UNITED STATES 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, 2004

[ ] 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 zother jurisdiction of         (I.R.S. Employer Identification No.)
   incorporation or organization)

 2875 N.E. 191ST STREET, SUITE 302                         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: $7,998,773

     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 December 31, 2004: $1,548,395.

     State the number of shares of Common Stock of Universal Insurance Holdings,
Inc. outstanding as of March 1, 2005: 35,003,219

     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 302, 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 ($5.0 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 JUA
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  previously  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. Through
renewal of the JUA  business  combined  with  business  solicited  in the market
through independent agents,  UPCIC is currently servicing  approximately  50,000
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 but is not limited to the use
of specific  policy  forms,  limitations  on coverage  amounts on buildings  and
contents 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, 2004 includes  approximately 45,000 policies with coverage for wind
risks and 5,000  policies  without  wind  risks.  The  average  wind  premium is
approximately  $876 and the  average  ex-wind  premium  is  approximately  $491.
Approximately  24% 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.

                                       2


     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 August 17, 1998 and  contracted  with UPCIC on September 28,
1998.  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 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  970 active
independent agents.

AGENCY OPERATIONS

     Universal  Florida  Insurance Agency was incorporated in Florida on July 2,
1998 and Coastal  Homeowners  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.

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.  Separate legal entities
have been  formed  for each state and are  governed  by the  respective  states'
departments  of  insurance.  None of the  agencies are  currently  active as the
Company  has  changed  its  focus  to  selling  leads  to  other  companies  and
independent agents.

OTHER OPERATIONS

     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  currently  furnishes  pool
services to homeowners.

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.

                                       3


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  regulatory   environment,   the  frequency  of
litigation,   the  size  of  judgments,   severe  weather   conditions  and  the
availability  and cost of  reinsurance.  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 indication of future results of operations
in light of UPCIC's  relatively  short  operating  history  and the  competitive
nature of the insurance industry.

     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  potentially  numerous  insured  losses  arising out of
single  or  multiple  occurrences,  such as  natural  catastrophes.  As with all
property  and  casualty  insurers,  UPCIC  expects to and 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 for
multiple  hurricanes.  However,  UPCIC may not buy enough  reinsurance  to cover
multiple  storms going forward or be able to timely obtain  reinsurance.  During
2004,  Florida  experienced  four windstorm  catastrophes  (Hurricanes  Charley,
Frances, Ivan and Jeanne) which resulted in losses. As a result of these storms,
the Company estimates it incurred approximately  $148,500,000 in losses prior to
reinsurance and $1,600,000 net of reinsurance.

                                       4


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  $400,000  up  to
approximately the 100 year PML as of the beginning of hurricane season on June 1
of each year. 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.  In light of
the four  windstorm  catastrophes  Florida  experienced  in 2004, an increase in
catastrophe reinsurance costs for the current year renewal is possible and could
adversely  effect UPCIC's  results.  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 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 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

                                       5


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
third parties filing suit and the ensuing  litigation.  By comparison,  property
damage  claims tend to be reported in a relatively  shorter  period of time with
the vast majority of these claims resulting in an adjustment without 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.

                                      Year Ended               Year Ended
                                   December 31, 2004        December 31, 2003
                                   -----------------        -----------------
                                              (Dollars in Thousands)

 Balance at beginning of year           $ 7,681                  $ 7,225

 Less reinsurance recoverable            (6,330)                  (5,635)
                                         -------                  -------

 Net balance at beginning of year         1,351                    1,590
                                         ------                   -----
 Incurred related to:
   Current year                           2,218                    1,174
   Prior years                               56                     (200)
                                         -------                  -------
 Total incurred                           2,274                      974
                                         -------                  -------

 Paid related to:
   Current year                           1,496                      786
   Prior years                              549                      427
                                         -------                  -------
 Total paid                               2,045                    1,213
                                         -------                  -------

 Net balance at end of year               1,580                    1,351
   Plus reinsurance recoverable          56,292                    6,330
                                         -------                  -------

 Balance at end of year                $ 57,872                   $7,681
                                       =========                  =======


     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  increased its liability for loss and LAE
for claims  occurring in prior years by $56,000 for the year ended  December 31,
2004 and decreased its liability for loss and LAE for claims  occurring in prior
years  by  $200,000  in  2003.  There  can  be no  assurance  concerning  future
adjustments of reserves,  positive or negative,  for claims through December 31,
2004.

     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.

                                       6


     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,
                                            2004                    2003
                                            ----                    ----
                                               (DOLLARS IN THOUSANDS)

Loss and LAE, net                        $  769                 $   655
IBNR, net                                   811                     696
                                      -------------           -------------
Total Unpaid loss and LAE, net            1,580                   1,351

Reinsurance recoverable                $ 27,137                 $ 2,693
IBNR recoverable                         29,155                   3,637
                                      -------------           -------------
Total reinsurance recoverable          $ 56,292                 $ 6,330
                                      =============           =============


     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,

                                           2004        2003      2002       2001        2000        1999       1998
                                           ----        ----      ----       ----        ----        ----       ----
                                                                    (DOLLARS IN THE THOUSANDS)
                                                                                
Balance Sheet liability                  $1,580      $1,351    $1,591     $2,893      $1,372      $1,532     $1,588
Cumulative paid as of:
One year later                               -          950       667      3,660       1,308         897        939
Two years later                              -           -        992      3,667       1,635       1,081        904
Three years later                            -           -         -       3,899       1,693       1,115      1,010
Four years later                             -           -         -          -        1,811       1,191      1,024
Five years later                             -           -         -          -           -        1,206        999
Six years later                              -           -         -          -           -           -       1,006
Re-estimated liability as of:
End of year                              $1,580      $1,351    $1,591     $2,893      $1,372      $1,532     $1,588
One year later                               -        1,360     1,249      4,237       1,797       1,344      1,067
Two years later                              -           -      1,369      3,974       1,944       1,269      1,089
Three years later                            -           -         -       4,158       1,926       1,286      1,071
Four years later                             -           -         -          -        1,940       1,270      1,024
Five years later                             -           -         -          -           -        1,229      1,013
Six years later                              -           -         -          -           -           -       1,019
Cumulative redundancy (deficiency)           -           (9)      222     (1,265)       (568)        303        569


     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

                                       7


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,  net of  reinsurance  and  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 and commissions paid to the Company in the amount
of $2,904,805 in 2004 and $1,429,206 in 2003.

                                    YEARS ENDED DECEMBER 31,
                                  2004                    2003
                                  ----                    ----
                                     (DOLLARS IN THOUSANDS)

Loss Ratio                         89%                     62%
Expense Ratio                      43                      51
                              ------------            ------------
Combined Ratio                    132%                    113%

     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 have become 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.

                                       8


EMPLOYEES

     As of March 1, 2005,  the Company had 54 full-time  employees.  None of the
Company's  employees is represented by a labor union.  The Company also utilized
the services of several  temporary  employees during the year to assist with the
increased  workload  related to the four  hurricanes  Florida  experienced.  The
Company has an  employment  agreement  with its  President  and Chief  Executive
Officer. See "Executive Compensation--Employment Agreement."

ITEM 2.     DESCRIPTION OF PROPERTY

     The Company leases  approximately 7,400 square feet of office space for its
corporate  headquarters  in Miami,  Florida under a short term lease  originally
expiring  December 31, 2004 and extended  until June 30, 2005. On July 31, 2004,
The Company purchased a modern building located in Fort Lauderdale, Florida that
it  intends  to use  as its  home  office.  The  Company  is in the  process  of
completing  the build out of the building.  The Company plans on relocating  its
corporate  headquarters  to the building by the second half of 2005. The Company
believes  that the new building is suitable for its intended use and adequate to
meet the  Company's  current  needs.  The building  will be 100% utilized by the
Company.  The  building is currently  unoccupied.  There is no mortgage or lease
arrangement. The building is adequately covered by insurance.

ITEM 3.     LEGAL PROCEEDINGS

     The Company is involved in certain lawsuits.  In the opinion of management,
except as described below, 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 claims  aspect of its  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  unrelated  to the  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 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
2003.

     Since  December  1997,  as a condition of the  licensing  of the  Company's
subsidiary, the Company's outside counsel 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 were 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 2003.  The remaining
funds together with interest  earned,  net of settlement cost and attorney fees,
were returned to the Company.

     On July 2, 2004,  the Company and its subsidiary  Tigerquote.com  Insurance
and Financial Services Group, Inc. settled a dispute with former employee Patric
Allan.  The  subsidiary  filed suit against Mr.  Allan on June 12, 2004,  in the
United  States  District  Court for the Southern  District of Florida.  The suit
alleged that Mr. Allan breached his employment  agreement with the subsidiary by
failing to  perform  his duties for an  extended  period and by  establishing  a

                                       9


competing business while employed by the subsidiary. The former employee filed a
separate  action in the  Superior  Court in and for  Maricopa  County,  Arizona,
alleging that the subsidiary and the Company  breached the employment  agreement
and  caused  emotional  distress  to the  former  employee.  Both  actions  were
dismissed pursuant to the settlement  agreement entered into as of July 2, 2004.
Among its provisions,  the settlement  agreement  specified that the Company and
the subsidiary transfer ownership of an Arizona-based insurance agency affiliate
to Mr. Allan.

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

None.


                                     PART II

ITEM 5.     MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL
            BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES

     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, 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

Year ended December 31, 2004             High                Low
----------------------------             ----                ---
     First Quarter                     $ 0.08               $ 0.045
     Second Quarter                      0.10                 0.04
     Third Quarter                       0.06                 0.04
     Fourth Quarter                      0.05                 0.045


     At March 1, 2005, transfer agent records indicate 42 shareholders of record
of the Company's Common Stock. There were approximately 425 beneficial owners of
its Common Stock. In addition, there were 3 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 and 2004, aggregate dividends on the Preferred Stock of $49,948 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  and  2004,  the  Company  did not pay a  dividend  to  common
stockholders.

                                       10


OTHER STOCK ISSUANCES

     During the year ended  December  31,  2004,  the Company  issued  2,823,529
shares of Common Stock in conjunction with an amendment approved by the Board of
Directors to the employment  agreement between the Company and Bradley I. Meier,
the Company's  President,  whereby Mr. Meier elected to receive shares of Common
Stock in lieu of $72,000 in accrued salary.  The shares were issued to Mr. Meier
in a private transaction performed in accordance with the terms of the amendment
and pursuant to Section 4(2) of the Securities Act of 1933, as amended.  Also in
April 2004, Sean P. Downes, COO of UPCIC, elected to receive 2,000,000 shares of
common stock in lieu of a $50,000 bonus. The shares were issued to Mr. Downes in
a private transaction pursuant to Section 4(2) of the Securities Act of 1993, as
amended.  Also  in the  past  fiscal  year,  pursuant  to  Section  4(2)  of the
Securities Act of 1933, as amended,  Patric Allan, former CEO of Tigerquote.com,
was granted 100,000 shares of Common Stock,  valued at $10,000,  consistent with
the terms of his employment with the Company,  and Janet Conde,  Human Resources
Director of UIH, was granted  125,000 shares of Common Stock,  valued at $8,750,
in recognition of service to the Company.  Patric Allan  subsequently  forfeited
his 100,000  shares in  connection  with the  settlement  of a dispute  with the
Company.

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.

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.
INVESTORS ARE CAUTIONED THAT THESE FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES
OF FUTURE PERFORMANCE OR RESULTS.

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 $5.0
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.

                                       11


     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  previously  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
50,000 homeowners  insurance policies.  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 OIR approval. See
Item 1, 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
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, 2004.

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

                                       12


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 2004.

RELATED PARTIES

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

Dennis Downes and  Associates,  a multi-line  insurance  adjustment  corporation
based in Deerfield  Beach,  Florida  performs  certain claims adjusting work for
UPCIC. Dennis Downes and Associates is owned by Dennis Downes, who is the father
of Sean P. Downes,  COO of UPCIC.  During 2004 and 2003, the Company paid claims
adjusting fees of $1,034,151 and $119,471 to Dennis Downes and Associates.

RESULTS OF OPERATIONS - YEAR ENDED DECEMBER 31, 2004 AND YEAR ENDED DECEMBER 31,
2003.

     Gross premiums  written  increased  33.7% to $41,120,962 for the year ended
December 31, 2004 from  $30,745,878  for the year ended  December 31, 2003.  The
increase in gross premiums  written is primarily  attributable to an approximate
25.9% increase in new business as well as an overall 7.8% premium rate increase.

     Net  premiums  written  increased  80.6% to  $5,648,548  for the year ended
December 31, 2004 from  $3,127,502  for the year ended  December  31, 2003.  The
increase in net  premiums  written  reflects  the impact of  reinsurance,  since
$35,472,414  or 86.3% of premiums  written were ceded to reinsurers for the year
ended  December 31, 2004 as compared to  $27,618,376 or 89.8% for the year ended
December 31, 2003. This fluctuation was a result of the Company's election under
its quota share reinsurance treaty to cede 90% of gross written premiums, losses
and loss  adjustment  expenses  during  2003 and the first  five  months of 2004
except for new and renewal  without  wind risk  business  with policy  effective
dates of June 1, 2003 and after versus 80% during the remaining  seven months of
2004.  The Company ceded the additional  amounts  commencing in 2003 in order to
limit its loss  exposure  while it  stabilized  operations.  The increase in net
premiums written is also  attributable to an increase in new business as well as
premium rate increases.

     Net  premiums  earned  increased  53.1% to  $4,125,757  for the year  ended
December 31, 2004 from  $2,694,170  for the year ended  December  31, 2003.  The
increase 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 and the first  five  months of 2004
except for new and renewal  without  wind risk  business  with policy  effective
dates of June 1, 2003 and after versus 80% of gross written premiums, losses and
loss adjustment expenses during the remaining seven months of 2004.

     Commission  revenue  increased  29.4%  to  $1,510,345  for the  year  ended
December  31,  2004  from  $1,167,606  for the year  ended  December  31,  2003.
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 increase is primarily due to increased policy fee income
attributable to an increase in new and renewal business.

     Investment  income consists of net investment income and net realized gains
(losses).  Investment  income  increased  116.2% to $178,246  for the year ended
December  31,  2004 from  $82,458  for the year ended  December  31,  2003.  The
increase is primarily due to higher  investment  balances and a higher  interest
rate environment during 2004.

     Transaction  fees consist of revenue  from the selling of insurance  leads.
Transaction  fee  revenue  increased  20.6% to  $1,662,743  for the  year  ended
December 31, 2004 from  $1,379,211  for the year ended  December  31, 2003.  The
increase is  primarily  due to increased  sales of insurance  leads to insurance
agents.

                                       13


     Other revenue  decreased  54.9% to $521,682 for the year ended December 31,
2004 from  $1,156,571  for the year ended  December 31, 2003.  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  increased 133.4% to
$2,274,035 for the year ended December 31, 2004 from $974,489 for the year ended
December 31, 2003 as compared to net premiums  earned which  increased  55.1% to
$4,125,757  for the year ended  December 31, 2004 from  $2,694,170  for the year
ended December 31, 2003. 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.
Losses and LAE increased  due to the higher  frequency and severity of claims in
2004 and  because of  changes to the  Company's  reinsurance  program  discussed
above.  The Company's direct loss ratio for the year ended December 31, 2004 was
464.1%  compared to 46.2% for the year ended  December 31, 2003.  The  Company's
direct loss ratio increased principally due to the higher frequency and severity
of claims in 2004. During 2004,  Florida  experienced 4 windstorms  catastrophes
(Hurricanes  Charley,  Frances,  Ivan and Jeanne) which resulted in losses. As a
result  of  these  storms,  the  Company  estimates  it  incurred  approximately
$148,500,000  in losses prior to reinsurance  and $1,600,000 net of reinsurance.
The losses from these storms resulted in 447.0% of direct loss ratio. Except for
these claims the Company  believes  that the  severity  and  frequency of claims
remained  relatively  stable for the  periods  under  comparison.  During  2003,
Florida did not experience windstorm catastrophes.  The Company's net loss ratio
for the year ended  December  31, 2004 was 55.1%  compared to 36.2% for the year
ended  December 31,  2003.  The net loss ratio  increased  due to an increase in
direct losses incurred.

     Catastrophes  are an  inherent  risk  of the  property-liability  insurance
business,  particularly  in the geographic area where the Company does 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 direct  unpaid  losses and LAE at  December  31,  2004 is
$57,871,952.  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 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 $42,841,000 and a high of $68,776,000. 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.  However,  if losses  exceeded  direct loss reserve
estimates  there could be a material  adverse effect on the Company's  financial
statements. Also, if there are regulatory initiatives, legislative enactments or
case law precedents which change the basis for policy coverage,  in any of these
events,  there  could be an effect on direct  loss  reserve  estimates  having a
material adverse effect on the Company's financial statements.

     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, 2004 were
increased  in the current  year by $55,480  for claims  that had  occurred on or
before the prior 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.  The Company's  liabilities  for
unpaid losses and LAE, net of related reinsurance  recoverables,  as of December
31, 2003 were  decreased  by $199,948  for claims that had occurred on or before
the previous 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.  There can be no  assurance  concerning
future  adjustments  of  reserves,  positive  or  negative,  for claims  through
December 31, 2004.

     General and  administrative  expenses  increased 3.4% to $5,984,871 for the
year ended  December 31, 2004 from  $5,787,055  for the year ended  December 31,
2003.  General and  administrative  expenses  have  increased  primarily  due to
further development of the Company's insurance operations.

                                       14


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,  2004,  cash flows  provided by operating
activities were $15,888,529.  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  2003,  the Company  purchased  software  for  $520,000.  Management
believes the software  will assist it in reducing  overall  management  expenses
versus the previous outside vendor agreement.  The final installment  payment on
the  software of $150,000 was paid in March 2005.  In addition,  the Company has
outstanding  loans in the amount of $127,659 to finance  several  vehicles and a
boat, all acquired for business use and marketing of the Company's  products and
$426,221 for working capital needs. The amounts will become due during the years
2005 through 2011.

     In July 2004, the Company  borrowed monies from three private  investors in
the amounts of $175,000, $150,000 and $100,000 for working capital. The terms of
the notes  evidencing  such loans  require  interest  payments  at a rate of 10%
through  January 2005 with equal  monthly  payments of principal  plus  interest
thereafter  until January 2006,  the maturity date of the notes.  In conjunction
with the loans,  the  Company  plans to issue to the private  investors  in 2005
warrants to purchase  175,000,  150,000 and 100,000 shares of restricted  Common
Stock each at an  exercise  price of $.05 per share,  and each  expiring in July
2009. These transactions were approved by the Company's Board of Directors.

     In September  2004,  the Company  borrowed  $50,000 from each of Bradley I.
Meier, President and Chief Executive Officer of the Company, and Sean P. Downes,
Chief  Operating  Officer of UPCIC.  The monies were used to make an  additional
capital  contribution  to UPCIC to ensure  that UPCIC meets  regulatory  surplus
requirements  and to allow for continued  development of UPCIC's  business.  The
principal  amount of these  loans was repaid in October  2004.  Interest  in the
amount of $5,000  remains  outstanding  on each such loan. In  conjunction  with
these loans the Company  anticipates  issuing 50,000 shares of restricted Common
Stock to each of Mr. Meier and Mr. Downes.  Also in September  2004, the Company
borrowed $100,000 from a private investor, which loan, plus interest of $10,000,
was repaid in October 2004.  The funds were used to make an  additional  capital
contribution to UPCIC to ensure that UPCIC meets regulatory surplus requirements
and to allow for continued  development of UPCIC's business. In conjunction with
this loan the Company  anticipates  issuing 100,000 shares of restricted  Common
Stock to the private investor. These transactions were approved by the Company's
Board of Directors.

     Also in September 2004, the Company's reinsurance intermediary advanced the
Company $250,000 which was used as an additional capital contribution to UPCIC.

     The  balance  of cash and cash  equivalents  as of  December  31,  2004 was
$22,443,579.  Most of this amount,  including the $14,017,571 cash received from
reinsures in advance of  catastrophe  claims,  is available to pay claims in the
event of a catastrophic event pending  reimbursement for any aggregate amount in
excess of $400,000 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.

                                       15


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-27.

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

     None.

ITEM 8A.    CONTROLS AND PROCEDURES

     The Company  carried out an evaluation  under the  supervision and with the
participation  of  the  Company's  management,  including  the  Company's  Chief
Executive  Officer and Chief  Financial  Officer,  of the  effectiveness  of the
design  and  operation  of the  Company's  disclosure  controls  and  procedures
pursuant  to Rule 13a-15  under the  Securities  Exchange  Act of 1934 as of the
period covered by this report.  Based on that  evaluation,  the Company's  Chief
Executive  Officer and Chief  Financial  Officer have concluded that  disclosure
controls and  procedures  were  effective as of the end of the period covered by
this report to ensure that  information  required to be disclosed by the Company
in its reports  that it files or submits  under the  Securities  Exchange Act of
1934 is recorded,  processed,  summarized  and reported  within the time periods
specified in the Securities and Exchange  Commissions rules and forms. There was
no change in the Company's  internal  controls  over  financial  reporting  that
occurred during the period covered by this report that has materially  affected,
or is reasonably  likely to materially  affect,  the Company's  internal control
over financial reporting.

ITEM 8B.    OTHER INFORMATION

     None.


                                    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, 2004
are as follows:


Name                            Age      Position
----                            ---      --------
                                   
Bradley I. Meier                37       President, Chief Executive Officer, Secretary and Director
Norman M. Meier                 65       Director, Secretary

                                                 16


                                   
Reed J. Slogoff                 36       Director
Joel M. Wilentz, M.D.           70       Director
James M. Lynch                  50       Executive Vice President and Chief Financial Officer
Sean P. Downes                  34       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.

     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.  Currently, the Company does
not have a  procedure  by  which  shareholders  may  recommend  nominees  to the
Company's  Board of  Directors.  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.

                                       17


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.

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, 2004.



                                              SUMMARY COMPENSATION TABLE


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

Name and                           Year Ended                                      Restricted   Long-Term Compensation Securities
Principal Position                December 31          Salary          Bonus       Stock Award       Underlying Options
------------------                -----------          ------          -----       -----------        ------------------
                                                                                             
Bradley I. Meier                      2004            $419,052        $     0              0                1,000,000
President and CEO                     2003             381,150              0              0                        0
                                      2002             346,500              0              0                        0

James M. Lynch                        2004            $172,375        $15,000              0                        0
Executive Vice President and          2003             155,000              0              0                        0
CFO                                   2002             149,250         15,000              0                        0

Sean P. Downes                        2004            $225,000        $29,933      2,000,000                        0
Chief Operating Officer of            2003             109,167              0              0                        0
UPCIC                                 2002              81,250              0              0                  200,000





                                 OPTION GRANTS IN LAST FISCAL YEAR

                            Number Of            % of Total
                            Securities        Options Granted
                       Underlying Options     to Employees in    Exercise or Base
Name                         Granted            Fiscal Year      Price                  Expiration Date
----                         -------            -----------      -----                  ---------------
                                                                                
Bradley I. Meier            1,000,000               100%         $0.056                     2014

                                                   18




                                     AGGREGATED OPTION EXERCISES AND OPTION VALUES
                                         FOR THE YEAR ENDED DECEMBER 31, 2004

                             Shares                      Number of Securities               Value of Unexercised
                            Acquired     Value          Underlying Unexercised            In-The-Money Options at
Name                      on Exchange    Realized     Options at December 31, 2004           December 31, 2004
----                      -----------    --------     ----------------------------           -----------------

                                                     Exercisable     Unexercisable      Exercisable     Unexercisable
                                                     -----------     -------------      -----------     -------------
                                                                                            
Bradley I. Meier              -             -           1,000,000            -               $-               $-



             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
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 Mr. Meier's  employment  agreement  dated May 1, 1997, he 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 $0.056  per  share,  which  vested  immediately.  The
Company  issued  2,823,529  and  4,708,332  shares of Common  Stock  during  the
respective years ended December 31, 2004 and 2003 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.  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, 2004:

                                       19



                                             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                  11,261,651                  $1.10                         N/A
 approved by security holders
 ----------------------------------------------------------------------------------------------------------------------------
 Equity compensation plans
 not approved by security                         -                        -                            -
 holders
 ----------------------------------------------------------------------------------------------------------------------------
 Total                                      11,261,651                  $1.10                         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, 2005,  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 302, 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 ownrship.

(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, 2005,  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)

*    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 302, 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 Phylis R.
     Meier, Mr. Meier's former spouse, as to which Mr. Meier disclaims beneficial ownership.

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

                                                  21


COMMON STOCK

     As of March 1, 2005,  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
          Ownership(1)                       Ownership(2)               ----------------
          -----------                        ------------
                                                                       
Bradley I. Meier(3)                          21,051,110                      60.1%
Sean P. Downes(4)                             2,759,444                       7.9%
Norman M. Meier(5)                            2,667,529                       7.6%
Reed J. Slogoff(6)                              255,000                        .7%
Joel M. Wilentz(7)                              255,000                        .7%
James M. Lynch(8)                               225,000                        .7%

Officers and directors as a group
    (6 people)(9)                            27,213,083                      77.7%

(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
     302, 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) 15,330,170 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) 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, (j) options to purchase 1,000,000 shares of Common Stock at an
     exercise  price of  $0.056  per  share  which  vested  on March 4,  2004 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

                                           22


  
     and  250,225   shares  of  Common  Stock  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)  2,444,444  shares of Common Stock (ii)  options to purchase  15,000
     shares of Common  Stock at an exercise  price of $1.10 per share,  (iii)  options to
     purchase  100,000 shares of Common Stock at an exercise price of $0.50 per share and
     (iv)  options to purchase  200,000  shares of Common  Stock at an exercise  price of
     $0.04 per share.

(5)  Consists of (i) (a) 479,246  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.

(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  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) 50,000  shares of Common  Stock,  (ii)  options to  purchase  50,000
     shares of Common  Stock at an exercise  price of $1.87 per share,  (iii)  options to
     purchase 25,000 shares of Common Stock at an exercise price of $1.10 per share, (iv)
     options to purchase  15,000  shares of Common  Stock at exercise  price of $0.70 per
     share and (v)  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.

                                           23


SERIES M PREFERRED STOCK

     As of March 1, 2005, 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 302
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 302
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 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, 2005, 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 302
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 302
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 A  Preferred  Stock  specified
     opposite her or its name.

(2)  Consists of 9,975 shares of Series A Preferred Stock  beneficially  owned.  Excludes all
     shares of Series A Preferred Stock owned by Norman M. Meier,  Ms. Meier's former spouse,
     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, 2005, 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:


                                             Amount and Nature of
Name and Address(1)                          Beneficial Ownership(2)        Percent of Class
----------------                             --------------------           ----------------
                                                                            
Martin Steinberg, Esq., as the                      6,518,004                     18.6%
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 on March 5, 2004.


ITEM 12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Since  December  1997,  as a condition of the  licensing  of the  Company's
subsidiary, the Company's outside counsel 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 were 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 2003.  The remaining
funds together with interest  earned,  net of settlement cost and attorney fees,
were returned to the Company.

     Dennis Downes and Associates, a multi-line insurance adjustment corporation
based in Deerfield  Beach,  Florida  performs  certain claims adjusting work for
UPCIC. Dennis Downes and Associates is owned by Dennis Downes, who is the father
of Sean P. Downes,  COO of UPCIC.  During 2004 and 2003, the Company paid claims
adjusting fees of $1,034,151 and $119,471 to Dennis Downes and Associates.

                                       25


     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)

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)

                                       26


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

(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



ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES.

AUDIT FEES

Audit fees for the fiscal  years ended  December  31, 2004 and December 31, 2003
were $132,000 and $115,000, respectively.

AUDIT RELATED FEES

Audit related fees for the fiscal years ended December 31, 2004 and December 31,
2003 were $0.

TAX FEES

Tax fees for the fiscal years ended December 31, 2004 and December 31, 2003 were
$31,500 and $25,000, 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, 2004 and December 31, 2003
were $0.

                                       27


                                   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 31, 2005             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 Officer and Director    March 31, 2005
--------------------
Bradley I. Meier

/s/ James M. Lynch       Chief Financial Officer                            March 31, 2005
--------------------
James M. Lynch

/s/ Norman M. Meier      Director                                           March 31, 2005
--------------------
Norman M. Meier

/s/ Reed J. Slogoff      Director                                           March 31, 2005
--------------------
Reed J. Slogoff

/s/ Joel M. Wilentz      Director                                           March 31, 2005
--------------------
Joel M. Wilentz

                                            28




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


                                                                                                               Page
                                                                                                               ----
                                                                                                     
Report of Independent Registered Public Accounting Firm.........................................................F-2
Consolidated Balance Sheet - December 31, 2004..................................................................F-3
Consolidated Statements of Operations for the Years Ended December 31, 2004 and 2003 ...........................F-4
Consolidated Statements of Stockholders' Equity and Comprehensive Loss for the Years
Ended December 31, 2004 and 2003................................................................................F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2004 and 2003............................F-6
Notes to Consolidated Financial Statements...............................................................F-7 - F-27


                                                        F-1


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors
Universal Insurance Holdings, Inc.
Miami, Florida


We have  audited  the  accompanying  consolidated  balance  sheets of  UNIVERSAL
INSURANCE  HOLDINGS,  INC. AND  SUBSIDIARIES  (the "Company") as of December 31,
2004,  and the related  consolidated  statements  of  operations,  stockholders'
equity  and  comprehensive  loss and cash flows for each of the two years in the
period ended December 31, 2004. These consolidated  financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audit  to  obtain  reasonable  assurance  about  whether  the
consolidated financial statements are free of material misstatement. The Company
has determined  that it is not required to have, nor were we engaged to perform,
an audit of its internal  control over financial  reporting.  Our audit included
consideration  of  internal  control  over  financial  reporting  as a basis for
designing audit  procedures that are appropriate in the  circumstances,  but not
for the purpose of expressing an opinion on the  effectiveness  of the Company's
internal  control  over  financial  reporting.  Accordingly,  we express no such
opinion. An audit also includes examining,  on a test basis, evidence supporting
the amounts and disclosures in the consolidated  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, 2004, and the results of its
operations  and its cash  flows  for each of the two years in the  period  ended
December 31, 2004, in conformity with accounting  principles  generally accepted
in the United States of America.



/s/ Blackman Kallick Bartelstein LLP

Chicago, Illinois
March 30, 2005

                                      F-2



                           UNIVERSAL INSURANCE HOLDINGS, INC. AND SUBSIDIARIES
                                       CONSOLIDATED BALANCE SHEET
                                            DECEMBER 31, 2004


                                                 ASSETS
                                                                                
Cash and cash equivalents                                                                 $ 22,443,579
Investments in real estate                                                                   1,680,001
Reinsurance recoverables                                                                    87,473,383
Premiums and other receivables                                                               1,278,511
Property and equipment, net                                                                    910,005
Other assets                                                                                   216,489
                                                                                   --------------------
Total Assets                                                                             $ 114,001,968
                                                                                   ====================


                                  LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:
Unpaid losses and loss adjustment expenses                                                  57,871,952
Unearned premiums                                                                           23,889,861
Accounts payable                                                                             3,522,511
Reinsurance payable                                                                         23,072,930
Other accrued expenses                                                                       1,611,242
Loans payable                                                                                  703,880
                                                                                   --------------------
Total Liabilities                                                                          110,672,376
                                                                                   --------------------

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, 34,408,775
  shares issued and 31,300,130 shares outstanding                                              265,493
Common stock in treasury, at cost - 208,645 shares                                            (101,820)
Additional paid-in capital                                                                  15,114,407
Accumulated deficit                                                                        (11,949,875)
                                                                                   --------------------
Total stockholders' equity                                                                   3,329,592
                                                                                   --------------------
Total liabilities and stockholders' equity                                               $ 114,001,968
                                                                                   ====================


         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, 2004          December 31, 2003
                                                             -----------------          -----------------
                                                                                    
PREMIUMS EARNED AND OTHER REVENUES:
  Premium earned, net                                           $ 4,125,757                $ 2,694,170
  Net investment income                                             178,246                     82,458
  Commission revenue                                              1,510,345                  1,167,606
  Transaction fees                                                1,662,743                  1,379,211
  Other revenue                                                     521,682                  1,156,571
                                                               -------------              -------------

             Total premiums earned and other revenues             7,998,773                  6,480,016
                                                               -------------              -------------

OPERATING COSTS AND EXPENSES:
  Losses and loss adjustment expenses                             2,274,035                    974,489
  General and administrative expenses                             5,984,871                  5,787,055
                                                               -------------              -------------

             Total operating costs and expenses                   8,258,906                  6,761,544

NET LOSS                                                         $ (260,133)                $ (281,528)
                                                               =============              =============

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

WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - BASIC                                              30,214,169                 23,777,515
                                                               =============              =============

LOSS PER COMMON SHARE
Diluted                                                             $ (0.01)                   $ (0.01)
                                                               =============              =============

WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - DILUTED                                            30,214,169                 23,777,515
                                                               =============              =============


          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 LOSS

                                               YEARS ENDED DECEMBER 31, 2004 AND 2003


                 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,
2003         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
losses 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
            --------- -------- ------------ ---------- --------- -----------  ------------  --------------    -------   ------------

Net loss          -        -            -          -         -          -               -        (260,133)         -       (260,133)


Net change
in unrealized
gains on
available
for sale
securities        -        -            -          -         -          -               -              -       25,657        25,657

Comprehensive
loss                                                                                                                       (234,476)


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

Issuance
of common
stock             -        -     5,048,529     50,485        -           -          90,265             -           -        140,750
            --------- -------- ------------ ---------- --------- -----------  ------------  --------------    -------   ------------

BALANCE,
December 31,
2004         138,640   $1,387   31,508,775   $265,493   208,645   $(101,820)   $15,114,407   $(11,949,875)    $    -     $3,329,592
            --------- -------- ------------ ---------- --------- -----------  ------------  --------------    -------   ------------

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

                        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, 2004            December 31, 2003
                                                                    -----------------            -----------------
                                                                                            
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                                   $ (260,133)                  $ (281,528)
  Adjustments to reconcile net loss
    to cash provided by operations:
  Amortization and depreciation                                               390,247                      268,953
  Loss on disposal of assets                                                  (19,280)                     (40,503)
  Issuance of common stock as compensation                                    140,750                       67,999
  Net accretion of bond premiums and discounts                                     -                        (5,793)
Net change in assets and liabilities relating to operating
  activities:
  Prepaid reinsurance premiums and reinsurance recoverable                (62,635,844)                     996,780
  Premiums and other receivables                                             (741,925)                     664,988
  Other assets                                                                (32,828)                          -
  Reinsurance payable                                                      17,937,096                    4,089,021
  Accounts payable                                                          2,345,857                     (158,565)
  Other accrued expenses                                                      789,224                     (151,430)
  Unpaid losses and loss adjustment expenses                               50,191,080                      456,117
  Unearned premiums                                                         7,784,285                   (2,319,453)
                                                                     ----------------             ----------------

Net cash provided by operating activities                                  15,888,529                    3,586,586
                                                                     ----------------             ----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                                        (23,888)                    (237,069)
  Proceeds from sale of equity securities available for sale                  194,976                      133,414
  Proceeds from maturities of debt securities held to maturity                100,000                      235,133
  Purchase of real estate                                                  (1,680,001)                          -
  Sale of real estate                                                         140,022                       93,405
                                                                     ----------------             ----------------

Net cash  (used in) provided by investing activities                     (1,268,891)                     224,883
                                                                     ----------------             ----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Preferred stock dividend                                                  (49,948)                     (49,948)
  Payments on loans payable                                                (797,412)                    (665,163)
  Proceeds from loans payable                                               660,023                      327,000
                                                                     ----------------             ----------------

Net cash used in financing activities                                      (187,337)                    (388,111)
                                                                     ----------------             ----------------

NET INCREASE IN CASH AND CASH                                            14,432,301                    3,423,358
EQUIVALENTS

CASH AND CASH EQUIVALENTS, Beginning of year                              8,011,278                    4,587,920
                                                                     ----------------             ----------------

CASH AND CASH EQUIVALENTS, End of year                                 $ 22,443,579                  $ 8,011,278
                                                                     ================             ================


               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.

INSURANCE OPERATIONS

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  ($5,000,000) 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 August 17, 1998 and
contracted  with UPCIC 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,
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.  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. 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. 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 UPCIC.

ONLINE COMMERCE OPERATIONS

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 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.

                                      F-7


is a network of Internet insurance agencies.  As of December 31, 2004, insurance
agencies  have  been  established  in 22  states.  None of  these  agencies  are
currently  active as the Company has changed its focus to selling leads to other
companies and independent agents.

CORPORATE AND OTHER OPERATIONS

During 2001,  the Company  formed Tiger Home  Services,  Inc.,  which  currently
furnishes  pool services 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  include the  accounts of
Universal  Insurance  Holdings,  Inc.,  its wholly owned  subsidiary,  Universal
Property &  Casualty  Insurance  Co. and other  wholly  owned  entities  and the
Universal  Insurance  Holdings,  Inc.  Stock  Grantor  Trust.  All  intercompany
accounts  and   transactions   have  been  eliminated  in   consolidation.   The
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  and  its
subsidiaries  operated  principally  in  two  business  segments  consisting  of
insurance and online commerce  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 consolidated  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 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 a building purchased by UPCIC
that the Company intends to use as its home office.  The Company is capitalizing
current costs related to buildout of the building. Once completed,  depreciation
will be  provided  on the  straight-line  basis  over  twenty-seven-and-one-half
years. Real estate activity also includes residential  properties rented for the
production of income until they were sold during 2004 and 2003. These properties
were  purchased  in prior years in  connection  with the  settlement  of certain
claims.  The  properties  were  depreciated  on  the  straight-line  basis  over
twenty-seven-and-one-half years until the date of sale.

SECURITIES  AVAILABLE FOR SALE.  Equity  securities  are reported at fair value,
with unrealized  gains and losses  reported net of applicable  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.

                                      F-8


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.

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.  Effective  November 2004, for most customers  payment is
required in advance of distribution of the leads.  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, 2004.

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, net of valuation allowance.

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.

                                      F-9


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
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.  UPCIC  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 UPCIC as of December 31, 2004, and the results of its operations and its cash
flow, for the year then ended have been  determined in accordance with statutory
accounting principles.

NEW  ACCOUNTING  PRONOUNCEMENTS.  In December  2002,  the  Financial  Accounting
Standards  Board  ("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 Accounting  Principles Board Opinion No. 25, ACCOUNTING FOR
STOCK ISSUED TO EMPLOYEES  and related  interpretations.  However,  the enhanced
disclosure  provisions as defined by SFAS No. 148 which became  effective in the
first quarter of 2003 have been  implemented.  In December 2004, the FASB issued
SFAS No.  123  (revised  2004)  ("SFAS No.  123R")  SHARE-BASED  PAYMENT,  which
replaces  SFAS. No. 123 and supersedes APB No. 25. As a result of SFAS No. 123R,
the Company  will be required to recognize  the cost of its stock  options as an
expense in the  consolidated  statement  of  operations  beginning  in the first
quarter of 2006. The Company is currently assessing the impact that the adoption
of SFAS No. 123R will have on the consolidated results of operations.

                                      F-10


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  previously  renewed  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, 2004,  the Company has direct
unearned premiums of $23,889,861.

NOTE 4 - REINSURANCE

UPCIC's in-force  policyholder  coverage for windstorm  exposures as of December
31, 2004 was approximately $6.1 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.

QUOTA SHARE

Effective June 1, 2004, UPCIC entered into a quota share reinsurance  treaty and
excess  per risk  agreements  with  various  reinsurers.  Under the quota  share
treaty,  UPCIC  cedes  80%  of its  gross  written  premiums,  losses  and  loss
adjustment  expenses  for  policies  with  coverage  for wind risk with a ceding
commission  equal to 31% of ceded  gross  written  premium.  For the year  ended
December 31, 2003,  UPCIC ceded 90% of gross written  premiums,  losses and loss
adjustment  expenses  for all policies  except for new and renewal  without wind
risk  business  with  policy  effective  dates of June 1, 2003 and after  with a
ceding commission equal to 28% of ceded gross premiums written.  UPCIC continued
to cede 90% of all policies during the first five months of 2004, 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, 2004 and 2003,  UPCIC entered into a multiple line excess per
risk agreement with various reinsurers.  Under the multiple line excess per risk
agreement,  UPCIC obtained coverage of $1,300,000 in excess of $500,000 ultimate
net loss for each  risk and each  property  loss,  and  $1,000,000  in excess of
$300,000 for each  casualty  loss. A $5,200,000  aggregate  limit applies to the
term of the contract.  Effective June 1, 2004, UPCIC entered into a property per
risk excess  agreement  covering  ex-wind only policies.  Under the property per
risk excess agreement, UPCIC obtained coverage of $300,000 in excess of $200,000
for each property loss. A $2,100,000  aggregate limit applies to the term of the
contract.

                                      F-11


EXCESS CATASTROPHE

The  excess  catastrophe  reinsurance  agreement  provides  two layers of excess
catastrophe  coverage of  $24,000,000 in excess of $2,000,000 as of December 31,
2003 as follows:


                                 First Layer          Second Layer
                                 -----------          ------------
Coverage                      $18,000,000 in      $6,000,000 in excess
                              excess of           of  $20,000,000 each
                              $2,000,000 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


Effective  June 1, 2004,  UPCIC  revised  and  enhanced  its excess  catastrophe
reinsurance program. The excess catastrophe  reinsurance agreement provides four
layers of excess catastrophe  coverage of $22,200,000 in excess of $2,000,000 as
of December 31, 2004 as follows:


                                 First Layer          Second Layer            Third Layer            Fourth Layer
                                 -----------          ------------            -----------            ------------
                                                                                     
Coverage                      $3,000,000 in       $5,000,000 in excess   $7,500,000 in excess    $6,700,000 in excess
                              excess of           of  $5,000,000 each    of $10,000,000 each     of $17,500,000 each
                              $2,000,000 each     loss occurrence        loss occurrence         loss occurrence
                              loss occurrence
Deposit premium               $1,020,000          $1,337,500             $1,425,000              $770,500
Minimum premium               $816,000            $1,070,000             $1,140,000              $616,400
Premium rate -% of            0.0213%             0.028%                 0.0307%                 0.016%
total insurance value


The catastrophe  contract  contains one  reinstatement.  Effective June 1, 2004,
under separate excess catastrophe contracts, UPCIC obtained catastrophe coverage
of  $22,200,000  in excess of  $2,000,000  covering  third and fourth events and
catastrophe  coverage of $15,500,000 in excess of $2,000,000  covering fifth and
six events as follows:


Third and Fourth Event

                                 First Layer          Second Layer            Third Layer            Fourth Layer
                                 -----------          ------------            -----------            ------------
                                                                                     
Coverage                      $3,000,000 in       $5,000,000 in excess   $7,500,000 in excess    $6,700,000 in excess
                              excess of           of  $5,000,000 each    of $10,000,000 each     of $17,500,000 each
                              $2,000,000 each     loss occurrence        loss occurrence         loss occurrence
                              loss occurrence
Minimum premium               $255,000            $325,000               $356,250                $300,000
Maximum premium               $1,050,000          $1,375,000             $1,500,000              $1,500,000

                                                         F-12



Fifth and Sixth Event

                                           First Layer               Second Layer                  Third Layer
                                           -----------               ------------                  -----------
                                                                                  
Coverage                              $3,000,000 in excess    $5,000,000 in excess of      $7,500,000 in excess of
                                      of $2,000,000 each      $5,000,000 each loss         $10,000,000 each loss
                                      loss occurrence         occurrence                   occurrence
Minimum premium                       $300,000                $375,000                     $375,000
Maximum premium                       $825,000                $1,000,000                   $1,200,000


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, 2003, 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, 2003 to May 31,  2004) 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  $54,341,000  in excess of  $21,446,000.  The
premium for this coverage was $2,397,060.  Effective June 1, 2004, UPCIC entered
a subsequent  reimbursement agreement with the Fund under the same terms through
May 31, 2005. The Fund has provided UPCIC with coverage of $59,469,000 in excess
of  $17,812,000  as of December  31,  2004.  The premium for this  coverage  was
$2,453,238.  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, 2004                                    December 31, 2003
                           -----------------                                    -----------------

             Premiums         Premiums        Loss and Loss        Premiums           Premiums        Loss and Loss
              Written          Earned          Adjustment          Written             Earned           Adjustment
              -------          ------           Expenses           -------             ------            Expenses
                                                --------                                                 --------
                                                                                    
Direct        $41,120,962      $33,219,781     $154,169,550      $30,745,878         $33,065,332      $15,275,032

Ceded         (35,472,414)     (29,094,024)    (151,895,515)     (27,618,376)        (30,371,162)     (14,300,543)
              -----------      -----------     ------------      -----------         -----------      -----------

Net           $ 5,648,548      $ 4,125,757     $  2,274,035      $ 3,127,502         $ 2,694,170      $   974,489
              ===========      ===========     ============      ===========         ===========      ===========




Other amount
                                                                                  December 31, 2004
                                                                                  -----------------
                                                                                  
Reinsurance recoverable on unpaid losses and loss adjustment expenses                $56,292,041
Reinsurance recoverable on paid losses                                                   935,225
Other reinsurance receivables                                                          9,818,602
Unearned premiums ceded                                                               20,427,515
                                                                                      ----------
Prepaid reinsurance premiums and reinsurance recoverable                             $87,473,383
                                                                                     -----------

Reinsurance premium payable                                                          $23,072,930
                                                                                     ===========

                                                        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.  Three reinsurers have unsecured
balances  greater than 10% of the total amount of prepaid  reinsurance  premiums
and  reinsurance  recoverables  as of December 31, 2004.  The balances for these
reinsurers are $25,984,941 which is with the Florida Hurricane Catastrophe Fund,
and  $8,252,986 and $6,758,717  with domestic  reinsurers  rated by A.M. Best A+
(superior) and A (excellent),  respectively.  As of December 31, 2004, UPCIC has
reinsurance  contracts with various reinsurers,  all rated A- or better by A. M.
Best, 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, 2004          December 31, 2003
                                   -----------------          -----------------

Debt securities held-to-maturity      $ 3,957                   $ 13,551
Common stocks                          45,180                      7,398
Cash and cash equivalents             274,184                     88,521
Real estate                           (87,982)                      -
                                   ----------                   ----------
                                      235,339                    109,470
Investment expenses                    57,093                     27,012
                                   ----------                   ----------
                                     $178,246                   $ 82,458
                                   ==========                   ==========


Proceeds from the sale of equity  securities  during 2004 and 2003 were $194,976
and $133,414 respectively. Gross gains on the sale of securities during 2004 and
2003  were  $45,180  and  $7,266,  respectively.  Gross  losses  on the  sale of
securities during 2004 and 2003 were $0 and $347, respectively.

The aggregate  amortized cost, gross unrealized  holding gains, gross unrealized
holding losses and fair value as of December 31, 2004 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            $ 22,443,579         $        -         $        -      $ 22,443,579
Equity securities                               -                  -                  -                 -
                                     ------------         ----------         ----------      ------------
  Total                              $ 22,443,579         $        -         $        -      $ 22,443,579
                                     ============         ==========         ==========      ============

Held-to-maturity securities:
U. S.  Government agencies           $          -                  -         $        -      $          -
                                     ============         ==========         ==========      ============



As of December 31, 2004,  the Company had no  held-to-maturity  securities  with
maturities due after one year.


As of  December  31,  2004,  short-term  investments  with a  carrying  value of
$1,500,000 were on deposit with regulatory authorities.

                                      F-14


NOTE 6 - PROPERTY AND EQUIPMENT

Property and equipment as of December 31, 2004 consisted of the following:


    Computers                                                  $ 144,252
    Furniture                                                    134,011
    Automobiles and equipment                                     485,281
    Software                                                     992,452
                                                               ---------
    Total cost                                                 1,755,996
    Less: Accumulated depreciation and amortization             (845,991)
                                                               ---------
    Net carrying value                                         $ 910,005
                                                               =========


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.  During
2004,  Florida  experienced four windstorms  catastrophes  (Hurricanes  Charley,
Frances,   Ivan  and  Jeanne)  which  resulted  in  losses.   UPCIC's   in-force
policyholder  coverage  for  windstorm  exposures  as of  December  31, 2004 was
approximately $6.1 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, 2004 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. However, if losses exceeded direct loss reserve
estimates  there could be a material  adverse effect on the Company's  financial
statements. Also, if there are regulatory initiatives, legislative enactments or
case law precedents which change the basis for policy coverage,  in any of these
events,  there  could be an effect on direct  loss  reserve  estimates  having a
material adverse effect on the Company's financial statements.

                                      F-15


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

                                      Year Ended                 Year Ended
                                   December 31, 2004         December 31, 2003
                                   -----------------         -----------------

Balance at beginning of year       $  7,680,872                 $ 7,224,755

Less reinsurance recoverable         (6,329,872)                 (5,634,455)
                                   ------------                 -----------

Net balance at beginning of year      1,351,000                   1,590,300
                                   ------------                 -----------

Incurred related to:
  Current year                        2,218,555                   1,174,437
  Prior years                            55,480                    (199,948)
                                   ------------                 -----------
Total incurred                        2,274,035                     974,489
                                   ------------                 -----------

Paid related to:
  Current year                        1,496,024                     786,430
  Prior years                           549,100                     427,359
                                   ------------                 -----------
Total paid                            2,045,124                   1,213,789
                                   ------------                 -----------

Net balance at end of year            1,579,911                   1,351,000
Plus reinsurance recoverable         56,292,041                   6,329,872
                                   ------------                 -----------

Balance at end of year             $ 57,871,952                 $ 7,680,872
                                   ============                 ===========

The Company's  liabilities for unpaid losses and LAE, net of related reinsurance
recoverables,  as of December  31, 2004 were  increased  in the current  year by
$55,480 for claims that had occurred on or before the prior 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.  The Company's  liabilities  for unpaid losses and LAE, net of related
reinsurance recoverables, as of December 31, 2003 were decreased by $199,948 for
claims that had occurred on or before the previous 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.  There
can be no assurance  that the  Company's  unpaid losses and LAE will not develop
redundancies or deficiencies  and possibly differ  materially from the Company's
unpaid  losses and LAE as of December  31,  2004.  In the future,  if the unpaid
losses  and  LAE  develop  redundancies  or  deficiencies,  such  redundancy  or
deficiency  would have a positive  or adverse  impact,  respectively,  on future
results of operations.

NOTE 8 - LOANS PAYABLE

During 2003, the Company purchased  software for $520,000.  Management  believes
the software will assist it in reducing overall  management  expenses versus the
previous outside vendor agreement. The final installment payment on the software
of $150,000 was paid in March 2005.

Loans payable as of December 31, 2004 also consists of the following  bank loans
secured by the respective assets: a boat loan for $95,528,  principal due in May
2011,  with interest paid monthly at 8.8%,  and several  vehicle loans  totaling
$32,131,  principal due from January 2005 to September  2006, with interest paid
monthly ranging from 5.6% to 10%. Other loans with vendors  amounted to $426,221
as of December  31,  2004.  Loans with vendors are  primarily  short-term  loans
utilized for working capital.

                                      F-16


Loan repayments are due as follows as of December 31, 2004:



         2005               $    578,721
         2006                     53,698
         2007                     16,180
         2008                     13,664
         2009                     18,282
   Thereafter                     23,335
                          ---------------
                            $    703,880
                          ===============


NOTE 9 - REGULATORY REQUIREMENTS AND RESTRICTIONS

UPCIC is subject to comprehensive  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 2004 and 2003 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,  2004 and 2003 and  stockholders'  equity  under GAAP as of
December 31, 2004:



                                                          Year Ended                             Year Ended
                                                      December 31, 2004                       December 31, 2003
                                                      -----------------                       -----------------
                                                Net Loss                  Surplus                    Net Loss
                                                --------                  -------                    --------
                                                                                    
Balance per statutory financial          $       (1,802,644)      $        5,219,075         $        (344,324)
statement, as originally filed

Deferred income taxes                               (99,159)                (313,252)                  (18,889)
Increase non-admitted assets                           -                      33,930                      -
Other                                               (18,195)                 (18,195)
                                         -----------------------   -----------------------    -----------------------
Balance in conformity with GAAP          $       (1,919,998)      $        4,921,558         $        (363,213)
                                         =======================   =======================    =======================


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.  Claims adjusting functions are
performed by Universal Adjusting Corporation, a wholly owned subsidiary.

Dennis Downes and  Associates,  a multi-line  insurance  adjustment  corporation
based in Deerfield  Beach,  Florida  performs  certain claims adjusting work for
UPCIC. Dennis Downes and Associates is owned by Dennis Downes, who is the father
of Sean P. Downes,  COO of UPCIC.  During 2004 and 2003, the Company paid claims
adjusting fees of $1,037,151 and $119,471 to Dennis Downes and Associates.

Since  December  1997,  as  a  condition  of  the  licensing  of  the  Company's
subsidiary, the Company's outside counsel 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 were included in
the Company's consolidated 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 2003.
The remaining  funds together with interest  earned,  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, 2004,  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, 2004 and 2003:


                                                  2004            2003
                                                  ----            ----
 Statutory federal income tax rate                34.0%           34.0%

 Increases (decreases) resulting from:

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

          Other                                    0.0%            0.0%
                                             ----------      ----------
 Effective tax rate                                0.0%            0.0%
                                             ==========      ==========

Deferred  income taxes as of December  31, 2004 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                                232,524
              Unpaid losses                                     57,299
                                                           -----------
                                                            3,494,323

  Deferred income tax liabilities:
              Property and equipment                          (182,600)
                                                           -----------

  Net deferred income tax asset                              3,311,723
  Less: valuation allowance                                 (3,311,723)
                                                           -----------
  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
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.

                                      F-18


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 on 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.

A summary of the option  activity for the years ended December 31, 2004 and 2003
is presented below:


                                                                     Options Exercisable
                                                                     -------------------                  Weighted
                                                                                                          Average
                                      Number                Option Price per Share           Number       Exercise
                                    of Shares          Low          High       Weighted     of Shares      Price
                                    ---------          ---          ----       --------     ---------      -----
                                                                                        
Outstanding January 1, 2003          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
Issued                               1,000,000        $ 0.06      $  0.06       $  0.06
                                    -----------
Outstanding December 31, 2004        8,032,999        $ 0.04      $  3.88       $  1.00    8,032,999      $ 1.00
                                    ===========


The following  table  summarizes  the  information  about options under the Plan
outstanding as of December 31, 2004:

                                      F-19


                       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         7,890,000                3.9                $0.96
   $2.88 - $3.88           142,999                0.4                $3.39
                         ---------
                         8,032,999
                         =========


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
Tigerquote.com  Plan.  The  Tigerquote.com  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  Tigerquote.com  Plan  has no
provisions  for the  exercising  of options  other than paying the cash exercise
price.


A summary of the option activity of the Tigerquote.com  Plan for the years ended
December 31, 2004 and 2003 is presented below:


                                                          Options Exercisable
                                                          -------------------                          Weighted
                                                                                                        Average
                                   Number             Option Price per Share               Number       Exercise
                                 of Shares          Low          High       Weighted     of Shares       Price
                                 ---------          ---          ----       --------     ---------       -----
                                                                                      
Outstanding January 1, 2003       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
Granted                                -         $   -        $   -         $   -
                                  -------
Outstanding December 31, 2004     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, 2004:


                       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                 5.25                $0.50
                        -----------
                          835,000
                        ===========

                                      F-20


As described in Note 2, the Company accounts for stock-based  compensation using
the  provisions  of APB No.  25 and  related  interpretations.  No  compensation
expense was recognized in the year ended  December 31, 2004 for options  granted
to employees and directors as the exercise price for the only stock option grant
equaled  its fair  market  value at the time of  grant.  No stock  options  were
granted in 2003 and no  compensation  expense was  recognized for that year. 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, 2004      December 31, 2003
                                        -----------------      -----------------

Net income (loss):
As reported                             $ (260,133)            $ (281,528)
Compensation expense (fair value)          (97,233)              (196,116)
                                       ------------           ------------
Pro forma                               $ (357,366)            $ (477,644)
Net income (loss) per share:
Basic
As reported                                $ (0.01)               $ (0.01)
Compensation expense                          0.00                  (0.01)
                                       ------------           ------------
Pro forma                                  $ (0.01)               $ (0.02)
Diluted
As reported                                $ (0.01)               $ (0.01)
Compensation expense                          0.00                  (0.01)
                                       ------------           ------------
Pro forma                                  $ (0.01)               $ (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, 2004          December 31, 2003
                                   -----------------          -----------------
    Dividend yield                       0%                         N/A
    Expected life of option               5                         N/A
    Risk free interest rate             6.5%                        N/A
    Expected volatility                154.5%                       N/A

Using the  Black-Scholes  Option Pricing Model,  the estimated  weighted average
fair  value per option  granted  during the year  ended  December  31,  2004 was
$0.056. There were no options granted in 2003.

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-21


WARRANTS

A summary of the warrant activity for the years ended December 31, 2004 and 2003
is presented below:


                                                             Warrants Exercisable
                                                             --------------------
                                                                                            Weighted       Weighted
                                                                                            Average        Average
                                      Number                  Warrant Price per Share        Number        Exercise
                                     of Shares          Low          High       Weighted    of Shares       Price
                                    ---------          ---          ----       --------     ---------       -----
                                                                                          
Outstanding January 1, 2003           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
Cancelled                             -                $    -       $    -        $    -
                                    ------------
Outstanding December 31, 2004         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, 2004:

                      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                  2.4                $1.03
   $1.75 - $6.00           779,543                  1.0                $2.84
                         -----------
                         2,393,652
                         ===========


No warrants were issued in 2003 or 2004.

OTHER STOCK ISSUANCES

     During the year ended  December  31,  2004,  the Company  issued  2,823,529
shares of Common Stock in conjunction with an amendment approved by the Board of
Directors to the employment  agreement between the Company and Bradley I. Meier,
the Company's  President,  whereby Mr. Meier elected to receive shares of Common
Stock in lieu of $72,000 in accrued salary.  The shares were issued to Mr. Meier
in a private transaction performed in accordance with the terms of the amendment
and pursuant to Section 4(2) of the Securities Act of 1933, as amended.  Also in
April 2004, Sean P. Downes, COO of UPCIC, elected to receive 2,000,000 shares of
Common Stock in lieu of a $50,000 bonus. The shares were issued to Mr. Downes in
a private transaction pursuant to Section 4(2) of the Securities Act of 1933, as
amended.  Also  in the  past  fiscal  year,  pursuant  to  Section  4(2)  of the
Securities Act of 1933, as amended,  Patric Allan, former CEO of Tigerquote.com,
was granted 100,000 shares of Common Stock,  valued at $10,000,  consistent with
the terms of his employment with the Company,  and Janet Conde,  Human Resources
Director of UIH, was granted  125,000 shares of Common Stock,  valued at $8,750,
in recognition of service to the Company.  Patric Allan  subsequently  forfeited
the 100,000  shares in  connection  with the  settlement  of a dispute  with the
Company.

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 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.  During the year ended  December 31, 2003,  the Company  issued  75,000
shares of Common Stock to the Board of Directors as board compensation.

                                      F-22


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.   The
consolidated financial statements include the accounts of the SGT.

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
$0.056 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  7,400  square  feet of office  space for its
corporate  headquarters in Miami, Florida under a short-term lease expiring June
30, 2005,  which  approximates the date when management plans on moving into the
Company's new home office building. Rent expense for 2004 was $276,420.

OPERATING LEASE

During 2004, the Company leased certain computer  equipment and software under a
master equipment lease agreement with Relational Funding,  Inc. with an original
equipment cost of $204,485. The following is a schedule of future minimum rental
payments  required under the  non-cancelable  operating lease as of December 31,
2004:

         2005               $ 74,736
         2006                 74,736
         2007                 37,728
                         ------------
                           $ 187,200
                         ============

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

                                      F-23


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,  an outside  management company unrelated to the 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 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, 2004 and 2003.

Options and warrants  totaling  10,317,121  and 9,382,185 were excluded from the
calculation of diluted earnings per share as their effect was  anti-dilutive for
the years ended December 31, 2004 and 2003, respectively.


                                                               Year Ended                            Year Ended
                                                             December 31, 2004                     December 31, 2003
                                                             -----------------                     -----------------
                                             Loss                                         Loss
                                         Available to                                 Available to
                                            Common                                       Common
                                         Stockholders                    Per Share    Stockholders                    Per Share
                                            Amount          Shares        Amount         Amount          Shares        Amount
                                            ------          ------        ------         ------          ------        ------
                                                                                                   
Net  income (loss)                       $ (260,133)                                  $ (281,528)
Less: Preferred stock dividends             (49,948)                                     (49,948)
                                         -----------                                  -----------

Income (loss) available
to common stockholders                     (310,081)      30,214,169     $ (0.01)       (331,476)     23,777,515     $ (0.01)
                                                                         ========                                    ========

Effect of dilutive securities:
Stock options and warrants                     -                             -              -                            -
Preferred stock                                -               -             -              -              -             -
                                         -----------      ----------     --------     ----------      ----------     --------

Income (loss) available to common
stockholders and assumed
conversion                               $ (310,081)      30,214,169     $ (0.01)     $ (331,476)     23,777,515     $ (0.01)
                                         ===========      ==========     ========     ==========      ==========     ========



NOTE 16 - SEGMENT INFORMATION

The Company and its subsidiaries  operate  principally in two business  segments
consisting of insurance and online  commerce.  The  insurance  segment  consists
primarily of  underwriting  through  UPCIC,  managing  general agent  operations
through  Universal Risk Advisors,  Inc.,  claims  processing  through  Universal
Adjusting   Corporation,   property  inspections  through  Universal  Inspection

                                      F-24


Corporation and marketing and distribution  through Coastal Homeowners Insurance
Specialists,  Inc. and Universal Florida  Insurance  Agency,  Inc. The insurance
segment sells homeowners insurance and includes substantially all aspects of the
insurance, distribution and claims process. The online commerce segment consists
of Internet insurance leads generation through Tigerquote.com and commissions on
policies placed by Tigerquote.com Insurance Solutions, Inc.

The accounting  policies of the segments are the same as those  described in the
summary of significant accounting policies and practices.  The Company evaluates
its  business  segments  based  on GAAP  pretax  operating  earnings.  Corporate
overhead  expenses are  allocated  to business  segments.  Transactions  between
reportable segments are accounted for at fair value.

Operating segments that are not individually reportable,  based on the extent of
the  current  operations  in such  segments,  are  included  in the "All  Other"
category.  The  "All  Other"  category  currently  includes  the  operations  of
Universal  Insurance  Holdings,  Inc.,  Tiger  Home  Services,  Inc.  and  other
entities.


Information  regarding  components of operations for the year ended December 31,
2004 and 2003 follows:


                                                                           Year ended December 31,
                                                                      2004                           2003
                                                                      ----                           ----
                                                                                        
Total revenue
     Insurance segment                                                $17,288,415                     $8,517,817
     Online commerce segment                                            1,732,480                      1,469,532
     Corporate and other                                                  240,142                        367,331
                                                               -------------------            -------------------

              Total operating segments                                 19,261,037                     10,354,680
     Intercompany eliminations                                        (11,262,264)                    (3,874,664)
                                                               -------------------            -------------------

              Total revenues                                           $7,998,773                     $6,480,016
                                                               ===================            ===================


(Loss) earnings before income taxes
     Insurance segment                                                 $1,445,165                     $1,004,583
     Online commerce segment                                             (397,603)                       163,469
     Corporate and other                                               (1,307,695)                    (1,449,580)
                                                               -------------------            -------------------

              Total loss before income taxes                            ($260,133)                     ($281,528)
                                                               ===================            ===================


Information regarding total assets as of December 31, 2004

                                                       F-25


                                                    December 31,
                                                        2004
                                                        ----

Total assets
       Insurance segment                              $115,113,334
       Online commerce segment                             199,971
       Corporate and other                                 193,405
                                                  -----------------

              Total operating segments                $115,506,710
Intercompany eliminations                               (1,504,742)
                                                  -----------------

              Total assets                            $114,001,968
                                                  =================

                                      F-26