HCI - Earnings call transcript Q4 2017

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Operator

Good afternoon, and welcome to HCI Group’s Fourth Quarter and Full Year Earnings Call. My name is Darren, and I will be your conference operator this afternoon. At this time, all participants will be in a listen-only mode.

Before we begin today's call, I would like to remind everyone that this conference call is being recorded and will be available for replay through April 06, 2018, starting later this evening. This call is also being broadcast live via webcast and available via webcast replay until April 06, 2018, on the Investor Information section of the HCI Group website at www.hcigroup.com. to of call Group. Investor like Mitchell, to now President Vice Relations would turn over the Kevin I for HCI please proceed. Sir,

Kevin Mitchell

quarter Harmsworth, Paresh Patel, Thank HCI Chairman and earnings afternoon. good Officer; our Financial With and and Officer. Executive fourth Mark call. are you, XXXX Chief full today Welcome me Chief year our and Group’s to

update our turn Following Paresh’s for and and the then the quarter back for outlook. an opening remarks, business operational financial Mark and performance will Paresh call review to year

Finally, our To visit we access today’s the Investor take your will questions. at webcast, Relations corporate please section hcigroup.com. of website

to Before our Private Act Reform XXXX. like listeners words would to project Securities to Words remind presentations of anticipate, are estimate, similar statements. other such today’s and opportunity and pursuant and to plan responses to expressions forward-looking we expect, intended the begin, that forward-looking and contain intend, questions Litigation take I may as the made signify statements

are not risks and Forward-looking various and rather to guarantees but results statements subject uncertainties. are of future conditions

like effects developments business, risks have of develop in conditions CEO. now with filings into and company’s update or Exchange are to events, any all Securities uncertainties and actual these operations. Some Chairman the turn the any to financial Commission. and call adverse Patel, uncertainties company’s identified said, material HCI Should and on these to our would of the the disclaims risks the forward-looking could that obligations results Group, Inc. I statements. Paresh Paresh? With over

Paresh Patel

welcome, and Thank Kevin, everyone. you,

We earned normal its HCI of Irma. results a $X.XX. Hurricane indicate, EPS our As returned after to QX healthy diluted profitability

day. policyholders Irma. highlights. the fourth We trickle from the to into continue to from The Hurricane Here this damages claims had worked are some who resolve claims quarter of XX,XXX

XXX have all least However, once. at been closed claims but

been as of today, of about process. claims in handling currently is previously have course claims normal X,XXX reopened As closed the

states; expanded expansion North three we began completing licensing Carolina, Ohio into we our California, additional our nine-state our and that the During quarter, June. last

of year. insurance flood We expect this some begin selling to states these later to

We is time, with over is per who square XXXX And process our a office their its about property on of fully to fourth real financial XX,XXX dividend, also to for of it building we $X.XX quarterly XXth estate added Mark? a which policies Greenleaf our the us Capital become assumption familiar national to banking eight consecutive to and year. our is through full finally, a in This quarter did and I'll CFO, a building from as turn land. our paid Mark on performance this modest our And share foot citizens lease. another property normal, assumption acres new portfolio. our October, nonaffiliated take institution Harmsworth The division, leased long-term dividend. will

Mark Harmsworth

Thanks Paresh.

provision prior mentioned, for fourth no had were as year, which was per double In year. expenses. in Hurricane well development development a prior adverse So $X.XX, the quarter as quarter no The adverse last Paresh same expense significant the reduction the diluted a Matthew fully is XXXX, quarter-over-quarter of loss change weather-related and quarter from earnings this we impact biggest share quarter the fourth included that In our loss of in than quarter years. losses. of fourth -- as the of more

all claims of XX%, ratio the lawsuits, Claims which trends. is historic the Our down. claim range some incurred our despite are in per and loss quarter expense is for week, loss positive

our a resulting as tax that from a be would provision liabilities what the it was mind, believe quarter will pleased monitor in benefit than our and at deferred While with we income enacted year around we're too income it's with for This is had changes so loss conservative we we but trend, reduction and looking XX.X%, obviously continue in lower tax we reflects soon federal to tax a know if in it this and will it expense effective it million booked matures. that When notice rate rates. XX.X%. quarter. tax you'll this Normally $X.X average a from this one-time the

More XX% our but things been future. in will to effective importantly the number generally XX%. tax rate rate, lower income be around have of impact A we the significantly can

a in XXXX. this expect positive per around We future drop to have significant on impact This to starting share. XX% should earnings

share it fully vary impact increase about we would will the what earnings XX% been. lower per by from will have rate diluted otherwise While from quarter-to-quarter, the estimate that

investments Speaking for be run past, that of securities the of such statement. the will in income there XXXX, swings material way market purposes a changes, of generally income you are periods the changes equity the through accounted result that value In however heard This equity quarterly volatility. through market GAAP in may for. will have be run change balance starting could in net in sheet, in any changes equity in that may have

but line the and to taken wages now all a statement benefits, Before statement. a to other personnel past, any expenses. impact which we've line we've on income stock-based wages. reclassification personnel-related the and I the line quick the and or administrative to and employment-related ratios. and In This make sheet, expenses, expenses changed This other no of change income Starting statement name employment general expenses. turning and quarter, expenses, one presentation we like combined called a the were income on on balance net is salaries them of employment another includes operating has made comment income compensation, personnel included taxes this salary income wanted other to line to included had the expenses, salaries the a statement simply these from with

of money to insurance on now Hurricane no put balance any our additional call, mentioned to sheet, Looking we into the raise had need last I or Irma, after our as companies. to capital any

in homeowners choice, required a as Both TypTap, and a ratio consideration of repurchased $XXX XXXX just XXX% in the excess XX, were choice we have and level. of XXXX are for total part As X,XXX%. just program, over consideration homeowners XXX,XXX of fourth for TypTap total million million company XXX,XXX our $XX.X in $XXX shares a back is the at the the $X.XX investments have we cash was million. XXXX, under and December quarter under is XXX%. of buyback The total bought million well of $XX surplus of and million. RBC In shares The plan the holding

income capitalizing estate. real by and liquidity position As cash on strong we've investing we mentioned have and our been in before, fixed more equities

investments income year, these $XX million. should During Continuing -- forward. have by cash, just higher higher increased investment with in with over invest to drive going yields, we combined investment more the combining

Just here. value was quarter. of The share back as rates. X,XXX,XXX and basic XX,XXX,XXX. quarter was the With tailwinds forward good we a that, year and turn In yields it outstanding was it claims to more for of third lower by shares higher Book deploy number up look and us being numbers quick few investment $XX.XX, $XX.XX income from cash number to trends, per the end improving diluted of the of the was shares we tax a at at summary, fully provided I'll Paresh. some of the end other the outstanding

Paresh Patel

you, Mark. Thank Okay.

numbers Well, as firstly we QX and XXXX beyond two the XXXX financial eliminated and are why? have about show, optimistic very ahead, of and major the Looking events about uncertainties company. QX we

profitability healthy can normal more it importantly, operations pump it can to QX the healthy and and that a thereafter. that First major withstand the revert stress hurricane, was back back operational operations. of to financial hurricane QX and promptly

mention adds elaborate. buyback Any Secondly, up, to let consistent me dividend every always we does our progress and appear our share not individual steady but big, be quarter. quarter

have $XX XXXX. from value over per started share book We when company the $X.XX grown to in

unnoticed, over these In any date, an you addition, as dividends, that by $X.XX is in with shares. low numbers achieved reduced past tax look see when haul, gains years, a are given it and often evident. in has goes interest days We long what things these paid environment add to high X.X the this so have count the we them have quarter, we very finally, very our rate. are in you share and don't do rates share the Furthermore, five inception consistently, but about produced the up, but million per we been over and

less the improved open and with provide for are forward, business we bodes are well and that Going tremendously. things is have outcomes the higher the and have already that, This few that the success conclusion, in we removed very conditions today. the that months. Interest uncertainties we instructions? in positive some exists and and the And Operator, for optimistic. questions. future favorable ready much is over rising appropriate long-term for we last major rates tax to the formula lower is why up improving In from please a picked call rate

Operator

Thank you, comes question-and-answer question. At [Operator first of conducting Mark time, Sir. be question session. with this from your we'll Please Our instructions] SunTrust. proceed a Hughes

Mark Hughes

is may being talk experience some Is Good some on energy fourth do here is storms, of that about expended that claims you you. quarter? lawsuits in Could missing the thank think or you improvement of the favorable sustainable? underlying Yes, afternoon. more that you're and market little a so in from elsewhere the there the impact that any be

Paresh Patel

the question parts. different in Paresh. it's Mark, to add two I'd

has good any much there anything a decrease claims the have is In or come the much think winter and had terms occurring had weather. a because haven't else normally claims We thunderstorms largely of has and The the pretty affect in, and Irma I to has pretty this been in we occurred count. favorable. really winter claim, and is that been coming very actual since gone, that non-Irma weather

made last weather. can't of of weather-related of do that underwriting the daily event. because the is the but biggest the claims bulk take improvement We years, it's and some So we changes for a over see some we of because that, of credit couple

are As as were go, efforts the of but Irma claims. on we're in far their they what it's that is than early lawyers focusing Irma daily terms more lawsuits days, noticing before very

towards is decline, daily starting shifting it's claims lawsuits but that over focus see. we lawsuits lawsuits, Irma and the the to are away So, Irma from numbers

Mark Harmsworth

biggest mentioned drop related to weather week this and same the the Mark, on elaborate was year. versus dropping the actually quarter per Paresh and XXXX first claims claims the in last we've something biggest, quarter just drop steady in fairly of And about to had just

Sorry…

Paresh Patel

First quarter XXXX.

Mark Harmsworth

versus QX QX XXXX XXXX.

year. off have the a drop since Irma, been going on it's So, but throughout we've

Mark Hughes

Right.

business, Okay. around, going that, but to The this does X,XXX presumably be that is of that sort as reopened think time that more or I reopened, normal that, just course that's consistently is their trend reinsurers that pretty of have is the you've described issue?

Paresh Patel

in send occur the so Yeah, are so reopens a bill. course additional is where we've early this of closed when they they example, and usually situation moment, business, we're that the and repairs them final paid and They may do [indiscernible] in usually be claim there it, the some normal and the get payments in we look, pay at due. the for

claim. payment have additional to the the and make reopen reclose we So, claim, the

So, because there activity houses being is a there lot is of claims, individually. these XX,XXX on those on work that done going

lot because of to reopened claims Other goes that wasn't they additional the a that So, on. times the the go when repair. they until the get evident actually start may repairs doing find make homeowners damage we

So, there this like that occur. is various reasons

open also and and things course, us sues as start well. they Of that lawsuits if somebody

this would've reasons the expected they start, we in what various time. point we're early seeing at but there's So, to occur numbers are

Mark Hughes

here Can going June you think X? you once give will What thoughts the hit how be think trend we some do is costs to reinsurance year-over-year? impact you us on

Paresh Patel

will guess. tell in be as program and the question The June up. reinsurance how I easily restarts early eventual that be. to our would to I obviously and it's rates much time just will X, presume is outcome Mark, what the would going too tell

Mark Hughes

don't to perhaps. venture a care range You

Paresh Patel

bad going than want I insurers number am it, the of in suspect to is a reinsurers greater speculation going and really to number right. want, but than a be the what's happen the part I lesser

pick XX%. between and X% So, a range

Mark Hughes

about the testing up pick the is a citizens, share I then to think result competition? what's you is Yes, of here in because that testing am then out the maybe your capital understand XXXX? First, how process, How there going sort are in among constraints there net with think, you do to your okay. new topline And of we waters the do topline do there? bit curious little XXXX? some you And

Paresh Patel

nature of hoping From topline to may something gets our reasonably because or a business or book obviously the we're At think current the initial nature, we or of a dramatically in of well. book done get we perspective, if being of least that that, that are but business have flattish a I something is performing plan. short that's an matter XXXX. of acquisition change It cautious

add who that say and policies to that mindful well, of as performing. I not new of Before may be our we have well of we how their and because are think last of leverages. is that go people lots a years may of there some and or the current expanded over and a perform portfolio ratios lot I regretting loss are combined now because few ratios expansion lot

Mark Hughes

And about citizens…? how the new

Paresh Patel

don’t want of kind mistake. We repeat to the

Mark Hughes

process, early any citizens there? new the observations about How

Paresh Patel

of of I actually were we as XXXX. major elaborate and should at Citizens a assumption trying the what Yeah, had do. end re-overhaul to to their process

We So, in had process. starting never participated XXXX. new

be with for us prudent thought it. we So, be would it to just familiar

of with suddenly the take policies, planning an small a process. It any just citizens to anything suddenly that learn we we [depop], take the out that process future, we got to So a just opportunity in wasn't or were very large be great QX should opinion that passing how else was familiar us even nature. a works. that fewer it we was to want come and us as did It

now and efficient. streamlined in does the perspective our more know how process, works So much and from new but by a lot Citizens think it's that's it's all I we more it design. was process their the and the of and it's work it

Mark Hughes

much. very Thank you,

Paresh Patel

Thank you.

Mark Harmsworth

Thanks Mark.

Operator

from with question. Brian Our proceed next your of comes Please Sidoti. question Hollenden

Brian Hollenden

my taking for Hi and call. thanks

Paresh Patel

Brian. Thank you,

Brian Hollenden

now gross give Can an can slide, the update nine 'XX us approved, where stood what end to 'XX? by premium and at of end you on with and of states you rate grow the

Paresh Patel

Okay.

five it week to being in timeframes. was I'll different in two-year Last TypTap So, give business. anniversary our you of

in more done very kinds We policies of we to as X that premium other well and million over that, over all expectation on timeframe. is that other But of is and policies in moment. we are things states with We've it. this, nine X,XXX keep this the go million going written can get have The policies beyond achieve zero other over well Obviously, the force. it the the is timeframe at if which in how obviously as do what And we're to will us, etcetera. we trying $XX which does next $XX that in is obviously in multiple premium states. big for milestone this we some that? for of million things is across the NFIB such set on us, But business, debate of dependent

Brian Hollenden

gears acquisition switching biggest seeing has been And the maybe just then a to interesting the transaction bit little are getting on anything what impediment done? and you a front

Paresh Patel

price. together the of people a there. paid easy. what been Well for Deals second be the to we same that’s current when is get fair value The on the part between for business difference done always wants It’s on think is problem come business it. what owner and the the

been that's the disciplined so about we've very always issue. stuff, So, overpaying for

come yet. look but to I ask an that business, going do without phase where will think serious at And they I moment at income The many of item there, we're realization suspect I before that say go because who haven't years interesting to how lot a through there is your the earning are exit you you alternatives. eventually shareholders people the other that

lot do suspect. a than reallocate more more will lots that have in they have they believe teams management Some time to

Brian Hollenden

to premium where ago? me. talk where then All right that right. versus ratio pricing, the you you on you think this ratio? moving I can are just talk the sort And were XX% forward? little annualized about now And then rate is you just know know Can If of about bit a last expense one year for you way

Mark Harmsworth

down. that I expenses I'll total of talk premiums I a expenses about earned of it's about you the at if net for you our because the the was that think in are quarter than to just in full and minute. more bit for fourth you just a combined sort ratio think actually expense expense. see XX%. the little if you a if down are up bit other little mean, The terms I if interest tend look ratio, year

it's that's reinsurance some going what and If for changes really that you the combined I XX% of ratio. the and year, going any sort see of would XX between forward costs. a noise terms about But see range is in in somewhere normalized forward, I absent of of of crazy would the in that of sort full sort what XX

Paresh Patel

what of the changes previous And was force nature in what? or premium question, you're or rate my your asking

Brian Hollenden

Yeah.

Just rate changes.

Paresh Patel

Okay.

whatsoever. increases expecting ones that which us And business our on rate especially take just no changes in philosophy don't. policies the very terms makes So, basic what rate healthy of run is it we we and we not

annual late the are are the do filings forward. our rates fall. forward are over least when our help summer decide due what will at to Going And they early going IRR our that going we will at be plans of actuaries us the rate course and

are rushing been anything because as else least already see enough was we've sort in have increases We far we and has expected should nature prone of could a hurricane rates. as of that file we to that our AOB at were And around been hurricane not the Irma for for in or rate reflected state. because that long

comfortable much So, exactly at we where are with the are moment. very we

Brian Hollenden

Thank you.

Operator

your Soleimani Our next KBW. question question. of comes Please proceed from with Arash

Arash Soleimani

or Thanks. prior fourth development there year any the adverse? in either favorable Was quarter

Mark Harmsworth

No.

Arash Soleimani

any was accident current And development? there year

Mark Harmsworth

No.

Arash Soleimani

like Homeowners’ development Choice statutory homeowners’ Claddaugh. between financials it adverse for choice in in And there your looks contract Okay. was an

second completely was question questions the to of of one, on transaction and second part purpose basis then transaction? that assume GAAP the it correct never two is, yes a eliminated? that So, the And that what was it is question is the there, then happened, if

Paresh Patel

Yeah.

the clear impact GAAP statement consolidation. consolidated one be on everything is because is there to on Just on no eliminated first the

Mark Harmsworth

nature have ourselves be of Homeowners And what's second so third But reserves capital we're can we part it we within looked Choice. we at we know all we didn't very And with bit where our want question we didn't with conservative that Homeowners are But pride insurance you we run and just Case wouldn't of to etcetera. with the got we need on in and capital additional the the Irma, in and any the after financials.... going etcetera. contributions is, point little But comfortable make sure we've with afford we a that the of do think a bad to our we and reserves Claddaugh. correctly, plenty did Choice it. AOB party,

Operator

gentlemen please stand technical We and some be please. difficulties. experiencing by. standby appear please Again, to Ladies

Our rejoined. speakers have

Paresh Patel

Sorry about that.

gone we Arash, have still Something online. you back are wrong but here, there?

Arash Soleimani

Yes, I'm here.

Paresh Patel

So get to the question? my you answer hopefully

Arash Soleimani

was was to that you everyone and regulator gist mean to needed it's that not to it needed of it capital where statutory add basically but the I happy, be know make conservative. to be to extra the entity, it the any you just

You a that from look even to stronger did that is capital it much correct? make this perspective

Paresh Patel

Same reason... Yeah.

Arash Soleimani

RBC like bit conservative. number to when be Choice the want and said minimum. was cushion You Does extra like anything an said gave we like is pushed they a was you say, of, was XXX a a there I just to that XXX% anything you there for basically little Homeowner more think have guess it look you want to hey bit maybe I just the you

you cover? guess how what would be Like - would like have without to? I or adverse be something it XXX would close development what So, this gone to like it

Paresh Patel

premium for Right. adverse price development, my Because actually pay it a cover. to paid that. We do to fire the

Arash Soleimani

Right.

Mark Harmsworth

reduced been have that. future than ratio enough, make adverse would like to ratio didn't RBC surplus with just would with was let. It the do But higher higher nothing even was. surplus make to anything of the to or really this look It look RBC actually higher You it have HDPC. development deal trying it where the

Arash Soleimani

Okay.

protect in the say AOB already the This in HCPC in adverse case there let's even So was crazier be would basically, just more like, development is. than situation? that was, gets you're point just future saying what's from crazy, whole it

Paresh Patel

not because HCPC Yes, take Claddaugh lawsuit, will the

Arash Soleimani

makes That sense. Okay.

Paresh Patel

point. you to where the answer And market that the was and was Arash zero why we case. home absolutely when whole did really the That's in to the co-level that question quarter, the drive the ask is everything that

doing than reason So, to appear we for this it were doesn't other just - any that safety.

Arash Soleimani

think XXX% start need put you if more Right, you in that XXX, any once so would And there? that it's because the right. right you I for TypTap to there at is mentioned, right,

Mark Harmsworth

XXXX%.... its Arash

Arash Soleimani

I thought you XXX, okay. said

Mark Harmsworth

we in if apologize, didn’t than clearly, more that you I TypTap. surplus enough come got

Arash Soleimani

the stuff and you so for you just out And written sundried direct can premium the, quarter mentioned, a that the premium? yes, citizen break

Paresh Patel

that premium non-cash really, I in that you the get written wasn't didn’t moratorium this, terms tell you the fourth assumed is much had the and also that of direct going quarter to written policies. are premium gone affecting on because

So, because don't I some going to you're volatility see written going to – are the you effect But perceive from just premium direct in QX. got premium think written reversal the I get numbers.

Mark Harmsworth

I think was assume and was low. assume Yeah XX.X and Growth million. Yeah. $X rate like very was premium very,

So....

Arash Soleimani

direct But like assume so XX.X? gross was you said, cost

Mark Harmsworth

assumed And like was Yeah. X.X.

Arash Soleimani

And have that X%. the not the you neighborhood it then at so and expense operating the of basically at the taking policy if and it including gross closer just expense, you out other And year or wages ratio, and looking looking general personnel a I'm and spaces looks interest XX. the the out expenses acquisition the something rest to other was probably on broken cost on in like Okay. get

that's see I back fourth So quarter trend. that XXXX, I in seasonality, same to just look of if the seem

So, to sort XX% in range, on percent basis kind the XQ a XQ? of X% XQ gross and then of

Mark Harmsworth

bit. you Yeah, it a I mean I percentages, when confuses think little about talk

apart. that take me let So,

chewing is expense quarter one you chewing will so The quarter. expenses. main bonus know fourth up with in up that and expense So, end lower the up fourth you're often

million that you're quarter, comes - see. about look forward And its if of fairly it's year for closer quarter combine if $XX the probably about It in those year $XX quarters. you're million together fourth out this way been neighborhood if always XX% range you to probably of to lower in quarter lower XX% two you overtime, you typically that’s three expense But for is the surprised. going basis but it’s So what go are at it personnel if to assuming its not and last that's first consistent a course, in on than OpEx. dropping that slightly

Arash Soleimani

Thanks. of And is reason fourth had year that the we it's and the because lower year? in storms the quarter last this

Mark Harmsworth

Yes.

Arash Soleimani

And I Looks just back is market ago. reinsurance you that, the a put most you talking of, below it's like out mean know months levels participants I range onto days the of question, hearing said XX%. these X% few to we're that about considerably what a were

X-to-X seem speaking, the realistically high So range, as more guess based I it in on probably you're more why what X-to-X recently? hearing are going realistic we're as like Is or you XX. does more

Paresh Patel

I outside a range that so assets was Arash, putting wide the I wouldn't fall range.

and things your talk you’ve it’s go to with its very done numbers the the worry stuff what outcome I'm until outcome, the to early you about be. and but will people – get season happy numbers, always better If final in you

Arash Soleimani

say... to fair it's And

Paresh Patel

do years I'm think right in early and I earthquake what you it’s experience rates. days rates do of too when and it. the the reason can you agreed Japanese this do changed be There back XXXX cautious stuff. some now isn't like is it being In is reinsurance of

when it been numbers optimistic the in I'm have are to like I signed. the range, you So, do but like X%

Arash Soleimani

writing mentioned, like this start expect you sense. you know to year makes flood expect to you quarter - did I said you was What in? that stay Sure, or what the roughly start you did

Paresh Patel

to to, than when more sprint marathon so a No, have a few policies. start we sure go this we doing steps comfortable we're we through haven’t. we There's a we're to trying as we're these want and writing make

Arash Soleimani

policies are current what a TypTap? for And the enforcing enforced premium's

Paresh Patel

I earlier, in about over XXXX and think policies million X I said force.

Arash Soleimani

with you the percentage haven't associated that a AOB of XX,XXX the what them? stuff, And Okay. do AOB have

Paresh Patel

also to when I and ask question, which litigation everything started. going just not the but think policy, else is occur. just its That Arash is stuff AOB really also part you AOB is

So, the up. we the tick getting because - know seen month we've every starting we're numbers

that that it peak we to number this that year. what will So, near watching sometime is be, is are late peak we going nowhere And to yet. mid expect number but

Arash Soleimani

Do you the did the you was reopen said? that it ones number when - like XXXX

Paresh Patel

that, eventually expect Yes, course but they claims is these you get wave them, first normal are will the reopens, these XXXX We reopen - yes, you one what reopen. to reopen. close of in work etcetera. done the of events because At happens being

We are more when of all be and etcetera second which that but in numbers, expecting now is the be it arise. will will that I mid we're peak reopens wave the of stuff to which this anticipating much lawsuits significant to much smaller And like late said, year.

is out a going so number be. what ultimate over as received related the a bit little further losses we have XXX number far. Irma So, to lot It's meaningless because you to to a extrapolate

Arash Soleimani

first you wave guess the legitimate. more say Well is I Right.

you that XXXX sense - it really of saying that is know So, oriented. AOB you're to It's actually wave makes it's reopen reasons? or reopened more non-shady not first for because litigation in it

Paresh Patel

real One claims open, but PAs or very but with not the last of litigation, comment AOB or that part do bulk to are yes, them. those little on of

Arash Soleimani

Okay.

you Irma that mentioned are those with not necessarily? the or So, associated loss hundred those related XXXX

Mark Harmsworth

Well that’s part that of also the illustrate again, right. but XXXX, point same just

see that XXXX got have today those a been have you've of we lawsuits. to do losses that tells nothing If with you that because hundred them others

Arash Soleimani

Right.

Mark Harmsworth

mixture overtime. That change will

Arash Soleimani

And just to change. when process citizens the back -

might prepared in be kind have and XXXX companies citizens the provide you get it be firmly or you know, any storm there's know, case, are out do knocks, believe ready and other another opportunity? to you is capitalize just to and So, you some just of reason bigger trying that again and it

Mark Harmsworth

with using dialed should well prudent we imminently when sort we the new just processing so. XXXX. We We to because we it. revenue should very sometimes a in decade doing with we seem of familiar for anticipating because we over the need look it put citizen or since been do think just were next survives the decade. it process had we've it that their were with it Arash, old about to familiar It place but it that wanted something weren't process, be be going process

Arash Soleimani

sense. No, that makes

Okay, very the I Thanks much answers. that's everything for think have. I

Mark Harmsworth

Absolutely. Thank you.

Operator

Our from with next SunTrust. question is your a question. follow proceed Mark of up Please Hughes

Mark Hughes

you you To costs costs, incorporate Yeah, will that rate. I assume and the your thank into have you. those do higher reinsurance re-file extent

rates You of would wind the had contemplated the that eventually. already blow made the that point sort

rates? wanted or clarify, or you rates rates will are just incorporate So reinsurance you, have to up your X% re-file your that into new if what X%

Paresh Patel

for question Mark, a if the require or difficult may up hopefully asked probably we a I up the that simple rates would filing. absorb rates go reason. say go should that X% rate something XX% just just If

we So, it's just the a are scale. question of where on

Mark Hughes

you're I but a in I language that one least to how or water impact to around language able roll is the also, seemed to I is I filing, And has that so, out more policies? what on rate to language policy some can't And then the the policy use some a am if that there restrict limitations a there that prevalent extent damages water some contractor, like some And evidence policyholder that. kind in that of rate damage? at is And that saw if get language, think strategy maybe remember precisely didn't back widely? right there

Paresh Patel

single that filed will claims contemplated So, their portfolio. more of approved have just in got parcel rates the because, part share are on. biggest the of if at Mark, be this Irma We and and complicated prudent trends, just calls filing seem require we rate the that customers business had remove we our asset And we has has that see we're providing Irma time etcetera, and you there had the for about kind mindful we just of our relooked of an didn't policyholders, and stuff trying moment that so answer. to the our always on trying and and for and we developed had asked. we're on policyholder doing process etcetera to these as that that's given and business we we question is in we're this add effects it are that a uncertainty what's But no on mind and as very the it's our XXX,XXX change question very and there all to talked that our the them at peace that that can trend change watching -- to lawsuit insightful but

do So, wish at a to through trauma, if can gone when avoid not we time people we further it. have create uncertainty some

the that like. So, we repeal trying file you work department to are with if rate to

Mark Hughes

language policy was I that reduction? there recalling right or associated that with in even Am was the a rate unchanged

Paresh Patel

it There was do in things, actuarially when reduction to because these have neutral a that they make we change. making

through So, created we've that But there gone just that that have adjustment state-wide lot was angst given that. a course seem of it would some Irma a in of as rate doing doesn't appropriate event.

Mark Hughes

the Understood. of offset? rate What was magnitude the

Paresh Patel

reduced passing they rates, and that will Well actually kind language would yeah, of because we so necessarily, we was less its doesn’t tell those but in amount. neutral. flat losses a it savings certain thing you, were that and the [ready] And expected reduce by

Mark Hughes

was impact a perspective neutral guess the what premium? I but on loss Right, from ratio

Paresh Patel

about the it's of of premium entirely fact points portfolio. which a XX% have in portion right. minus It low particular is both, our overall our a wasn’t portfolio, and been maybe I the that policy of the would about digits think a across one high-single couple entire plus or type on

Mark Hughes

that Did you just was think much reduction of reasonable a want in be you the for was you or disruptive think coverage that a to change didn't too and did reduction?

Paresh Patel

started looked claims We moment a kind steady up policyholders. anything we of it, all we and was treat daily agents back, And Irma it stuff to came let's and to see. the at time making do it of to at as start creates bring it everything this moment we try but well future point in at changes we That just seem when doesn't it work won't our and because contact the we we else. sort -- policyholders No. at had walking long these when before appropriate how not that quite in with XX,XXX we were said, additional obviously reasonable coverage the disrupt showed our through mean the it -- our process for our it agents with doesn’t it we was do steadily the time. thought to etcetera, and implement we are constant It

Mark Hughes

have had properly was question of improving so what a last hear that final QX a that quarter year. maybe you trends Mark, mentioned and I pre-existing just think Then continuation claims I trend? was since Did been the of fourth a

Mark Harmsworth

something been that's going been It's the throughout year. on

The claims but that's XXXX from dropped been I as have biggest the was going into our XXXX. first mentioned, through XX% on it's per year. about the drop in something week quarter I think

Mark Hughes

much. very you Thank

Operator

our over who end Kevin now like would reached call back We've of session. the to has closing a the I comments. few turn question-and-answer to Mitchell

Kevin Mitchell

support for the future. you received progress I'd to look of express our the employees, appreciation like management continued forward shareholders, behalf entire most on importantly, we our On updating team, and to policyholders. agents the We near from in our our

Operator

Thank today concludes you presentation. our call. for This for us joining today's

You may now disconnect.

HCI (HCI) 6 Mar 182017 Q4 Earnings call transcript