Sean Downes - Chairman and Chief Executive Officer
Thank you, Dean. And thank you everyone for joining us today. Before I begin, I'd like to express my heartfelt condolences for anyone affected by the tragedy that occurred in Pittsburg last weekend. As Pennsylvania is not only State where Universal rights business, there where many of us who also have personal connections and family. Additionally, Universal is intently focused on helping all policyholders who have been affected by recent natural disasters including Hurricane Florence, Tropical Storm Gordon and Hurricane Michael.
Our catastrophe teams have been on the ground in the affected areas since the events made landfall. We are processing claims as fast as possible and we are available for any other assistance that policyholders require during this time of need. Please do not hesitate to follow-up with a Universal representative should you need assistance.
Now moving on to our third quarter earnings discussion. I'll begin by providing some highlights from the quarter and will then review our growth [REMOVIDO]s and strategy. John will cover several important current topics and Frank will conclude by discussing financial results .We will then open up the call for questions. We are pleased with our third quarter of results as we report a net income of $37.4 million and diluted EPS of $1.04 for an annualized ROE of 28.4%. This result is particularly impressive in light of the increased catastrophic activity experienced during the quarter, most notably tropical storm Gordon and hurricane Florence.
Each of which occurred within our geographic footprint. We report an excellent top-line growth in the third quarter with 12.5% growth in direct premiums written including 9.1% growth within Florida and 34.9% growth in other states. Our underwriting profitability was strong with an 82% combined ratio for the quarter, this includes weather losses above expectations of $7.5 million or four points. Our service company subsidiaries continued to contribute to our bottom line results as Universal Adjusting Corporation and Blue Atlantic Reinsurance Corporation contributed $16.7 million and $0.6 million respectively to third quarter results.
Lastly, as was also the case during both the first and second quarter, our effective tax rate benefited from the federal tax reform that was passed in late 2017 which had a meaningful positive impact on our net income for the quarter when compared to the prior year.
I'd now like to discuss our growth outlook heading forward. We believe we have position Universal well for the future by pursuing various organic growth avenues, which have resulted in a more stable diversified and balanced business. Our core Florida book continues to produce strong organic growth with direct written premium growth of 9.1% in the third quarter. This includes our growth and policy count as well as the average statewide rate increase of 3.4% that was approved in December 2017. Our 2018 Florida rate filing currently remains in process, and we will provide an update as a situation continues to develop.
We continue to believe that we can profitably grow on organic basis in Florida, writing business through both our independent agency network and our direct-to-consumer platform Universal direct. Geographic expansion is another key element of our growth strategy and direct premiums written within our other states book grew strong34.9% in third quarter. We are now active in 17 states with licenses in additional three states, Illinois Iowa and West Virginia. We expect to continue to expand our geographic footprint in a prudent and conservative manner going forward.
Universal Direct, our unique direct-to -consumer online homeowners insurance platform is available in all of our active states and continues to demonstrate a solid growth trajectory. Universal Direct is approximately 12,700 policies in force for approximately $16.2 million of in force premium. We continue to believe that Universal Direct is well-positioned to continue to contribute to our growth efforts going forward. We continue to grow our book of business and we remain confident that our multi-part organic growth strategy will enable us to deliver profitable premium growth.
We have a solid balance sheet with a conservative investment portfolio, minimal debt or goodwill and appropriately set loss reserve position. We are protected by a comprehensive reinsurance program. Our unique vertically integrated structure positions us well to capitalize in the event of a disruptive industry event as evidenced by the income generated by Universal Adjusting Corporation and Blue Atlantic Reinsurance Corporation in the wake of Hurricane Irma. We are excited about what future holds for Universal and we expect to continue to deliver substantial value to our shareholders for the remainder of 2018 and beyond.
Universal Insurance Holdings Inc. (UVE) CEO Sean Downes on Q3 2018 Results - Earnings Call Transcript | Seeking Alpha
