UIHC - Earnings call transcript Q2 2019 | AMERICAN COASTAL INSURANCE Corp

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Operator

Greetings, and welcome to UPC Insurance Second 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]

It is now my pleasure to introduce Adam Prior of The Equity Group. sir. ahead go Please

Adam Prior

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

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

In presentation an addition, has it’s on website. accompanying the Company available made

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

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

within the made call federal business Company we the started, results operations of I respect relating the following forward-looking of behalf to on securities Except get would subsidiaries. the with the conference Before the historical to in statements statements meaning statements information, and laws, trends and and Company’s of statement its including constitute like the products in to this the Company. and financial read

materially with UPC described those and U.S. statements and from these forward-looking of differ filings a those Exchange uncertainties, including results UPC’s in the may as in anticipated result risks Securities Commission. time-to-time from from Actual

any or new information, to disclaims the or otherwise. UPC update developments of forward-looking revise statements, as result future specifically obligation whether a any

turn I’d ahead, call like John. to Please Forney, the Executive that, With John over to go UPC’s Chief now Mr. Officer.

John Forney

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

our earnings said, Adam investor we presentation As release. are with publishing conjunction in an

it find on and encourage can You it. website to I you our review

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

won't CEO quarters that a we any posted activity. loss UPC I it the first happen likes This was a that again. quarter tough of of than and Nobody my hurricane do without XX less us, as for

business, personal and states, The are and two the in is doing or in rather our our in great the is our of they widespread, the the in concentrated not Florida year XX half New news are commercial problems lines business and York. first quarter general only systemic good of

of our activity were in product Florida victims are of eight the business part bad XX and weaknesses CAT fine. points those exposed and products. rest bad The lines over management in New York, Both states on New and Florida over and our York of doing which in points

need at hand. more and is We in both rate that places

Our went increase Florida into earlier X.X% did family rate month, New York’s this effect as X.X%. security

are increases soon coming rate Additional states. both in

impact. in X, to a and the presentation in projected Please look Florida investor refer for is detailed what the coming Slide at

using all completed We re-underwriting of we Island. the Rhode have also major tool our piloted the year states predictive last analytics with

Florida the Island’s on points of is and not loss We XX we year it improvement actual year. data, do was And can analytics the in book our and now the that after get by entire of on using used This would back calling less we policies three ratio had book this XX tested than predictive the X% points table to New investor down our last Slide suggests review. to happened if presentation shows manage York. policies. intend hypothetical model that Rhode what beginning have the model is

than indicated X XXXX And development the Slide any also is this. use lower since others more presentation initiatives, investor of still down self our and of trending actuarially of is adverse this aerial ratio again. for showing year on imagery, with inspections roof quarter's accident ratio loss the non-CAT Even XXXX Our underwriting home are traction. personalized other signs See XXXX. year the

recently underwriting personal welcomed our efforts Personal after Lines where of July to a years Rosbrook Nationwide We and of XX of are his our have him are position we and last redoubling board. XX will part was on lead Underwriting. our lines leader underwriting Director lines at Bob personal on thrilled joined efforts in Staff as areas Bob we efforts. all us new that

to other close like by I'd highlighting two the UPC recent to additions team.

Bergstrom CAT Director. Farmers, the was years where spent most has joined Manager. Territory new as in Claims he recently Claims Jeff this Mountain XX last our week Jeff who First, Phoenix at us West the

With to it continued pace the enables CAT and immediately. activity, Jeff imperative of that strengthen team. CAT we was that our claims us upgrade do

strongly Culture created new that the a culture of Director priority Leadership our high UPC people me. strong Training Finally, is We investing at organization a reporting throughout leaders and of called UPC. supports at in the a development believe we in to Development the and position having

Maloney]. be officer, new career army the and fill to fortunate an last troop after us were a able Mike this most amazing unit. to the as commander years as in XX elite military’s Force, an [Mike We joins year role counter Delta with squadron terrorism XX

continue all of help to have are themselves. a stature guy to join him best we We with designed working to a our be to the version we culture of Mike humbled look and build as forward people UPC

At to this his I'd like point, remarks. it for over Brad to turn

Brad Martz

hello. to performance. results the encourage also everyone but information you UPC's Insurance. CFO to review review investor presentation for This more is regarding Form the UPC Brad and press financial John Martz, and XX-Q our of Thank company's I'm release, pleased

net compared $XX of XX, year-over-year; ended $X.XX of year; for million loss include $XXX million Highlights to $XX.X or share versus share last XX% $X.X of an a June million share year or our or of quarter increase $X.XX gross approximately a XXXX, share $X.XX million $X.X a million written ago. our loss or a premiums or core million, a $X.XX $XX.X the

book XX.X%, per up or X.X% our from combined a $X.XX and points up was from underlying share X.X value ago year-end. $XX.XX, was year ratio Our

commercial the And premiums XX% XX% up deceleration direct $XX in saw year-over-year. premiums the accounted over written to for approximately growth grew XX%. slowing quarter positive assumed regions Florida for written growth E&S Premiums the to had regions year-over-year quarter. acceleration and lines over with personal in which all The is lines, growth an in commercial of in XX% in million and Northeast just

revenues Ceded with driven of the and increase second to a million year, reinsurance in $X.X to increase premiums the period included quota total earned impacting being XX% the items equity income in by revenues. Other our same $X.X year. XX.X% quarter sessions investment last X% favorably gains Unrealized approximately premiums the gross from other our increased change share program. compared to during net the were compared X% in earned at significant million securities quarter, in last

adjustment an ratio in of increase $XX.X new net of losses prior losses ratio year of XX from Included reserve a net net million, quarter second development. loss XX% gross This and year a and million $XX.X and XX.X%. were of loss current year-over-year. during loss the was quarter UPC's produced expense loss or unfavorable $XX.X million million $XXX.X events of catastrophe XX.X%

million, Excluding was million year-over-year. cat and prior development, approximately or adjustment loss year XX% $XX.X up underlying expense $XX our loss and

our XX.X% from year-over-year quota the ratio assumed gross accounted for losses increase XX.X%, roughly XX% fire loss net loss X.X underlying or points. and company's Large ratio up losses than E&S quarter. of arrangements of underlying during $X.X was approximately an million that The was share point a underlying less in of up

million being million to during the remaining reinsurance quarter catastrophe with of non-hurricane program ceded quota incurred program. ceded $X.X loss excess losses were reinsurance the share to million catastrophe $X.X program, gross to $XX.X the million, and our aggregate UPC’s $XX.X the

$XX.X to from of second points our million losses versus cat retained XX% for and added or of quarter quarter over the of the net and were effect reserve from of included XXXX losses. $X.X to non-cat million, down stemming year catastrophe million the or combined and compared XX points development losses XX% last $X.X the year. loss cat losses from The million X.X ratio prior Net total $X.X

warranted on in year increases homeowners XXXX. litigation company's in The Most benefit company reported activity personal and primarily during assignment quarter of from the accident the Florida reserve the stemmed development late the strengthening. of claims, lines business that saw

of in behind accident taken years. grateful shown fraud half legislative and remains the period beyond. half for way painful the by proactive action the development this office significantly to saw abuse will to curb puts saw the new patterns we or reserve support good. second less I the we optimistic and prior the mitigate Thus, in UPC And will long believe meaningful XXXX that changes passing a is improvements very intended Regulation unusual to Florida persist the company of related of it the the recent quarter. went first AOB these year Insurance the to for risk to the lead that the hopefully, related legislation during likely making us reserve potential narrative Legislature for the

$XX.X was or lines. commercial in quarter production operating driven UPC’s required people to primarily was to strong which the rose of UPC’s slightly to was remaining due technology The million an written increase million $XX.X increase investments premiums non-loss costs, continue million policy which of XX%, acquisition growth than by faster in long-term year-over-year. the $XX.X pace expenses $X.X were strategy. and The support million, related

gross points Our an for XX.X%. declined year, actually first the half increase gross quarter of the expense a was XXXX, of slightly ratio of but from couple ratio XX.X%, expense of last second to our

and And $XXX.X XX, million nearly balance of Moving value years billion attributable accumulated $XX.XX stockholders sheet, June at cash total fixed an remained of book A-plus. composite comprehensive duration invested XXXX. with was X.X of income. with assets surplus million assets. equity excluding share June of group to $X.X billion, approximately our overall lastly, the of our At statutory was our the of rating other Shareholders' to UIHC ended XX, maturities $X.X with including UPC the per at a quarter $XXX.X

for I'd closing Forney remarks. to John now like reintroduce

John Forney

this We'd add take Brad. at Thank Nothing happy to questions. further to point. you, be

Operator

conducting Please At question. [Operator first Elyse your be session. question with will Our this Greenspan time, Wells from comes you. Fargo. we question-and-answer Thank Instructions] state a

Elyse Greenspan

where Hi, where you us question, in booking development compare kind business quarter. on in sense from took where did I ongoing sitting So a won't a you guys I insinuate, just up that this for does want trued more future. is XXXX? see be your spend so Florida in thanks. issue issues to won't bit accident first – tried the you're have here. we on to that just we guys can But Good like of My year XXXX? how you the guess, And time any a that little to give sense there the an obviously you you evening. adverse

Brad Martz

end $XXX basically year-end. move We Brad. the million. net just loss at range reserves is were this At year-end, top closer our our Elyse, to of Hi established approximately

look cautious to change. So wide and we a activity the not saw central we was on the the given felt had first half, given but that all was prudent like And development to pretty be range that unusual it we we and methodologies a expect at, estimate.

timing the indications, some with that positive inappropriate data a repeat, the was was we legislation and take see new are the won't good it to felt there just charge we now. Although, especially suggested that but like

John Forney

Elyse, year I'd this is John. accident add actuarial indications we the included Florida. that for

investor that year in was presentation, a improvement XXXX one Florida think from In year-end year we did. accident I four first our accident point shown the like XXXX.

four still wasn't with of a Even year adverse significant a the this points indications still anyway It it's more but – and accident it's development, favorable. XXXX look improvement. there's even points couple

improvement trying trend So is and good. as didn't much industry, much year, law driven in of half the development thought as we had the dying we've just could breadth AOB think I they before changed. get underlying as We by Brad the hopefully this stuff said the in first have as the to of as

Brad Martz

incurred side And That's for up had to XX speaks frequency Obviously, we on They are and loss year-end. really million development little cat looking year were little at. when the it been quarter events That's you We the is the for event at And a the kind tough. cat cat for adds majority non-cat the what the has different had, events. a from bit. side. about The XXXX have each we of the that different. $X.X averaged of quickly. grown and

$XX about make million, we XXXX, $XX June year gross tell at about XX%. we we've $XX an XX, events, to of gross at got you XX%, excuses had IBNR IBNR and losses or the I conservative. of for the cat about that load million-ish. XXXX, $XX the load and on no XX, – $XX.X be million losses year can at of this And June million, we was million want This

a taking overall conservative activity. this on just of non-hurricane weather-driven are more we much So some stance

Elyse Greenspan

XXXX And versus if you maybe necessarily something so a Florida better, four was said so – but I bit less. points guess wasn't XXXX, little

into back the XXXX – and where do some conservatism you put this terms accident go you I year guess more first So book XXXX, in quarter or of you did XXXX? did try quarter – to of

John Forney

I bleed year results always mean, the current we – indication. in prior the Sure. all years definitely of accident

XXXX this We're accident hoping better about it's not significantly widens that better XXXX, than but spread is at So slightly year-end. point.

Elyse Greenspan

ratio quarter. Okay. the And up cost in went then policy the acquisition

I some think should that commercial you stronger forward? said going that we was think How lines. about within due growth modeling to

Brad Martz

compare Yes. Policy the of be tough acquisition the of to costs prior distortions quarter to are going quota because share.

Elyse Greenspan

– is a use quarter’s ratio going is this good forward? What level to

Brad Martz

previous quarter. – It's the forward. you give But expect three probably an to slightly very close elevated average you previous we'd this if took the would quarters of going three, it be what probably

Elyse Greenspan

in Okay. the And quarter gross permanent your then in movement on basis? do you see losses any a

Brad Martz

No.

Elyse Greenspan

there given back out you you and us repurchase Okay. then And share then tonight? stock might thoughts the that just you authorization, announced, you program, can guys put when last just around question, just it update buying on use

John Forney

a it that stock. stock We it do like with to the make it the tomorrow. quickly buy to board where is, what's imminent accretive don't at do But had we'll it's have very prepared in about that. board place. when prepared issue to meeting to it's and it back seems had to the wanted and out discussion day trading obviously plans authorization the appropriate. we Right, we happening do is and We robust in the sure look day at We're

Elyse Greenspan

very you Okay. much. Thank

John Forney

you. Thank

Operator

Our next James. Greg Raymond state question comes Peters with your Please question. from

Greg Peters

give we in policies? sense region. your price and us by versus back provide and X Good you how how release that press is premium a go written a Page new afternoon. Can much change by to on of the much Can assumed of is roadmap increase region direct you

John Forney

whole I month one renewal sense the but And little because the big. guess, book renewal I bit of won't a can give just it's you on of data. is picture be that. it's book, This the

policies our okay. at renewed looking we’re June, we in XXXX, So that

year-over-year at they book So to June, one-month a entire personal up they lines were renewed business, of to renewed the and to actual for premium of actually what XXXX was in on June. June those X.X% snapshot that – on compared XXXX renewals policies XXXX from the based

the of there's done. gives sort that book you we've that mid So high sense increases to from previous through premium the of additional flowing a a rate single-digits that

Greg Peters

What about the side, commercial on John?

John Forney

Commercial don't on side, I seeing count commercial and precise increases personal but side. and rate a number in we're as there have both policy

Greg Peters

top more with at around in you because your tie of we presumably be the and coming identified capital growth pressure? growth to How least kind substantial with year-to-date, like just and you're growth the of any with up, generating back So this position little the was should capital. question about share to be it context repurchase rates your in put line that your that is in thinking position going capital

John Forney

to is very we able that overall, happen. be looked I that, the sure the think plan shape good the we've closely to need a group make a in capital entities from that is very position. capital We and statutory have sitting at right make in to

obviously we into line primary any out line this flows to But now have capital the that's that make is goal is bottom wonderful top flowing don't company all sure So profit. our constraints. the

why I we're that's of in about. actions that taking And which been talked some new in have for or time. rate underwriting reactionary, process the they're is all None

norm New and the much in in cat both and of in the for than states. some said, the year, higher underlying in York I Florida issues As by exposed first those half quarter of losses got historical

is those get for this states We so not we've us. two knew are enough. it that made we done rate and needed to more And clear what now far important

time, business at does at that is be in sure make to we're So that want. that that actions going same new other we're taking we come the to and rates the doing

and because book of have to a of we We money in right states that growth that and making our be we'll pull lots as levers can money primary those making certain the new whole. business goal has the to course making slow sure are of now is states do

Greg Peters

of so release, the or premium, XX.X% a X press think earned around commentary Page in I you said was percentage us On your quarter. reinsurance costs second give of you Thanks. as some

Given of the for the back where reinsurance on they XXXX/XXXX be half numbers look season, program consistent cat should what the with change? the half plan your in is changes first year? second the Is or were the those quarter to that like there to going or a

Brad Martz

be should a It very consistent.

Greg Peters

And Okay. then…

Brad Martz

is to premium Obviously, the sizable are from adding moving year. earned XX% which share big family over XX.X% change, $XXX security, million premiums ceded of from the expected quota writer, to this produce the a and

because that ceded only earned of of in but So one will the XX.X, share the the security were quarter for quota up go months premiums only family was the three the for quarter.

happy got for a work tricky. just the little securities is make offline forward. the family look that, in gets going at participation adjust that So we've with their project on guidance you the can but and – share to quota to sure I'm you writings year

Greg Peters

there, Thanks. for investor of were slide And us I Great. was XX of those builds was The non-Florida last your did year sort studying answers. a numbers the seconds XX in versus in the different CAT on non-CAT. couple around then what I presentation walking could and spend on previous versus wondering those question questions Thanks just development. if X. Florida or Page through, your prior you

Just this make sure want I'm to reading right.

Brad Martz

size event is hurricane XXXX. XXXX, the us related our much I cat XX of the XX-plus job But did number part. Sure. I ceded. from Not hard million, X.X course, all mean really that's other for the a kitty is because sad with events, average XXXX, the pretty three to The have We hit mentioned, good almost that coming year, in stuff CAT million. that's events

is XX million. retention Our

stuff, we fully see of retained. mostly loss So that some creep as it's on

claims. The that's late think on CAT. basically the the So million X to AOB of want the activity. on litigation, the side, I about story non-CAT reporting that's reported focus I claims But mentioned, late just million. X.X We

the of development, it. it's loss but saw, triangles. vast majority just count actual development ultimate we not claim So We triangles, do claim

report saw – expected. late reported more we what And we a call we'd late claim than

frequency So, from. really math where of development that of driven out you it's severity expectations exceeded Florida. being actual the just do that's average increased comes all the our And on claims and and

Greg Peters

Thanks Great. the additional color for there.

Brad Martz

You're welcome.

Operator

KBW. with question. Our Christopher [Operator question your state next Instructions] Thanks. Campbell from comes Please

Christopher Campbell

gentlemen. afternoon Good Hi.

John Forney

Chris. Hi

Christopher Campbell

I Hey, there I same so changes guess last lot the the my year, you the first if as you, would've renewals, a now of had was in would question on know reinsurance just, the is program, exact if what cost been. have program

John Forney

We program as can we don't sure not exact I'm answer have the year, a hypothetical. last same so

what We cost? haven't didn't calculated had it would what something if done we do, that we

Christopher Campbell

Okay.

guess I So your were way, risk rates in adjusted up, year-over-year? what another

John Forney

very have that, about We And too. have strongly. worked to of reinsurance say well relationships have really they've us it good supported them. And the put only ever partners we we together, and for talked and them not for very that worked program with all us win-win and that we

Brad Martz

follow-up ratio, ceding ceding to true and of on anymore costs into losses share ceded which that. earned premiums the the given measure and the have you divided take quota is gross your the measure ceded That's And account on premiums earned. a the of previous commentary my your there's to cost not by reinsurance commissions,

But, the components best happy program. our quota complicated. do of with cost got specific the for if reinsurance we're you break So, forward to out it's very the questions. more of you've going share We'll

Christopher Campbell

Like guess inflation the Okay. mean, to earnings of the deck? that price rate Got should much I like bottom the of increases, much then cost to I where was how higher is in you part reinsurance cost we like increases reinsurance line. it. much accelerate, like how that did the how versus and fall covers program of you costs due outline, Florida expect that, can increase that rate and how loss then of that much in And to

John Forney

with reinsurance have did reinsurance our for we to nor reinsurance It program. rate to do and had to need we costs, do anything increase with costs a had not nothing we higher said account

a rate in filing on system. from indications. losses for based developed record. These were and into these have thunderstorm are X.X business doing in really, your while pipeline Florida, in get July. just, And year to that XX that into in increases you we've and losses ago a in takes every rate It been the CAT long just, events corollary as Florida it just hail don't was in Florida system have events got in the historical the especially The these have do any developed years. Florida They the it that

now we losses they're and now They we price just but have can that don't, for here them. the

had them. rate Florida we’re course for our ordinary some of business. So increases historically it. CAT type price events We've extraordinary in haven't of and That's sort existed trying are that to

Christopher Campbell

Okay. Got it.

security trying So like get like that XX.X the looking think this about it? weather like X.X% elevated the is basically then when non-CAT the like we're at and to to is family it way in UPC, in

John Forney

biggest way down Florida that to to exist want if and what's the now. events to happening need. of of be driver sudden are simplify million $XX about That's to a events that historical in record million the those don't seem hail best or all think $XX It's, in it, you the it

Christopher Campbell

it. got Okay,

so seems should the what that I like is like is we or to I really me. thinking mean, inflation that mean X.X mean in the of I high be XX.X. Florida the So, book. cost loss

John Forney

be book. it cover we're want to in adequate We what the on to seeing going

increases So, not be can't that actuarially going we're rate get justified. to obviously

you in think show right So need Florida. we able that to there have to and be the it's

Christopher Campbell

Okay, it. got

Brad Martz

– our investor in net change presentation of the premium rate. the retention to really And is presentation, and the your our expectation slide impact

retention, of the But going the rate too is in into take be that our that think I account and on we growth and some we Florida. calling an of part So to in expect it have do impact strategy to competitiveness. flowing

Christopher Campbell

in on says, increased you without of that guess, as question I second claims us potential another that then And have if payment going on the improvements, litigation why are bullet and terms it. claimants? closed the increasing. dissatisfied the and deck, would some give could handling Got Slide Okay. that just says up is like be X for it claims like book had some would create your color you you of

John Forney

since and to St. he what's going they're in because is really Scott an think staff has that a is great transformed it's have claims John I way why up the experienced well increasingly answer and we trained paid Company. expert arrived what's at covered the what's And more deductible gets what and what's what and on not. under now doesn't, covered the not much and

And got probably anything before something claims so, we we were really were to there need in that Scott on here paying on. that didn't pay

is without then doing well deductible, not closed we're and claims it doesn't paid. if if stuff it's So claim – a isn't just payment than our or damages covered of isn’t a paying less get and measure covered, doing job it

litigation. So it impact doesn't have on any

which our changed don't is said you haven't it to stance let's why quickly, down time pay said We owe, see do always claims. our We what we've and pay cycle dramatically. say which what we is going

Christopher Campbell

And just sense. makes numbers, few the Elyse’s [indiscernible] That it. Got created then a by laws Okay. question. questions on

think Elyse I asked it. maybe

Irma. no You development there was said on

current So Irma those or IBNR do Irma your have fix loss what how for and your two and events. left much you are Michael

John Forney

up. on that Chris. a Hold second, looking Brad's

Brad Martz

a In minute.

John Forney

don't to Chris. up. We'll that slow get you we Well things to want on back

Christopher Campbell

– numbers one then And Okay, got it. last just ones.

loss stop with with the the I'm that so year on you accident million over aggregate development. CAT assuming the XX limit the XX guys So storms, went development

it that you XX given, weather, adequate this or have So that like with feel the million that be you non-CAT in does the your risk guys feel there could year, go a that experience does over like one too. place

Brad Martz

aggregate this year. exhaust and it the do million quarters, million this for We exhaust XXXX. that's And to increased helpful cover it the We year full in not increased expect the in used but we've last XX first year. the XX And did to year. been we second

Christopher Campbell

Those I you know the are it. questions wanted had. to offline. just you if have all Got the Irma or numbers follow-up don’t I

John Forney

change wasn't the quarter. Well, follow-up. We'll there in any

Brad Martz

were I they're not change, that. last quarter, for any bringing so they the have didn't but We same, whatever apologize

Christopher Campbell

Okay. Thanks lot. a All lot. a right. That's

John Forney

Thanks Chris.

Operator

come our turn question-and-answer that, Thank to management. to to we'd With you. now of We've end back the it like session.

John Forney

everybody John back is would again have Hi, thank to and Talk for much. for the on sure so that thank call some this Forney better We're news work guys, interest in soon. their to like once going again. next you to on their making you quarter just very you get for time to UPC. I we

Operator

All Thank may concludes Have a day. conference. today's parties you. This great disconnect.

AMERICAN COASTAL INSURANCE (ACIC) 31 Jul 192019 Q2 Earnings call transcript