UIHC - Earnings call transcript Q3 2017 | AMERICAN COASTAL INSURANCE Corp

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Operator

Greetings, and welcome to the UPC Insurance 2017 Third Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation [Operator Instructions].

As a reminder, this conference is being recorded. I would now like to the conference over to your host, Adam Prior. you. Thank

begin. may You

Adam Prior

good Thank and us. for morning you you everyone. joining Thank

can earnings Relations the UPC’s copies section. today You of in release find at www.upcinsurance.com Investor

You’re XXX-XXX-XXXX, office to also you contact be send we’d happy at copy. a welcome to and our

has addition, available on this its In made broadcast site. Web Insurance UPC

these a federal meaning update revise Before and securities statements this with the to any to forward-looking over or following and filings historical respect in of ahead, and of like call forward-looking on the we time-to-time and information, Commission. like within conference of behalf laws, statements UPC the started, including statements trends results UPC Please results statements, whether Company those read any from Executive the I’d a in described UPC’s result to relating specifically turn Securities Exchange as Officer. I’d financial result of With and Chief UPC’s those call including that, to otherwise. statements may and forward-looking and Company’s from constitute the or differ go of subsidiaries. the the the disclaims operations information, get made uncertainties, to Actual anticipated John now Forney, developments risks Mr. results the from with U.S. the to in John. future new as statement materially Company. business obligation products Except

John Forney

force, hurricanes you. XXX,XXX premium during We I passed for $X force we taking UPC to With Martz, Chief behalf of want the our Thanks, on at we couple put of On deal Adam. with Forney, Brad had appreciate is We UPC the time This me Financial at today and CEO in you're too. John us Insurance and hurricanes UPC, Insurance. is perspective join call. President policies milestones to big have billion Officer. to of everyone those some the in quarter. in

total the they financial first Coast Operationally, strong. million Cat and United and and at and we X income another non-recurring the hurricanes demonstrate largest of Southwest and over operating XXXX, make our personal we cap $XX Florida, landfall of we Company, But we and commercial made did the two the appreciate have made We expected have gross at in of and billion amortization. in where leaving wide a the in even in the for us sense went of hurricane And into losses resiliency all taking our the the QX. Florida. to only market in investors, over well other cat merger losses largest losses $X.X $XX events. positive the to than earlier lines even through million net to Texas For for state us all right of X%. for income of that, after other time double full-year, reinsurance our share history, And our of in our beginning year, Those used XX% and Harvey show And aforementioned million positive we merger Irma combined share two concentration landfall others nine showed still reinsurance first quarter. and AmCo States our in so of least of and and exposure benefit of charges non-cash partners $XX that area results after account chance months the XX%, $XX have the year. market of billion yes, Irma less at same the retained states, capacity,

and put of and the But the claims, for XXXX. the a month XX XX,XXX entire hard To-date, the claims. year has months service closed strain his over environment in XX,XXX We teams just worth will off. standpoint, on answered received of felt from been solved while challenging, claims Scott bell quarter. Receiving certainly any compared the And our that John company. we of and from And work in about of over we arose. of Irma, paid pressure Harvey have preparation and XX% have Irma and Harvey to almost resources claims one claims every problem a the XX% St. team

quarter. hurricanes alluded not story I opening, the my in the at UPC were to only As during

much We new for on policies, continued September, books. In states the to the were two new an largest business we wrote number month. that our business put XX,XXX for amazing shutdown profitable considering

over our grew all count over did of performance lines we quarter, by that in results to underwriting financial count policy the core our our to commercial put policy X.X%. personal rate beginning detail. Brad our the through improving XX%. Brad? discuss Board. this while just place increases to on the XX% our over it flow We and For turn lines Martz was this in point, by to And X.X% results. earlier of across are book, Retention I'd like year more our At

Brad Martz

GAAP the million catastrophe to our hello. of per to our of Brad combined strong revenue press million a year. I'm of and for underlying XX-Q release of XX.X% was share. get highlights and $X.XX the a $XX those, encourage ratios; review before of third CFO our John But point losses financial $X.XX results. or $X.XX and year-over-year; grow from loss remind review the and the to UPC's you, regarding of to information XX% $XX.X approximately prior which of and Martz, I'm recent quarter million XXXX ratio Underlying Highlights XX solid we or growth or operating most improvement loss Form improving share, $XX expense pleased Thank Insurance. non-GAAP everyone ops I were; would more of quarter. a net UPC share like

with $XXX earned revenue direct XX%; written XX% for from premiums of additional premiums net of up the mix from UPC's were quarter was grew gross growth million, XX% derived property personal loans. gross Some million, million; driven Company's the Northeast premiums Southeast; written up for gross Insurance $XXX Gulf commercial personal and year-over-year; XX% XX% premium year-over-year all written growth Florida, XX% written insight region, into mainly year-over-year year-over-year; XX% XX% Coastal the $XXX commercial a from growth Organic premium. gross by the quarter XX% includes; Florida's earned premiums approximately American regions. of the from XX% of and from loans

XX% Assumed E&S all premiums underwritten $X.X Net by to million the income or commercial the nearly investment property quarter of were million related increased year-over-year. $X.X business AmRisc. during

year net hurricanes the approximately premiums XXth $XXX the AmCo a third points in million total, loss And at losses year, in results $XX landmark accident as development on years force those the end increased These $X in quarter, policies of and in items, $XXX,XXX. and Included retained the reserve September catastrophe $X to quarter. exceeded from eclipsed were $XX inclusion for of UPC quarter. losses well by favorable during quarter net driven Our ratio prior during to current Irma, as XX billion approximately Insurance. this Harvey million total the of year. at milestone the added force in John from catastrophes million million of over as mentioned, XX% last UPC's

of million gross million due premium or saw primarily XX% or reduced favorable loss prior million year are million catastrophe change $XX frequency or American losses million $XX.X driven points direct ratio same of lower the and by and UPC's increased written was the non-loss their by operating of expenses, consistent Excluding compared year-over-year. the to inclusion year-over-year; non-cat approximately fueled XX% to costs, attritional policy as of approximately residential was driven net all that ago. development, the XX% reserve operating policy Coastal's of cost; as ratios AmCo's $XX expense growth, which assets, year-over-year well acquisition business of year to with period by loss underlying UPC intangible improved remaining acquisition amortization impact commercial a loss XX which primarily its UPC’s over change increased the $X.X $X.X

for reinsurance sheet, a gross UPC assets level program catastrophe with feeding billion, $X remained over X.X a of expenses including expense non-cash income ratio, billion losses our X.X our with million to and over the significant operating quarter, gross year the during historical the UPC's by year-over-year. For increase strong. our amortization to total XX.X%. ended expense approximately commission nearly of of improving capitalization better flow improved which same assets, invested Despite ratio the period quarter underlying even of adjusts $XXX $X.X the QX, points balance points expenses and and cash from ago.

combined Our has during liabilities reintroduce in XX, but which reinsurance holding the portfolio. some $XX reinsurance $XXX remarks. a our at the if increase Hurricanes during until recoverable by due both the quarter, that UPC necessary. of million. for to investments available John incurred. Shareholders’ Company's and approximately unrestricted number end equity the now for million companies of is significantly $X.X roughly million like related to and minimum, exhaustec, surplus cash contribution liquidity cap was catastrophe unrealized billion proportionately any to of due Forney is XXXX it included approximately an Harvey for changes expected all loss believes the to to The payments to at the quarter to offset Total is $XXX assets net Irma. in and of statutory reserves limit statutory increased the in May I’d until of approximately gains closing which losses declined loss partially events net still of the related the At the quarter, remaining Group company,

John Forney

family Thanks life. Brad. me probably my live given A would once long history, doctor I told that a

in of XXXX our So care better thing me he financial face same the take UPC's about the the tells resiliency season told hurricane historic me Company. equipment. of I the

to are be time. long We going for a around

building running with that So and we UPC in mind. are

to open the we’d for time, that this questions. grateful like investors us all are for to journey. We line supporting on At our up

Operator

you. Thank

question-and-answer Instructions]. session will be now conducting [Operator We a

proceed. first Greg Peters Please with comes from Raymond James. Our question

Greg Peters

specifically breaks I of were give some the color losses, risk a There’s fraud. wanted how out around up a it always provide how claims and there the Harvey, to many more there's late around notice working and Irma payment. benefits discussion without of claims, between catastrophe potential chance of you course closed to

in a that one you So I but provide color. can that lot additional asked maybe question, some there's

Brad Martz

and of $XX million Irma of And about almost loss $XXX Irma. quarter end The hurricane little we've million was of million. we million on and payments as for Harvey the at estimate got over yesterday, the gross $XX total at recorded for $XX Harvey,

Greg Peters

many Do an Harvey, payment. of claims on without how were idea? And closed those you have

Brad Martz

XX% closed of and without been the XX% Irma payment. of Harvey payment claims without have have the closed claims been

Greg Peters

important guess months. to is I reinsurance going topic the be So, over an conversation next several the

second, then And perspectives talk about color in with terms could reinsurance some XXXX? is the in everything there. your if around progressing follow-up costs you First, reinsurance recoverable. And your of for what I are recoveries assume

Brad Martz

On our great the no already has yes, who working vast kind we recoverable, know, the enough credit cash working risk reinsurance program, with and any been is to their one with fortunate have already. you our monies reinsurers. very reinsurance We to to majority collateralized. recoverable, as of expect of having are problem partners -- We're communicating be related which advance don't

seller in fore any a position we're So smoothly. that we're enviable And where securities. not to be going very going is of

John Forney

With what's business. prices, happen reinsurance a to we're not future in in regard the with to going prediction

in in add predictions. carriers rewarded just than fare storms it's made the have such pricing that that that more to voices not cacophony have companies so And won't that in favorable underwriting so will say that terms be of well. did that's with fared performance, hope would the claims well our of I I

lacking bit would the think in it has have make, had underwriting So prediction that those last in regard. carriers that and that if good one infrastructure which between and little been market maybe be see to are that few I differentiation, years those lacking some in claims we'll the I a

Greg Peters

question final just update and and re-queue. Allstate The relationship you the I'll Can GEICO? Company's with on

John Forney

be to continue very strong, and Both growing.

Greg Peters

you, up Any any additional new states with that color? partnered they're or or for Allstate GEICO

John Forney

in their with to business about our believe nothing with potentially writes us a Florida footprint. but makes healthy I across And us and how only writes business productive we largest regular our And Florida. have book with to grow. partner elsewhere. does GEICO continue us currently book that GEICO's Florida. in grow Allstate and of Allstate business very in of dialogue

Operator

Please [Operator KBW. Instructions] Arash comes go question Our with ahead. next Soleimani from

Arash Soleimani

start-off. So the reserve in Florida? gross and period prior was just What to development outside

John Forney

last million of and we year. outside for I'm Florida, bifurcate are of the say outside Florida $X.X to reserve number… you’re that reported adverse asking When color Florida? which you you’re between of that Is more Arash, the trying what not you development on or looking sure

Arash Soleimani

XQ I'm looking 'XX. for

John Forney

of is the just and development of the driven XXXX So in Matthew. $X Hurricane accident quarter roughly year favorable by primarily million 'XX third reserve

Arash Soleimani

question quarter of the quarter And What's the in XXXX had the way quarterly and amortization. the I think that that? in first beyond was and then other right to on of the fourth

John Forney

amortization the Note approximately third approximately And seven quarter, and fourth to information million. balance additional of some fourth total approximately QX quarter for $XX $X.X million for our for quarter be form $X.X the then in for on quarter, quarter XX-Q million. XXXX, it’ll 'XX, second XXXX $X.X of each million include

million So XXXX in in about $XX million XXXX. year $XX.X calendar and

Arash Soleimani

And cash this. also at statutory QX? capital mentioned What at you have and HoldCo I may the think was QX

John Forney

of quarter was I and the cash, was statutory the HoldCo at million million. report it end capital $XXX approximately $XX

Arash Soleimani

if of downstream have any are thinking? you you And into And what subsidiaries much year-end? the how to cash are downstream before to do the plans the plans

John Forney

the got might yet. some a We meeting this yet. consider. we haven't -- regard make to not that later made Board We've the have in where But management recommendations may for formal been those determined Board amounts week decisions

have capital additional capital contribute feel analysis. our lots if ability to of We necessary. good done about And

Arash Soleimani

For Harvey split American and the what Irma? was for Coastal,

John Forney

being $X $XXX Harvey. it anything we Coastal incur E&S AmCo the loss was Irma But which Harvey, million for of part -- with balance, pegged other well business. have Blueline, the commercial the about Irma for million is $XXX for American and retention as didn’t Coastal’s at American million as UPC. for did

Arash Soleimani

the much how the the versus in of of the XOL earned was premium share And premium for seeded from terms the earn seeded quarter, quota in -- the cover?

John Forney

have second. get you, I could handy. me don't I give number that it for one

Arash Soleimani

Sure.

John Forney

on. should get Arash, we'll We move number. with back to you that

Arash Soleimani

I’ll Yes, you can re-queue. on. move

Operator

you Thank Instructions]. [Operator

question with go ahead. next comes Peters Our from Raymond Greg James. Please

Greg Peters

gotten to due quarter, specifically around processing of them OIR to performance conversations then had had regarding prices in conversations specifically around from with you quarter, the costs you've circle I been you've of possibility after the claims. the back any if you've And reinsurance the the and how rising? about your wanted feedback more higher claims,

John Forney

our with terrific healthy a We've very job. the think them. commissioner we have new headquarters conversations doing and relationship had is time person us great and with this longstanding He We to in OIR positive with appreciated a spend visited investors, him. has very productive That our reinsurance done my to that basically Insurance his Florida had our first for And and quarter. we knowledge, really regulators, book then time open actually up a partners. Commissioner our with We're it. dialogue

what the of our we on It And solve so job we doing. don't every mode have in problem. any great then secrets that from a and every We've claims situation. operation isn’t it time that of happens, something doesn't that OIR we're and there through been the about mean hurricanes. done like wake the falls the quickly something address the And that's here cracks, now

do OIR time. anticipating with any Florida at address for not statutory to specifically that reinsurance haven't expedited rate we're a an about up There's conversations in prices reinsurance. capability specific increase, in But this to increases. increases had We going rate

Greg Peters

the the reinsurance, slope in then get get reinsurers back you go do coverage John. or And on bought pricing down pricing. a happen losses your in with of going to going to percentage that didn't to on want didn't any conversations the are getting, 'XX? your think what's higher losses know I limit to that really How get with don't commenting around any you reinsurance react But hit XXXX. you in with layers slippery large of --

John Forney

that all last think earned couple very our years, we their there've And a kind good for in many are that us We’re spread though significant even the we’re us that been our reinsurers years largest been I reinsurers years. good with our the pretty are returns. losses for the of We any partnership upper concentration reinsurance really have and win-win us five fortunate don’t have have with our the with But of the have to been to necessarily lot a their reinsurers. that profitable are have don’t a that's for panel are have strong hiding commitment intermediate wanted core book. a spread relationship -- we on largest Most of that and our counter-party that with group reinsurers. last of be we to partners a partners, we’re reinsurers the and But our they’re throughout losses. in layers and program have of a have largest a long-term have

or so And many those we about hurricanes a who end be are. to begun benefit feel just doubt these And of because their have we’re to we've delivering without going already we going up good discussions. events going felt from we're talk to our going we the we’re are we up we whether or to structure we where next reinsurance how we down, year about the that's flat feel to program partners, regardless would. like times get we the that year, whether And after of are predicting said we

Greg Peters

the around to can component of just process the at if going? would the you year. State in then cover effect Assignment of cover believe on How fraud cat aggregate other have question be as update the of in last program you is The the renews us And the that events. Benefit beginning reinsurance the I that Florida? kitty experience your that

John Forney

Sure.

does of available. of see be out in to at pricing And it market year. kind would ag, the actively trying beginning now are the the the On what renew right we and structure

programs. last it's pressure know, in kitty active has And market. called so couple those very cat of you years the been on As been there

we is strategy to see with AOB With to I hurricanes. we’re how we regard goes. AOB, that regard on there -- any good with particular and a think we’ll don’t know insight that out have have we So the what

not help part level things in and activity Broward doesn’t a the core been Dade but has that think Irma have insight. Florida. closely legitimate we is without done find at hurricanes. it are there lot the of and we’re a Florida, it pending to AOB not some of in the a them no We perspective far be especially help that significant with things as going regulatory continues The activity issue AOB picture have go being trying on we are There we our seen solution mean as things And in and is County. abuse to Southeast, legislative that in regard there to of forward some commissioner from curb bigger prohibiting It to to especially and so And to be won't his out on the team that. have assignments. try supportive to with working are accomplish stood

Operator

you. Thank

have KBW. We from Soleimani Arash with follow-up a

Arash Soleimani

fourth has the from In there Philippe? been quarter, Storm noise any Tropical

John Forney

be yes, during believe. to No. related have aggregate program. We it impactful The was losses your on $XX seeded not quarter, there believe, the of follow-up questions, to vast share will those previous losses QX. seeded will reinsurance to the million but majority quota been be our earned we And under

Arash Soleimani

and okay. Okay, the rest is XOL then,

John Forney

Perhaps.

Arash Soleimani

The far Were the QX other quarter? to in any following year-to-date question in so question. other Philippe kitty had there I on just the cats

John Forney

that's named and had storm insignificant was an but no. eight, cats, Kitty small significant. We a well. nothing else as which But

Arash Soleimani

from preliminary you Coastal did And captive? made of what you the million of that American in the your assumed quarter, think in remarks. in of comment say terms a I But premiums came $X.X part

John Forney

it. XXX% Almost of

Arash Soleimani

So nothing that’s there -- go was ahead…

John Forney

It's of captive not American subsidiary Coastal is of insurance Blueline nothing with do Holdings. to It has company. a American AmCo Coastal.

Arash Soleimani

anything been there on going with at else all? TWIA has And

John Forney

No.

Arash Soleimani

went and what Florida latest where me remind into the what you the date was increase effect? And rate received it in was

John Forney

getting varied varied we’re starting It's terrific. onto -- book that's It's X.X% for it we've been been And see and of renewals increase, business, it county. now overall, to our from legacy from months that's the county in rate effect three the retained on some the of to business the while first that. and

now. other We the pending our also rate in product OIR right pending have an on increase family security our about X.X percent before Florida, product that’s

Arash Soleimani

through a you you I comments don't that. much could made And the to you But I increases of terms market Do was broadly? some filing my broadly to rate potentially terms detail primarily but storms, of into reinsurance these from in said in know aside to make pass want you the harden speaking, too -- get market. Florida know question rates. more of reinsurance, on you expect result the rate Florida as the just a

John Forney

of smaller has think Florida almost a the time a the on as this took take last retention that I the our difficulties continuing that oriented the a faced carriers been result result for some year. that's some market and everybody worked the of take will a been hardening, of to result that as out and Matthew of market have hardening year, retention advantage. as AOB It's and people now AOB

Arash Soleimani

just think increases? terms beyond will result these the storms increases of And the storms these on the top you AOB, rate of from in do increases further AOB in

John Forney

I like way really have that We we to. in nor want any know to that Florida. we're positioned don't -- would way we that the predict we

said, grow last to X% the some somewhat policy agents. hurricanes in I in for Florida. couple in We of of our become the again difficulties there quarter some quarter, of more just about again their prevalent years to state delivering to a in on grew the because is other flight by the started count As the Florida in quality as have and had have going carriers we

Arash Soleimani

that more polices rates go And up in if to Citizens. go there you Citizens do see out if potentially? Would do causes you an we more or into primary do opportunity look and Florida, take to see

John Forney

into Arash, you breaking-up and didn’t went you language a that quite were we understand.

Arash Soleimani

and that be Florida that Citizens. as more speakers]… was go trying up do ask if causes What Would an opportunity is, we rates go [multiple I into to policy in

John Forney

breaking-up. -- If again rates go you’re up more, say that still

Arash Soleimani

for into connection. take you you policy want a going outs? a more as in go go to an opportunity Florida cellphone am Citizens to up and more If where I rates result. would Would Citizens is present that

John Forney

make question out the can't connection. your still with We

Adam Prior

up, hear Adam, the go you was, in continue this The Citizens you me. question rates event that consider to can if take John, out? would is

John Forney

as you Adam, We well, a we bad question couldn’t do. or either. have connection understand your

Arash Soleimani

be a -- you hearing am I connection Can Adam, there hear me any better Adam heard I clearly. now? might

John Forney

you. can hear We

Arash Soleimani

Is December you terms quota X? that that have So in been I you the basically get that of that share already Or something was trying would process? in at -- renewed have.

John Forney

Your connection quota is still you about bad, and looking the I we're and evaluating. I but think understood had it's something share asked at

Arash Soleimani

And does allow my other was on rating. question the do? Kroll Kroll to rating you the What

John Forney

Arash, hear can’t we you. We can’t understand your questions.

going I move have to think we’re to on.

really is connection Your bad.

Adam Prior

You might want to re-queue. try and

Operator

Instructions] further are no questions. [Operator There

John Forney

for on end at Okay, the we apologize so everybody's you technical your your experienced in the But partnership and call. much difficulty journey. appreciate company time Thank today. the there we the appreciate for of our interest we

Operator

Thank participation. concludes teleconference. you your you. today’s Thank for This

time. at your disconnect may lines this You

AMERICAN COASTAL INSURANCE (ACIC) 7 Nov 172017 Q3 Earnings call transcript