CNFR - Earnings call transcript Q1 2018

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Operator

Good morning everyone and welcome to the Conifer Holdings First Quarter 2018 Investor Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that today's event is being recorded. And I would now like to turn the conference over to Adam Prior with The Equity Group. ahead. go Please

Adam Prior

good quarter and yesterday. Conifer its issued Thank results morning after first financial market the XXXX you everyone. close of

On as you earnings the accompanies ir.cnfrh.com, copies today. Company's the of management's can discussion release slide the find well presentation that as Web-site,

the large the are that slide Webcast can selected at on view, side may looking to of page. easier you presentation via which are If you read right-hand the Webcast, that find slides in the be

result with a accounting with new otherwise. of future or reconciled of filings GAAP. Company was the with federal started, Conifer within get release. with operations these asked information, not that rules as to and result of Conifer's made except Actual the to we statements the financial those obligation may relating and disclaims Before as Conifer accounting specifically of conference products data securities statutory statements statements, Company's and that results from any statements note time SEC. news to its has constitute Also, respect whether statements in the in differ subsidiaries. developments I including the meaning anticipated measures and risks forward-looking non-GAAP the provided is information, historical prepared accordance to the results laws, call any the from materially in from this Statutory reconciliation in is forward-looking may therefore results, including a a or trends, Company time the revise to forward-looking and business of uncertainties update described the and

morning. the and management's I'd to after Jim call With Jim. Officer. that, turn Chairman like We will now conduct a session Executive ahead, Petcoff, prepared Mr Go over to Chief remarks Q&A this

James G. Petcoff

everyone. morning good and Adam, you, Thank

management Roney. would Andy us and Harold Joining Meloche, Petcoff, be Petcoff, Nick today from Brian

business performance risk for consistent that quarter deemphasized select report to of for long-term lines our vision Company. reduced the personal and Maintaining with the profitability our We has are first are pleased solid XXXX. not

ratio. and of To continued results, improvement is overall. the almost XX performance towards reduction significant stronger percentage our For in the changes pattern mix the validates loss stems lines decreasing the being saw our significant underwriting date, our to first our mainly to enough quarter, slight This ratio and This from underwriting nimble Company's decrease combined and expense due year. ratio a in react recognize Company. our our in a hallmark the improvement with in points ability prior over business markets lines was largely the we in performing to commercial shift of by

lines overarching individual build way personal markets returns that continued call generating a the Across for and to believe of of and strive stable written that our market quarters momentum underwriting underwriting With a like between underwriting underwriting premiums We to last two we maintain over specialty, select the upon commercial remains to in an generate hand cycles, all for do goal in markets. a serve. we breakdown growth balance consistent profit. we and XXXX. Our I'd the Nick is profitability to of that, as look for

Nicholas J. Petcoff

Jim. you, Thank

in gross premiums XX% of quarter net commercial total Our the of written XX% and XXXX. represented premium lines earned of approximately first

the strong commercial businesses quarter way. performer in were the Our for small lines led the owner-operated and

While in and planned reduction of shift XXXX, gross the our our expected, better-performing specialty was first lines. this premiums quarter were mix given toward for written business down

this these key and lines in quick-service our value growth in element The niche we on and exceptionally of proposition lessening well is time. Specifically, sectors amount performed over overall time, business, of focused restaurant is the we strong business security at we markets to testament the best which while other have on are a know saw that guard Conifer's focus that segments. and specialty our

Florida. such sought markets, to our personal higher-risk we example, to lines exposure reduce For as

wind-exposed have should production, results an lines in the This markets Company's Conifer's underwriting quarter-over-quarter premium top in In our states. XX by X%. earned basically expansion deemphasized across partially We by almost impacted our and also help increased and of line same Hawaii. greater million. in of these reductions book XX% which Cumulatively, continuing period. for by the homeowners quarter, just $XX premium the the our overall drive quarter, specialty personal decline going commercial business lines in areas premium Even Texas positive first for personal the premium results planned is earned was forward. personal over like our offset net net flat do continued net commercial lines at given reduction business penetration our all growth earned We niche expect lines existing geographic by

personal written premiums. business, to X% XXXX our gross written first our of total lines Now, the over represented approximately quarter premiums for of

to this reinsurance. improve XX% prior year reduce personal costs compared reduction lines the As and is personal wind-exposed profitability terms a though should the roughly lines Even previously in help is decrease our production planned addressed, down, period. at of

us that the our Jim the mix made call over and best-performing selection, returns discussion more will more the of stronger toward changes shareholder financials. on better mentioned, efforts delivering underwriting Harold in our now a profitable brief I'll to has underwriting to overall. specialty lines performing provide business results, performance to As We over drive to we improve time. improved led allow commercial shift believe Meloche solid hand lines, and risk even focus our have the

Harold Meloche

Thank you, Nick.

press will fully go but welcome I few a Q&A. highlights detailed sheet filings, over balance briefly during any financial specific questions release the As and in our is results quarterly and information

our quarter to As lines business. decreased decrease in million million was of Nick $XX primarily quarter earned approximately XXXX. for first to first reduction net due the to under the in premiums just X% wind-exposed mentioned, the $XX.X compared This personal

reserves The the first in the points the percentage on $XX.X to prior development XX.X% Company's the compared $XX.X has million improved the loss and reduced in accident were As XX adverse Jim of in losses expenses the cover. compared loss quarter ratio adjustment the XXXX. in to prior Company's ratio to period, approximately benefits to and XXX.X% due highlighted, year impact million Conifer's the in period combined year been of quarter first same

of development. March had the Company XXXX, As in XX, $X.X under ceded million event leaving cover future $X.X of million ADC of the the

XX% was in period. prior As ratio, a in result, the compared XX% year improvement in loss Conifer reported first its a significant the to quarter which

roughly containment prior efforts. decrease largely was expense XXXX ongoing of in quarter XX% compared approximately to the our period, cost and ratio Our year the the was first in XX% to due

net period. first reported or $X.XX in For per $X.X the income net of $X.XX prior Company year of a or $XXX,XXX compared share the share quarter, million per to the loss

sheet, a them. approximately tax strategy against fixed just majority an vast this valuation currently We the of at under assets was allowance the share with deferred does at AA, a Regarding investments include quarter-end, yield portfolio total quality quarter-end, our of Book and were average million assets, years, not in total $X.XX cash of investment with of of duration and income maintain an a of three our conservative $XXX and with $XXX average $X.XX balance per share value tax million. per equivalent credit full X.X%. has which securities

for turn the conservatively cycle. market capital remarks. it I'd have with the to to Jim over our And We objective like with back closing investments managed of throughout that, protecting

James G. Petcoff

now, the for leverage we of markets, premiums is primary all Profitability experience rest Harold. and writing where profitable focus can niche select underwriting the XXXX. teams, Operator? time. drive And deliver in markets, Thanks, as will our the our key positive take grow our In remains our generate for to our results of strong we your are we ready returns results shareholders over questions. that

Operator

questioner be Bob Boenning Farnam go [Operator Instructions] ahead. & Scattergood. with Please Our will first today

Robert Farnam

talk related ceded quarter Looks as go So, $X.XX to about kind adverse this I going development see in the cover expect what each something we just forward. losses I the want of to to adjustments want ADC. to share out? know the like we're Is per for to the going quarter. deferred

James G. Petcoff

would AOB that see wouldn't get we all that that I mean, the a think is the think is be claims. with of there I there possibility I'd does with development, We good it's back. I a we that be, saying is like in wouldn't remiss there back but way that timing be before because more I ADC, could issue, any get What the we to that development. mean, money pay continued issue the when Florida

it's So, than asset. better a deferred tax

deferred accounting, you that which asset, up under get make have paid. this You does doesn't deferred are they back tax asset. it money up show GAAP in back show state to when under In but to a get

to…? Harold, book that's not So the value you that's real do want balance a sheet. on

Harold Meloche

perfect. that's think I

James G. Petcoff

has That's ever the by that, the first that said Harold way. time

Robert Farnam

somewhere it would operating adding impacted like have there. in are back net your we So, if seems it results earnings, it into

where So impact the fall or that $X.XX would million? $X.X

James G. Petcoff

Harold, you should answer.

Harold Meloche

Yes, sure.

and net expenses. LAE under that So, falls losses

then that's using to So, that be and going the amortizing where and interest really to happen over method. time – is what's going we're

it we claims. timing to the up So, matches the of pay with expect when

$XX,XXX each Jim see, over development, the or to amortization no $X.X if know, time of so, quarter to what lines additional be, we along see it's that million. $XX,XXX don't going of So, But to you're saying. was going I that have there we're going of is

Robert Farnam

growing like of regarding pulling right. obviously lines lines, lot Okay, a question a are do areas you all personal so there? in you you're and personal in second And back what areas,

James G. Petcoff

Andy?

Andrew D. Petcoff

personal for largely write decrease continuing in writing. But that past are that The continue of lower-value to low-value well the the our that current us. has business we we due lines did that the book with see few We agency in was that years of sale dwelling of over of book dwelling performed that to book and business business. Texas, is a

continue Midwest. will dwelling writing And the in so, low-value in Texas we and the both

Robert Farnam

personal really want lines here low-value from just dwellings? you is, So,

Andrew D. Petcoff

focus now, our is That right yes.

James G. Petcoff

efficient cats our Florida the that between decrease because going Florida reinsurance. exposed hurricane and cat wind we're Hawaii have a order mean purchase totally But as to exposure areas as with hurricane so balance in we're the risks Texas in homeowners, be any and that of to of wanted We Hawaii our wind-exposed Mainly is exposure. but do commercial the exposure. doesn't In to Texas Florida not have that and decrease are to to had we not the we to Texas, cat in well do out area.

Robert Farnam

guys. Thanks okay, All great. right,

Operator

next will James. questioner Raymond Doirin ahead. our today be Please go Carl with And

Carl Doirin

Greg This is Carl Doirin for Peters. in

can how question, should are the insurance you your a personal about a just deemphasizing premium given ceded and talk about follow-up cost think lines on Just question, we you Florida?

James G. Petcoff

Andy?

Andrew D. Petcoff

the the areas total, TIV, by peak season. all wind-exposed about be will down our half wind expect, by of in We

see TIV in large So, our you'll over a time. decrease

total do But to cat reinsurance cost to in do are that personal relation lines commercial areas. see in just the that's expect reduction Now a wind-exposed little year. the we have the We the for lines. in over still ultimately,

James G. Petcoff

it This be But significant. next year. should year more

Andrew D. Petcoff

Correct.

Carl Doirin

thank that. expense right, commercial All what in guess the I I for I high could ratio, about operating we quite it and relative but a an you was bit And the the year-over-year, if the still consolidated quarter, also was Very to in improved other noticed and a improvement a but high bit. bit expenses lines expected, still just talk helpful. corporate

provide So, and color. there if you could talk about what's on going some

James G. Petcoff

Harold I'm year let in going for profit hit essence quarter. is, but our got answer with in agents, commissions profitable the the last what first numbers, to all through happened

it news, it, good in and we but all proper quarter. mean paid hit running I well of that's bulk Harold? commissions commercial mean the first to but it's the but really bad the is to seemed some the I of So, agents news,

Harold Meloche

a is piece it. that Yes, of large

it Hurricane development on claims. some as of was Irma we did there cost reinstatement piece is Another additional have

not about the did and XXX% have ratio also development Without impacted relating to reinsurance contracts, to loss our ratio. so percentage would the lower but $XXX,XXX Now, reinsurance we to of of expense on reinstatement treaties see items, did X those were see side, been those two $XXX,XXX the losses by points. expense we ceded our cost that any approximately

Carl Doirin

could that. could talk specialty about more, you add there pricing And your if the Thank experience if environment guess far year-to-date? I in you so one lines, for the helpful. very I Okay,

James G. Petcoff

Nick?

Nicholas J. Petcoff

auto pricing strong us. a the has still for commercial, In Sure. environment

We by it that's past but strong a in are across of seeing regionally, book overall environment, still on line. the our slightly The auto bit renewal rate that's hospitality rate and over increases more much down is in on kind region the board slightly. down is the double-digit increase range, auto of it a commercial the commercial couple It's varies the of on pretty and years still business. low

work to and we're range. decrease You property function is seeing that's of rate changes. comp low-single digits. are is say, various slightly up the liability increase, And flat side the area state then where environments seeing probably a rates and rates mid-single-digit one The the

Carl Doirin

[indiscernible]. update market, was and right, many Florida you do the homeowners you could provide All there to I if insurance have an out? that with guess And in completely us you expect when how do then policies just be

James G. Petcoff

Andy?

Andrew D. Petcoff

calls, on in other business that we started of year. As we've those the on non-renewing book mentioned assumed had, all this February of policies we of

of XXXX of all policies of January be the Florida assumed Florida. in So, off we in should homeowner

Carl Doirin

you Thank Perfect. much. very

Operator

And there look further to no questions. be

So this back session. conclude any our for closing I over will turn Petcoff remarks. to conference to like question-and-answer Jim would the

James G. Petcoff

and and appreciate We call the you. thank looks everybody who think to for us. world on looking the today. you supporting Thank do the future bright is We we're forward

Operator

presentation. attending for And has the conference you concluded. Thank now today's

may You disconnect. now

Conifer (CNFR) 12 May 182018 Q1 Earnings call transcript