,792
     Accrued taxes, licenses and fees                                              -                       (6,758)
     Unpaid losses and loss adjustment expenses                                 456,117                   977,888
     Unearned premiums                                                       (2,319,453)                4,371,790
                                                                           -------------             -------------
Net cash provided by (used in) operating activities                           3,586,586                (8,517,522)
                                                                           -------------             -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Capital expenditures                                                      (237,069)                 (155,345)
     Purchase of equity securities available for sale                              -                      (18,160)
     Proceeds from sale of equity securities available for sale                 133,414                       -
     Proceeds from maturities of debt securities held to maturity               235,133                 2,699,235
     Purchase of real estate                                                       -                     (280,487)
     Sale of real estate                                                         93,405                   173,102
                                                                           -------------             -------------
Net cash provided by investing activities                                       224,883                 2,418,345
                                                                           -------------             -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Preferred stock dividend                                                   (49,948)                  (49,950)
     Payments on loans payable                                                 (665,163)                     -
     Proceeds from loans payable                                                327,000                   255,348
                                                                           -------------             -------------
Net cash (used in) provided by financing activities                            (388,111)                  205,398
                                                                           -------------             -------------

NET INCREASE (DECREASE) IN CASH AND CASH                                      3,423,358                (5,893,779)
EQUIVALENTS

CASH AND CASH EQUIVALENTS, Beginning of year                                  4,587,920                10,481,699
                                                                           -------------             -------------

CASH AND CASH EQUIVALENTS, End of year                                     $  8,011,278              $  4,587,920
                                                                           =============             =============



                       The accompanying notes are an integral part of the consolidated financial statements.




                                                                  F-6




               UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION

NATURE OF OPERATIONS

Universal Insurance Holdings,  Inc. (the "Company") was originally  incorporated
as Universal Heights, Inc. in Delaware in November 1990. The Company changed its
name to Universal  Insurance  Holdings,  Inc. on January 12, 2001.  The Company,
through its wholly owned  subsidiary,  Universal  Insurance  Holding  Company of
Florida,  formed Universal  Property & Casualty  Insurance  Company ("UPCIC") in
1997.  UPCIC's  application to become a Florida  licensed  property and casualty
insurance  company  was filed in May 1997 with the Florida  Office of  Insurance
Regulation  ("OIR") and was approved on October 29, 1997.  In 1998,  UPCIC began
operations through the acquisition of homeowner insurance policies issued by the
Florida  Residential  Property  and  Casualty  Joint  Underwriting   Association
("JUA").

The JUA was  established  in 1992 as a  temporary  measure to provide  insurance
coverage for  individuals  who could not obtain  coverage from private  carriers
because of the impact on the private  insurance  market of  Hurricane  Andrew in
1992. Rather than serving as a temporary source of emergency  insurance coverage
as was  originally  intended,  the JUA became a major  provider of original  and
renewal insurance  coverage for Florida  residents.  In an attempt to reduce the
number  of  policies  in the JUA,  and  thus  the  exposure  of the  program  to
liability,   the  Florida  legislature  approved  a  number  of  initiatives  to
depopulate  the JUA,  which  resulted  in  policies  being  acquired  by private
insurers and provided  additional  incentives to private insurance  companies to
acquire policies from the JUA.

On December 4, 1997,  the Company raised  approximately  $6,700,000 in a private
offering  with  various  institutional  and/or  otherwise  accredited  investors
pursuant to which the Company issued, in the aggregate, 11,208,996 shares of its
common stock at a price of $.60 per share. The proceeds of this transaction were
used partially for working capital  purposes and to meet the minimum  regulatory
capitalization  requirements  ($5,300,000) required by the Florida Department of
Insurance to engage in this type of homeowners insurance company business.

In February 1998, the Company commenced its insurance  business.  Since then the
Company has developed into a vertically  integrated  insurance  holding  company
performing  all  aspects of  insurance  underwriting,  distribution  and claims.
Universal Risk Advisors,  Inc. was  incorporated in Florida on July 2, 1998, and
became licensed by the Florida  Department of Insurance on September 28, 1998 as
the Company's wholly owned managing general agent ("MGA").  Through the MGA, the
Company has  underwriting  and claims authority for UPCIC as well as third-party
insurance companies. The MGA seeks to generate revenue through policy fee income
and other  administrative  fees  from the  marketing  of UPCIC  and  third-party
insurance products through the Company's distribution network and UPCIC.

Universal  Florida Insurance Agency was incorporated in Florida on July 2, 1998,
U.S. Insurance Solutions, Inc. was incorporated in Florida on August 4, 1998 and
Coastal  Homeowners  Insurance  Specialist,  Inc. was incorporated in Florida on
July 2, 2001, each as wholly owned subsidiaries of Universal Insurance Holdings,
Inc. to solicit  voluntary  business and to generate  commission  revenue.  U.S.
Insurance  Solutions,  Inc. was sold back to its former agency  principal during
2003 for $100 and the assumption of certain  obligations in the aggregate amount
of $16,000.  The  remaining  two  entities  are a part of the  Company's  agency
operations,  which seek to generate income from  commissions,  premium financing
referral  fees and the  marketing of ancillary  services.  In addition,  Capital
Resources Group,  LTD. was incorporated in the British Virgin Islands on June 2,
2000 as a  subsidiary  of the  Company  to  participate  in  contingent  capital
products. Universal Risk Life Advisors, Inc. was incorporated in Florida on June
1, 1999 as the Company's  wholly owned managing general agent for life insurance
products.  The  Company has also formed a claims  adjusting  company,  Universal
Adjusting  Corporation,  which was  incorporated  in Delaware on August 9, 1999.
Universal  Adjusting  Corporation  currently has claims  authority for Universal
Property & Casualty Insurance Company.  The Company has also formed subsidiaries
that  specialize,  or will  specialize,  in  selling  insurance  and  generating
insurance leads via the Internet.  Tigerquote.com Insurance & Financial Services
Group, Inc. ("Tigerquote.com") and Tigerquote.com Insurance Solutions, Inc. were

                                      F-7


incorporated  in  Delaware  on June 6, 1999 and August 23,  1999,  respectively.
Tigerquote.com   is  an  Internet   insurance  lead  generating   network  while
Tigerquote.com  Insurance  Solutions,  Inc. is a network of  Internet  insurance
agencies.  As of December 31, 2003,  insurance agencies have been established in
22 states and are active in 5 states. During 2001, the Company formed Tiger Home
Services,  Inc., which furnishes pest control,  pool services and landscaping to
homeowners.  The services are currently  offered to commercial  and  residential
customers in certain areas in the state of Florida. Various plans are offered to
fit customer needs.

BASIS OF PRESENTATION

The  accompanying  consolidated  financial  statements  have  been  prepared  in
conformity with accounting principles generally accepted in the United States of
America ("GAAP") that differ from statutory  accounting  practices prescribed or
permitted for insurance companies by regulatory authorities. The Company has one
reportable segment during each period reported in the accompanying  consolidated
financial statements, based upon management reporting.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

The significant  accounting  policies  followed by the Company are summarized as
follows:

USE OF ESTIMATES.  The  preparation of financial  statements in conformity  with
GAAP requires  management  to make  estimates  and  assumptions  that affect the
reported  amounts of assets and liabilities and disclosure of contingent  assets
and  liabilities  as of the date of the  financial  statements  and the reported
amounts of revenues and expenses  during the  reporting  periods.  The Company's
primary areas of estimate are the  recognition  of premium  revenues,  insurance
liabilities, deferred policy acquisition costs, provision for premium deficiency
and reinsurance. Actual results could differ from those estimates.

PRINCIPLES OF CONSOLIDATION.  The consolidated  financial statements include the
accounts, after intercompany eliminations, of the Company and its subsidiaries.

CASH AND CASH  EQUIVALENTS.  The Company includes all short-term,  highly liquid
investments  that are readily  convertible  to known amounts of cash and have an
original maturity of three months or less in cash equivalents.

SECURITIES HELD TO MATURITY.  Debt  securities  which the Company has the intent
and ability to hold to maturity  are reported at  amortized  cost,  adjusted for
amortization  of premiums or  accretion of  discounts  and  other-than-temporary
declines in fair value.

INVESTMENTS IN REAL ESTATE. Investments in real estate are reported at the lower
of cost or  appraised  value.  Real  estate  represents  residential  properties
purchased by UPCIC in  connection  with the  settlement of certain  claims.  The
properties  are  rented  for the  production  of income  until they can be sold.
Depreciation  is provided on the  straight-line  basis over twenty seven and one
half years.

SECURITIES  AVAILABLE FOR SALE.  Equity  securities  are reported at fair value,
with  unrealized  gains and losses  reported  net of deferred  tax as a separate
component of stockholders'  equity.  Realized gains and losses are determined on
the specific identification method.

PROPERTY AND EQUIPMENT. Property and equipment is recorded at cost. Depreciation
is provided on the  straight-line  basis over the  estimated  useful life of the
assets. Estimated useful life of all property and equipment ranges from three to
five years.  Routine repairs and  maintenance are expensed as incurred.  Website
development  costs are  capitalized  and amortized over their  estimated  useful
life.

RECOGNITION OF PREMIUM REVENUES.  Property and liability premiums are recognized
as revenue on a pro rata basis over the policy  term.  The  portion of  premiums
that will be  earned  in the  future  are  deferred  and  reported  as  unearned
premiums.  The Company believes that its revenue recognition policies conform to
Staff Accounting Bulletin 101, Revenue Recognition in Financial Statements.

                                      F-8


RECOGNITION OF COMMISSION REVENUE. Commission revenue, which is comprised of the
MGA's  policy  fee  income  on  all  new  and  renewal  insurance  policies  and
commissions generated from agency operations is recognized as income upon policy
inception. The Company believes that its revenue recognition policies conform to
Staff Accounting Bulletin 101, Revenue Recognition in Financial Statements.

RECOGNITION  OF  TRANSACTION  FEE REVENUE.  Transaction  fee  revenue,  which is
comprised of revenue from the selling of insurance leads is recognized as income
upon  sale of the  lead.  The  Company  believes  that its  revenue  recognition
policies  conform to Staff  Accounting  Bulletin  101,  Revenue  Recognition  in
Financial Statements.

DEFERRED  POLICY  ACQUISITION  COSTS.  Commissions  and other costs of acquiring
insurance that vary with and are primarily  related to the production of new and
renewal business net of reinsurance  commissions are deferred and amortized over
the terms of the  policies or  reinsurance  treaties to which they are  related.
Investment  income is taken into  consideration  when  calculating  the  maximum
amount of deferred acquisition cost.

INSURANCE  LIABILITIES.  Unpaid losses and loss adjustment  expenses ("LAE") are
provided for as claims are  incurred.  The  provision for unpaid losses and loss
adjustment expenses includes:  (1) the accumulation of individual case estimates
for  claims and claim  adjustment  expenses  reported  prior to the close of the
accounting  period;  (2) estimates for unreported claims based on industry data;
and (3) estimates of expenses for  investigating  and adjusting  claims based on
the experience of the Company and the industry.

Inherent  in the  estimates  of  ultimate  claims are  expected  trends in claim
severity,  frequency and other factors that may vary as claims are settled.  The
amount of  uncertainty in the estimates for casualty  coverage is  significantly
affected  by such  factors as the amount of claims  experience  relative  to the
development  period,  knowledge  of the actual facts and  circumstances  and the
amount of insurance risk  retained.  In the case of UPCIC,  this  uncertainty is
compounded by UPCIC's limited history of claims experience. In addition, UPCIC's
policyholders are currently concentrated in South Florida, which is periodically
subject to adverse weather  conditions  such as hurricanes and tropical  storms.
The  methods  for making  such  estimates  and for  establishing  the  resulting
liability are continually reviewed, and any adjustments are reflected in current
earnings.

PROVISION FOR PREMIUM  DEFICIENCY.  It is the  Company's  policy to evaluate and
recognize  losses on  insurance  contracts  when  estimated  future  claims  and
maintenance  costs under a group of existing  contracts will exceed  anticipated
future premiums.  No accrual for premium deficiency was considered  necessary as
of December 31, 2003.

REINSURANCE.  In the normal course of business,  the Company seeks to reduce the
risk of loss  that may  arise  from  catastrophes  or other  events  that  cause
unfavorable underwriting results by reinsuring certain levels of risk in various
areas of  exposure  with other  insurance  enterprises  or  reinsurers.  Amounts
recoverable  from  reinsurers  are  estimated  in a manner  consistent  with the
provisions of the reinsurance agreement and consistent with the establishment of
the liability of the Company.

INCOME TAXES. Income tax provisions are based on the asset and liability method.
Deferred  federal  income  taxes have been  provided for  temporary  differences
between the tax basis of assets and  liabilities  and their reported  amounts in
the consolidated financial statements.

INCOME (LOSS) PER SHARE OF COMMON STOCK. Basic earnings per share is computed by
dividing  the  Company's  net income  (loss)  less  cumulative  Preferred  Stock
dividends by the  weighted-average  number of shares of Common Stock outstanding
during the period.  Diluted  earnings  per share is  computed  by  dividing  the
Company's  net income  (loss) minus  Preferred  Stock  dividends by the weighted
average number of shares of Common Stock  outstanding  during the period and the
impact of all dilutive  potential  common  shares,  primarily  Preferred  Stock,
options and  warrants.  The  dilutive  impact of stock  options and  warrants is
determined by applying the treasury stock method and the dilutive  impact of the
Preferred Stock is determined by applying the "if converted" method.

FAIR MARKET VALUE OF FINANCIAL  INSTRUMENTS.  Statement of Financial  Accounting
Standards   ("SFAS")  No.  107,   Disclosure   About  Fair  Value  of  Financial
Instruments,  requires  disclosure of the estimated  fair value of all financial

                                      F-9


instruments including both assets and liabilities unless specifically  exempted.
The Company uses the following  methods and  assumptions  in estimating the fair
value of financial instruments.

     Cash and cash equivalents: the carrying amount reported in the consolidated
     balance sheet for cash and cash equivalents  approximates fair value due to
     the short-term nature of those items.

     Premiums and other receivables and accounts  payable:  the carrying amounts
     reported  in  the  consolidated   balance  sheet  for  premiums  and  other
     receivables and accounts payable  approximate their fair value due to their
     short-term nature.

     Equity securities  available-for-sale and debt securities held-to-maturity:
     fair  values  for  equity and debt  securities  are based on quoted  market
     prices.

     Notes payable are principally equal to the unpaid balance of the respective
     notes.

CONCENTRATIONS OF CREDIT RISK. Financial instruments,  which potentially subject
the Company to  concentrations  of credit  risk,  consist  principally  of cash,
investments, premiums receivable and reinsurance recoverables. Concentrations of
credit  risk with  respect to premiums  receivable  are limited due to the large
number of individuals  comprising  the Company's  customer  base.  However,  the
majority of the  Company's  revenues are  currently  derived  from  products and
services  offered to customers in Florida  which could be adversely  affected by
economic downturns,  an increase in competition or other environmental  changes.
In order to reduce  credit  risk for amounts  due from  reinsurers,  the Company
seeks to do business with financially sound reinsurance  companies and regularly
evaluates the financial strength of all reinsurers used.

STOCK  OPTIONS.  The  Company  grants  options  for a fixed  number of shares to
employees and outside  directors  with an exercise price equal to the fair value
of the shares as of the grant date. The Company has elected to apply  Accounting
Principles Board ("APB") No. 25,  Accounting for Stock Issued to Employees,  and
related interpretations in accounting for its stock options granted to employees
and directors, and SFAS No. 123 Accounting for Stock-Based Compensation, for its
stock options granted to  non-employees.  Under APB No. 25, because the exercise
price of the Company's  employee and director  stock  options  equals the market
price of underlying  stock on the date of the grant, no compensation  expense is
recognized.  The Company  expenses  the fair value  (determined  as of the grant
date) of options and warrants  granted to  non-employees in accordance with SFAS
No. 123. The Company has adopted the disclosure  only provisions of SFAS No. 123
(see Note 12).

STATUTORY ACCOUNTING. The Company prepares its statutory financial statements in
conformity  with accounting  practices  prescribed or permitted by the Office of
Insurance  Regulation of the State of Florida.  Effective  January 1, 2001,  the
Office of Insurance  Regulation of the State of Florida  required that insurance
companies  domiciled in the State of Florida prepare their  statutory  financial
statements   in   accordance   with  the  National   Association   of  Insurance
Commissioners'   ("NAIC")  Accounting   Practices  and  Procedures  Manual  (the
"Manual"),  as modified by the Office of  Insurance  Regulation  of the State of
Florida.  Accordingly,  the admitted assets, liabilities and capital and surplus
of Universal  Property & Casualty Insurance Company as of December 31, 2003, and
the  results  of its  operations  and its cash flow for the year then ended have
been determined in accordance with the new accounting principles.

NEW ACCOUNTING PRONOUNCEMENTS.  In July 2001, the Financial Accounting Standards
Board ("FASB")  issued SFAS No. 141,  Business  Combinations,  and SFAS No. 142,
Goodwill and Other Intangible Assets.  These standards establish  accounting and
reporting  for  business  combinations.  SFAS  No.  141  requires  all  business
combinations  entered into subsequent to June 30, 2001 to be accounted for using
the purchase method of accounting. SFAS No. 142 provides that goodwill and other
intangible  assets  with  indefinite  lives will not be  amortized,  but will be
tested for  impairment on an annual basis.  Universal  adopted the provisions of
these  statements in the first quarter of 2002.  The impact of such adoption did
not have a material effect on the Company's consolidated financial statements.

In August 2001,  the FASB issued SFAS No. 144,  Accounting for the Impairment or
Disposal of Long-Lived  Assets,  which is effective  for fiscal years  beginning
after  December 15, 2001.  This  statement  addresses  financial  accounting and
reporting for the  impairment or disposal of  long-lived  assets and  supercedes
SFAS No.  121,  Accounting  for the  Impairment  of  Long-Lived  Assets  and for

                                      F-10


Long-Lived Assets to Be Disposed of, and the accounting and reporting provisions
of  Accounting  Principles  Board  Opinion  No.  30,  Reporting  the  Results of
Operations - Reporting  the Effects of Disposal of a Segment of a Business,  and
Extraordinary,  Unusual and Infrequently Occurring Events and Transactions,  for
the disposal of a segment of a business (as previously defined in that opinion).
This statement also amends  Accounting  Research  Bulletin No. 51,  Consolidated
Financial   Statements,   to  eliminate  the  exception  to  consolidation   for
subsidiaries for which control is likely to be temporary. Universal adopted SFAS
No. 144 in the first quarter of 2002. The impact of such adoption did not have a
material effect on the Company's consolidated financial statements.

In December  2002,  the FASB issued SFAS No.  148,  Accounting  for  Stock-Based
Compensation - Transition and Disclosure. This statement, which is effective for
years ending after December 15, 2002,  amends Statement No. 123,  Accounting for
Stock-Based  Compensation,  and provides alternative methods of transition for a
voluntary  change to the fair  value-based  method of accounting for stock-based
employee  compensation.  In addition,  Statement  No. 148 amends the  disclosure
requirements  of Statement No. 123 regardless of the  accounting  method used to
account  for  stock-based  compensation.  The  Company has chosen to continue to
account for  stock-based  compensation  of employees  using the intrinsic  value
method  prescribed in APB No. 25,  Accounting  for Stock Issued to Employees and
related interpretations.  However, the enhanced disclosure provisions as defined
by SFAS No. 148 became  effective  and were  adopted by the Company in the first
quarter of 2003.

RECLASSIFICATIONS.  Certain  prior year  amounts in the  consolidated  financial
statements have been reclassified to conform with the current year presentation.

NOTE 3 - INSURANCE OPERATIONS

UPCIC  commenced  its insurance  activity in February 1998 by assuming  policies
from the JUA.  UPCIC  received the unearned  premiums  and began  servicing  the
policies. Subsequently, UPCIC was successful in renewing a large number of these
policies  while  commencing  solicitation  of business in the  voluntary  market
through independent agents. Unearned premiums represent amounts that UPCIC would
refund  policyholders  if  their  policies  were  canceled.  Accordingly,  UPCIC
determines  unearned  premiums by calculating  the pro rata amount that would be
due to the  policyholder  at a given point in time based upon the premiums  owed
over the life of each policy.  As of December  31, 2003,  the Company has direct
unearned premiums of $16,105,576.

UPCIC's  obligation for liabilities  for policies  assumed from the JUA began at
11:59 p.m. on the date of assumption of the policies. UPCIC has no liability for
assumed  policies prior to the assumption date nor does UPCIC have any liability
for claims  made to the JUA.  Similarly,  the JUA has no  liability  for assumed
liabilities subsequent to the assumption date.

NOTE 4 - REINSURANCE

UPCIC's in-force  policyholder  coverage for windstorm  exposures as of December
31, 2003 was approximately $4.6 billion. In the normal course of business, UPCIC
also seeks to reduce the risk of loss that may arise from  catastrophes or other
events that cause unfavorable  underwriting results by reinsuring certain levels
of risk in  various  areas of  exposure  with  other  insurance  enterprises  or
reinsurers.

Amounts  recoverable  from reinsurers are estimated in a manner  consistent with
the  reinsurance  policy.  Reinsurance  premiums,  losses  and  loss  adjustment
expenses are accounted for on bases consistent with those used in accounting for
the  original  policies  issued  and the  terms  of the  reinsurance  contracts.
Reinsurance  ceding  commissions  received are deferred and  amortized  over the
effective period of the related insurance policies.

UPCIC  limits the  maximum  net loss that can arise from large risks or risks in
concentrated  areas of exposure by reinsuring  (ceding)  certain levels of risks
with other  insurers or reinsurers,  either on an automatic  basis under general
reinsurance  contracts  known as "treaties"  or by  negotiation  on  substantial
individual  risks.  The reinsurance  arrangements  are intended to provide UPCIC
with the ability to maintain its exposure to loss within its capital  resources.
Such reinsurance  includes quota share,  excess of loss and catastrophe forms of
reinsurance.

                                      F-11




QUOTA SHARE

Effective June 1, 2003, UPCIC entered into a quota share reinsurance  treaty and
excess  per risk  agreements  with  various  reinsurers.  Under the quota  share
treaty,  UPCIC  cedes  90%  of its  gross  written  premiums,  losses  and  loss
adjustment  expenses  for  policies  with  coverage  for wind risk with a ceding
commission  equal to 28% of ceded  gross  premiums  written.  For the year ended
December 31, 2002,  UPCIC ceded 50% of gross written  premiums,  losses and loss
adjustment  expenses for all policies  during the first five months of 2002, 80%
during the  subsequent  four months and 90% during the  remaining  three months.
UPCIC  continued  to cede 90% of all policies  during  2003,  except for new and
renewal  without wind risk business with policy  effective dates of June 1, 2003
and after.  In addition,  the quota share  treaty has a  limitation  for any one
occurrence of $2,000,000.

EXCESS PER RISK

Effective  June 1, 2003,  UPCIC entered into an excess per risk  agreement  with
various reinsurers. Under the excess per risk agreement, UPCIC obtained coverage
of  $1,300,000  in excess of  $500,000  ultimate  net loss for each  risk,  each
property  loss,  and  $1,000,000  in  excess of  $300,000  each  casualty  loss,
excluding  losses arising from the peril of wind to the extent such wind related
losses are the result of a hurricane.  A $5,200,000 limit applies to the term of
the contract.

EXCESS CATASTROPHE

The excess  catastrophe  reinsurance  agreement  provides three layers of excess
catastrophe coverage as of December 31, 2002 as follows:

                          First Layer         Second Layer         Third Layer
                          -----------         ------------         -----------

Coverage                 $12,000,000 in     $25,000,000 in      $13,000,000 in
                         excess of          excess of           excess of
                         $2,000,000 each    $14,000,000 each    $19,000,000 each
                         loss occurrence    loss occurrence     loss occurrence
Deposit premium          $3,600,000         $2,750,000          $1,300,000
Minimum premium          $2,880,000         $2,600,000          $1,040,000
Premium rate -% of       0.078%             0.016%              0.028%
total insurance value


Effective  June 1, 2003,  UPCIC  revised  and  enhanced  its excess  catastrophe
reinsurance program. The excess catastrophe  reinsurance  agreement provides two
layers of excess catastrophe coverage as of December 31, 2003 as follows:


                                First Layer          Second Layer
                                -----------          ------------

Coverage                      $18,000,000 in      $6,000,000 in
                              excess of           excess of
                              $2,000,000 each     $20,000,000 each
                              loss occurrence     loss occurrence
Deposit premium               $4,680,000          $810,000
Minimum premium               $3,744,000          $648,000
Premium rate -% of            0.102%              0.018%
total insurance value

                                      F-12



Loss occurrence is defined as all individual  losses directly  occasioned by any
one  disaster,  accident  or loss or series of  disasters,  accidents  or losses
arising  out of one  event,  which  occurs  within  the area of one state of the
United States or province of Canada and states or provinces  contiguous  thereto
and to one another.

Effective June 1, 2002 UPCIC entered a reimbursement  agreement with the Florida
Hurricane  Catastrophe  Fund (the "Fund"),  which is administered by the Florida
State Board of Administration. Under the reimbursement agreement, the Fund would
reimburse the Company,  with respect to each loss occurrence during the contract
year  (June 1, 2002 to May 31,  2003) for 90% of the  ultimate  loss paid by the
Company in excess of the Company's retention plus 5% of the reimbursed losses to
cover loss adjustment  expenses. A covered event means any one storm declared to
be a hurricane by the National  Hurricane Center for losses incurred in Florida,
both  while  it is a  hurricane  and  through  subsequent  downgrades.  The Fund
provided  UPCIC with  coverage  of  $56,312,000  in excess of  $19,228,000.  The
premium for this coverage was $2,394,227.  Effective June 1, 2003, UPCIC entered
a subsequent  reimbursement agreement with the Fund under the same terms through
May 31, 2004. The Fund has provided UPCIC with coverage of $54,341,000 in excess
of  $21,446,000  as of December  31,  2003.  The premium for this  coverage  was
$2,397,060.  In the event of  depletion  of the Fund due to losses  arising from
catastrophic events, the Fund would assess homeowners' insurers writing business
in the state of  Florida.  Florida law allows  insurers to make rate  filings to
pass these assessments to policyholders.

Amounts  recoverable  from  reinsurers  are  estimated  in  accordance  with the
reinsurance contract.  Reinsurance premiums, losses and loss adjustment expenses
("LAE") are accounted for on bases  consistent with those used in accounting for
the original policies issued and the terms of the reinsurance contracts.

The preceding reinsurance arrangements had the following effect on certain items
in the accompanying consolidated financial statements:



                              Year Ended                                  Year Ended
                           December 31, 2003                           December 31, 2002
                           -----------------                           -----------------

               Premiums         Premiums       Loss and Loss       Premiums       Premiums
               Written          Earned          Adjustment          Written        Earned          Adjustment
               -------          ------           Expenses           -------        ------           Expenses
                                                 --------                                           ---------
                                                                                
Direct      $ 30,745,878    $  33,065,332    $  15,275,032      $  33,160,567   $  28,788,776     $  17,998,488

Ceded        (27,618,376)     (30,371,162)     (14,300,543)       (31,213,385)    (23,893,153)      (13,360,328)
            ------------    -------------    -------------      -------------   -------------     -------------

Net         $  3,127,502    $   2,694,170    $     974,489      $   1,947,182   $   4,895,623     $   4,638,160
            ============    =============    =============      =============   =============     =============

Other amounts:
                                                               December 31, 2003

Reinsurance recoverable on unpaid losses and loss adjustment
expenses                                                           $6,329,872
Reinsurance recoverable on paid losses                              2,166,133
Other reinsurance receivables                                       2,159,157
Unearned premiums ceded                                            14,182,377
                                                                  ------------
Prepaid reinsurance premiums and reinsurance recoverable          $24,837,539
                                                                  ============

Reinsurance payable                                                $5,135,834
                                                                  ============

                                      F-13



UPCIC's  reinsurance  contracts  do not relieve  UPCIC from its  obligations  to
policyholders.  Failure of reinsurers to honor their obligations could result in
losses to UPCIC;  consequently,  allowances are  established  for amounts deemed
uncollectible.  UPCIC evaluates the similar geographic regions,  activities,  or
economic   characteristics  of  the  reinsurers  to  minimize  its  exposure  to
significant  losses from reinsurer  insolvencies.  Two reinsurers have unsecured
balances greater than 10% of the total amounts of prepaid  reinsurance  premiums
and  reinsurance  recoverables  as of December 31, 2003.  The balances for these
reinsurers  are $6,451,000 and  $5,560,000.  As of December 31, 2003,  UPCIC has
reinsurance  contracts  with various  reinsurers  located  throughout the United
States and internationally. UPCIC believes that this distribution of reinsurance
contracts  adequately  minimizes  UPCIC's  risk  from  any  potential  operating
difficulties of its reinsurers.

NOTE 5 - INVESTMENTS

Major categories of net investment income are summarized as follows:

                                        Year Ended              Year Ended
                                    December 31, 2003       December 31, 2002
                                    -----------------       -----------------

Debt securities held-to-maturity        $   13,551            $  237,440
Common stocks                                7,398                 2,040
Cash and cash equivalents                   88,521               130,951
                                        ----------            ----------
                                           109,470               370,431
Investment expenses                         27,012                12,808
                                        ----------            ----------
                                        $   82,458            $  357,623
                                        ==========            ==========

Proceeds from the sale of equity  securities  during 2003 and 2002 were $133,414
and $0 respectively.  Gross gains on the sale of securities during 2003 and 2002
were $7,266 and $81,299,  respectively.  Gross losses on the sale of  securities
during 2003 and 2002 were $347 and $2,644, respectively.

The aggregate  amortized cost, gross unrealized  holding gains, gross unrealized
holding losses and fair value as of December 31, 2003 for available-for-sale and
held-to-maturity securities by major security type are as follows:


                                           Cost or               Gross                Gross               Fair
                                        Amortized Cost      Unrealized Gains    Unrealized Losses         Value
                                        --------------      ----------------    -----------------         -----
                                                                                            
Available-for-sale securities:
Cash and cash equivalents               $  8,011,278        $              -    $             -         $  8,011,278
Equity securities                            175,453                       -            (25,657)        $    149,796
                                        ------------        ----------------    -----------------       ------------
  Total                                 $  8,186,731        $               -   $       (25,657)        $  8,161,074
                                        ============        ================    =================       ============

Held-to-maturity securities:
US government agencies                  $    100,243                   3,092    $             -         $    103,335
                                        ============        ================    =================       ============


The scheduled maturities of held-to-maturity  securities as of December 31, 2003
were as follows:

                                                Amortized
                                                  Cost              Fair Value
                                                  ---               ----------
Due after one year through five years            $100,243             $103,335



The preceding data is based on the stated  maturities of the securities.  Actual
maturities  may  differ  as  borrowers  may  have the  right  to call or  prepay
obligations.

                                      F-14


As of December 31, 2003, investments with a carrying value of $1,500,000 were on
deposit with regulatory authorities.

NOTE 6 - PROPERTY AND EQUIPMENT

Property and equipment as of December 31, 2003 consisted of the following:

        Computers                                          $     482,167
        Furnture                                                 131,472
        Automobiles and equipment                                712,203
        Software                                                 520,000
                                                           -------------

        Total cost                                             1,845,842
        Less: Accumulated depreciation and amortization         (634,199)
                                                           -------------
                                                           $   1,211,643


NOTE 7 - LIABILITY FOR UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES

As described in Note 2, UPCIC establishes liabilities for unpaid losses and loss
adjustment  expenses on reported and unreported claims of insured losses.  These
liability  estimates are based on known facts and interpretation of factors such
as claim payment  patterns,  loss  payments,  pending  levels of unpaid  claims,
product  mix  and  industry   experience.   The   establishment  of  appropriate
liabilities,  including liabilities for catastrophes, is an inherently uncertain
process.  This  uncertainty is compounded by UPCIC's  limited  history of claims
experience.  UPCIC regularly updates its estimates as new facts become known and
further events occur which may impact the resolution of unsettled claims.

The level of  catastrophe  loss  experienced in any year cannot be predicted and
could be material  to results of  operations  and  financial  position.  UPCIC's
policyholders are concentrated in South Florida,  which is periodically  subject
to adverse weather  conditions such as hurricanes and tropical  storms.  UPCIC's
in-force  policyholder  coverage for windstorm exposures as of December 31, 2003
was  approximately  $4.6  billion.   UPCIC  continuously  evaluates  alternative
business  strategies  to more  effectively  manage its  exposure to  catastrophe
losses,  including  the  maintenance  of  catastrophic  reinsurance  coverage as
discussed in Note 4.

Management believes that the liabilities for claims and claims expense as of
December 31, 2003 is appropriately established in the aggregate and adequate to
cover the ultimate cost of reported and unreported claims arising from losses
which had occurred by that date.

                                      F-15




Activity in the  liability  for unpaid  losses and loss  adjustment  expenses is
summarized as follows:


                                                Year Ended         Year Ended
                                            December 31, 2003  December 31, 2002
                                            -----------------  -----------------

Balance at beginning of year                    $ 7,224,755       $ 6,246,867

Less reinsurance recoverable                     (5,634,455)       (3,278,316)
                                                -----------       -----------

Net balance at beginning of year                  1,590,330         2,968,551
                                                -----------       -----------
Incurred related to:
  Current year                                    1,174,437         3,908,724
  Prior year                                       (199,948)          729,436
                                                -----------       -----------
Total incurred                                      974,489         4,638,160
                                                -----------       -----------

Paid related to:
  Current year                                      786,430         2,894,786
  Prior years                                       427,359         3,121,625
                                                -----------       -----------
Total paid                                        1,213,789         6,016,411
                                                -----------       -----------

Net balance at end of year                        1,351,000         1,590,300
  Plus reinsurance recoverable                    6,329,872         5,634,455
                                                -----------       -----------

Balance at end of year                          $ 7,680,872       $ 7,224,755
                                                ===========       ===========

The Company's  liabilities for unpaid losses and LAE, net of related reinsurance
recoverables,  as of December  31, 2003 were  decreased  in the current  year by
$199,948 for claims that had occurred on or before the prior year balance  sheet
date.  This  favorable  loss  emergence   resulted   principally  from  settling
homeowners' losses established in the prior year for amounts that were less than
expected.  The Company's  liabilities  for unpaid losses and LAE, net of related
reinsurance recoverables, as of December 31, 2002 were increased by $729,436 for
claims that had occurred on or before the previous year balance sheet date. This
unfavorable loss emergence resulted principally from settling homeowners' losses
established in the prior year for amounts that were more than expected.

NOTE 8 - LOANS PAYABLE

On May 29,  2002,  the  Company  entered  into a  Senior  Promissory  Note  with
Renaissance  Reinsurance  LTD. for the principal  sum of $750,000  payable in 12
monthly  installments of $62,500.  Interest accrued on the unpaid balance of the
principal  amount at a fixed annual rate of 9%.  Universal Risk  Advisors,  Inc.
signed as guarantor  of the note.  The loan amount was  contributed  to UPCIC as
additional  paid-in  capital.  The  remaining  balance  of the loan was paid off
during 2003.

During 2003, the Company purchased  software for $520,000.  Management  believes
this will result in reducing  overall  management  expenses  versus the previous
outside vendor agreement.  Of the remaining unpaid purchase price of $480,000 as
of December 31, 2003,  $30,000 was payable on January 5, 2004 and the  remainder
is payable in 5 monthly  installments of $10,000 through May 2004 followed by 10
monthly  installments of $40,000 through March 2005. The remaining  installments
include principal and interest as there is no stipulated interest rate.

Loans payable as of December 31, 2003 also consists of the following  bank loans
secured by the respective assets: a boat loan for $119,574, principal due in May
2011,  with interest paid monthly at 8.8%,  and several  vehicle loans  totaling
$158,362,  principal due from January 2004 to September 2006, with interest paid
monthly  ranging from 5.6% to 10%. Other loans with vendors  amounted to $83,333
as of December 31, 2003.

                                      F-16


Loan repayments are due as follows:

        2004         $  554,401
        2005            169,961
        2006             35,445
        2007             16,181
        2008             17,664
  Thereafter             47,617
                     -----------
                     $  841,269
                     ===========

NOTE 9 - REGULATORY REQUIREMENTS AND RESTRICTIONS

UPCIC is subject to  comprehensive  supervision  and  regulation by the OIR. The
Florida  Insurance  Code (the  "Code")  requires  that  UPCIC  maintain  minimum
statutory surplus of $4,000,000.  UPCIC is also required to adhere to prescribed
premium-to-surplus  ratios under the Code and to maintain approved securities on
deposit with the State of Florida.

The  following  schedule  reconciles  statutory net loss and surplus of UPCIC as
reported in the 2003 and 2002 annual  statements filed with the OIR, prepared on
the basis of statutory accounting principles,  to UPCIC's net loss for the years
ended  December  31,  2003 and 2002 and  stockholders'  equity  under GAAP as of
December 31, 2003:




                                                          Year Ended                             Year Ended
                                                      December 31, 2003                       December 31, 2002
                                                      -----------------                       -----------------

                                                Net Loss                 Surplus                    Net Loss
                                                --------                 -------                    --------
                                                                                  
Balance per statutory financial          $        (344,324)       $      4,590,619         $        (475,329)
statement, as originally filed
Balance per statutory financial                   (344,324)              4,590,619                  (475,329)
statement, as adjusted
Deferred policy acquisition costs                     -                       -                     (529,942)
Deferred income taxes                              (18,889)                105,649                     81,232
Policy assessment                                     -                    287,332                    287,332
Increase non-admitted assets                          -                    675,998                      -
Other                                                 -                   (214,922)                     -
                                         ----------------------   ---------------------    --------------------
Balance in conformity with GAAP          $        (363,213)       $      5,444,676         $         (636,707)
                                         ======================   =====================    ====================



NOTE 10 - RELATED PARTY TRANSACTIONS

All underwriting, rating, policy issuance and administration functions for UPCIC
are performed by UPCIC, Universal Risk Advisors, Inc., a wholly owned subsidiary
of the Company, and unaffiliated third parties.

Since December 1997, as a condition of the licensing of the Company's subsidiary
the Company's  outside counsel has held $290,000 in trust for the benefit of the
Company in the counsel's escrow account pending  resolution of a claim against a
Company director and an unrelated  entity.  Such funds have been included in the
Company's  financial  statements as cash and cash equivalents.  In October 2003,
the dispute  was  resolved  and the claim was settled on terms  including a cash
payment of $201,000, which the Company paid under an indemnification arrangement
with the director.  Legal fees related to the  settlement  were  $37,036.  These
amounts  were  recorded  as an expense  during the fourth  quarter of 2003.  The
remaining  funds, net of settlement cost and attorney fees, were returned to the
Company.

                                      F-17



NOTE 11- INCOME TAX PROVISION

Since its inception,  the Company has incurred  cumulative tax operating losses.
Therefore,  the Company has not incurred any significant  income tax liabilities
during that time. As of December 31, 2003,  the Company had net  operating  loss
carryforwards  totaling  approximately  $9,425,000 which are available to offset
future taxable income, if any, through 2023.

The following  table  reconciles  the statutory  federal  income tax rate to the
Company's effective tax rate for the years ended December 31, 2003 and 2002:



                                                         2003            2002
                                                         ----            ----
       Statutory federal income tax rate                 34.0%          34.0%

       Increases (decreases) resulting from:

                Change in valuation allowance           (34.0%)        (27.7%)

                Other                                     0.0%          (6.3%)
                                                      ----------      ----------

       Effective tax rate                                 0.0%           0.0%
                                                      ==========      ==========

Deferred  income taxes as of December  31, 2003 are  provided for the  temporary
differences between financial reporting basis and the tax basis of the Company's
assets and liabilities under SFAS 109. The tax effects of temporary  differences
are as follows:

        Deferred income tax assets:
                Net operating loss carryforward         $  3,204,500
                Unearned premiums                            130,777
                Unpaid losses                                 52,270
                                                        ------------
                                                           3,387,547

        Deferred income tax liabilities:
                Property and equipment                      (117,177)

        Net deferred income tax asset                      3,270,370
        Less: valuation allowance                         (3,270,370)
                                                        ------------
        Net deferred income tax asset                   $          -
                                                        ============


The Company has prepared  projections  that indicate it may generate some amount
of income from  operations  in the future.  However,  a valuation  allowance  is
deemed necessary because management does not believe that it is more likely than

                                      F-18


not that the Company will  generate  substantial  taxable  income  sufficient to
realize the tax benefits associated with the net deferred income tax asset shown
above in the near future.

The remaining net operating loss carryforwards will expire as follows:

      Expiration

        2007                            $       328,000
        2008                                  1,010,000
        2009                                  1,116,000
        2010                                    677,000
        2011                                  1,570,000
        2012                                  1,379,000
        2013                                      5,000
        2020                                  1,229,000
        2021                                  1,258,000
        2022                                    404,000
        2023                                    449,000
                                        ---------------
                                        $     9,425,000
                                        ===============


NOTE 12 - STOCKHOLDERS' EQUITY

CUMULATIVE PREFERRED STOCK

In October  1994,  49,950  shares of Series A  Preferred  Stock  were  issued in
repayment  of $499,487  of related  party  debt,  and 88,690  shares of Series M
Preferred  Stock were  issued  during the fiscal  year ended  April 30, 1997 for
repayment  of  $88,690  of  related  party  debt.  Each  share of Series A and M
Preferred  Stock is  convertible  by the Company into 2.5 shares of Common Stock
and 5 shares of Common Stock, respectively,  into an aggregate of 568,326 common
shares.  Beginning May 1, 1998,  the Series A Preferred  Stock pays a cumulative
dividend of $.25 per share per quarter.  In connection with this issuance of the
Series A Preferred  Stock,  the Company issued the holders  warrants to purchase
12,488 shares of Common Stock at $4.25 per share,  exercisable  through  October
17, 2004.

STOCK OPTIONS

The Company  adopted a 1992 Stock Option Plan (the "Plan") under which shares of
Common Stock are reserved  for  issuance  upon the exercise of the options.  The
Plan is designed to serve as an incentive for attracting and retaining qualified
and competent employees, officers, directors and consultants of the Company. All
employees,  officers, directors and consultants of the Company or any subsidiary
are eligible to participate in the Plan. The Plan does not specify the number of
shares for which  options  are  available  for grant.  The stock  options may be
granted over a period not to exceed 10 years and  generally  vest as of the date
of grant or upon certain  goals  attained.  The Plan has no  provisions  for the
exercising of options other than paying the cash exercise price.

                                      F-19


A summary of the option activity for the years ended December 31, 2003 and 2002
is presented below:



                                                                     Options Exeriseable
                                                                     -------------------                                 Weighted
                                                                                                                         Average
                                         Number                 Option Price per Share                   Number         Exercise
                                        of Shares         Low             High          Weighted        of Shares         Price
                                        ---------         ---             ----          --------        ---------         -----
                                                                                                      
Outstanding January 1, 2002             6,838,624       $    0.50       $   22.00       $    1.24       6,838,624       $   1.24
Granted                                   230,000       $    0.04       $    0.50       $    0.09
                                     ------------
Outstanding December 31, 2002           7,068,624       $    0.04       $   22.00       $    1.20       7,068,624       $   1.20
Cancelled                                 (35,625)      $    6.00       $   22.00       $   14.51
                                     ------------
Outstanding December 31, 2003           7,032,999       $    0.04       $    3.88       $    1.14       7,032,999       $   1.14
                                     ============


The following  table  summarizes  the  information  about options under the Plan
outstanding as of December 31, 2003:

                Options Outstanding and Exercisable
                -----------------------------------

                                    Weighted Average
                                        Remaining          Weighted
  Range of              Number      Contractual Life       Average
Exercise Prices      Outstanding        (in years)      Exercise Price
---------------      -----------        ----------      --------------
 $0.04 - $1.87         6,890,000            4.1               $1.09
 $2.88 - $3.88           142,999            1.4               $3.39
                     -----------
                       7,032,999
                     ===========

The Company adopted a 2000 Stock Option Plan (the  "Tigerquote.com  Plan") under
which shares of common stock of  Tigerquote.com  are reserved for issuance  upon
the exercise of the options.  The Tigerquote.com Plan is designed to serve as an
incentive  for  attracting  and retaining  qualified  and  competent  employees,
officers,  directors and  consultants.  All employees,  officers,  directors and
consultants  of the Company or any subsidiary are eligible to participate in the
Plan.  The Plan does not  specify  the  number of shares for which  options  are
available  for grant.  The stock  options  may be  granted  over a period not to
exceed 10 years and generally vest as of the date of grant or upon certain goals
attained.  The Plan has no provisions  for the  exercising of options other than
paying the cash exercise price.

                                      F-20


A summary of the option activity of the Tigerquote.com  Plan for the years ended
December 31, 2003 and 2002 is presented below:



                                                                     Options Exeriseable
                                                                     -------------------                               Weighted
                                                                                                                       Average
                                         Number                 Option Price per Share                   Number       Exercise
                                        of Shares         Low             High          Weighted        of Shares       Price
                                        ---------         ---             ----          --------        ---------       -----
                                                                                                    
Outstanding January 1, 2002               835,000       $    0.50       $    0.50       $    0.50         835,000     $     0.50
Granted                                       -         $      -        $     -         $      -               -              -
                                     ------------
Outstanding December 31, 2002             835,000       $    0.50       $    0.50       $    0.50         835,000     $     0.50
Granted                                       -         $      -        $     -         $      -                -             -
                                     ------------
Outstanding December 31, 2003             835,000       $    0.50       $    0.50       $    0.50         835,000     $     0.50
                                     ============


The  following  table  summarizes  the  information   about  options  under  the
Tigerquote.com Plan outstanding as of December 31, 2003:

                Options Outstanding and Exercisable
                -----------------------------------

                                    Weighted Average
                                        Remaining          Weighted
  Range of              Number      Contractual Life       Average
Exercise Prices      Outstanding        (in years)      Exercise Price
---------------      -----------        ----------      --------------
 $0.50                   835,000           6.25               $.50
                     -----------
                         835,000
                     ===========



As described in Note 2, the Company accounts for stock-based  compensation using
the provisions of APB No. 25 and related interpretations.  No stock options were
granted in 2003.  Accordingly,  no compensation  expense has been recognized for
the year ended December 31, 2003. No compensation  expense was recognized in the
year ended  December 31, 2002 for options  granted to employees and directors as
the exercise  price for the only stock option  grant  equaled  their fair market
value at the time of grant.  The Company  expenses the fair value (as determined
as of the grant date) of options and warrants granted to non-employees  over the
vesting  period.  Had  compensation  cost for options  granted to employees  and
directors been determined in accordance  with the fair value  provisions of SFAS
123, the  Company's net income (loss) and net income (loss) per share would have
been as follows:


                                                Year Ended         Year Ended
                                            December 31, 2003  December 31, 2002
                                            -----------------  -----------------

Net income (loss)
As reported                                    $  (281,528)       $    71,051
Compensation expense                              (552,287)          (376,191)
                                                ----------        -----------
Pro Forma                                         (833,815)          (305,141)
Net income (loss) per share:
Basic
  As reported                                  $     (0.01)       $      0.00
  Compensation expense                         $     (0.03)       $     (0.02)
                                                ----------        -----------
  Pro forma                                    $     (0.04)       $     (0.02)

Diluted
  As reported                                  $     (0.01)       $      0.00
  Compensation expense                         $     (0.03)       $     (0.02)
  Pro forma                                     ----------        -----------
  Pro forma                                    $     (0.04)       $     (0.02)


The fair value of each option grant is estimated on the date of grant using the
Black-Scholes Option Pricing Model with the following weighted-average
assumptions.

                                        Year Ended                 Year Ended
                                    December 31, 2003          December 31, 2002
                                    -----------------          -----------------
    Dividend yield                        N/A                           0.00%
    Expected life of option               N/A                         5 years
    Risk free interest rate               N/A                           6.50%
    Expected volatility                   N/A                         126.03%

There were no options granted in 2003.  Using the  Black-Scholes  Option Pricing
Model,  the estimated  weighted average fair value per option granted during the
year ended December 31, 2002 was $0.05.

The  Black-Scholes  option pricing model was developed for use in estimating the
fair value of traded  options which have no vesting  restrictions  and are fully
transferable.  In addition,  such models require the input of highly  subjective
assumptions including the expected stock price volatility. Because the Company's
stock options have characteristics  significantly different from those of traded
options,  and because changes in the subjective input assumptions can materially
affect the fair value estimate,  in management's opinion, the existing models do
not necessarily provide a reliable single measure of the fair value of its stock
options.

The pro  forma  amounts  may not be  representative  of the  future  effects  on
reported net income (loss) and net income (loss) per share that will result from
the future granting of stock options since the pro forma compensation expense is
allocated  over the periods in which options become  exercisable  and new option
awards are granted periodically.

                                      F-22


WARRANTS

A summary of the warrant activity for the years ended December 31, 2003 and 2002
is presented below:




                                                                  Warrants Exeriseable
                                                                  --------------------                  Weighted       Weighted
                                                                                                         Average        Average
                                         Number                Warrant Price per Share                   Number        Exercise
                                        of Shares         Low             High          Weighted        of Shares        Price
                                        ---------         ---             ----          --------        ---------        -----
                                                                                                      
Outstanding January 1, 2002             4,393,652       $    0.75       $    6.00       $    1.34       4,393,652       $    1.34
Granted                                       -         $      -        $     -         $     -
                                     ------------
Outstanding December 31, 2002           4,393,652       $    0.75       $    6.00       $    1.34       4,393,652       $    1.34
Cancelled                              (2,000,000)      $    0.75       $    1.25       $    1.00
                                     ------------
Outstanding December 31, 2003           2,393,652       $    0.75       $    6.00       $    1.62       2,393,652       $    1.62
                                     ============



The following table summarizes the information about warrants  outstanding as of
December 31, 2003:

                Warrants Outstanding and Exercisable
                -----------------------------------

                                    Weighted Average
                                        Remaining          Weighted
  Range of              Number      Contractual Life       Average
Exercise Prices      Outstanding        (in years)      Exercise Price
---------------      -----------        ----------      --------------
 $0.75 - $1.50         1,614,109            3.4               $1.03
 $1.75 - $6.00           779,543            1.9               $2.84
                     -----------
                       2,393,652
                     ===========


No warrants were issued in 2002 or 2003.

OTHER STOCK ISSUANCES

The Company  issued  4,708,332 and  6,782,330  shares of Common Stock during the
respective years ended December 31, 2003 and 2002 in conjunction with amendments
approved  by the Board of  Directors  to the  employment  agreement  between the
Company  and Bradley I.  Meier,  the  Company's  President  and Chief  Executive
Officer,  whereby Mr. Meier converted salary and accrued vacation into shares of
Common  Stock.  The shares  were  issued to Mr.  Meier in  private  transactions
performed in accordance with the terms of the amendments and pursuant to Section
4(2) of the Securities Act of 1933, as amended.  An additional  2,823,529 shares
were issued on February 25, 2004.  During the year ended  December 31, 2003, the
Company  issued 75,000 shares of Common Stock to the Board of Directors as board
compensation.

STOCK GRANTOR TRUST

On April 3, 2000, the Company established the Universal Insurance Holdings, Inc.
Stock  Grantor Trust  ("SGT") to fund its  obligations  arising from its various
stock option  agreements.  The Company funded the SGT with  2,900,000  shares of
Company  Common  Stock.  In  exchange,  the  SGT  has  delivered  $29,000  and a
promissory  note to the  Company for  approximately  $2,320,000  which  together
represent  the  purchase  price of the  shares.  Amounts  owed by the SGT to the
Company will be repaid by cash received by the SGT, which will result in the SGT
releasing shares to satisfy Company obligations for stock options.

                                      F-23


NOTE 13 - COMMITMENTS AND CONTINGENCIES

Employment Agreement

As of August 11, 1999, the Company entered into a four-year employment agreement
with Bradley I. Meier,  the  Company's  President and Chief  Executive  Officer,
amending and restating the previous employment  agreement of May 1, 1997 between
the Company and Mr.  Meier.  Under the terms of the  employment  agreement,  Mr.
Meier will devote  substantially all of his time to the Company and will be paid
a base  salary of  $250,000  per year with a 5% annual  increase.  Additionally,
pursuant to the employment agreement, and during each year thereof, Mr. Meier is
entitled to a bonus  equal to 3% of pretax  profits up to  $5,000,000  and 4% of
pretax  profits in excess of $5,000,000.  On May 4, 2001,  Addendum No. 3 to the
employment  agreement was approved by the Board of Directors,  whereby Mr. Meier
was entitled to receive an additional fifteen percent (15%) increase in his base
compensation  in addition  to the  cumulative  base  compensation  and  increase
calculated at the  beginning of 2001,  retroactive  to January 1, 2001;  and for
each  successive  year  of  the  term  of  the  employment  agreement  the  base
compensation  as adjusted  by previous  increase(s)  shall be  increased  by ten
percent  (10%).   The  employment   agreement   contains   non-competition   and
non-disclosure   covenants.   In  addition,  the  agreement  shall  be  extended
automatically  for one year at each  anniversary of the date of the agreement up
to the fourth year of the agreement, at the option of Mr. Meier. Under the terms
of the  agreement  in 1997,  Mr.  Meier was granted  ten-year  stock  options to
purchase  1,500,000  shares of Common Stock at $1.00 per share, of which 500,000
options  vested  immediately,  500,000  options  vested  after  one year and the
remaining  options  vested  after two  years.  On March 4, 2004,  Mr.  Meier was
granted  ten-year stock options to purchase  1,000,000 shares of Common Stock at
$0.06 per share,  which vested  immediately.  The exercise  price of the options
equaled the market price of the Company's  Common Stock as of the date of grant.
See Note 12 for disclosure regarding stock issuance under this agreement.

LEASE AGREEMENT

The Company  leases  approximately  9,200  square  feet of office  space for its
corporate  headquarters  in Miami,  Florida  under a three-year  lease  expiring
December  31,  2004.   Management  is  currently  exploring   alternatives  upon
expiration of the lease. Rent expense for 2003 was $216,749.

NOTE 14 - LITIGATION

Certain  lawsuits  have been  filed  against  the  Company.  In the  opinion  of
management,  none of these  lawsuits are  material  and they are all  adequately
reserved for or covered by insurance or, if not so covered, are without merit or
involve such amounts that if disposed of  unfavorably  would not have a material
adverse effect on the Company's financial position or results of operations.

Universal  Management performed various services with respect to UPCIC insurance
policies and received fees for  performing  these  services  based upon policies
written pursuant to an agreement originally executed in 1997. The parties agreed
to terminate  the agreement  effective  January 15, 2002.  Universal  Management
communicated  to UPCIC that all  management  services would cease on the date of
termination  rather than  continuing  through the life of the policies for which
fees were paid on a premiums written basis. As a result, UPCIC ceased remittance
of the  management  fees to Universal  Management  as of  September 1, 2001.  On
November 6, 2001, UPCIC filed a Complaint  against  Universal  Management in the
United  States  District  Court for The  Southern  District  of  Florida,  Miami
Division,  alleging  breach of contract and demanding  specific  performance and
unspecified  damages.  On  December  28,  2001,  Universal  Management  filed  a
counterclaim  for breach of contract,  alleging  that it is entitled to fees for
policies  written from  September 2001 through the date of  termination.  During
2003,  the  parties  settled  the  matter  out of  court  and a  settlement  was
finalized. Accordingly, the Company has no further liability with respect to the
management  fees claimed by Universal  Management.  The terms of the  settlement
included a cash payment of $250,000 by the Company to Universal Management. This
amount was recorded as an expense and paid during the second quarter of 2003.




NOTE 15 - EARNINGS PER SHARE

The following table reconciles the numerator (earnings) and denominator (shares)
of the basic and diluted  earnings per share  computations for net income (loss)
for the years ended December 31, 2003 and 2002.

Options and warrants  totaling  9,382,185 and 11,457,566  were excluded from the
calculation of diluted earnings per share as their effect was  anti-dilutive for
the years ended December 31, 2003 and 2002, respectively.




                                                       Year Ended                  Year Ended
                                                     December 31, 2003           December 31, 2002
                                                     -----------------           -----------------
                                             Loss                                Income
                                       Available to                             Available to
                                           Common                                  Common
                                       Stockholders                Per Share    Stockholders                   Per Share
                                          Amount        Shares      Amount        Amount        Shares          Amount
                                          ------        ------      ------        ------        ------          ------
                                                                                              

Net income (loss)                       $ (281,528)                             $ 71,051
  Less: Preferred stock dividends          (49,948)                              (49,950)
                                        -----------                             --------

Income (loss) available
  to common stockholders                  (331,476)    23,777,515   $   (0.01)    21,101        15,600,921      $  0.00
                                                                    =========                                   -------
Effect of dilutive securities:
  Stock options and warrants                   -               -           -         -               4,710          -
  Preferred stock                              -               -           -      49,950           568,325          -
                                        ----------     ----------   ---------   --------        ----------      -------

Income (loss) available to common
  stockholders and assumed
  conversion                            $ (331,476)    23,777,515   $   (0.01)  $ 71,051        16,173,956      $  0.00
                                        ==========     ==========   =========   =========       ==========      =======


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