NGHC - Earnings call transcript Q4 2017 | National General Holdings Corp.

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Operator

Good morning, ladies and gentlemen, and welcome to the National General Holdings' Fourth 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, Christine Worley, Director of Investor Relations. Ma’am, the floor is yours.

Christine Worley

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

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

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

Barry Karfunkel

Good growth Christine. and fourth you, General. of conference year-end year one for you joining our Thank for call. National and This XXXX was quarter morning past earnings thank

line XXXX, While XXXX. am of excited what XXXX we our targeted than and bottom that of the the General was we've business, into the made performance We our year. not excluding strength I this the in that as about core progress entered come different vastly National carrier catastrophes

not larger are We a just carrier.

results the We are channel. stellar in carrier independent with agency that significantly grew

and in number nationwide entered successfully substantial new profitably have of states a We our partnership. support of

is in beyond We have via phenomenally General our also added even an distribution Direct initial which expectations. doing marketing expertise direct-to-consumer well

our our and & of growth XX%. or excluding Casualty of During the XX% fire business the experienced over We Property fourth rate segment lender-placed and organic in growth quarter, XX% ratio excluding excess experienced combined organic XX% losses. of

billion in Auto million gross of Our and thereby leading in total and carriers which quarter over from in one XXXX includes Business premium us vehicle the overall during industry. fourth of vehicle $X.X the up quarter, Auto, and to grew Small $XXX RV $XXX overall Personal the million XXXX making written non-standard

growth. softening our which insurance dampen see markets auto will as we enter While we some topline XXXX,

continue sophistication. We to conditions scale of view a and market our attractive for as company

enhanced ownership their our of the enterprise greatest year, value our one assets. through policy acquisition the During of significantly system

leverage able acquisition. more we it to to are ways able We already than prior to many were its in

rate strong book as well. grew at a Homeowners Our

less catastrophe share the on our losses industry drag was our this extremely feel year, weather that market areas. the highlighted personal the lines than were impacted was underwriting comfortable and with in we by While results

massive a premier expand will to product and during our fluent this expanded we've Moving developed year serves partnerships that we continue line sector. as forward, which

able to Our of the and extremely enhanced behind space this to the only in promise year's we and compete enhancements time be will to that’s need. stand felt catastrophic future I'm fortunate truly in Separately, position commitment take as carrier care response to our able our opportunities. them enhance product about excited to customers will of greatest which their future events that growth

segment results XX%. Health of and a Accident Our strong as while produced ratio premium experienced well. We've written below producing XX%, growth solid growth combined

forward general We carriers us and agencies, support by investment to platforms. us to our Mike one review continue is the which one am Life this binds give topline growth. sales and drive the rate margins. that, sale believe allow centers, inclusive target to topline A&H We management, we Settlement capital with pass comparative leading agency bought Entities agency uniquely the will more of on. positioned platform Inception this, which continued IT portfolio I financials. to at our lead the also an to a greater Settlement with to is together extremely over quarter’s distribution of detail look Mike management gives continued with this Life like all fantastic call to our pleased integrated of which for most you the pleased our be an independent flexibility platform with of portfolio return I’d of which growth Weiner we captive With our are

Michael Weiner

was loss million million Operating $XX.X income quarter. Barry. $XX.X the $X.XX net in last versus fourth prior of the in year compared million XXXX XXXX. you, in Fourth $X.X net versus EPS was were earnings year's Operating $X.XX quarter quarter. quarter to $XX million Thank of

Wildfire walk related which and impacted million the in wildfires quarter in the I'd losses fourth fourth to you by Southern both $XX.X California Northern and some Our quarter. to results were recorded items, through. losses, we impacted like

in combined of in overall the this the reduction implemented would P&C of assets would ratio revaluation been U.S. by the tax quarter. our XX.X% the XX.X% also losses, those our corporate to the have General's A National million tax Excluding ratio and rate performance been related impacted charge $XX.X driven quarter. recently deferred also have combined

give like our about some Now segments. two you to details additional I'd operating

by growth within our $XX.X income and premium Property $XX.X XX.X%, growth XX.X% ratio Casualty grew premium underlying The from P&C gross in of and excluding combined line Direct both grew fee with at to Firstly, growth $XXX acquisition the largely amortization was by million written General. year, and completed & fourth acquisitions to General of Direct organic past over XX.X% of million driven particularly intangibles. million XXXX XX.X% Service segment, our the driven quarter

driven of in losses mentioned the our XXXX, XX.X% increase and operational quarter. after the which loss related XX.X% majority fires our the attributed to & efficiencies. compared Causality to to with in was The combined in XX.X% XX.X%. the the we million us Excluding the our XQ by trends Overall California impacted mix in we by expense was Property the book, claims XQ Auto then fire to ratio driven XX.X% ratio The continue ratio in the loss see quarter, shift in initiatives. compared industry, the was and decrease moderate to better of losses with $XX to XXXX

growth XXXX income was $XXX.X and year versus versus Now mix Accident strong within with ratio the assets. our across XX.X% $XX.X year premium organic million Accident expense XQ of driven intangible of which net and to in Service written in The was the versus The prior growth sold. book. and quarter. XX.X% versus XX.X% grew ratio $XX.X excluding ratio in and quarter. increase the the amortization million by Health was combined in XQ business was prior loss fee XX.X% of The XX.X% non-cash XXXX XX% million Health from benefited segment, XX.X%

limited reclassification Report During owned In were for of consolidated not driver annually didn't night. quarter, presented additional class get independent material to The operations the hold capital a private management filed expense our three items quarterly of associated the credit XXXX. The smaller partnership initially an to for, financial sale recording Settlement timing Company's the related adjusted ending capital lines. recorded and for partnership to on fiscal monetizes and of statement fourth flexibility certain ventures of the second concluded or interest items alternative year all the in And primary filed previously the XXXX, in forward. the independent and general Life our listed the years moving us flow we XXXX a December estate footnote Settlement by correction was XXXX. gives and in Form handling managed entity. further the losses sold Entities items to XX, retrospective XX% Form for an stake from which XX-K cash results of financial The to the third-party We the for greater equity-backed expense of the identified adjustment a immaterial limited administration be costs joint that Life XXX cash ownership preparation in considerations. asset in which full contracts to Company's Annual and National that now quarter real of claims statements. loss relates with certain position financial General’s are XX-K, last and

echo of To this As we lot a required. accomplished future result, our is year. Barry’s comments, report not a amendment such for

the Let We policy our reinsurers purchased their the new and board agreements to with of deemphasized quality performance to remain we order. into director turn growth. treatment operating the them. me new support underlying leverage We And I'd enclosed with take we had high capital future some investments. just a entered pleased had new as and administration questions. I recap now year to We like moderator extremely over us which our some provides We our call low system, with the of grow. two independent share to will successful quarter with business. a

Operator

and first is then Instructions] now Binner. [Operator Ladies our announce question your open gentlemen, question. the affiliation Please you. Randy your questions. coming is today Thank pose from for floor And

Randy Binner

all what and about get if with related might Good regional on in on in markets it's there insurance that's a bit little more in growth of understanding it's product morning. want think start activity a comments and or color the you if to Hi, the that type, softening the if operate I your you FBR. Riley auto then kind that to auto? B. just a organic thing action have non-standard impact more

Barry Karfunkel

Okay.

years So we to is growth than whole. [indiscernible] in as we loss very prior terms anticipated better year, We competitors. the specific much above organic both dislocation some we our slightly taken trends. really cost some business terms Obviously of had in talked a this things. always either taking by trends steady-eddie a regional pricing due approach really rates of about how look in of I at loss of We've cost as the or our a

people other don't the that loss factors other as being are taking having I that into have as see industry and headwind really to next we on of as rate going a we terms move said, year. accordingly. the the cognizant That to whole in a trends So of their cost big be in

So that. we competitive increase the will into think environment more little bit a

trends, So think certainly our above historical the been organic has I well that will growth but rate to nowhere in be XXXX. there our

Randy Binner

Yes. that you just to just make, a kind can going? a there I bit that I a real It what efforts think improvements continued be of quick. guess was that scale a kind just in status of – quo mostly you've – would how was quarter, exercise, curious it the but on wonder flush out little what that's

Barry Karfunkel

via technology our I the which leverage some about. Yes. of really to business in platform successfully to that Property quarter. are product topline. updates the the no product last hard & I the extremely plan There's report, winning costs we segment. integration, also LPI talked reduce Well, listen you And is communicated which manage overall as our accounts, as our really new we on we’ve working can’t benefiting can are a Casualty tell we've we part

nothing material that pleased. So we with again and are

Randy Binner

Thank you.

Operator

Thank you.

from your question today Jeff announce then is next affiliation Please your Our question. coming Schmitt. pose

Jeff Schmitt

Jeff Good William morning, Hi. everyone. with This is Schmitt Blair.

the what around if I tax in be might XXXX? rate effective you it, mention missed Sorry did your thoughts

Barry Karfunkel

XXXX. forward. I be our approximately of going mention, our from XXXX, right But we fluctuations of the earnings no small actually be be have federal probably or the XX% profits Yes, question, XX% didn't internationally. the move might from move around There that, we pretty new edges some we're business so about as as we with is tax in some going around and some to into much regard to great very forward to now target the at

Jeff Schmitt

and maybe Okay, you're type there talk commercial how what rate of can looks? getting combined and still about auto, that you ratio then

Michael Weiner

commercial personal the our Our I commercial a vehicle size as average is than different whole. fleet really is vehicle used vehicles. two under vehicles industry type believe really

definitely individual succeed whole break able So business our then and really Personal in that different business, but line. line results well. expertise lines of Auto some doing it by [indiscernible] We as to is a really of the leverage is to we're don't vehicle out commercial

Jeff Schmitt

book, growth the then And Okay. side? on did auto the seeing you of what direct there type direct you're mention

Barry Karfunkel

We terms don’t have have. actual that numbers that we've produced we in

So the and the growth on a footprint a looking projections of we much talk we that of also and I growing the But store to in was We about business our business from bought in I some growth, certainly that I of geographical year-over-year decrease all areas. the talk repositioning some offset have, little that more from is a on some what's in in bottom it's that our by important, stretches topline unprofitable have pretty about exceeding business. but think change existing as perspective. stores footprint a closing the basis. We some we've which by did and and terms anticipated now of the line topline, stronger expectations the both repositioning say in decrease completed as original we well than we're organic that and that seen

Jeff Schmitt

Okay, you. Thank that's helpful.

Operator

you. Thank

then announce Our Meyer your question. affiliation and is Shields. next question pose coming today your from Please

Meyer Shields

Good, KBW. thanks,

you can given over growth than expected one So you faster was course how because of the growth, the organic about about expectation than expected new talk talk guess XXXX. penalty Originally Mike, organic? out of can that point stronger for expected worked business I a

Michael Weiner

and organic also because really came Homeowners the going we business, both business into business. I'm things that our to Yes, Vehicle are Property talked that from bifurcate in two about our growth

in came initially the noticeably in than about rate So because impact growth we X.X higher total as was anticipated.

So X.X our book by our at that Auto impacted about Property book X.

Meyer Shields

interfere down look Carolina I of California, tax for otherwise I'm been rates team when to lower a and of rates in to expected North there’s push eager the response the couple XXXX XXXX with regulators. that thinking we guess, Okay, business? seasoning state new of

Michael Weiner

No.

a I him about going the rate don't of are with on a for and always quick how we terms calculation always us tax impact into second. in we variable to the talk terms taking that a an me work really filings. states complex Let in affect rate of go rate is think and it's a in

don't really I So think all. materially to impact our business it's going at

Meyer Shields

growth Infinity NetGen? have last then any Kemper Does of the and implications Okay, for question. potential plant combination and for

Barry Karfunkel

space. leader I a believe don't I No, are so. think we in the non-standard

independent our us. think ability agents direct system, big work I our to consumers administration and are with advantage to both policy competitive to

auto So I think we'll continue to be a dominant player in the space. non-standard

Meyer Shields

Thanks fantastic. so Okay, much.

Operator

Thank you.

Phillips. pose Our Michael next Please coming question and is your announce today question. affiliation your from then

Michael Phillips

years morning. Thanks. involved? include kind original Good development what behind Morgan existing we details down draw the the of in Stanley. quarter were and the Can

Michael Weiner

Yes, sure.

development So had reserve some in minimis de the relatively quarter.

little think P&C in I was it the – total a million. on about side at about $X

really it So Auto on is business. our

is at on roughly is the it's our some was of XXXX. I’d obviously giving fluctuate $X it I we really view always going that. I And that look XXXX as size. what roughly really way think to years billion to into at the rounding development premium the And and or this just like think a about accident and XXXX,

And our what view trends in took above really again six-month that number really coming better XXXX in it's that's can from what a tell from rate at tell done much in our while some that that in tail is than both of proactive our the Now here rate short were. very we're anticipated lot XXXX, at we that. by we've slightly things business we a last point that driven taking, you a again this policies. business, you point from doesn't writing now, green I but this it's

particular and business a early a initiatives we claims PIP both our big unique with not have business. our and really preferred that settlement also mix Our that so in are non-standard standard businesses, impact

Michael Phillips

now, are last expectations XXXX pretty we great. there? quarters? but continued had switch for we great XX's there a expense first Thanks Can on low a and P&C improvements efficiency your couple XXXX number talked over flow I quarter what the Are you or isn’t Okay, about and guess side, this Mike. ratio? to

Michael Weiner

improvements Well, or obviously we continues do single here. every day what

right rate I'll company. focused We additional can expense business. some with But the be potentially from you ratio, best some I we So we get we that’ll a come had looking good think your perspective, policy are could that the There's some new have out. have right And for our system, through still a moving more operating where we're administration number to satisfied as now costs because never is the our always combined ratio bottom-line That's still in to there's run small quarter. ran efficiencies. through into that year. first the that I our quarter think with just opportunity that, probably and above still integration as

Michael Phillips

looks the the thing seasonality XQ if to I to XXXX? I expect pinpoint over – XX% are – more in can’t that seasonality there, Switch do going improvements but like A&H, it mean and you really below below you there, it’s then a

Michael Weiner

the to changed you enrollment to hard fourth Yes. that seasonality quarter, in think and terms on look Well, to look of it's I because want alluded you at the what and business that Remember the basis, quarterly right business. at open the impact exactly, a that. in and the seasonality of expense the the it always when very dates do you ratio

have in time. down huge ramp of on on costs other business ramp bringing a So periods obviously open enrollment we up that terms of that you of and into

to allow the have that's more by throughout that. driver robust the fluctuations but organization, those We model are on working utilizing really greater talent a to going not of that's us primary

A&H of there. business, really that impacted growth the had our it, short-term also good it's is a so right. in in We've variables business there it lot addition In driven medical to mix

Michael Phillips

kind on a a the last thanks. numbers on just I topline side. Mike guess Okay question of one

expecting mostly half You then million in the think the around $XXX still expect about from much XXXX XXXX that? in about second million talked you so rental million nationwide the in was talked you $XXX of How rates, I $XXX maybe fourth in to and quarter the or year. from

Michael Weiner

We the say don’t expectations in us we've I terms it out. breakout laid what provided exceeding is really in has on. period that the nationwide our can business of current

Michael Phillips

Q&A Mike. End of Thanks Great.

Operator

have queue at this time. We further no in questions the

Christine Worley

after touching forward again days everybody and thank earnings. to like quarter we I'd quarter joining fourth call our you report earnings to with first for look we

Operator

and call. your you, This conference Thank gentlemen. does conclude ladies

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

National General (NTTNP) 27 Feb 182017 Q4 Earnings call transcript