NGHC - Earnings call transcript Q2 2018 | National General Holdings Corp.

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Operator

Good morning, ladies and gentlemen, and welcome to the National General Holdings Second Quarter 2018 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. Ma'am, the floor is yours.

Christine Worley

Thank you. to General welcome Corp. and morning the Holdings National Good

General. name Conference Worley of Second Mike morning Weiner, National Officer, Earnings Officer. Chief My Barry Investor me is Karfunkel, are at Chief Director Quarter XXXX and the Call. Christine Executive this am and Relations Financial With I

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

GAAP. and information directly measures to in refer is GAAP financial measures non-GAAP release of of accounting press generally from call accepted for are our Barry will XXXX related Karfunkel. our Mr. to principles is comparable management earnings, Relations measures available the over quarter Web-site section our Finally, which most derived www.nationalgeneral.com. our Reconciliation not pleasure second or It is Investor these the that to financial CEO, my the at turn to in the now provided

Barry Karfunkel

morning Good joining call. earnings you. and thank Thank second quarter for our you conference

extremely are We top quarter's We strong once able and report despite to announce bottom continued results line pleased activity. another CAT results. solid again elevated were to

to XX% with and our Our entire second to our quarter generate. auto continues strength results continued products, profitability combined is by targets. we of for some overall our Jumping rate roughly ratio and XX%, All that with grew over a in, well platform perform XX% to above-average growth. continued within stability we and returns results. gross the extremely Overall, segments able the in are the demonstrate experiencing produced business line growth increases premium increased specific PIF strong and contributing growth top of driven of our written our both

the July, deal of high expect year. to of the auto single-digit our reach growth the our to nationwide we during anniversary half premium in slow rights As second range the renewal we

agency We of achieved premier our continued in our to experience homeowners and the driven momentum the book, we strong by the product with primarily growth new expansion have partners.

market. Our with confident line lender position continues I services our product remain in expectations. perform our with to the in

the has roughly of a in pleased ratio meaningfully XXXX had the top line combined XX.X%. book the contribute bottom at it quarter, to strong reached XX% We that to and platform began building A&H the level Our I'm another growing line.

with of for A&H are company product connected able raters, to turnkey offer a be purchase this carriers providers, With comparative of the June, as a we Additionally, acquisition leads of individual and as and that of system. integrates such other agencies devices. the as which leading an agencies on purchase is and an our segment, well lead as we Quotit incremental partners of providers LeadCloud surrounding be and as to multiple will acquisition, our we this agency the closed the lead the medical one end and utilize providers management rater, leading through short-term single as comparative LeadCloud. well providers connected national will leads, finalization automobiles agency to platform rules platform of recent from one integrated our positive plans agencies. data writers could At A&H

from while are growing on posted in to Mike results the look this seeing to line forward our the wonderful it's that, extremely pleasure this Weiner, call In to my to excited our detail and we technology the quarter's team. and with efforts. top future acquisition CFO, LeadCloud fantastic over provide summary, have With some We with results turn fantastic our results. investing

Michael Weiner

you, Thank Barry.

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

by second spring the Northeast part and impacted losses, States $XX.X Our Texas hail Midwestern in the and of impacted of quarter. that were approximately million weather results quarter this United to primarily related

with $XX.X investment in the and quarter. in net our rates. interest an keep During targets advantage to million portfolio quarter rising internal loss realized duration take line the our we of resulted This repositioned in

X.X% Our to fully value $XX.XX of diluted per book June XXXX. as XX, share sequentially grew

operating give to detail in like additional our some segments. I'd two Now,

favorably questions. impacted XQ was ratio which Severity roughly million decrease ratio the Accident compared of second Accident XXXX. XQ quarter quota in prior of expense XX.X% and of from in amortization industry quarter despite frequency, see compared to combined million in another XX.X% XX% million, auto a industry. P&C $XX that quarter across XX.X% of combined with growth by line that moderator $X.X written Barry's initiatives. by the and to the and XQ I'm XX.X% our favorable of the echo was intangible benefited book, development loss the General versus Health to pleased the premium ratio catastrophic versus $X.X underlying ratio grew XX.X%. grew the to year's with operational in $X.X $XXX.X to claims increased in in the the XXXX. Service million by XX.X% P&C to XXXX, assets. extremely our with was gross quarter comments, versus of loss XX.X% experience National was of assets. to ratio also we impacted versus to XX.X% XX.X% weather gross our book. favorable of XX.X% to favorable the XX.X% $XX.X ratio The The XXXX. the over The The to second and XXXX, growth versus resulted XXXX past loss continued of ratio to XXXX, $XXX.X $XX.X XQ driven of quarter trends income Accident which I'm excluding the experienced in quarter our I'll million, and Health, to we scale, unfavorable in driven and compared in XQ few to was XQ activity million development grew and quarter. amortization majority The income our the segment year in compared has premium from losses strong the excluding XXXX continue prior and where was non-cash within by solid over ago. year's fee of XX.X% open stability better in growth million up of million the [indiscernible]. pleased driven Within The share the $X.X benefited second XX.X% loss premium was was and the quarter First, the organic attribute turn was primarily quarters. million Health call compared $XX.X and growth. the moderate our XXXX. auto To in billion, place Overall, in written fee earnings our now in million efficiencies, personal having to XX% product in expense versus development industry, than and Service XX.X% of homeowners development intangible segment, The report product to XX.X% by $X

Operator

question Randy your question. announce affiliation, pose Please Our Binner. then [Operator first your from Instructions] coming is today

Randy Binner

B. with FBR. Riley, I'm

the Just auto questions. around line, on being severity kind but you accident industry I the that than a of think guess your in better quantify comments and better you frequency few why? much a can bit how is

Michael Weiner

latter, that Mike. first. we'll It's Sure, the one address

comments crack when four data we So these just make it we then we quarter-over-quarter, I'm rolling on looking, look and XX-quarter. a quarter, at at eight-quarter, look dash so

than year-over-year, doing General's the multiple these it. things, these So, when we look things frequency and at just slightly when it is a every kind better points about continues decreasing think look all data of we one than better in these National than against on And non-standard I and at be few really of focused others, industry of these is driving our And to more little metrics a the of relates again bit really our and our in decrease mix initiatives, things, on claims time business, the comp namely to collision that think frequency. industry. a it I

Randy Binner

initiatives claims what way? in frequency the how affect sorry, I'm And Okay.

Michael Weiner

coverage there, standard there out physical of business to But carriers. is apples potentially reduces preferred gets our to the terms a process not other settlement in than early less nature just more plus of Our compared damage apples it, frequency. non-standard is

Randy Binner

of overall overall kind in trend? price versus auto, And would Okay. you where characterize loss

Michael Weiner

that's about half of It's that that and historically, alluded rate. our seen with focus seen trends, ratios talk space. we to high a the us move way, when about we've come line allude will to growth to back into totality, in year. really we're talk I single and some in competition digits much you just going terms in loss low our target of decline rate the with second to we achieving this and And core in second back and rate being remain and to in a I'll in of to our In single that as to XXXX, cost probability hard kind a the more – segmented We're think on some our it pricing had about the for digits. that have that get discipline we've of informal taking

Randy Binner

Okay.

organic in single-digit? you enough that single-digits will and rate rate into the taking this mid are to you low your think So, to high moderate growth be

Michael Weiner

in stuck nationwide talked doing July our we of in at on, on. anomalies had Obviously business, the with the has And of as of rate terms it's and some just when grew then us business it's we last growth auto XX.X%. come come look year you in well. business and our about, That Barry that

on a that we're everything But if in our from business believe a core basis year-over-year digits but target ratio, of again, to grow we'll as that. boost focus those move downs happens in the seeing with nice rate on new year. got So it into and we taking we now ultimately what but to there, point. from the at will us really high lead of single will they that's competition our this see view We'll half be terms second

Randy Binner

where just of that any the how is segment that on Okay, is kind lender, great. forward in moving that wondering And combined plan on strategically? or ratio of then just kind and segment update developing

Barry Karfunkel

as in no last overall business it's expectations, it's line say difficult the I sequentially segment, perspective really performing can of its terms an manage quarter. in to to from individual so our continue from any P&C commit to our profitability. with product change We that

small there feel marketing about We're still out moderate continuing continue accounts. to we to So, some the good heavily, winning business. still

going So, certainly it's the think expectation is and through year. business management's meeting I the well

Randy Binner

great. lot. Okay, a Thanks

Operator

question then Matthew Please question. Carletti. next pose your note and affiliation coming from today Our is your

Matthew Carletti

in of growth participants think that one in rule the of on, your you opening Barry, to touched just Can with I'm a want size the of you market, book? more terms your the short-term sort that medical. give JMP. know us there of are just on guys of change of the little your the changes impact the comments book I I color – you back in and the have go in larger around Matt Carletti you some to could rules

Barry Karfunkel

Sure.

A&H also that market over the should, Our really coupled couple agencies couple north more X the months. we a have of of policies able terms of of product months individual go makes previously from of Obviously, to agencies fact right with That couple the it expect that Having should acquire is I believe the should premium of grow. that roughly. of to now help XXX well. book really last size capped and country, the with at makes the a million were size this A&H are we us mainstream XX wider the as appeal, now whole of that leading to of term in renewals the three the one policy that years as

Matthew Carletti

And to great. my right, All question relates just then M&A. other

shown market? and are point a focus General, biggest the the and success for of National kind guys you around the You on appetite past National in your you centers there, appetite where real of be have have the what's in my what at focused this If kind might M&A evolution your question this execute of in in one, within then M&A? hurdles market General and as it to finding your do

Barry Karfunkel

Sure.

as well of as to really opportunities. our that as and capability a capabilities may fit pipeline strategic There They on bolster a we of state existing M&A additional complement remain So well a focused are business. opportunities we definitely company. set our as is those add remain expand our as to block current open footprint M&A

we it. So, remain to open

to However, accretive. do it definitely kind of overpaying be the be not has right to and it We deal. like has definitely

Matthew Carletti

going I to or evolution you of it's in more for might where mean doesn't you see really the the be Company, just M&A it participating that forward opportunities? ripe the just would say business versus and matter of that side pointing one the P&C A&H

Barry Karfunkel

opportunities It's just at point. see the where we this

Matthew Carletti

Okay, for the great. Thanks answers.

Operator

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

Meyer Shields

KBW.

thing or from one in Was year seen this pretty So, processes there coming any external we've would feeding so be year-end or at that that catalysts? far it consistent philosophy is releases. XXXX is reserve that change

Michael Weiner

primarily the releases exposure, external really to vast fourth stuff with of some The third to majority we in had. quarter last and from coming The related year are that in related came they industry of cats all catalysts. property the of put really associated it's out down reserves, quarter. our Yes, you the of Mike. some the large alluding this It's to our

Harvey, two you Maria, if wildfires and we up. [indiscernible] remember Irma, that the So, large put

coming development positive some out of seen there. we've So,

is of short and what tail in a business on The business, our other so normal bet have the some the in in mix smaller had down come seen that of up that reserves books just such slightly Health XXXX. associated the terms with we've on Accident and we business, seen that's we the

Meyer Shields

very take quarter driving that? of rate that's if Is Okay, out the helpful. second little tax impact the a bit lighter various in even the Tax you than was anything adjustments. the first,

Michael Weiner

two out on or really us but XX%, So, we've had XX.X% to reflects a probably a together, that is be so also in as the comes will rate. that – good if going things earn at in you rate XX% the mix, average It go tax which it the tax for It business, going on will obviously few us continuing rate forward. forward. had some that quarter this get to we purchased we credits

a on So, there basis now. six-month right we're

Meyer Shields

you Thank fantastic. Okay, so much.

Operator

note Our today affiliation from question. Pan. coming Please Kai then next question is pose your and your

Kai Pan

of solid there the had where is and combined margin Morgan and XXs, quarter from in in any new ratio already another the penalty because called Stanley. in top so business low I guys just wonder combined you target your go, that do range? line is that ratio see at P&C question you that first drag My growth.

Michael Weiner

It's Weiner. Mike

a a business states. in bit So property new should has there We the as stable drag when as of of the penalty, forward rates some move penalty saw that on a of yes, on we that space growth. which nice abate get the business some auto nice Western the there growth the we particularly as in theoretically in you is and we and into we obviously more side terms well have property side, growth have a new do that's

focus XX product every new business profitability just the number to that our we'll as businesses the or time. [indiscernible] to optimal and the run range, continue with invest auto so off far XX But fall of the a our day. that's in period business target a we core sequential As in think quarter penalty doesn't we business on go, on year over with managers we ultimately,

Kai Pan

over homeowners the business do fast, this versus of combined your balance Then wonder, and pretty risk Okay, little in increasing auto bundle time overall sheet, tend growth quota on just ratio that's of are terms business? average at share. you you helping the how business lower products your the growing do time the because eventually balance a being business see to on bit the driving down focusing ratio have you to than own want basically I auto or combined great. you same take a the on homeowner

Michael Weiner

that lot to that our we've product really little talked So, growth of which the states bit nicely, premier in we drive have helping [indiscernible] seen grow business is a about that.

XX% volatility increased helps share We from us and lead quota our have a from capital also perspective perspective. which to a

that So, how about basis risk utilization. capital we of forward a feel management about go company from good in terms in we and the think

but auto it but that is far a As or and the retention. we package policy vast some package in a with goes, that the business that large really bit has business. policy of have that unique helps auto vehicle we a single of We're homeowners majority so block one monoline quite auto we have carriers a talk as about, we one on and home we the do monoline of do, that

industry happened. you're immune level a combined lower probably run for that to including so has environment, higher the been ourselves correct or micro Unfortunately So, that last have six cat the the in that cat events ratio. not these normal a should in quarters, of

having line. And really So is and to single can't future the from and on a going then our us help optimistic come weather in the a down I'm our auto into predict retention will it policy but perspective. of our technology benefit that again utilizing home I more cautiously certainly

think So, I well-positioned. we're

Kai Pan

great. That's

Just impact you're follow if quarter, any third in on from California? in that, growing California your wildfires potential given book homeowners the

Michael Weiner

Good question.

incredibly comes claims out but our was on have and we be. now. to now where tell radio it's team as we going morning event. ultimately very there, speak last season Right wildfires early the terms what a industry this the our I going in is We'll it's – So billion of estimate that too to early cats over active see our our $X impact large and Really is exposure. heard on on but

Kai Pan

may, if wonder, a Great. One a General tell bit I for you last one I National with you about here? us could your little mentioned MS&AD. just release partnership in press more opportunities

Barry Karfunkel

Barry is This Karfunkel.

So, looking partner MS&AD explore as and has Solutions, have make to joint assisting opportunities are a U.S. venture, well and their as create well. that outside possible, other forward Toyota Insurance to that a that large they with Toyota definitely potentially as with we relationship Management are successful a partnership the could which efforts in created venture and as them of is as

Kai Pan

Thanks opportunity opportunity Barry. revenue Gen premium for here? or How much potential Nat

Barry Karfunkel

We haven't provided any information on that.

Kai Pan

so you Thank and good great. much luck. Okay,

Operator

Thank you.

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

Christine Worley

we with much forward our you all earnings and call. very third quarter speaking Thank on you look again to

Operator

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

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

National General (NTTNP) 7 Aug 182018 Q2 Earnings call transcript