UIHC - Earnings call transcript Q3 2018 | AMERICAN COASTAL INSURANCE Corp

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Operator

Greetings and welcome to the United Insurance Holdings Corp.

Third Quarter 2018 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. to of conference the like host, to now Prior Adam Equity would turn over the your I Group. Please go ahead, Adam.

Adam Prior

and Thank joining Kevin good Thank everyone. you, you us. afternoon for

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

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

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

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

John Forney

we call of the probably President our UPC, appreciate Halloween in Financial and to had have With call. today Martz, here both me our quarter is on at Chief taking on treats Thanks had tricks Insurance. should us time Forney, behalf is On John and this since We CEO but your it, go. Adam. UPC yesterday we of join This Officer. Brad everyone

continue side, to organic strong positive the we On produce growth.

growth. to lines and over year-over-year. Our Both that up contributed earned premium have personal commercial XX% was

lines footprint end side, policies personal being spread our been of geographic At the the Florida. outside QX, were the our lines of across XX% Northeast the strong. On with over has of growth particularly personal

side, growth over XX% degradation testimony which products. and growth commercial was On trend has with to in AmRisc premium the accelerating, been perseverance in commercial That Coastal rate. the team is our the distributes lines the in of American underwrites that strength no and quarter

service our e-mails by more and than first-event Financially, reinsurance team, from the agents in limits Another far and Cotton. received than operationally was by faster from on world-class And exposure positive; Scott praising Michael, financially, have they've We Tim and was us been our his led and we other no industry. partners even than around, XX% response, to seeing been wonder the our industry. both response on this of Operationally, XX% our a with over have data reinsurance state cat those it I more provided policyholders Analytics, outstanding. Florida-domiciled the John have. company, has than according time program Florence reinsurance our stream to excelled. St. the hurricane Verisk time faster any that buy It's

Company. a The limit launch note significant we're bottom we impacting the not buy-down with quarter is has worry all we reinsurance We're to committed the from about very Insurance our about. Florence have never we that We a over single-digit the results. positive into the most Irma never win-win something exhaustion reinstatement appreciate is program So, our an which final our where amazing our At our And helped bought partnership and of reinsurance companies past retention rate couple long-term few we was one been the them. where of ex-Florida received program, of for support layer. to the retained got losses. since surprise action years, of limit, we've and buy premiums Journey partners worry online reinstated don't

to We ago, Florida making carrier have a a and journey been progress. business a we insurer $XXX in premier country good years the homeowners product-diversified create with on From have six billion in the XX specialized million cat become firm $X.X and geographically we're property states.

ratios the while are of of habitational our that one average the in states. the cat in producing XXth We Florida. of almost better achieved all-in homeowners' writer Best and largest the industry non-cat growth we've commercial in and insurer all, number country loss all than property

Kiln, the the great products Journey So have is goal. Journey with far, Insurance significant with in fifth partnership. felt already whom rating. growing journey. to a we've whom that States of as for But we the of our in marks largest continue UPC strategic we that able which we to been that to we carrier complement formation also in we company the respect Marine family, Best-rated Demotech look Company, long long-term portfolio insurance formed needed and we our it offering have The company on partnership accomplish United achieves in forward we and with are A.M. the Demotech Tokio a a because just all have

personal know and an lines use we lines have on three a commercial the be and South Initially, long well beginning. will just track rating will be in. our quite Texas, Carolina, write Florida, states will We which from Journey, But A.M. that and Best, focus record received A- to business. both

in and end hope begin the the time, their grow At We product to have first before our areas. filed to business we states Demotech will product continue and writing same of XXXX. already our companies

unusually August, On in in had a to non-cat July. the especially and quarter, ledger, the lesser we losses negative degree, during of high side the

other and losses number driver typically unrelated higher non-cat disproportionately has claims was was our true non-cat QX, weather and than losses high losses for of quarters QX the of While that to real large our elevated the weather.

higher none last in in QX, year's Large QX. incurred was the a had experience. and which liability had overall we QX more $XX the XX versus in example, quarter for For large losses loss typical than million two quarter

also months trend. these good claims this other in August average We After dropped than experience, results is The to levels. to do increase that more XX% October back continuously few as filings It's even we point, received we our can for for it appear year, indications our the to represent to are to increases rate not single-digit We loss development stay more were At last our and that remain non-cat others turn in and the year, important And redundant September over better year. of is none doing quarter. to implemented note slightly than the non-cat a rate loss than August three a that. double of news as sure of normal our was adverse bad experience double-digit actions his and states Still, portfolio. we this in make cost needed. underwriting reserves rate vigilant for this in Brad like in to related remarks. I'd ahead

Brad Martz

or gross Thank of review you, a driven to share, a John. the an CFO Both increase those, highlights. of Form to or net and Brad of were $XXX share; review ratio. the regarding results. of $XX.X But everyone to and Highlights And UPC's and premiums the core million would press more a losses added I over loss retained earned bottom-line net UPC combined before pleased $X.XX loss information XX%; $X.XX of hello, or roughly XX is non-GAAP financial $XX.X measures cat included $XX.X over to of a share. like Martz, million, $X.XX for of encourage I'm our we XX-Q million release quarter remind XXXX this our third by Insurance GAAP which get million to points

it guidance more along moment. for As John I'll Hurricane was our initial difficult certainly loss quarter so from Michael mentioned, in perspective, that discuss with a in detail a a

insight lines York. just direct XX% XX% And came XX%. Florida. our commercial personal written a region New additional written includes in revenue XX% the was led XX% for lines. Commercial Some approximately from Northeast quarter grew XX% by direct year-over-year, over UPC's personal slightly lines than of lines fastest-growing, Roughly our into mix year-over-year the premium faster were premiums up and at of growth

third commercial excess grew lines and in to nearly surplus $XX.X the quarter. million Assumed premiums XX%

year the quarter approximately and decreased losses ratio, to to million loss losses the we incurred in due the in down and year this favorable year. our XXXX. $XX and continued UPC's program, did commissions -- reserve that implemented third from on roughly income under decreased ceding quarter gross Our totaled and Florence investment to current due in the earned from retention full XX% from presentation was increased million to quarter. two XX% over full of retentions was points UPC revenue million last the XX.X% $XX Hurricane due This million a $X.X $XXX.X XX.X% Net remaining $X.X other last the company's current XX% reinsurance accident $XXX.X and calendar million prior cat disclosed recognized see expected. year-over-year change the last Irma during produced quarter. Harvey from which or retained million, primarily aggregate development increased XX years Hurricanes

two hurricanes losses non-cat impacting due reasons: for a Harvey losses primary largest retained last points losses comparison six to non-cat UPC's compared prior Excluding ratios and were year year over reason and the challenging abnormally UPC's is in Florida Irma low catastrophe and and XX up a favorable to impact underlying The First, of development, states, gross were to net respectively net UPC's Texas. loss reserve ago. the two year and increase underlying

by to of losses was between the of loss losses in in made expects $XX our $XX personal XX% UPC the of October normal for in liability-related $XX or hurricane of during fire, year, XX% second driven not million multiple Of the event XXXX quarter. commercial Second, in and in losses, lines personal third Hurricane losses and and $XX and $XX came the in Florida. related to and non-cat from losses, approximately other during the million retain large Florida quarter. severity commercial quarter we Michael, landfall million Michael. underlying states results current million increase is fourth frequency property lines, included our the above both million and saw in lines or

earned ceding If Michael the ceded and the premium personal as and could to acquisition range resulted growth our than the gross not other a growth. event. from XX% premiums, We dependent Hurricane and operating event retention The because percentage year-over-year flat million the $X.X slight year or range in generally expenses underlying which current UPC's and policy net in basis, non-loss between were cost outside our in lines increase Florence ratios the policy expense will by business ago. expenses year-over-year loss expenses ceding is commissions are UPC's reinsurance are second operating year-over-year increased earned rise higher and $XX are premiums. gross gross cost less during providing toward commissions of XX% operating approximately $XX.X million. consistent year improvements on prior acquisition is eroded a increased loss our ratios. with underlying expense UPC's premium much the same or net were higher the net of for excluding bifurcation On combined for Florida, be lines how due policy an ultimate a retention since for our gross our million, comparison in All of year-over-year, the is perfect current Michael between depend estimated loss retained driven costs, end the than million on acquisition given is acquisition current of cost, $X.X from in and period first did overall. where which $XX a million currently at a Florence, period commercial quarter, the

million is Journey. assets Kiln's at the equity $XX of value $XX.XX. shareholders assets. in company Shareholders' end decreased billion the as $XXX decreased total Marine a sheet, with $XX Non-controlling balance the million quarter, nearly and new million including approximately $X.X Unrestricted Insurance equity a ended under UIHC liquidity the represents Journey UPC $X.X contribution to form cash holding primarily of share of current to On of invested a just the result at quarter billion, over of item attributable company per to and with Company. Tokio made book investment the interest for the

the now remarks. to closing surplus. capital for million $XXX surplus some end the for the I'd statutory John Our to third quarter, Journey's statutory at increased of including like and combined reintroduce group

John Forney

new skills Chief and Thank you, we of leadership great Griffith welcomed had Chris Brad. joined National, our after insurance as and of are the continue end to has. to Chris the we Chris look we questions drive and his a for he our Officer. quarter, to our conclude UPC With efforts answer competitive has lot from we technical Safety any technology industry day happy as company. will One experience. Information relevant brings prepared us remarks forward use to a that, we as anyone and contributions to that advantage

Operator

be Thank be session. you. is now Our question-and-answer Peters Instructions] from Greg conducting first coming today Raymond [Operator We'll James. a question from

live. now is line Your

Greg Peters

Good afternoon. if reinsurance Tokio rated for about entity, Thank relationship off, starting affected Kiln, call. guess and is that entity, I talked I'm your your a of all the by new with you the acquisition just curious Journey, and at their RenRe platform? you

John Forney

no we're to dealing and that's and whatsoever their Tokio not that a with is timely at all answer This actually impact Marine Thank relationship separate Millennium impacted Journey. and of good you, has Greg. is by RenRe. question. This no, on our completely transaction very is with John a Tokio that sale Re on The entity it's

Greg Peters

on know, talked early I for idea the around the about in an be lower these you a you layers? talk about for It what Do gross year guess its then to your in know retention bit can hit piggybacking Perfect. I And little your And have they're expectations like might second loss? just pricing, you going a on reinsurance get for especially looked days. Brad, then the Michael. row. that,

Brad Martz

year events. third major a Actually, We've in the had row. five

John Forney

But who's counting?

Brad Martz

to loss net months, a over the from of $XXX record some loss in in $X million. the initial in modeled anywhere XX Florida, million to probably that towards impressive. be previous the In almost for of range not the top Gross development remarkable $XX Michael months, gross million losses probably we $XXX run. The given it's varies billion; expected pretty XX saw conservative. above just We'll events retained,

Greg Peters

on year. are And losses have on I noise just you partners count talking but I already. then of on lost know price guys early it's about in what of reinsurance there's marketplace outlook, the I'm sure but obviously some next perspective And the the your reported, still, cat terms in this for

John Forney

that, John. at stab a take Greg, I'll it's

are have We course, Of of we But same information billion the isn't to I'll over property cat Allstate and on nine reinsurance XX it's there's say the that largest cat, buyers say which Mutual Liberty U.S. and statistics $X all that AIG noise truly noise the of partnerships one world. guys, just and of we've Farm and the that. decipher thing of the and so with makes And the hard reinsurers. us in in other property and State that buy us. marketplace. all list seen big as then there's our

very important obviously. to us, they to we're the community partner and reinsurance So,

So, with have the look X%, strategic losses And last average depending our and we the X% years, you don't We're reinsurer. five of if on years transactional. over three at even a it's not -- return, between them. with reinsurance the panel reinsurers our positive the we're that cat earned,

is the cat kind returns so all decent collateralized, earned the and those they've of including looking losses. for of even they're that all almost so And returns are

with have our to price we to term. there be program in for lowest try We it we relationship So, win-win never we long reinsurers. because be the a want out know the

on and can to really be thinking, if up the So, to either the going Brad on on points has we in a as -- say way, try for might do to get that hit, hit, We'll them. upper in end Or if those deal makes UPC something but see relationship -- right at a makes a see do layer, off fair. to try program the and I'm to been for we've know lower now, we for but upper on both we're sense row. it It's impossible the by to us years let's been of layers they're side and any which everything we're long-term our said, for because years. get not well, I three got not our what we'll that looking for with three confident a haven't going them, as sense us few can, we're not, what we're and layers

Greg Peters

the as is those LAE you pointed And one loss the have you on question out, Thank answers. in for which, ratio, final up. underlying just ticking

probably that's other have selected right getting their business. against front? profitability And And doing of homeowners' that on aware, taking you're the some like with series are you are two, anything one, companies curious, talked last underlying you erosion insurance As about feel you're if -- in my And in questions. your I'm risk the of you the on.

John Forney

as Okay. And loss cat below Well, comprise of loss and business. we closely averages nine direct in are our ratios, call, -- our I our the of look at industry would on state-by-state. ratios, non-cat results XX% that mentioned tell I the you including very states

in there which For ironically, two the is the we're state to of happening they're loss below and industry our causes each states. only three in the than us, below very is for higher state The losses to for a Island, And year, averages ability else, in smaller nine in companies many above Everywhere reason And in the be is usually significantly those Florida. slightly so other we what's last industry averages the average the years, retain higher. that where Rhode ratio because cat small three then are more seven what Florida years Florida states slightly we companies. direct do. industry of that's and have

of And against. so adversely being any we evidence don't selected see

down at a we're thing spend look But any top on September at good. I'll looking October, into and if that lot trend look here We're everything. quite the We're month in taking analytics last underwriting. we're that we and the I we also results rolling there's a be things the on to technology quite good XX recently We of would we continued might did in another new just It for outlier to of us where the for already results what a good. isn't last results we October looked need had proprietary to remarks to I couldn't at. standpoint on staying that from technology more. powerful from And beginning, rate years Chubb September we been improve data needed look folks to using out states is results. And dropped if say rate other where ever rate if doing month But been tell and non-cat were would someone; make we answer was seen. tool, this, of think we've help our the on I have taking charts improve such the at of that not are everywhere, As underwriting we expect. saw It agree the it. back-testing results and been time in August a my you month we've a from a to going helping on and other that very half said trends. -- necessarily have we've also again, it that call predictive was at sure taken against even would right you our have that certainly, you back year a great doesn't as perspective, at think quarter concerned that comments mentioned be we make action. in lot And the we a this the an rate we happen working that with And all

in repeating anything we like August see happened itself So, then. since what don't

Greg Peters

your for answers. you Thank

Operator

you. Thank

from from question is Elyse Fargo. Our Greenspan next coming Wells

live. is now line Your

Elyse Greenspan

the we in My kind loss guess, thanks. of question, left picking up first ratio. I underlying where terms Hi, off of from

-- you've guess, where is was underlying So, can guys ratio that been many years. is loss August in I much the many, the you so worse because point above

more with how give considered, that to of a the that And when kind kind things look back would normal? line a and go Just back would sense, the so can all you us sense, first the in of you expect, you give us everything does reverted quarter? QX second October down say

Brad Martz

the generally Brad. Yes, our and And underlying what is absolutely quarters, QX toughest ratio loss of quarter Everyone perspective. right. to our gross one would I the needs recognize to this better business. we first Elyse, second loss in that's comparable expect our a is Hi, is always quarter. third absolutely saw from seasonality so a in

John Forney

Elyse. with wasn't really I And just that, And it seasonality. agree

one dollars thing. I million repeated. But drove typically As XX liability cost not in quarter when and one or is that mentioned, liability large losses, the seasonality we it's we seen -- have before, being haven't just of a zero several

one very strange sort some where concerned were or of month one why in there excited get -- fluky which So, one or about overly can't month, things you is quarter.

You've than our been. that and and at book to our trends, got it's to better go longer is And claims ever think not than better to confident going is not -- it's And the than is been. it's back look underwriting if reason term better. were, there's better been, we're to no where we I'm there's

Elyse Greenspan

that you were all claims or those all they confined different those were August states they across more were spread Florida? to in and XX So, referenced,

John Forney

XX weren't August. All in

to but over. some try there I and really July all were in numbers We to seven from in out was spread all think -- there theme, wasn't. and if a they see big the at there looked were August crazy August common

Brad Martz

saw as just as losses Yes, frequency that add highest our we large $XXX,XXX I of well. we anything the losses; would over characterize history large the in

it's year same you something a clearly our severity quarter where unusual, severity period to So, compare that highly just completely drove to point, a the it ago. was to expect persist. goes John's abnormal. up if we It XX%, And not this change,

Elyse Greenspan

and definition, outside to that definition your you have cat tied your losses within is PCS from And what so of thinking we're about when falls cat events?

Brad Martz

that trigger greater there But $X being Generally, our million. non-PCS events are than threshold do sometimes, yes.

Elyse Greenspan

Okay.

So, the $X million--

John Forney

down one them as and all and million, our has are multiple million losses. Like be PCS that events of more burned would a house than to catalog. not in losses Greater $X It million million multiple almost $X than worth be and $X cat. categorized $X.X or

Elyse Greenspan

kind the expenses I had And the your think pointed then And bit -- to I just kind there? rolled was higher sequentially, a maybe QX up great. modeling. anything is in but the I being than some of line for expected, for G&A Okay, was Or G&A -- reason? of most had did you most part were with been pick guess, expense where, it Brad, just

Brad Martz

In QX, for our example, received like North quasi-governmental assessments that so Carolina FAIR new was arrangements producers. started in the $X from the a We contingent Plan, commission we quarter. organizations million JUA, of top with some

put we but growth mean, So, -- for technology, had conservative agent accrual initial hit of We've continued in No, the that. the up out there's a very other incentives, investments -- only ordinary. nothing I in there and the nonrecurring a dollars gross But and the range. a overall, XX assessments really is probably guidance of and ratio the on expense couple million run contingency. rate XX from between the in

Elyse Greenspan

any it's then quarter, of of year And to like setting the in all weather Since the was non-cat kind in kind it margin. great. underlying true-up in go the the for sounds last you picks back third quarter, just no were your from Okay, correct? earlier question, sorry, I'm there where

Brad Martz

Correct.

Elyse Greenspan

you All Appreciate very the right. Thank much. color.

John Forney

Elyse. you, Thank

Operator

Thank KBW. is Christopher from coming you. Campbell Our today question Instructions] from next [Operator

now live. is line Your

Christopher Campbell

hi, Yes, evening gentlemen. good

John Forney

Good Chris. evening

Christopher Campbell

from of XX% I quarter's this back still about loss again. John the which core think ratio, like up about that pile --- out loss or losses. a still But million we I'm core And $XX number, if guess on number to is have from the we large mentioned going year-over-year. bps XXX I one abnormally ratio

what's XXX of, guess, driving guess, attritional I'd more call I bps So, I deterioration? that it

John Forney

more high out did losses. August; pointed we earlier, it was I As at average year a X% claims been most large driven claims. other year of the we has every than is we -- more it this said in level of about XX% But received The abnormally month by ago. non-cat

a was lot some weather a we and had where there had a in So, we it. claims just -- was half, reported just and of non-cat month there

point we lot October. down the not had that reasons. of September for last into and can to couple exactly and nothing As of I this limited back right seemed duration but -- said, to, in the its different a dropped of it's claims be say months. to a lot in it And cause. in happened There's is We

Christopher Campbell

Irma Okay, get on And can an it. we your loss gross got update then numbers?

John Forney

in Irma were. We gross number don't have a loss from our change where we

Christopher Campbell

it. got Okay,

John Forney

this nothing like been we new limited starting point, to to see doing November and of die amounts claims, reopens. modest and right on other we've have report just see number we've people we're some But we're good claims. At that seen there continuing the go of we're December. how some very things that But see those now. to job and out a have We'll in not revisiting off

Christopher Campbell

that that. of much guys Like Okay, I on of makes sense. tower. how a kind just question remaining? limit And just piece is And the collateralized know you have a

place hit, that been collateral that when released? has collateralized that and of would still would reinsurance any you would in be So, all had Irma have all just available the

Brad Martz

cascades a it tower. just million, million. program eroded, it loss that's no. doesn't and -- non-Florida But For loss for matter $XX that basically limit retention ex the down because dent the mean current $XX left of the it's programs. XXXX, of XXXX puts I our gross if layer, really the layer to gone. so loss million, And its of million our even excess got tiny of Florence we as $X.X hit billion underlying in the almost our program, its is, $XX excess Michael depending a all what catastrophe gets on $XXX

Christopher Campbell

the of program, what XXXX have And Irma, been the for that it. would one Got collateral any about released?

Brad Martz

the there no have We the potential have and reinsurance fully for has highly are collateralized but have released session. we some collateral confident no been collateral credit about on release, concerns collateral. would that the layers, very be or Yes, we're loss where we and risk upper there recoverables today gross

John Forney

the-- mind keep And in

Christopher Campbell

how like even to you an like, guys? the in be the take before development Like, loss for like be adverse got tower you the high you to that to to would, had have And Okay. top? if gross like issue for

John Forney

right now, within is provisions more enable that our works okay. back and have partners. that still to quite because not where would a to us with be have it would than matter done issue actually fall that us days for we And four It We've number or easily one, three double an collateral. it from of

it's a us. an and -- issue for not And just not concern not so it's it's

Christopher Campbell

Okay.

your it creeped back if than if So, get tower? up, a, you partners you double, would able be to collateral the creeped like, up back want that more to fill in to have it

John Forney

Yes.

Christopher Campbell

one of I was that? final Okay, got just higher. little And bit driving noticed it. what on favorable that was kind one then the a development year-over-year,

Brad Martz

Conservative reserving redundant. I achieve it. We around? accident Frequency trends always frequency be We our goal. philosophy. And severity has But development it what's been bounce not mean course. That's the to expected. aim in favorable is But to frequency. on been does the runoff relatively want driving see flat. that we is better don't It's actual all the than side. -- years prior of the challenge. slightly Of is the

Christopher Campbell

for answers. Got Well, it. All all the right. thanks

John Forney

Thank you, Chris.

Operator

our any We've turn like over back reached closing or further to comments. question-and-answer for Thank session. to end floor I'd you. the the of management

John Forney

months you the to taking in As of again We call. and us talk results time look in forward UPC few always, to being about we appreciate your a the to QX. on with everyone's interest join

So, everybody. thanks

Operator

teleconference. today's conclude does That you. Thank

may You this a disconnect your for lines thank day. wonderful time participation today. at have your you and We

AMERICAN COASTAL INSURANCE (ACIC) 3 Nov 182018 Q3 Earnings call transcript