UIHC - Earnings call transcript Q4 2018 | AMERICAN COASTAL INSURANCE Corp

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Operator

Greetings and welcome to the United Insurance Holdings Corp., Fourth Quarter and Year End 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]. Please note, this conference is being recorded. to of conference the like host, to now Prior Adam Equity would turn over the your I Group. Thank you.

You may proceed.

Adam Prior

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

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

an has the available presentation made addition, as accompanying In company well.

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

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

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

John Forney

at call. Brad President on On Financial Martz, to you With is UPC today Thanks behalf UPC, is Insurance. the taking appreciate Officer. Forney, us John time of Chief CEO we join This Adam. of everyone and our me

Earnings the Adam are this Release. conjunction first our with publishing an As we Investor Presentation in for quarter said, time

it Press review of find encourage shown on it. the and the address Release at to our our at can website I You top you

may refer presentation, from by the be analytics to we some of slide and time going data not through time slide will to we that While therein. included

the another to of accounting lot of losses. As expected, equity Michael the in had activity, a not noise to related from and quarter hurricane gains rule we mention the new effects cat

lot strong However growth. We underneath One: Both a a personal were organic all to commercial lines at produce positives. lines continue of double quarter. in rate there and it grew the digit

policies personalized For of Florida. over new outside our of we year about and of state them the XXX,XXX policies, ended personalized the XX% year in-force, wrote the business with over retained XX% XXX,XXX

new retained our been For have the in-force. over year X,XXX policies, and commercial the wrote of business stable. over and of XX% year in with Overall business ended commercial personalized we lines policies premiums both X,XXX

concerns from underlying non-CAT points for lowest put for outlier overall make to presentation, underlying lingering declined in look loss non-cat sure the at our both this we Florida. the quarter losses Our personalized indication Florida ratio The for personalize about shows investor X a rest over which since combined points XXXX accident ratio the indicated XXXX, over in any year its XX basis year-over-year. year was at ago. helps to in and actuarially down after actuarial performance had loss was Hopefully XXX that level ratio Please page QX.

activity organically rates and while down enabled us of We have profitable. loss past grow, continue driving future to we cat have taken couple to the us providing underlying a margin actions where of that to ratios, variety remain underlying thereby grow years and underwriting withstand want additional over to

of risks two wasn’t later on Journey XXXX highlight, look layers the I’ll our there we (A+) big our our reinsurers to team Trans forward and even at Subsequent our aggregate to Thanks share (A+), our in the remarks. I’ve many to program for presentation pricing. quarter we XX a with of market, That X/X depth books. $X efforts Re into products This mentality end Third: partnership of renewal. quota over billion. formed like wrote effected and come. refer we During the XXXX them to be AmRisc to so get negotiated investor it. for better great XX appreciation much it At the strong approved I’d an product for remainder during beyond Munich Florida for and Journey positive for us renewal extended September in entities Re we our favorable reinsurance his working to were various (A++) will to quickly. first will the with the cat newly and at us policy months put speed market Gen our and with to approval total of a we we more market in the vehicle this growth business add appreciate the turn a the the Please states demonstrated already complete loss and Brad pages the as to point and from Journey. reinsurance and programs, cover market in launched of quarter to help for variety over Re which We for to our of by first and A.M. to Journey get gained and our product Best-rated year-end formed admitted all their in and Last subsidiary until be

Brad Martz

everyone solid The earned and our increasing included Martz, and XX% to you, for Insurance. Brad quarter to Thank also the this line nearly highlights the review fourth of UPC top totaling growth gross is pleased with and CFO of I’m to John Press like financial information. Presentation first million. premiums more written UPC’s review would hello, premiums encourage highlights and Release $XXX Investor

earned the premiums XX% just grew billion, For increase $X.X of year-over-year. under to an year gross

Second, its results. underlying UPC saw significant improvements in

loss This same helped X movement period from points year and catastrophe driven XXXX. a is which Our year-over-year underlying points underlying due positive to by in combined the underlying an ratios. combined X our XX.X% for to both improvement ratio X of expense points being the up bring year, ratio almost higher losses was down XX.X%, ago, the over in

a catastrophe Third, primarily decrease or $X.XX $X.X only or year UPC ago. a had of the $X.XX due a from the $X.XX losses in to $X a period prior compared share, year $XX same of loss to $XX.X core million of share million a million a or million share

in million declined For or before from income year, the a UPC share, from tax. decline which of and amortization had primarily $XX.X the $XX.X expenses year million $X.XX a merger $XX.X million prior core

of periods as well in tax as so prior both period, UPC results the much Finally income clearer federal before and the affective rates tax experienced change in a favorable current year-over-year, income adjustments company’s performance. measure provided the the

in investment XX% the the if our well as not calculation. get year comparable which example, $XX.X tax, fourth net the same Similarly, operating, before million as a take quarter using the are you year similar for million year-over-year, increase For the are before of compare catastrophes of we which $XX a loss tax over occurs of income add prior income you that’s $XX.X million, million as and all the of and not UPCs from business losses in strong This back million losses, unrealized. $XX.X result which losses, improvement also and feels management all are impacting items XXXX. believe XXXX is prove full In compatible all the inclusive remains short, further cat of just year. which that the income earnings almost true the despite power it’s the margins remove we in XXXX. for reasonable will the $XXX,XXX year-over-year comparability UPCs are $X.X net of investment increased pretax

under beginning with personal led in consist premiums direct Additional Roughly and Florida commercial northeast they details up growth our regarding XX% XX% of lines quarter, lines region direct of the XX% UPCs New than written our came premiums faster for grew slightly by remained and year-over-year personal XX%. but lines. from fastest year-over-year, growing lines the York. total just XX% revenue Commercial written, XX%

share implemented resulted the year $XX.X for $X.X $XX.X the XX% were million Other presentation to year-over-year of due revenue in during quarter the as for excess commission losses premiums the or in during a gains in quarter. of XX.X% commissions The of the month decline lines current increased new premiums lack XXXX. quarter was accounting million earned million $X.X equities and XX.X% in rule in million $X.X earned decreased million $XX.X grew is any quota the ceded the million Investment the unrealized December commercial, to due change million one higher income of to and sessions for quarter seeding XX% GAAP revenue the to than mentioned second Assume the from $XX.X for growth XXXX. year-over-year to earned previously. and of Realized A due in $X.X surplus million. the John slightly seeding change premiums quarter gross earned quarter. during XXX% change our

was to year-over-year UPCs retained to non-hurricane gross $XXX.X $X.X $XX.X losses. ratio loss a to the XX and year. to current quarter fourth change five during events loss year a ratio the gross to million XX.X% net or points during the last nearly net of million XX points added million Reserve $XX.X due the produced $X.X under cat losses consistent accident related of year on losses $XX in the to million a the with loss, net XX.X% last and ratio three catastrophe years loss of prior loss in points company’s retention losses. this million due primarily million of the gross XX.X% losses a ratio XX increase our program. added increased This on to totaled from reinsurance XX.X% and up $XX.X up and remaining loss million dollar development $XX.X Net or points and non-cat growth quarter. the premium ratio increased aggregate to million points loss XX.X quarter Moving the from points Hurricane nearly ratio.

in billion million four-tenths $XXX and total the year base premium reserves gross ratio and the of biggest from personal very or significant. development improvements $X.X business in here non-cat the all this by this was of outside not coming million Florida, $X.X lines on which nearly of Florida. X% accident Despite loss of a across UPC is lines saw with favorable For earned, of both inside about trends

operating development, in expense underlying loss ratios ago. compared UPC’s primarily driven Coastal. improved impact losses catastrophe decreased $X.X quarter, expense and or our $X.X by year reserve decrease net merger the to amortization X.X% gross a non-loss period related an three in nearly year-over-year American the same the XXXX million to during million Excluding UPCs with networking points of

and expense However, over XX.X%. million X.X underlying adjusting point net points expense improved X.X% presents result after ratio improved for underlying to underlying $X.X XX.X% gross three increased or year-over-year. seeding expense commissions. It the more compatible The ratio

composite of cash rating UPC of million our invested grade December per United to with over and company XXX% assets of improved X.X our to with billion, A+. fixed share Shareholders shareholders’ Moving an our at declined nearly $XX.XX to and assets. the sheet, value to million X.XX% billion at Unrestricted $XX At attributable total overall and of excluding of the balance were a end duration decreased $XX.XX approximately and $XXX.X accumulated with book maturities investment yield-to-maturity other year the ended liquidity income. equity $X.X the year was of holdings a $X.X while holding including XX to comprehensive of years the

OCI Lastly like remarks. $XXX approximately during now, to of per And XXXX. Forney over I’d increased occurring reintroduce million excluding tangible despite John losses book some share, catastrophe value closing for X%,

John Forney

is for terms satisfying very a build our us. years’ activity years good a claims, we continue a to not for even the almost XXXX to year one cat was or while past strong Much $XXX,XXX higher processing off but It diversified cat sapped worth, than four you about activity. during Brad. earnings, to in XXXX normal relative start franchise. of Thanks couple

a UPC investments we’re help optimistic questions have and beyond. to in operational to remarks us results to better move your our take for support forward. produce you That have We So we we this much concludes as feel and we improvements at appreciate that XXXX point. chance and happy made the good continue

Operator

Instructions]. [Operator

of line Please Elyse your Our with do Wells first Fargo. question. question Greenspan the comes from with

Elyse Greenspan

first us give Michael you a the Hi, can booked were gross both question, hurricane My basis? losses and for quarter evening. on good where net

John Forney

Hurricane Brad. was quarter is million $XXX net this the was $XX Elyse, booked for and million. Hi Michael

Elyse Greenspan

retention the quarter other the the reinsurance program the Okay just so events. to or remainder really was in your were how of cat then related fourth works on there smaller and

John Forney

of quarters related prior worth million accident events the were $X.X $X about were that new there QX to Yes, $X.X events little million, XXXX. in and to increased during remaining from retention million new the related truly the was

Elyse Greenspan

the probably in on give we more year development little that a And would color little you the be most likely, can the then a what I’m know perfect. bit Okay, just assuming so, helpful. get quarter, can but that ’XX, you there $X.X color unfavorable if stemmed from. million bit or just accident us more

John Forney

missed Yeah, quarters from XQ, the on most we accident year. XXXX, QX immature last of

more take we and described d we implemented a this year. changes the factors know, that’s frequency helping the to Florida are rate conservative loss approach had in primary our seeing lower the Presentation. So we’ve year ratio accident I to driver, you improvement homeowner’s severity the actually Investor non-cat are obviously mean show we and development

So trends, but pretty development. optimistic remain we on expectations we the missed our about obviously

Elyse Greenspan

losses. to us of some rate know you cat guys that of mentioned bunch the Is Okay, XXXX? take you of like there you a of and as last to one-off and you then the changes, rate about We that mentioned an non Can give Florida also discussing specific you quarter are well. rate kind you were may, as some we think you more update know? looking know guys

John Forney

are rate more Florida. to We in take looking

have pre-filing a We pending.

continue we our as for know mention you’ll to points X Florida year-over-year. but the were down that indications in loss year you So occur, see non-cat

So are feel about good positioned. we how we

Elyse Greenspan

helpful. that’s Okay,

of XXXX? how impacted current terms we the rate, In was that Do for quarter. the outlook about tax some have you think for tax rate should an true-up there the

Brad Martz

unchanged tax on Outlook remains rate XX%. at

our just income you some differences. size when going unusual of are some to the low results levels temporary see of of have given You

to frustration the stronger posting to the relative taxable sense come a income tax there, that. of correct will trying make right understand help but we results, So booking

Elyse Greenspan

Okay, your then. and placed up then year my part reinsurance you Also of it last question. mid-year. I the mean of comes to program some at start

your year? guys As you to this we know reinsurance changes purchase get mid-year making are closer any to significant anticipating you outbound

John Forney

the account reinsurance that we all the right in we’re major years anticipate exact well purchased any Well, us don’t we the in to pricing. the but slightly of last structure layering midst served more and the so for and our with we’ve about over the has now you that know growth, discussions employed changes partners major couple structure

of placement. business in it’s as reinsurance usual So terms

them very right have get We partners and strong placement with to we’re now working down. the

Elyse Greenspan

Okay, the very much. thank I you color. appreciate

John Forney

You’re welcome.

Operator

James. Please question comes proceed with a Holanda line next with Our your from question. of Marcos Raymond

Marcos Holanda

for thanks guys, question. evening my good Hey, taking

John Forney

Thank you.

Marcos Holanda

guess us average, that set color I the the I of the is to some on target touched was obviously just hoping underlying you wanted above frame combined guys or more could is of Elyse So some to on achieve it? it the XX%, and ratio there give on time X for questions I up company be ask, if but just how below year a

Brad Martz

Timeframe is immediate.

our history, volatility and We products year. reflected our expect to in and price hit accordingly there’s that’s Obviously target each and immediate. every and uncertainty timeframe that is in business that and but

John Forney

would really had. X say, that I the you know And it we’ve year average is

a went along each loss underlying the merger share goes combined relative before in of there’s down points that the we and sessions a the sessions cat out things. underlying, with our look of any underlying that year and off last distortion share stuff, it’s the sessions, those the quota to did ‘XX different because reinsurers ratio if you American of effects to DAC Coastal, unwinding ratio basis effects quota our the of in of distort you at When know You under all took couple growth out with significantly. year’s

our right makes to it’s that sense. even that, of doesn’t underlying now underlying improvement underlying suppose in if get – is not any and to the results performing supports level So that business a that so at book combined it

Marcos Holanda

for sub. then thanks the that. another on one Journey Yeah, And

in You guys that a into the reasonable are for But think it side your the that right thought guys get admitted with was for to you wrote it it or policy. an of said already in type mentioned business AmRisc. just business. Is business remarks, whole the always rating non-admitted was the you I you XXXX? on of playing rational I

John Forney

into not the done. what admitted Line. to commercial to Journey We’ve Journey was surplus The Journey get through on we’ve company has accomplished that the on lines The markets play products on different personal side lines get been. market is is side different play on the and an lines Blue and always and into space. that’s

market category We A gives that an rating policy A us an wrote advantage. lines, first of rating. in have and kind a lenders apartment was we best The with A require now admitted in category, and a a Journey which really commercial ENS Florida, has admitted building best which Florida, because buster apartment and is typically nice market, to category, markets gone A

Marcos Holanda

for pricing guys Okay then market And losses think you insurance retro thanks meaningful on have you comes impact that. renewals. in your do up just it any the when to the great, lastly, will know

John Forney

Time the will reinsurance of you we expect our markets, tell. like term all know and as to well long partners make with term money at stress looking that Obviously business lot do are But long do. that there’s are the we we partners been we the as not a in year. every over the

XXXX than the a like are results Just going term be over our been lot ’XX. long better and they’ve in to

So feel relationship our want have side reinsurance and to the yeah, we some term like on that partners a been a and pain reinsurance it’s they profitable win-win. there’s long

to it. with you So a, that’s right why a do I way find know them fair said, to now we’re try to working

Marcos Holanda

you answers. for thank your Okay,

Operator

Instructions]. [Operator

of Christopher with with Our Campbell Please KBW. proceed next question the comes from line question. your

Christopher Campbell

gentlemen. Yes, good afternoon

John Forney

Chris! Hey

Christopher Campbell

on just first kind following up the of leases unfavorable the I development. about Hey! my guess question,

So the accident most that’s like recent it sounds year.

core your loss going how So XXXX. to picks is ratio into I for factor guess that

Brad Martz

it’s quarters. a mentioned, the accident effect have immature to to trickle-down As I going most

John Forney

ratio; basis it’s year was the and as Florida year-over-year. do. really for points things lower ration basis XXX it’s But that. picks, less loss in on material our know If I or number something that again points you are know mean not immaterial you of end XX – to said, prudent I us it’s like a factoring overall just it sort thing a scheme non-cat all that loss in But in, of the

for the So impact of amount and an improvement the immaterial seeing in doesn’t material development year that. a we’re business

Christopher Campbell

creep are anything – more it’s give just other Got the it, was you understand any you color any kind business from? like like and seeing I into you know AOB Just where guess the I that on…? core like or you that? immaterial, development other colors coming just Is but or can of back give could

John Forney

ago. No not since for a as reducing a in is writing company I’ve non-renewing before. AOB never years us lot business and talked factor any – business tri-county; we there. down a We’ve dates had significant this some at of business We time in we’ve six and ago. policies We’ve half new written we’ve been been haven’t Broward new been about stopped

ratio XXXX points, non-cat XX down Our loss and XXXX down tri-county premiums of ratio. XX% basis XX was percentage XX% or full year-over-year the up ratio, loss XXXX there our points, points are in - non-cat loss

what’s that’s it. So not driving no,

Brad Martz

Exactly! And been. again I as we’ve we XXXX reserved like are got ever to feel well reiterate, we as

are this into year current the we end setting on accident well. So year information account reserves taking all as

no that expect to the and So I about we concerns whatsoever. don’t continue development have

Christopher Campbell

up it, XX% the I CD guess very versus costs. year on guess you like were got looks reinsurance helpful. Okay, XX.X% to know ago. another that’s a the premiums It I one

that in United what’s on just should for that what costs we unpack you the could about like I think increase? higher that? is just Is of more guess coverage; getting I more terms it driving like So how guess

Brad Martz

the is to so business XX seeding only that’s months relative as has Coastal res months In lines change. might first American commercial is. of higher ratio commercial by The you what a it that. in had the the nine full residential It’s of the you XXXX produced expect,

John Forney

the in December change quota month is And other of share wasn’t the that there XXXX. for any place

share of XXXX. XX% on full in our sessions quota had we So one more month

are comparability we not issues. more no, So if just there’s paying some

Christopher Campbell

there the sense. a for $XXX makes that’s slide guys last you $XXX has looking And just presentation number loss it, you slide like that like then guys got had, the million. had was creep, was the was number because anymore million think deck Irma then I I at and I XX, Okay, of

is new $XXX for So that? million the number

John Forney

very number not it’s – new, ago. a from It’s it’s a months been but couple

Christopher Campbell

correct? million Hello! latest XXX is so number Okay, your gross for Irma,

John Forney

Yes.

Christopher Campbell

million just guys, I’m confirm got know want just gross then had million a switching big bit micro. little Okay, to originally. to you I a $XX $XXX like to range And that. on it guys wondering the

only like way Michael like Irma million seeing that Now guess attorneys signs still lost any you anything the up or creep you similar at to could $XXX have are making or seeing it’s the above million. north that $X I their are like that?

John Forney

not We our evidence on any are seeing that of book.

Christopher Campbell

to kind other, a of losses asked I one it’s Okay, about for think question to think quarter like understand in guess the you said guys And like not just great. released the collateral like I you just piece. I just and about that and twice terms like know much collateral question matter. then as just commutation of develop would I -- a like I like I have last

you I your are using if what just table losses to and write. does But to that. guess you to program the leasing that in guess are that next I a the to that So think the question in going is – new that purchase to don’t work that do going impact of program, forward? released. just hit because you going reinsurers program? you need have Is how collateral, the you know buffer of essence. are start it’s going collateral plug reinsurer that we write is the that using into business, that to already I does piece – terms because like mean the know How I like how guess

John Forney

matter certain as us to If don’t concerns we know work buffer collateral that where access times are were so have you worked advertised. post have is losses multiple a Irma as and of or cash back. There and obligated to hasn’t lot collateralized into collateral works. And and to days, deal the so at they about programs impacted trying release collateralized of were That’s have are released, flawlessly we meet. borrow haven’t within they after exactly to obligations make clawed the periods collateral and reinsurers ends their that so of new to They from capital I and was a developed on our exactly collateralized worked partners tables all. and of signs and designed those time. The up support we areas have obligations on beg reinsurance not to any for side. past the it how future seen any reinsurance we the they and distress capital, their partners with strapped allow

Christopher Campbell

And that reinsurers loss table. were participate Is issue. been after side rates the side, next and it’s they have is terms on proper the an something if having know like it. want year return would maybe higher like on there released just in any program or they any collateral concern the going you concerns on to then wouldn’t of a Got maybe reinsurers creep on a into there

John Forney

Well, loss that anybody Irma all industry that’s a period a significantly nobody have planned enjoyed numbers you and the up for know the not as gone on. of creep long at yeah. whole time has over Obviously something the

we how less as markets areas our for the know in the our relatively showing Irma market speaking It after should percent our still everybody’s be forward. losses or enjoyed are and far Irma. their it us they enjoyed than reinsurers a mean that fact the PCS on doesn’t that they price we’ve number, paying and You affected losses share got our a so that going than of products have on background well performed on

and exactly that’s have works know we out means. to what that figure it you all how So

Christopher Campbell

the in answers. luck Great, thanks XXXX! of for all well Best

Operator

We remarks. like the to management now you. turn for closing back to over Thank call

John Forney

dialogue Okay, appreciate well XXXX, continued thank joining and for your you the thank call. look so us really good the we over the year-end appreciate we so interest, of forward again. questions much rest you We everybody on to

Operator

teleconference. This concludes today’s

you this for Thank You your may participation. at lines time. now your disconnect

AMERICAN COASTAL INSURANCE (ACIC) 20 Feb 192018 Q4 Earnings call transcript