I'm going to add something to Milwrdfan's answer, in that I agree the cable should be replaced.
That's not UF cable, and looks curiously like NM cable, in that it seems to have a simple jacket (UF isolates all three wires in a poured nylon sheath). You've lost a good inch out of it at least. You've also demonstrated why not even UF cable is suitable for this application
Underground rating presumes physical protection by the surrounding earth.
It also sounds like this cable is fully exposed part of the year by a receding water line. You're lucky it didn't take more damage or you might be talking hospital bills. A splice is a mere band-aid for the problem (almost literally) and you're rolling the dice just fixing this one spot.
A while ago we had an excellent question about how you run wires underwater and I'll quote ThreePhaseEel
We will be using LFNC by the spool for a long run, or at least the longest coils you can get, here, to minimize the number of couplings to act as potential leak points.
What looks like a good pick here would be the newer XHHW-2 wire.
You could also go stainless steel conduit as well, but it's probably far more expensive and difficult to work with. In either case, you would avoid needing to splice cables underwater, and you would avoid any further damage.