NGHC - Earnings call transcript Q1 2018 | National General Holdings Corp.

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Operator

Good morning, ladies and gentlemen, and welcome to the First Quarter 2018 Earnings Call. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Christine Worley. Ma'am, the floor is yours.

Christine Worley

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

note the company's on including activity 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 and this or this results and and which undertake otherwise, except earning 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 statement, 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.

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

Barry Karfunkel

growth and morning, General growth top as And with of first good combined XX% National falling quarter's XXXX. being growth strongest a conference we dividends results helped Overall, paying characterize our in would you, that you, to pleased XX% is ratio in results. below continue combined at a below we've drive extremely that as line in call. XXXX XX%. XX%, Investment I reported thank mode. made quarterly of ratio our our joining company, this to target for in earnings Thank quarter We're

given We combined business range. within current continue believe Jumping targeted products. specific fall of -- to that the our some mix you ratio into expect into of that should results

from organic during will which lighter due auto ability extremely slightly non-standard our states, season growth activity will well In Our enhance profitable of and X.X to average overall XXXX, market and the All launching we growth. half growth product to above enhance peak the year, the down our quote segmentation RAD we rates in, softening. product further in in growth. due to we're look mainly the experience second our perform experienced conversion decreased new and experiencing forward some continues to rates, have slowed some that business the to

and channel well. creation. value continued strong direct a Our for see growth continues to perform opportunity We

softness. important We geographies in some expect are to this channel more rate that distribution experiencing be even

over that premium the is flat to You've business was the CV Century year-over-year; National we as primarily our book changes auto came that that made acquisition. of part small to attributable some noted that

Century worth strong national April businesses their product, decision from marketplace. XX.X% services The coming on our high growth. acquired as to our line. XX%, with from Standard Mutual the premier continues also homeowner's National the Turning that's which area one recent volatility is our sideways our some the from to effective well seeded and the We've which homeowner's relationships us. do net increase experience to agency the on product, as a Agencies growth representing amount to quota share also The are was by homeowners' protection X. driven desire increasing engagement increased to so

have in having underlying which As administration to well forward will the our homeowners beginning believe greater we to ever us had, the now homeowner's than looking volume new all marketplace. position we benefit into product our provides homeowners' strength product of XXXX, which development our leveraging of the data, our to NPS, in data we RAD the have launch system, team. the we've of We're policy of on additional that insight specification

National to being in over that immediately growth great Karfunkel Turning counsel Officer. leadership platform of each into to we niche surprise the remain and small like sound largest took role well Chairman and role and who other personal the at I'd line graciously we slice to continue solid sophisticated Zyskind, as with margins. experience the I of complement we has solid following forward of Barry as continuing Last excited a continues of President the experience work acquired, niche Chief continue that most extremely each capacity, And work my and the not look I'm we was and our took thank he and General, growth have Executive companies me named view individual U.S. to to together. In with of offerings. benefits leadership line father. General also Robert on senior but passing alongside should top of the group National to real good National numbers. we one to as continue grow and market our We our since General A&H, other I to of with to alongside co-Chairman Robert worked least, positioned

while still benefiting significant posted we've counsel board was over us while In Mike to As and role progress line on best growing to results, Weiner, with it and to quarter's pleasure supporting future year our a half, in continuing member. CFO, to felt opportunities. call his the detail we've last our over that, continued Barry to heavily With summary, the the this invest top Chairman provide to results. made hand some over is my as fantastic turn it

Michael Weiner

review the I'd Thank to the financials like some first for you, of Barry. quarter.

to First Operating in prior quarter quarter. XXXX net of income $XX.X in was year's was versus the $XX.X Operating quarter were last quarter. $X.XX million $XX first in versus million the earnings $XX.X million year's XXXX. compared $X.XX EPS million

$XX.X the the of northeastern results by Our that first impacted million winter United quarter weather of primarily part this were quarter. to impacted related losses States

grew book the diluted sequentially March of market the fully per of maturity yield higher our to in XX, Despite as of XXXX. securities. $XX.XX X.X% value share Our fixed impact value impact

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

loss decrease $X.X increase in to The expense development the versus also XQ XX.X% favorable personal place favorable claims Firstly, of loss compared the than amortization initiatives. our favorably to the in in by million roughly was gross see primarily in of of was segment, XX.X% our versus quarter line within The excluding XX.X%, underlying in The & million, and General Service grew with of The homeowner's $XX.X income by impacted Severity majority to Property ratio of XQ increased P&C compared of in 'XX by book operational year-ago prior and was to written ratio $XX period $XXX.X we with industry, period and XX.X% which first we frequency, premium assets. growth quarter the the 'XX. in combined driven in Overall, million million continue expense our million billion trends growth. to grew was XX.X% Fee 'XX, premium losses development product in scale, to compared XX.X%. Casualty 'XX, first XQ to in our XXXX our by ratio in $X.X with the in loss weather-related driven efficiencies compared organic auto auto share quarter. $X quota having our driven industry. driven X.X% moderately year the prior XXXX. ratio XX.X% XQ of to XX.X% attribute XX.X% was by better of National the intangible

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

results, strength like think has open to I'm S-X Thank pleased automatic demonstrate ordinary an built eligibility. that up this for the part Finally, its regained course I'd last there years. platform company the now filed extremely the and that to like are any quarter night, I'd we've note registration echo the To that to as moderator our many over of questions. call Barry's it over to the quarter comments, of first turn if we shelf you. with shelf

Operator

question first is Randy your And Instructions] from [Operator coming Binner.

Randy Binner

a rate kind as first level on this year The with I that 'XX the quota seasonality 'XX on should segment for of of lot now to look is that -- a kind of first there to -- Casualty level modeling and but at quarter acquisition or cost. the off is we better just of in a is a seasonally run actually quarter Property of question are acquisition cost ratios the cost, ratio? with just acquisition the wanted in share start the of higher kind full the settling the

Michael Weiner

quarter that XQ of not versus driver would XQ is in of place quota from I 'XX look that year-over-year the modeling in Mike. at it's biggest Yes, clearly 'XX. a The first share perspective. XXXX was

XQ number So good you're to going ratio basis on forward. a use the 'XX perspective

Randy Binner

seems where characterize lender is year them P&C, in of business over so kind to going kind and of on it then of within to where so rest us this jumping talk And well can for about now margins can longer-term -- better move actually that's lender, that around are plan you -- and what expect -- for the the like you you placed?

Michael Weiner

really the product Yes. overall P&C We the segment. lender-placed managed within

working top We're We're the the our leveraging we've notably win benefiting technology quarters. LPI had from business. line. should which the what within So some there's successes, cost [new some enterprise, real accounts, the the no in communicated and reduce to is early and we platform also continuing hard, issue] prior across updates new

So to business. LPI the we're and perhaps like with at least think, I pleased comment made my would on very in we've it, the Barry from perspective progress

Barry Karfunkel

Yes.

Randy Binner

Yes.

countercyclical long-term, part guess want question, the you is the you it? that to right, to to business. on Correct? keep This I of point something want a So would a necessarily this mean, not divest. I put is

Barry Karfunkel

The to business the have pleased we taken plans We're business. we is initiatives the divest doing that with well. have and no

Randy Binner

in one I'm to more But and on going that's squeeze A&H. over

So sold of those are kind I growth platforms. medical XX-year individual products, think the focus plans on your area the which highest I the think in about markets by A&H

So to observation in on the that that, take be? the the that to is plans from rule with There's sold. that going any medical a months question is three is kind changes where under be year. is going coming short-term to or And right, of how a can is, that be going growth just commentary

are some outside curious that be medical looks outlook of that for individual how to of of Just products Obamacare. kind the those

Barry Karfunkel

Sure.

actually is segment A&H products. classify as really from growth I the our entire individual our specifically really, wouldn't doing coming well. So

and the stop Our a offering -- as aren't that lot well, extremely group that with we've of what there loss offerings product to a well; group doing for offering self-funded in those is niche got. groups products, smaller-size those space compete products, product really

sold, Turning the medical to that allow new looking forward of to side, that mainstream short-term to be definitely look and we XX-month forward product becoming forward. more going individual regulations having to a

Operator

from The Carletti. next Matt question is coming

Matthew Carletti

market or your Just had talk homeowners just A&H bit core competition, and been or there's the on any in a particularly about first market some we've obviously, any there what are there's year? some, market auto you there with to Have about in the a the impact on as nonstandard, recent come you lot have tax new taking out also couple of even over little P&C. from in Can place. changes one impact have M&A, of where the the away switching questions. been -- thought seen others Maybe nonstandard changes into might to

Barry Karfunkel

No.

to and yet. National invest We dividends in we haven't General, impact will going driving our core any we for focused as results for forward. seen on and really us to best business, sophistication, possible Again, as of to our believe continue that just we're pay continue capabilities

I is we -- softness, some approach. states our in but are some disciplined As showing my prepared are remarks in there -- market remain mentioned we

Matthew Carletti

now shown other strong the but you've my really past And expertise in question; in growth exhibited for certainly organic have kind many quarters M&A. of

on you to do curious more of kind the General growth of M&A kind for continue opportunities future? to -- expect see foreseeable see here So continue just about, a more, Barry, the pure for we to be and should organic landscape or approach National

Barry Karfunkel

date, together organic to mean, and along, seen eyes looking strong the a we've and of that to date. past bringing we the strategic all that the opportunities capabilities we've great extent ears it's good job that I for over opportunistic comes we've and open, with culminating always year. our growth an really keep to really really but fit Plus, acquired done

Operator

The question coming Pan. is Kai from next

Kai Pan

on Morgan like combined XX%. of just around of range, P&C versus general your the than actually ratio Could side, your guided ratio question range? couldn't you more in trend, loss-cost quarter your first P&C sort sort XX% even better Stanley. better My in pricing, XX% term is about why is the the trend than discuss first combined to

Michael Weiner

and Sure. I'll this maybe will Kai start, is if finish you like. Mike. Barry

where some which on few the business -- we PPD came primarily is nonstandard had favorable in, So things is, that auto. short-tail

little basis, quarter, into a that. 'XX bit fell stronger which in first drove So came some on of a which the year-over-year

we me the talk regard the rate from a and it and the But perspective, again to -- a So and just slant with from frequency about into severity that's quarter. that perspective nice of let have the coming tailwind one with also notably, here. very auto nonstandard

year-over-year, industry, Severity, claims been to primarily decreasing continued notably BI few our and seeing we about talked we've enhance Again, as better activities really we're better to put we've than in industry. that PIP Again, and BI increase and than on frequency, see and continue cost. So slight into the a a driven primarily Collision, medical by place. I due with that the seen basis. year-over-year a that's and states to

rate is really the will for we we low to segmented about the it So of single from -- perspective, -- think doing mid- to what trends taking that ultimately kind that then digits us. rate we're and into loss-cost now equal we're feed

Kai Pan

Settlement. there rates this investment is Life right question second in losses My about you what do the even the investment on And side with maybe rising some quarter, and think Life side, the noticed the interest the now?

Michael Weiner

Yes.

our really That's XXXX, Life Life -- in in investments slightly actually is we year I year-over-year to or basis, one. Settlement income those guess year-over-year. there did Keep fourth in on nice the, our the the have And not we portfolio we things a sold received third the those investment on had -- that in you're first some our did a party. we sold on on unrelated to an and a quarter, invested referring comparison year-over-year investments drove had down had then we that moving higher-grade that quarter that So into in quarter, repositioning quarter dramatically that ago losses mind and year-over-year Settlement investment. we've subsequently income third them this some sold that of investments, securities, were I Two and think some the lower to yield basis. a driver

Kai Pan

I recent Barry, more discuss about hope even the the to changes you can board.

that with us, the you changed asset as parties? remind related probably And like what's manager noticed I remaining well As your relationships well. you can

Barry Karfunkel

again, the now, was that the progress the board Barry any we related I made, we -- I relationships as member. And definitely change over regarding had a felt given provides for and co-chair the don't as take got opportunity and for counsel believe that, of guidance have him but Robert it to party roles. that to great we've a he we thank board that

Kai Pan

there sort -- to CEO I the and board the insight you split the arrangement and the is board you, business like you like are an an and wondering to forward? of operate guys the of Robert plan roles. So Co-Chairmen into, how if like guys, any -- there how was going like president are the going you

Barry Karfunkel

business plan we've on as it the thus We operating operated Yes. far.

jointly management have own our business with always job. bringing the to unique operated senior together our We the and skills

Kai Pan

I there if Fargo one Is may. last And the update any Wells on situation?

Michael Weiner

update No. that There's We that. on with really our no on remain update really there's still no constant from so perspective position that.

Operator

from is Jeff And Schmitt. coming next question

Jeffrey Schmitt

My questions of you that mainly loss answered seeing but of the has book General. let one there Blair. me with Direct I'm level performance are William just and were ask growth What been? how on

Barry Karfunkel

acquiring Direct that quote mentioned a we during the for QX since -- down. doing was whole We as Obviously well. activity segment it's General, the nonstandard

nonstandard We results -- General the Direct they servicing of General General's are we and to specifically is community, excited basically well the that's our grow, Direct financial us. works sophistication distribution; we -- as were channel, continue as from the continue in a marketing all and to upgrading channel that loss invest at really don't we distribution with look that direct-to-consumer for product something to ours and distribute

Michael Weiner

did both aggressive exceeded that. a expectations the our metric add like when to bottom acquisition, by the just extent, we the and to I'd had on perspective. I Yes. notably, and top robust the we've to and line think any We plan line

Jeffrey Schmitt

numbers And the it's can you the behind much there down quote book? nonstandard activity? in put How any

Barry Karfunkel

right now. We're not giving detail that amount of

Operator

next coming question from the Shields. is Meyer And

Meyer Shields

sort through in of penalty. to take on was the with us XXXX? business you hoping I year for the growth could overall if KBW. impact expeditions loss Mike, year, ratio you of regard us understand for And new the helped the last very auto rapid

Michael Weiner

Yes.

-- business business is penalties of ratio each the of one that our loss as different that ratio in different loss So new what terms seasons. business always has again said we've

So benefit the disproportionately in that. that, is year-ago shrinks some the extent period that to be what line to to there'll

be Right? hockey will linear that a that rates. important not thing, a changes stick, when short of netted I it's about talk of line, in businesses. different against of terms is of duration because like Some more it most It's the the primarily But the

So dramatic still bring a to about on clip; of that's go business business very as pun. new don't but year. we on to talk penalties, going growing that, some terms in I the be a we the we're us through a that'll healthy see should think impact But tailwind for at

Meyer Shields

we Within more year-over-year. and amortization little the bit down general trend of actually P&C, we out intangibles, take sustainable expenses that quarter as should predictive of XXXX? went if dollar year-over-year rate run or admin a the a first at look Is

Michael Weiner

there's in there a the in but really I terms perspective think spoke that as number. from two are really Well, Yes. I components percentages, variable earlier. of it about are two about And embedded things that of

have the well we lower are So business policy our the increased administration first system, all technology We've right? of we've operational $X expenses. which over efficiencies and our We're purchased one pushing is, yielding GWP billion. a in scale, invested

well year-over-year a on basis, works. share how benefit quota the As the you as have

from think basis. So relatively on a a ratio percentages perspective the basis, run-rate using I quarter safe you're first

Meyer Shields

finally, change asset expenses? then impact have investment And any in manager on will the

Michael Weiner

we're don't it'll think -- manager, on receiving be asset pay we the getting rate our a our really manager. new with very percentage we that and what from don't prior I pleased were We paid asset the we're We're from with comment very think that. noticeable thing. pleased on that I

Operator

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

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

National General (NTTNP) 13 May 182018 Q1 Earnings call transcript