NGHC - Earnings call transcript Q3 2017 | National General Holdings Corp.

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Operator

Good morning, ladies and gentlemen, and welcome to the National General Holdings' Third Quarter Earnings Call. At this time, all participants have been placed on a listen-only mode and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Barry Karfunkel. Sir, the floor is yours.

Christine Worley

Hi, this is actually Christine Worley, Director of Investor Relations. to call. General welcome quarter Corp and conference earnings morning, the Holdings National third Good is Worley National name Director My Christine of am and Investor the I Relations at General. as I said, Barry With me Weiner, Financial Officer. Chief Officer; and Chief Karfunkel, this Mike Executive are morning

respect Karfunkel team which business with new may plans those assumptions. Commission. will by developments as of speak actual may and in other be statements that historical presentation uncertainties, Exchange in forward-looking can significant filings future these set statements may Mr. in There future of include the Weiner in including expectations are with accurately, risks the and obligation or including and to a changes assurance this their are our our results date be from Securities of management the relating statements, developments result of no forth on as and as as for and of facts statements projections this or be with except objectives these those expressed required the factors we Mr. of statements and implied the The Actual update impossible revise results, based Before information, only as differ any statements. results in consistent may result and whether These remarks. materially a of or presentation, beyond otherwise, note Members to the potential. our no or undertake please law. review forward-looking company's statements, operations, assumptions that predict difficult following activities to management include control. Such our or involve than current earnings to future are many

that With third measures these directly derived our Reconciliation related Finally, Mr. information to are is Karfunkel. release will Generally Investor financial Accounting our press Principles, measures GAAP. of on the the non-GAAP section in and quarter most comparable financial I for our from GAAP Relations available of www.nationalgeneral.com. which or CEO, XXXX Accepted not provided measures refer to management is that at present earnings, website Barry our the

Barry Karfunkel

morning you. in Irma good for National conference joining where resulting and our am the a memory very and earnings announce I call. from third million thank to losses our quarter Good Maria. pleased to recent Thank active quarter, of most one cat of hurricanes industry you seasons hurricane and another Harvey, in XX quarter the General experienced

the losses experienced Our P&C segment excluding aforementioned ratio. ratio; have a we XX% would reported combined a combined XX%

including Our Direct Small the growth business line shutting growth. XXs. after other non-Standard aggressively in The Business their organic General Auto where lines now we underperforming source, a at business the of expenses are perform extremely begun low point well and and and to Auto, in bringing we've their continues invest rates in RV, experienced to

July. Thus Nationwide's quarter agents existing we locations and needs extremely January our policies results from paper four to our this far years. Nationwide's in This policies with market we're Nationwide's non-Standard on the to and in started serving and agents began we non-Standard acquired National locations. We look opened for renew to to of forward new partnership many pleased XX

capabilities believe writers. Packaged, the Homeowner sophisticated of our organic continues We're growth with Home we analytic Homeowners our direction to the leverage pleased to Our of Auto strong could one and be business experience as well. and extremely business most

$XX of We've not million in X.X% California will between execute we checks including to most serving our net pleased holders advance one disruptive our continue plans We're massive during a to a Our be pretax pleased and onsite in were with market loss be to we recorded on to strong able geographically. customers. this market stand carriers by premier of the of roughly October, [home] placed and the times Tubbs experiencing line reinsurance roughly on breakeven progress to as hurricane history. growth California's of wildfires our LPI like extremely affected business In to commitment fees. and lender realize expand business; wildfires made reinstatement I'm the estimate our [indiscernible] million reinsurance to to excluding that policy the $XX It's is that share fastest deemed results. responding activity

look the we the being positive work in nowhere forward to contributor near is Our done near and future. LPI

continue pleased high continues our of our our [indiscernible] General quarterly as ratio I'm our company. our makes in [enterprise] built with assumptions look acknowledge domestic one over underwritings I'm we effectively The business active operating hard XX% him supplemental combined of we've to discipline We've review. to segment, catastrophe of benefit enabled increased can A&H Auto us excited beyond perform. ease appointment NPS in Jay of conservatism. continued our the experienced. EuroAccident our we has achieved to of of to product. remain growing focus this but Turning in assets will to grow decade. dedication we gives how industry positioned continued margin was and coupled employees leverage also in Their and gone Mike as phenomenal have respond Nichols helping makes premier over in offerings, above the drive National and about turn of our strong ex-cat only us experience it the National that also greatest scalability growth the I like I'm unique pleased to our is the that call as a Directors. our was CFO, Homeowners stop-loss in so which to work flexibility pleased worth of by the our our announce brings business. the to personal Weiner, domestically of to non-Standard to increases Owning to to a recorded improved trends the quarter our quarters that utilize business to are. system, the Jay We distribution with improvement us policy with Board segment with its from A&H this most we've our carrier General I'd the the and that greater In with NPS wealth performance our net the like line our and and from one the our our not extreme reserve and announce growth product quarter. EuroAccident we forward part very I'd extremely use results technology. niche administration profitable compete acquisition everything by lender-placed in technology. in and our a and review severity in with book summary is to of was well driven growth very how earnings demonstrated a financial book that quarter. our NPS by and

Mike Weiner

Thank you, Barry.

Third of the quarter was million $XX year's million on in quarter XXXX earnings were of million versus $X.XX Operating based as $XX September compared net Operating year's shares quarter. the $XX XXXX. outstanding versus in $XX EPS was average million to of prior million weighted quarter XXXX. $X.XX income XXX XX, third in last

I'd to some items, Our you by which through. were walk impacted third like quarter results

losses hurricane to related of Maria. First, quarter; we the Harvey, recognized recorded Irma, losses in $XX pretax and million

organic lines and on strong has We a within I'd by achieve Auto elevated resulted which like growth being segments. point. loss to very both Home some two roughly And operating continue to our give details our X you in now ratio additional

from decline grew lender-placed XX% premium written gross $XX and Casualty, a offset of and Direct partially Standard our XX% and our million a by to our $XX Property million within premiums. growth, from by Firstly, Property million acquisition, driven in General $XXX Casualty, organic

Overall loss with 'XX, change which year, claims with X growth in XQ General. completed reclassification grew Casualty's XX% particularly agreements to into trends from and entered combined the in and quarter. see XQ Property XX% the organic and to a amortization Auto and XQ $XXX and industry, was was within reclassification Property in better worth XX% was ratio new losses and our growth commissions to claims handling, we XX% severity business strong of the shift a loss of moderate both to the increase compared Service experience book driven by initiatives. the associated by the our primarily The income growth of 'XX serving and in claims to by book. was assets. $XX driven that lender-placed, of Direct handling Harvey, compared over XX%, was in in Maria, to with XX% expense penalty Casualty Auto compared XQ decrease hurricane acquisitions our underlying XX% The and which driven XX%. significant million The to ratio in majority Irma Excluding by ratio continues associated quota costs Home 'XX. 'XX, excluding million premium fee the the driven of new attribute the mix points past intangible and share with from

year's in net of quarter premiums. products. by $XX in was elevated discussed XX% and mix 'XX impact our EuroAccident excluding Service quarter Health $XX of million non-cash prior prior roughly written fee million from Northern more the decline growth income versus California million we ratio XX% million ratio all quarter. Accident was XX% in in XX% XX% assets. strong reinsurance driven the As reflects the intangible in year's and to of we was Health's heavy which was recognize associated XQ within in reinstated XXXX ratio our in $XX business of to $XX benefitted The and segment, towards premiums with books. versus quarter. amortization The the ratio Accident million The combined now expect grew our second to premium our occurred $XXX across sold losses versus and versus from the the loss release with business. And the that in $XX million pretax of expense XX% recoverables earnings excluding combined XX% October, wildfires net

business a individuals insurance to white have niche primarily Sweden. collar focused providing in Europe, private medical We very in

were quarterly what to was reviewed we our patterns reserve of line our adjusted we closure that assumptions the part the As reflect severity model experiencing. in and review, book assumed in claims our

settlement on and not we our with of data our that a Because well review greater aligns felt our product and Health in so strong niche we a sold our in reserve segment in appropriate. product Life our We claims have. EuroAccident life investment industry which in given supplemental flexibility reserves as both was The our trends in both XXX put hold Life get Contract Accident business. is this us offerings. In monetizing the assets set great to reliance credit ability support quarterly to it, have that there for with position experience returns the EuroAccident comfortable the our we that quarter, Entities feel to by the and Domestically of assets expected a Our continue as a gave basis greater Entities very and to on we'll as capital offering. remain a we is adjustment our very policies. and giving stop-loss sale redeemed we Settlement XX% capital full Settlement us

We our with of part in In Settlement the duration partner we shorter as quarter this are managing Life and credit fixed in deemphasizing portfolio quality our maturities. into the investment fixed line higher income portfolio. repositioned asset class

moderator our purchased for overall quarter. Board. shortened I last like To two now Director quarter We rated of lot grow years remain X.XX policy to our as and in quota independent we to echo X.XX leverage with we the we've growth. X.XX provide our duration Barry's reinsurers And year, past quarter. which accomplished highly to business. future this the questions. into with to years I'd to extremely our the from support call with the over pleased shares new will comment, us entered this the third a We we in future year's and administration added our system turn a new operating performance for Over

Operator

and pose and open first coming Kai, questions. question please Kai Instructions] your And Thank for you. the your [Operator is question. gentlemen, from the now is affiliation mention floor Ladies Pan.

Kai Pan

Good there thank -- on what first business, moving the morning, because Yeah. of loss year-over-year improvements try in sort is the ratio underlying understand Morgan parts. the your in you. some are Stanley. question My to P&C

basically ratio. the improvements the points to said most is You X.X year-over-year of expense loss ratio about classified

ex-cat So ratio you your about basis exit actually improved been by XXX calculation, points. loss that see year underlying

that driven try is year-over-year if driven math -- see what's Just to has the and the correct what improvement?

Mike Weiner

yes. is answer Your

about And and you our So out Packaged talk of don't not Vehicle you want from the numbers better cat take extensively forget be quarter. happen all through the to ex-cat our get clear reclassification loss in to those just particularly the the just when obviously that. just to cats as at loss when we're trends that We're cat, There's about our and We're expense, between business. Home excluding [ex-Home]. looking a continue perspective that. items seeing and we excluding

improvement So, yeah, over X% an is little expectation within range. overall of a

Kai Pan

And drag of point that business penalty? from X includes say the about the probably sort new

Mike Weiner

on little Home a Correct. X about And that is the business, drag really that's the and Auto X bit on side little on the totality business, bifurcated in point point point X a higher over correct.

Kai Pan

great. Okay,

rate it you like is lumpy what's Second if like and at four line of quarters talked guys of run getting we're in in looks wonder a business? last ratio [book], your guys high in on you are this the a I little XXs business, like terms high question sort like combined now about XXs. a a and just of past you sort like A&H the looking year remember for look of sustainable probably into

Mike Weiner

XXs. I basis, we normalized a the ratio should on that it expect see low in combined would to you be say would -- wise a -- would

Kai Pan

separation one a lot okay, a guys the if in terms of I with companies. great. Last Low resets mean that's may, you XXs, the sister done your I have on

are relationship see and sister are your business front? think sort between and I currently you companies we remaining to more the expected on actions what of

Barry Karfunkel

to done and that always Everything stronger that our we focus. have build National is a has General been

Operator

your from is affiliation Please pose coming the line And live. is Binner. question. your announce next your and Randy question Randy

Weston Bloomer

that? this Weston kind what's taking on this. outlook then I did the on little any apologize And Hi you if turn the a to late I profitability to disclose guys But Randy. for drive jumped lender-placed I actions call are segment? of profitable missed to Bloomer you the and Thanks. the

Mike Weiner

Sure.

lot even extensively drove losses from that basis. second work of in that me sequential actually second broke is of people's we'd we a year's lot things, a did, Yes, us, terms large some quarter address of abnormally on quarter we this is it. for Let this we in business disclosed, quarter, a what claims really and Few fronts. the hard that, in

performing kick terms and move some better really of then last our that initiatives as in business really kick we core in Our that'll outlined are and continue to Barry the of in key relationships to in quarter expense forward. started

what executing the about and on good our our feel in we plan. So, position is business

Weston Bloomer

one-time tax was than little the lower had a the rate quarter, what we then in And bit expected is there? there anything

Mike Weiner

Yeah.

we've associated the think [timed] throughout only exhausted there of told we so run I is all year through. equalization, the Luxembourg all tax benefit that's as thing the that's everybody really this

income versus kind the lot in of In the addition a we mix had domestic it, of some cats is of lower [will] shifts to in it. terms of that losses that businesses we the other make of

in mid it. about rate tax thinking kind we're a From fourth of our XXs. thinking looking we're we're quarter, So for about the perspective,

Weston Bloomer

ratio then what retention a we is expected. little the than segment lower P&C And the the last in one,

quota any to there we a expect there should was one-time or share So on how basis? go-forward that related

Mike Weiner

we what our business need at think the business of I really first share at our quarter our -- premium. gross our to to looking of you of a our written business, metric did was so look in better do is the quota third implementation is end

We of million you really reinsurers. million. had transfer. party where around we $XXX approximately to which the revolves months [seeded] third down went premium could written nine that net it our So, about extensively $XXX And

Weston Bloomer

any more you. if Okay, helpful. back great in jump questions. I that's I'll have Thank

Operator

mention Shields. live, the And line Meyer is please your your Meyer and question. coming affiliation your question pose is next you. Thank from

Unidentified Analyst

my you for taking is questions. [indiscernible] this for Thank Hi, Meyer.

are and to apparently the guess in getting business trajectory new where So on tailwind? we shifting from the a into headwind I a

Barry Karfunkel

Well the that as really business whole. in goes a to the growth

any we're continue better so still outlined that. Day, expected we've year and we As but our in hyper seeing think when growth our in market or growth of going growth particularly we advantage have we about the come that business. are increased business an that at this that's to due somewhat month We seen the have Investor we Property it. into to coming and again we penetration to on this now. take coming pattern -- seeing We're a we the abatement In Auto XX the about had the not to on business increased ago outlined, point in said we're business as namely which view competition than

and really already organic business we hyper have then market. slowdown business the increased But comes as So you'll it's the the again will that your penalty growth opportunities in of driven that into competition diminish our period by over time. see

Unidentified Analyst

General Got I for XXX National declines it, get your XQ sort seeing 'XX. is that thank of competitors seeing you. there? commentary your are the same And Can

Barry Karfunkel

Yeah.

So [fast a basis. everything on so are two Particularly we're things; track] we frequency at look rolling looking XX at we month when at looking data.

between it the liability better you at frequency on physical And of On much the like a industry, as than damage so basis, look as damage answer coverages, yes. on better bifurcate the so we're to obviously as side is side. liability and physical I'd but and we're much the industry liability the it seeing the certainly not the seeing

Unidentified Analyst

I guess that terms Got refer could the it. all similarly And I to [bring]? Homeowners the principal cats, for excluding then

Barry Karfunkel

frequency if talk Obviously to not then But throw and cats I that severity. cats Yeah. flat from I been from much the fairly it's perspective, talk about both excluding can about there. relatively

Unidentified Analyst

Okay.

the on the that Board? I this specific type with play General's am Jay morning, announcement on of curious I National role Lastly bit guess will

Barry Karfunkel

National good someone got experience benefit He will of wealth a that to advisor that's a is General, us.

to a So the value he's Board. definitely add

Unidentified Analyst

get back in the I'll answers. for Thank you queue.

Barry Karfunkel

Thank you.

Operator

please and pose question. your question is Adam And from Thank Klauber. mention the affiliation Adam, coming you. your next

Adam Klauber

Good morning.

the to nine compared follow now what's combined up. what or six the Auto ratio been Could loss Just say have, was so you months we to core say to improvement?

Mike Weiner

of the Well business that Auto in Auto approximately basis. has we we have plus really we of rest, XX so. to that our have breakout penalty total we But look been in point terms we new X is segment don't articulated versus XX target as at our about -- or

to So been into we the we bit been on operate higher frankly it that on than is growth in cases, pattern. low the within spot but on the anticipated has to side from many the little where Quite mid continue teens a spot low XXs. is we haven't

from doing anticipated. we're the new So we you certainly better diversify perspective business than when comp that

Adam Klauber

of book level putting the in What's you're rate your Auto today?

Barry Karfunkel

The Auto? rate in

Mike Weiner

basically Auto our we're trend equal Yes, now; is our to in [cutting] not a -- right cost loss at book point trends. this equal

Adam Klauber

Is what you doing around ago? were six months that

Mike Weiner

basis single to mid is the high Yes, in the -- high single-digits.

Adam Klauber

is And is that is from it? then to doing a that overall And direct looking you the know the a how to growing book as standpoint doing as how it ratio little number or One, from book? exact am a are book get for gross is standpoint than or I that loss you but not a performing? -- worse well curtailing

Barry Karfunkel

our hopefully the in We've results make investing It's strides. we business really look of The if given future in of had are you I've a book also looked time where But significant we've been growth been picking now the we've amount standpoint, of forward sort of really shut performing flat come ahead remarks, underperforming in expectations right to said phenomenal, to year-over-year we're quarters. is of that point to up my able is our in stores well it that expectations. and a prepared to which ahead as at it down. from

Adam Klauber

volatility, book touching] that business, further? you reduce that the general lot strong force-placed the as [interference there's can a of far volatility lot clearly causing as then way forward any for is a going if of in but industry And

Barry Karfunkel

of terms the volatility that that property we The is in volatility general of exposure business have. cat

of So our some we've volatility in book done reducing things totality. that in in terms

business. property no our perspective Homeowners content much We is book, to in comfortable the reinsurance have with obviously the that a into quota associated liability quarter. ventured terms than But sensitive the we and the our we physical into sideways we total that think program, from some with it. cat because the with there's quota and gives benefit more protection book shares feel But shares it early entered associated diversification the it us of in in that

Operator

question line Thank And coming Pan. Kai from your is a you. live. we've Kai follow-up

Kai Pan

Thank you for squeezing me in.

pricing side? well you cost both customers? potential that more of question about just on business on Is could a the to So reinsurance? as then your bit and a reinsurance you pricing outlook, going pricing able be sort talk like to own do your on you purchasing own up the the will And what's reinsurance pass how your strategy -- little

Barry Karfunkel

Yes I think a things. few

We exactly that context our terms to absorb But a the little that industry that the I in we'll run we early happening on is just the and for with industry our as California going waver these about think wildfires this buying our long which with too of in rigorous do it's particularly really company again to changing and quite our that waver in talk obviously we do storms rules perspective. pricing in We what offset. very [that's] is going, [XX] in focus executed program. from book those is primarily won't outmost not market see process a increase examine and management where from large to three in as on see what reinsurance we'll written we're will in terms losses. the a now to the but out not what's there frankly appetite I anticipated risk in risk our happens. will -- on we don't reinsurance that of totality

Unidentified Analyst

Okay much. you so great. Thank

Operator

there And no more Thank questions you. the in line. are

Christine Worley

our quarter call. on much. forward you you And fourth earnings look Thank all connecting with very again to we

Operator

and call. This you, ladies conclude today's conference does gentlemen. Thank

disconnect have your Thank you participation. this You day. your lines for time phone and at wonderful may a

National General (NTTNP) 9 Nov 172017 Q3 Earnings call transcript