FNHC - Earnings call transcript Q4 2020

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Operator

Good morning. And welcome to the FedNat Holding Company's Fourth Quarter 2020 Conference Call. My name is Victor and I will be your conference operator this morning. At this time, all participants will be in listen-only mode.

Before we begin today's call, I'd like to remind everyone that this conference call is being recorded as well as broadcast live via webcast.

be by webcast section visiting website www.fednat.com. will afternoon later of call at accessible and the today's available replay via this FedNat's Additionally, Investor Relations

Kilkelly, turn over Now, the like Relations. Bernie? to to I'd Bernie FedNat Investor call

Bernie Kilkelly

morning Victor. to FedNat's Welcome you, XXXX Thank everyone. call. quarter conference again good And fourth

efficient income. year's remarks transparency non-GAAP these measures provide greater Our prepared to measures, use include earnings release prior such We non-GAAP a comparison more meaningful and references results. and as to adjusted operating to

result statements. made not from and what these Statements may to non-GAAP materially GAAP project are to conference expect, or Our in forecasted forward-looking this from and uncertainties reconciliations expectations measures forward-looking expressed this are differ Actual statements call forward-looking being events, in that and numerous limited including on due may is described that other anticipate, are that statements this predict, are identify the in on the call available are issued and outcomes on involving are estimate, statements. and to time call, our results non-GAAP risks and but risks in as Words the forward-looking expectations, not release matters filings current risks The to, yesterday the our uncertainties call press made in other from SEC measures uncertainties, historical conference and by facts earnings management such not with release. the company time. realized. based or discussed words phrases similar intended to this

forward-looking to circumstances disclaims FedNat events future or of this reflect today's statements update new only otherwise. and statements speak information, any to obligation during as made Forward-looking revise any specifically conference call or date

the Chief turn over will Braun. Officer, Executive I FedNat's Mike to Now, call

Mike Braun

quarter call. go your Ron today. then call our detail Erick questions. into you. are conference on Good fourth Jordan, to my Accounting will Financial Chief And remarks, and will quarter Chief After and the take with XXXX Ron me Fernandez, our Officer; results. our fourth Officer morning welcome Thank on more we

know, of were to fourth unprecedented in Atlantic of a providing the and agencies time The partner fourth in you in policyholders need. to had which to and million storms our to pre-tax our by that had an Florida. and I their and events. remotely their of majority by service meeting work Louisiana quarter, losses to severe main year quality our XX% we XXXX on were XX weather highest staff, the catastrophe of these The quarter storms, primarily the Eta. want FedNat main in record, XXXX In XX commitment. As number of Delta, the hurricane remains commend made the results dedication full $XX U.S. landfall highest season impacted for losses and over continues that Zeta hurricanes committed driven

claims that Our reserves also fourth emerged and tax to business. construction litigation costs. quarter by in have and XXXX trends We that claims $XX discontinued prior reserve to recent by defect due of during impacted liability after million our general year strengthened results book strengthening relating were resulted higher-than-expected commercial

commend the to we Storm who highest reinsurance in in agents the quality co-participation Uri provide in discussed incur diligently to As earnings expects FedNat to which approximately caused release service of expects heavy We our in our residential million. to $XX million claims claims from February, Texas. our yesterday, this of event, were retention along storm. incur FedNat again for with partner of working Winter employees of damage this excess policyholders by affected $XX and are aggregate approximately our

our remainder with Uri to managing Anchor XX% general trading The be percent affiliate SageSure, quarter million has an company result, the term, occurred. total to this expected place losses, share on extends XXXX. of from business profitability to $XX not quarter our seeded July XXXX the which over the to X, treaty exposure XX, into the portion same in underwriter Depending a in necessarily we the As its in is Re, which pre-tax. recover may Uri Uri an a of of of June be able

discussions Anchor We or with reinsurance. are continuing reinsurance Re add SageSure the the to increase in additional to treaty and limit

shareholder of announced part As of you is position. capital board Board the a conditions, as a assess alternatives know, financing in to to options of or to to transaction. other to our of and would and committee that there about of market potential Piper committee is financial oversee advisor Sandler committee retained strengthen committee potential special alternatives. ongoing, no as The formed be work, enhance November work its Directors value. strategic subject The review actively timing a Any the FedNat certainty such company's exploring assurances can the a such ongoing and the strategic be

continues focus action three and our executing strategies future operations taken value. to to the in for team our improve During and company and growth areas. earnings particular, improve the management have we on process, main book our In

we to insurance conserve capital while the at First, an companies appropriate during liquidity working holding company. XXXX, maintained position our at

As year and ratios of in at company. million a the result, XXX% excess ended companies all the $XX with three holding RBC in we capital insurance

Ron more insurance reinsurance share his we in purchased companies. quarter statutory we will coverage the more to surplus reinsurance additional provide help in protection relief discuss remarks. purchased additional detail from Second,

of rates the build rates Florida Third, raising Homeowners adequate. of long-term to within improve non-Florida This value. we more until have business business book our markets includes and and our business are restricting Florida continued and our and in profitability initiatives shrinking

the Florida of to insurers. Homeowners to continues in litigation challenging, sharply, number continues lawsuits to to continues ways decline Florida while environment bring Plaintiff's the be bar the market, AOB find the at against Looking

and effect more costs additional in claims, are June, of October. The reinsurance this in an that So, reflect that higher accurately X.X% took we effect to took Florida to environment. increased rate continuing rates the and raise in X.X% costs increases include in

if on and effect March book, X.X% take take fire X% in for April. in that, filed will approved Homeowners approved our our and on if effect also dwelling will have We another

book shown books our in of December a in the business homeowner XX.X% by This reduce to continuing are in policies enforced of XX, significant policies at reduction of since XXX,XXX when XXXX as the XXXX. Florida, force. roughly in end a had represents decline to XXXX We we XXX,XXX

as non-renewing target increased through to costs, rates meet growth. profitable our do new we plus targets. we also non-Florida that business including limit policies continue our We and wide business, reinsurance pricing throughout such the hotspots not Florida, In our on Orlando are and state to areas, passing Homeowners Metro raising certain focused are by Tri-County

written of increase and effect in took Texas non-Florida business through SageSure, effect For X.X% in took rate our Louisiana January. our increase in X.X% November, in

of effect in a increase XX.X% December, took increase Maison, For XX.X% a Louisiana in Texas effect and took in in rate February.

of Our favorable less in non-Florida more terms more including have and environment, operating litigation rates. markets flexibility currently setting a

Excluding non-Florida the weather Homeowners events, pleased are underlying business. we the severe profitability with of impact of our performance and

attritional excluding is points about Florida, compared XX% non-Florida ratio better. weather in approximately XX% to or Our severe loss about XX

$XXX a company's XXXX, on in is XX% million increase non-Florida $XX of business. non-Florida the XXXX in based these Florida As XXXX, compared rate fully million exposure in of the first incremental And current track premiums the that increases favorable the are total. our assuming non-Florida markets, book more anticipate as and a in thereafter, on over our a We quarter out premium premium overall with incremental gross compared XXXX, of of of book. now in earned million generate to nearing contribute $XXX when as incremental and will flat cumulative in expansion to annually XXXX to result over of XXXX

turn with on Now financials. the to the that, quarter's details over call Ron more I'll for fourth

Ronald Jordan

good and Thanks Mike morning, everyone.

financial were an severe per and weather the to share, of impacted we by fourth full Primarily year adjusted loss operating quarter our in mentioned, of record to events. last of results quarter. fourth this loss XXXX, of Mike compared fourth reported impact XXXX As a quarter due $X.XX year's $X.XX in number

we the $XXX from loss $X.XX compared year, were $XX pre-tax cat adjusted on operating to quarter, XXXX. million reported our losses recoveries. $X.XX, full of basis, an million and gross of the In events fourth net loss a a of in For

weather million net recoveries. of an catastrophe $XXX of XXXX, For losses. from terms the in severe just year full were year clearly unprecedented our and million over $XXX events was It gross losses pre-tax

Mike discontinued commercial million As our pre-tax impact fourth million. mentioned, liability Overall, general reserve in pre-tax. our quarter approximately also impacted which $XX.X results strengthening reserves by net year line, quarter strengthening a over was just had $XX in the prior were of

on net equity. been $X approximately cat of reserves ROE would measure income, a low-single-digit XX and quarter have our the losses strengthening, operating December adjusted fourth representing Excluding million stockholders' based our

back to And XXXX. profitability $XXX XX% my Re December increased This was book December an gross XX compares topic Net for both XX%. XX bit Maison we our Florida of smallest we count large to in in were roughly Inclusive loss policies quarter Maison seeded to non-Florida. acquisition to some the the contributed premium layer policies event same of written entered from way as XXXX, the in fourth XX% premiums our quarter, quarter. conclusion This XXX,XXX quota-share of to increased primarily discussed, million premiums of incur already business, just the in year on year, another quarter to program year. from year this January XX of of million June the despite ago. in a cost session in Effective the book. are of quota-share As for at Effective all coming the X% the last quarter of increases aggregate reflecting in entered our on Florida Florida, our $XX premiums gross treaty from quota-share through through on the book SageSure. quarter the of month time as the Maison acquisition then December X, XX% Average to XX% over as And continue quarter operation. at our policy XX% desire premiums approximately and million. Florida to quarter. in same our additional excess events. December XX% December, come XX% year's in excess And per our loss a with to to which we XX% quota-share time. increase Effective XX, decline due completed reinsurance. of primarily remarks. across treaty November new at more XX% greater X% Anchor the markets XXX,XXX policy XX% XX% Florida to our provides premiums rate in in higher XX% have when treaty to quarter force limit earned effective non-Florida a increased business reinsurance of in Florida in of place fourth October exposure. Florida only year-over-year non-Florida the non-Florida sideways states our number Homeowners X, September geographic the XX. gross rose to reducing $XX into mix last our declined session to growth the XX% to due compared fourth same middle-sized prior I'll it with at compared we percentage book at in The the declined on prior compared grew than written of of were flat new the outside restore percentage legacy from treaties Non-Florida Florida XX, this and business just states the written premiums one from in year, last written force, earned to Consolidated to fourth Gross increase in a on Florida we increases The in in X, was this entered now percentage while fourth of to of premium XX% number rates increased our period, on growth that XX% our our quite protection this sequential well

was quarter strengthening. reserve cats XXX%, points prior net XX year and points loss from from net Our including the in ratio XX

a of the being be strengthening, XXXX XX%. have landed approximately reserve net higher where This effect and have costs. Compared the part are upward excess ratio relative Excluding both to cats the in underlying cost XXXX loss loss the expense on by reinsurance ratio and versus of XX% quarter to in they fourth and our loss be of the quarter our fourth caused higher ratios in driven absent would ratio our XOL XOL increase would of costs. basis, higher expense

are ratios these denominator real impacts the clearly, So a factor. on

Turning now statutory companies to the at in appropriate our position. to liquidity in and to company. holding our quarter the balance capital sheet We took maintain insurance action and maintain capital fourth

and our ratios $XX million All XX. at had carriers company the liquidity insurance ended excess year December RBC with XXX% of in non-insurance we of holding the at in

As our public the debt from our has threshold. second have declaring of long that been exceeds ratio us debt-to-capital XX%. disclosed XXXX preclude a pushed over filings, outstanding Cap in losses terms dividend of over our half us when the

quarter I'll and the by equivalents rate are benefits and Mike decrease from increases. XXXX XXXX result, the a figure million unprecedented in over XXXX, As quarter. [ph] fourth increases, in $XX in quarter, XXXX the million basis. use instead premium, an foreseeable future. the net do XXXX, the on million million to $XXX order $XX the $XXX XXXX, wrap fourth gross million almost with anticipate as as dividends earnings gross the baseline. were rate due of quarter impacts a on losses our first benefits quarter earned rate primarily the could fund all mentioned, cat topic the third in higher compared increases from premium XXXX. here over not year the course we real declaring $XX to to say year ended. up is benefit the very of are fourth beginning to to that that total Suffice $XXX XXXX fourth related in a increases the In and first the that the that from million quarter to to endured of XXXX. ended XXXX.We to compared compared calendar At has perspective, investments retentions XQ, $XX immediate to $X more of Again, on or the a $XXX will way as The year-end these full-year in tangible to of of frame consolidated in as in the quarter million cash these the million one way need year, Compared just returning XXXX. million from XXXX, in of our of to cash already we even of baseline, in

turn back I'll Now the Mike. to call over

Mike Braun

questions, All right, you up thank can for Ron, Operator, ahead you it please. go for that. and open

Operator

Greg James. Raymond will the you. line come instructions] Our [Operator question Thank first from of from Peters

You may begin.

Greg Peters

Good morning.

a from when Texas and minute goes I we And you've your first retention, So, FedNat, I comments, this talked in it events, about other like should the sitting losses. things tornado and hailstorms, through happen your on that think be retention it that South. that the would think in know weather in like that the will but per you to minute is in a spend And commonplace what reinsurance a and events place? spend about reinsurance about event the point purchases like about states going on about quarter, being on I you here now and how for made, thinking in pretty think second about might basis huge April, forward? your and Houston, industry we're think example, should if put there's generate based hailstorm a you've When would I say what we and

Ronald Jordan

in cover for Generally we the short Yes, Greg. And answer is per excess have million. event speaking, events. that million $XX good $XX morning, of

the buy tried spend to Uri is, created challenges, replacement reinsurance, six our part buy done what and now events, with loss of a So, events, cascading significant prudent and the on we to additional coverage. five has many we've so have to reinsurance be being

an of May for $XX So, above we million have through the would event. end coverage

Greg Peters

to to pieces protect any Got in had reinsurance, what be And big importantly, topic on And do frequency sticking But is of cat obviously, your that terms the of mean, a regarding you year. of you're moving frequency and lot going then here. provide we more it. we I there perspective sheet more this given there? about last thinking can should renewal? costs annual And from of a I balance imagine the the recurrence severity,

could that any So, you helpful? perspectives would be provide on

Mike Braun

Yeah, absolutely.

Florida we've carrier, is less one the from are the a specific been of that a the interested lower challenges in to reinsurers carrier So, as grown of to Florida non-Florida some layers. have

we cat with this the effective splitting year, July tower. So, our be X will renewal,

So, been our completed. and SageSure tower. book program that And in two, has will for, have market separate the I a cat of believe, that's months, been most three

a would as FNIC, well other carriers, MNIC separate And reinsurance So, program is non-Florida then Florida, SageSure MIC business, three and is all the non-SageSure be July be as will X MIC which our primarily tower. tower. which our in forward

terms last the we before year bought approximately lack we've $XXX buying spend holes cascading. those of from to of additional cover replace total additional in the of spent And So, limit, some million.

total So, in on we're the we're based will in policies decrease with on. and it and renewing I where how terms think spend, spend, and writing optimization policies, we're of doing be a now so portfolio, our that our total

the pricing The were So, Florida it's say clearly, peak is that. zone. in. reinsurance expected because But recognize renewals too zone, and states early reinsurance than clearly at the we coastal more are capital to a a where has Clearly, January. for less is peak come

we're spend, I pretty total there. shape think in good a on So,

increase, an again, off, but that saying our to down, once not our I smaller, go down. this which there. once again should non-Florida I and SageSure absolute benefit for reinsurance, recognize a rates pay we'll think rates I'm While going book are that I book may think splitting spend, with is And

said Brian QX. including $X $XX out rate massive statewide that have million we increases XX% QX in earn increases. gross versus nearing in are in years. Florida, four We the will massive These have million last XXXX, increases, rate over rate over

non-Florida, ratio the the find Florida challenge But Florida the we be attritional find of and loss find weather, to well. attritional as the terms we So, stabilizing loss ratio. in in challenge be to in that we

a Greg out deeper on at any there, of that. question. So, throwing lot your I'm to go Happy

Greg Peters

I No, appreciate commentary. the

Do I'm a and has the industry not that happened. guess sympathetic regulators? different try more everything an bit final pain that's Are business you find as with issue of do make more change the just And results, you for clearly your Texas agnostic going been only recognize it is any a this of result to they about one to have you suspect do through? you filings? carriers. honest, is, As they're little for results rate right the tone in this, I be at they last looking and and your let's plowing as And be and for through just I'd on usual? you're thinking year question clobbered and lot just a sensitive

Mike Braun

Yeah.

In terms the regulator, the very OIR, think I an Florida, done terms a job. incredible in of Florida good of job, they've

very difficult by a increases. I and spot resident situation. think help contain I of everyone for the state trying to price commend the being Florida of they're in in tough protect a a OIR who's

legislators, the job more unless situation. And they're to to I forced with fair to We would find therefore difficult. there's is reality the the be of However, and by the accommodating much find OIR say that We be reform rate their reasonable. them give Florida increases.

litigation. trying the And state see with primarily I to related very the see that abuses think are they've we Florida. the legislators on been that abuses we inform in proactive,

But our that I litigation type So, to bad be the situation will that for good. policies anticipate it, of good happy stakeholders don't the those that improved not I new I They're of improves with. this XXXX. existing don't. is, policyholders. could continuing be residents truth We're if talked book the that in hopeful in say moves. non-renewals, happening about continuing where year. in our some I'm of we with we're And Unfortunately, Therefore, our profitability looks Florida. business But would the shed for we're reform we're we to which Greg, bad necessary. is they're lot. business. state not hate in increases continue limiting shareholders. there's absolutely of But all was these writing rate We're Florida, Florida, write are our And the business a that business to our for

it's and to continue we're So, catch with up new take rate as there's once our until rates costs. an limit unfortunate business these again inflated either or to our reform going situation,

that got the it's In four through I ratio last increase the over abuses was much not to slowing we've the slowing. so working terms steady those of offset premium attritional pretty And loss believe abuses. which stopping, or Florida, it's years, book are that in the but

Greg Peters

Texas Do the sitting the on question, your the you or I when of on Got you change, RBC company. in capital quarter know preannouncement results? commented things might I have and losses, year given holding any your it. guess ratios liquidity the And at report final first end preview view how you

Mike Braun

a there's things so Yes, of there. couple

power, with losses. been a amazing So, I of problem of that we of not tiny these for with been the now that the created to weather amount that the would had lack warm in fraction and of amount once think in it the a the stay not homes XXXX, incur terms you Texas, you loss were weather where And going all truly experienced. it's have down, water again, then able we've that have really grid had

where of levels terms are capital, the appropriate support of capital. on to with committed we at in So, we're carriers our

significant affiliated policies, our our support companies that generate with business, support and to to our our to support We policyholders, carriers, claims. have fees facilitate

underwriting losses exceeded big that have of lot get the you a generated. events. Unfortunately, fees when there's these being So, weather

online, with half a the Greg, rate I I'm feel the spends. stating of absolute the once So, not spend second again, reinsurance, on less but that of XXXX,

XXXX of so those increases that But improves while plus So, effect, second just increased it's endured, have been take rate a amount with we've costs as weather again, once the increases hold. VAT rate of these our the taking really much. half at all

and related our costs losses associated attritional to with the Our costs reinsurance.

Greg Peters

for Got it. All Thank answers. right. your you

Mike Braun

Greg. you, Thank right. All

Operator

Hale Partnership. Our next question of from Hale from comes line Instructions] the Steve [Operator

You may begin.

Steve Hale

is going? it Hey, Mike, Ron, how

Mike Braun

Steve. morning, good Hey,

Steve Hale

them the to the you strengthen on guys after available? of regarding options options all two on reviewing decided that committee questions that. about the for Kind capital Question position. path disclosure special Is the reviewing they morning. Good

Mike Braun

The committee was formed in November.

it, I has was, do could been we should create the impacted say, it the amount But that to committee to plus process and been see before it work we honestly, experiencing. of Formerly, in but clearly, value. something by was lens them weather announced what we've the their when

So, QX last lot with and QX, analysis Zeta, QX Sally, year Eta, in of with having weather impacts then being and Uri now QX. Laura, a then these Delta, their

assume So, is try we recent ensuring committee events creating Absolutely. weather that do I have the analysis. adequate their than part a special And for shareholders. occurred. the say to before it it events. of on we that you portion have have formed was is our would now that's continuing work that More value Yeah, all value, create capital to based so to to would these of

Steve Hale

strengthening third-party strengthening Yeah, be company supportive, capital be source could have position going your I the existing are And position sitting wheel to concern happen. a guess just the It's of I'm the and question if you guess I trying to of folks alternative bit capital? not opposed to more going complete as there's of capital for here reason to opposed position a the strategic who I'm you're storms been it little Is could be be And M&A. raising you could indistinct. a is assets go capital a as that diluted. strategy that is who shareholders selling the get would you, the accretively, up, if sale the to or through the with are can curious the guys specific? literally that comes things

are voice it's that a is assessed So, I'm sure as to perspective. fair from heard, make shareholder's that trying those just and alternatives shareholder

Mike Braun

Hey, Steve, clear. and loud hear I you

looking large Absolutely. support you've focus the is committee Whatever again, company. for capital is shareholders what we do. what to our a You're look once have than as shareholder, cannot The our with sufficient also they're the today, get they're more capital very our - been times out that. That's sit tough to at looking I business. best their the But evaluating. here through is shareholders. of granular we to outcome Once for the they're is us.

the we before sure We positioned of but rolling in have latter increases make that there's to we're lot manner. those really roll well want rate a of half in, if additional more a premium meaningful 'XX in, headwinds

say I diligently Steve, committee hear to to you for try So than our working other can't create give shareholders. the is I anything specific, to you value

Steve Hale

Yeah, Mike, I appreciate that.

You've got period to that don't normal Grail. bridge able be right And that, we weather. pre-emptive to happens of to that Holy with the the part to hopefully bridge what to shareholders get provide just It's know becomes of conversation.

So, that, I'll guys. drop off. Thank you, with

Mike Braun

that, please if And you No, I not appreciate Thank Steve. hesitate. follow-up, obviously, you. have do

Steve Hale

Yeah. Mike. Thanks,

Operator

you. Thank

will the question be Our next Broomall of line from Bill from Dowling.

You may begin.

Bill Broomall

Great. Thank you.

getting is I'm pipe maybe Texas? understand maybe you're of lot follow-up that the what some of burst? quick is a just of of average Texas it, Was happened? guessing its in help that actually of losses? in size to that, And kind Just what's losses But unique you these what you're Texas? seeing on types the in Texas can claims Mike, event. us a

Ronald Jordan

Yeah.

So, The numbers losses less have of Insurance believe Houston our not billion day. we're $XX in had SageSure Houston majority the yesterday, think I look is there once $XX to Journal billion out at losses water, And $XX to they're putting water, all it if again, the its you And we're billion in range. we we're loss the seeing these power, the The book Partners. with that losses sizable than in far are of area. I a be the for would seeing experiencing. what been

compared and that get But have those get pipes a we're you seeing being some a bathroom, a can to on event. hurricane. compound specifically sizable they pricing. big if So, when it's It's you losses, one, second-floor

hurricane of in media. out more So, of But the billion event. others. of I the fair terms terms a in I $XX is And comparable a you're there the some to average the we're seeing seeing think in of what than it's gamut severity, comparison think

Bill Broomall

Texas, in a you've I you it. in and have because kind contractors match you've for hurricanes events Got of that demand it seen? everything Florida? think unique the Is prior some perspective, maybe Is that surge experienced

Mike Braun

Yeah.

a you So, to and part need increased price, a price. is neighbors demand a they out Absolutely. need when your dry search when a need a And plumber, when need there's dry once business. all again, of guy, our there's plumber, all there's an you guy, a price, out

In demand So, labor in and I down. happening will And of hurricane after as spiking and out material. with well. dry with for of demands spike these that that's decrease right surge, time. that think a and other will plumbers diminishes dip Texas see Typically, words, remediation do services we time some now for the

Bill Broomall

it. And participate will services you to your claims business Just this confirm react think but so wanted correct? event, to said and I Got that I handling that. will

Mike Braun

Yeah.

So, have organizations. claims multiple we

our in ready have external a of or do adjusting such adjusting there's field it's and our well, every just and though, claim just can't in location, because lot a vendors for utilize spike activity. adjusting. We as We've cat got our desk perhaps distant a be resources because you we located residence,

over of a the to So, we third-party have us contractors that of the in-house And they're however, what we're big part our years. majority our we're process. do able partnered doing, with absolutely utilize

Bill Broomall

Got it.

about appreciate conversation the talk I And could side. wonder the increases. the if I about you rate other thanks. Okay

pushing up? through held people of retentions your You're are rate, increasing rates. a lot guessing how I'm

environment. doing you're So, that I just in wonder how

Mike Braun

upside. our seeing It's increases. People working happen. very need people, as Bill, It's not getting to policyholder policyholder well. shareholder costs. doesn't We And unfortunate. in the from litigation, It's doesn't a very frustrating it's it increases that happen. perspective. perspective, is and that's it's need are The reform These in from frustrating getting perspective, the XX% a litigation, upside. elevated need From we're are to Florida. big big seeing very it a shareholder the

in a So, our we're have XX% four seeing prices and the doubled Orlando five litigation, Florida, to It's driven relative state. or by years. over last as

bad. doing big admirable in and unfortunately, things month trying meets people. I March So, of multiple it's that the are April. inform which which and There's an really unfortunate. see don't educate job, the happening, too for legislative proposed regulator's something to being The is body,

And continue pass it then which at we that 'XX. I'm have more the I renew with time, through I when think the there'll And then some our rates takes in renewal in incur and they time. for we increase. up, some And policies reform. gradually then we it'll 'XX, over there's rates, increase. But no And offers. choice it would let rate, hopefully, we opportunities happen then, to for But assume addressed. hopeful review takes would XX-months. say don't have be but again, the go file to be therefore reform rate it me point, So, to to the have until that expense,

You're XX talking to XX months.

increased increase hopefully in because premiums, 'XX. hit So, we we're these get of weather vulnerable, in It period, where not unfortunate. premiums. timing with that earned is. premiums, we the the Florida most on And had half look increases huge the latter can much expense. the But legislators. again, we seen really in things And by once six costs, with increased is of there yet while the haven't get but very better events. And we've then we're realizing It's

the the well. tort do of residents was great. you in hope created Florida think I like value can as in see I I Texas Texas the state reform and XXXX, think something in for that And it that

Bill Broomall

when to seen structures, different changed or to Has and the much Perfect. Thank talking quota-share what's…? view the their into expanded that reinsures those all? quota-shares or how for you're have cat they're on willing at put you for change comments. you caps And

Mike Braun

I two non-cat reasons. don't variety a of think been of lot for buckets either really, reinsurers buckets, It always into you to kind both have that a liked and find there's go into always been the cat. divided

that so cat only much quota-share. goes into there's So,

then quota-share minimal cat want you your that are cat others doesn't have actual, and an Some want actual basis. writers primarily an on on cat

and is have different types relationship there's we all to it's a that with So, with XX to try big find them. point such matching why reinsurers that's of

Bill Broomall

Got it.

Okay, thanks.

And 'XX? done. I'm what Thank one your all at quick, number real you. one Just was year-end surplus

Mike Braun

a And calls trying to that, we we're got you I Bill. because get have to. do with off Ron, couple cut it got you handy to more

it have You Ron? handy,

Ronald Jordan

million FNIC of it's sum the million the $XXX the under Yeah. inclusive two, surplus. of stacked FNIC $XX there, million stat on Monarch's based were and so $XXX is since at

Mike Braun

All right. we appreciate Thanks, Bill, up. follow And can it.

Bill Broomall

guys. much, so Thanks Yeah.

Mike Braun

Thank you.

Operator

Doug from come will Ruth question next Financial. Our Lenox from

begin. You may

Doug Ruth

Hi, citizens about and good morning now? status to you little the what them is a everybody there. Could of with bit think you happening talk

Ronald Jordan

in to Yeah, XXX,XXX recall, continues up they purchase approximately marketplace. And Florida year, good to were now. right My a to may at Citizens down seven, of balance also, to at this XXX,XXX. may end their at X.X is they XXX,XXX million X eight to in of have state protect speculation, have about understanding a Citizens some morning the sheet. low benefits entity, Doug. they're reinsurance lot certain it's variables. competitive six, got is they they the grow. Everyone obviously being back a about end They the policies million tax policies ago. and don't years subject to Then

their So, [ph] they're competitor and competitors.

Doug Ruth

competitive that Legislature make And that maybe to the is it other carriers? do citizens could think against do so something Florida you less that there's FedNat and

Mike Braun

going take supposed to a things a anything's The now, into Do private there's you doesn't I basically you take two, go more willing one. with Once a Number lot market private stay go can Number private XX% do. if think just before right that happen. than always premium. the market of at to you're that's carrier, the again, that to citizen Doug, will but have a you not market, you, answer's to change? they no.

take if competitive as private staying and citizens a market go carriers into won't move offer, are most supposed a they get to option. in and policies, not really terms them of if in their But You're put others citizens. private people the renewal will

So see they're there. in future. out the changes I anything don't near

Doug Ruth

some And we're days the my come. for Okay. Well, you questions. looking to cantor. appreciate forward Thank I answering to better

Mike Braun

Thank day. you, Have a Doug. good

Operator

question from next Matt comes the And the from line JMP. of Carletti

You may begin.

Matt Carletti

exposure you bigger goes be net number additional max you the the can Mike, you than just your talk could net briefly take it's reinsurance that's days there think very get to And you there it morning. loss and if or of you the think? Good did - a potential because Texas kind bigger is Thanks. early exposure event about is all hoping there to came should estimate. I how in was and than you

Mike Braun

Yeah.

good going retention. we're saying good Matt, To morning. is and our that, question we're over So to what go

we're so hour year end. whole have in the stating because strengthening [ph] we cats then we a that. did Okay, unfortunately, the And program, a of at lot

really go at get we end. hit we we with took as do numbers not And So, finalize that, those up much Uri. and after reserves year

we co $XX a from think got basically million it's the there, really relating to we've participation clarify, to and whole where Zeta So, Delta Eta.

XX our was coming think well second big We're you're now. above again, the don't was But which with event, So it increase our million out that to event, very number. big see and Laura not gross anticipate think right first we which have Uri. or could event going right second a $XX the putting But point. Sally is shifting in, once that's retention. is I I decrease. a But this number the We biggest. all our was Uri But at information it's was with

Matt Carletti

kind Uri, last movement falls you program a as more storms hearing right, Uri that number on been we've opposed the where itself that to in the so right, gap is to would development All right? basis, on net be year your might it come for on likely from move of were be gross there if where

Mike Braun

You correct. are

ballparks, Zeta on million. believe so with with one our the we're got So, all would on best gap information, any from $XX on movement from We've and a those Uri we're available Delta, of reserves events based comfortable comfortable be with and three all Eta. we lot layer those, of

Matt Carletti

quota-share at good relates I as Okay, are be place? added And we on. with those the wrong, great. earlier the expenses about expense placed how should programs those presume could lot with of but not think that about of new And wasn't of expenses to think fall my that, kind of How getting pieces question because terms when moving where the of then storm ratios kind to our there that other stuff pressure. and you as are I we mostly additional a all in should fall, layers

Mike Braun

as to on we The quota-share, sure, terms feel Ron based deeper me historical perspective. I'm a well give today that. Yeah, as overview. let can reasonable an go be But on just perspective

we as terms, course, to Of but Ron, go want they want could deeper? I always reasonable. you be better categorized think

Ronald Jordan

The the our the and main quota-shares talked when line line. that Yeah, net line, because drives the you've exist expense I our the ratio up our loss guess about comment really how pro-rata with and XOL on expense phenomenon quota-shares, I net same of got does up. to costs on respect my loss happening reductions types ratio premium up, not the go

With quota-share significantly I I'm ratios. getting free. not So, make lawyers that sure what would I our some at not to move expect Matt, net because doing mean, quota-shares to expect you're money. it's it is, they are of said, do the

to itself So, of higher cost form bottom-line - or Sure, it going higher is a there expenses to in it's not treaties? the expense a additional evidence ratio. those doesn't

Matt Carletti

Okay. forward. Thank going luck, you. Good

Mike Braun

Thanks.

Operator

further for questions in remarks. not Thank any And queue, call Braun, the am back to over any I showing you. Mike to closing the I like turn

Mike Braun

for participating today's thank Well, call. All you in everyone right.

recognize to FedNat Before we close, our want team. again I

staff time provide highest doing and their this Our team, maintain value are to quality our ongoing of quality service our dedication reputation policyholders to and partner need our Their the and FedNat for the continue and pandemic. an of in company. efforts to midst including continue will in agents, our help build

today. answer all day. appreciate and So, very question you. a and everyone, Thank have the participation And good

Operator

and conference for this gentlemen, Ladies call. today's participating. concludes you Thank

now You may disconnect.

FedNat Holding (FNHCQ) 3 Mar 212020 Q4 Earnings call transcript