NGHC - Earnings call transcript Q3 2018 | National General Holdings Corp.

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Operator

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

Christine Worley

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

Call. Quarter XXXX Conference Earnings Third

General. morning my As Officer, of the National am the and Investor me name at Christine Financial operator stated, Mike is Weiner, Worley Officer. Chief Barry are Karfunkel, and Chief I Relations With Executive this Director

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

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

Barry Karfunkel

thank Thank third joining you. I Good morning of call. earnings with for despite earnings extremely conference elevated another our and pleased activity. you robust quarter am quarter

each across to unify acquisitions platform This the our past value been the that to our a to quarter demonstrate creations them enterprise. we've and able achieve entire capabilities by business's integrate unique that shares in continues way leveraging

clients Turning of to specific some the of business.

Our quarter auto perform X.X of The segmentation reflection this product provides well. and line the to risk continues pricing selection results that RAD are us.

RAD rollout segmentation. more X.X, to begun product to benefit which further our sophisticated with we have We expect

which ensure of and growth large products remained homeowners’ line continued growth within segmented solid stricter activity We've product, expansion expect from excited recent nationwide come we into Looking consumer in auto our loss targets. with book our channel. of Within benefiting future in within our forward, high from line entered of profitability been states increasing, future expansion. the we industry. direct of be more an guidelines recent investment should are result net In to California, our new has as direct, lift the underwriting state this one the our the worth homeowners’ to general about sophisticated continued growth current the states our meets where from rollout and to experience continued and acquisitions a quarter to as new implementing business, business well that as

performance of the in extremely segment. A&H. of business I'm pleased to all lines Turning the with

customers results short of growth coming as that line products small pricing enrollment top-line and including our target our well with loss medical from open stop savings strong a continues perform anticipate our underwriting We Our approach. term result individual is strong extremely group to differentiated to niche offer period.

our Our product well strategic financial positions the Weiner continues to underaged us one that and turn individual it lines. product XX to Mike for call own of makes our strong to assembling of control changing well With technology with healthcare my we for as various and The detailed market review health distribution, distribution assets such growth pleasure and Medicare prospects approach perform our took the very that, in and possible. over this results. in our quarter more is health

Michael Weiner

you, Thank Barry.

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

quarter results wildfires. impacted by third in Hurricane related million California were losses $XX by Florence the to Our approximately and

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

fourth our $X are by pretax of We that roughly share expect disclosed million Hurricane $XX to quarter Michael quarter reinsurance the recoverable. also million to net results impact we

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

XX.X% of product our loss casualty. billion product Also ratio XXXX ratio XXXX XX.X% XX% of XX.X% auto accident ratio at quarter assets. accident year losses $XX.X years personal trends claims, intangible in million organic XX.X% favorable premium XX.X% view $XX third growth driven Service auto quarter. XX.X%. to particularly with related million excluding by compares to our growth. accident of which impacting of was compared ago in the of by driven combined the year to physical which year versus same improved the age on underlying grew premium The and reflects fee $XXX XX.X% in and the short current grew loss property tailed million, for written amortization First, and loss the was Gross of $X.X quarter compared XXXX. weather income XQ, our homeowner’s The P&C prior ratio. damage the to to of the

industry XX.X% P&C was the September in book we ratio XXXX. was better than auto better combined to we continue see XQ shift. better RAD trends to to ratio ago which than years industry and loss mix our selection attribute a primarily began which segmentation, driven expense two Overall, our results The by in product to extent lesser implement months from XXth, which nine moderate X.X roughly frequency the to to For compares pricing XX.X%. we ending the XX.X%, risk

strong to another both for especially the XX.X in ratio products. XXXX XX.X% to current ratio domestic XXXX. the Now million in and versus prior I The were reporting Health Accident of our and versus and was view % open Accident XX.X XX.X growth the that the year XQ income segment. headwinds in XX.X% Service excluding amortization and the of Florence California of versus grew intangible The the like said, -- over the strong for turn the fee in excitement quarter quarter. written current year within With accident quarter our the quarter, XX.X% questions. individual Health Hurricane ratio up was reflects loss of XX% Gross XX.X premium XX.X our now The improvement versus million to moderator loss Barry's loss benefited across year’s million, and Wildfires. from non-cash to third I'd ratio which was expense ratio prior with combined the book. group to in assets. self-funded call like small in in both XXX.X echo

Operator

[Operator from your Carletti. affiliation then note Instructions]. question. our is And Mat coming today Please question your first pose

Matthew Carletti

Carletti Hey, thanks, JMP. Matt with morning. Good

a questions. had couple Just of

mentioned A&H it or P&C First expand saw and of of a more that bit kind improvement severity a is on maybe you in, was year the but you you of the could Mike, Was accident subsegments in both were better expected. bit seeing specifically was frequency on businesses. came little a you loss than know the ratio I its it What both.

Michael Weiner

first segment. severity of about we the within talked Well, the context Sure. frequent P&C

year XX So, seen absolutely sequential of driven we non-standard. the trends our was is mix and look both ourselves better has year say data. track of continues new not the two by we frequency really launched We've needs X.X is We shift look defined shift at businesses do segmentation industry. industry, on the comp Everywhere continue our a right, at ago, to or RAD product, we decrease down. than operate gone to it against driver that's primary perfect to the increased about the segmentation. impact more the over is which you rolling also and the it. I pricing which of data driving look a We extent, by collision. me eight To against which seen We've mix the It's under quarter, you're we and and and states it, years would excuse that the which but quarter. fast and better at attributed and a lesser

while by we some the which and the than What the driven miles goes lower against non-standard in that, much also standard still on of perhaps and old see impact but same to elasticity continue see to hard We lesser driven than extent still by is has to preferred. prove, increasing increase again factors, but it's severity driven driver frequency a greater do we severity the BI. the a obviously the industry, better PIP really

on going what's auto that's So, our business. really

have different we On on business the a more that into the and get incredibly A&H as we the Accident more in story. side. more little Again, we bit write. And right, Health vintages business tail the short experience credibility year,

on as we bigger down credibility we've go underwriting as information that well more this and to funded we're the company and group remember we both loss data in that businesses And have stop and as a get on and focused pace business perform fully highly at on our seen do very we segmentation. products. driven better just we've small the are that individual So, continues we're our does well

good we about move we So, feel trends forward. as those

Matthew Carletti

specifically on in changes describe markets what if pricing and the comment in broadly, on home. there any market and competition is those a how then you And of auto you're kind little Can kind that? more or you seeing just to Great. of

Barry Karfunkel

two again different stories say. Yeah, would I

we competition auto bit Again, that. niche competitors. insulated in focus and between decreasing a continue more into market severity which side, to totality on market small pressure come absolutely lot more frequency back fragmented which see little with large in the non-standard First think and is the competitive on increasing more our on Again, increasing. the I

to we’re seeing the overall However, trends loss mid in low-single-digits.

so our that, to are ability getting don’t with growth. rate which is line see rate margins or in which our point impact on get increases from at getting anything this We’re really

Matthew Carletti

in have changed, need us - of just on Great. is just you. on in seeing know to needs how in periods. M&A us of latest have you're NetGen’s you know I P&C terms maybe and really wants the M&A, it’s of can what can changed really of landscape, grown, also Barry update has kind on thoughts. that recent maybe you question Last update I for kind your platform Thank kind the

Barry Karfunkel

don’t approach that I regardless Sure. opportunities footprint look acquire we much. our National business. We’ve will very or that forward. for going be think to of has expansion capabilities case changed definitely and always When to strategic General’s enhance opportunities the line look we state as really at opportunistic been M&A

So, that question. your that’s answers I - hope

Matthew Carletti

you quarter. Sure, yes. and Thank last for on congrats answers the

Barry Karfunkel

you. Thank

Michael Weiner

Matt. Thank you,

Operator

Thank you.

affiliation Our your then announce question coming is next your today post from question. Binner, please Randy and

Randy Binner

of policies also know with hear just a of that this products, health if going in few, some to And be a A&H, your and the would new enrollment up I supplement, of set more period enrollment have but and your you’ll was going of those Yeah Riley, kind open specifically but benefit open particularly, On B. set quarter. supplemental speak around limited the the duration taken FBR. up period good want don’t I policies, short-term ability kind kind and advantage have extend little of can in kind think enrollment open you into bit any it period? to you just to a of

Barry Karfunkel

Yes, thank you.

the yes, into plans is expected expanded of growth So, driver medical a the duration short-term going key open of definitely period. enrollment

the all product stage We’re National as as of individual health today, is to demographics duration. able it look being market distribution, more years, over advantage generation And We the as the of the take in medical offer the offering of been well. side distribution the short-term a that and [indiscernible] acquire in assets insurance duration independent to the short-term leading to the addresses our agencies about to place, our one the distribution up quoted and country growth gives offering that bring acquire on well on extended agencies as product years of been really we're comparative ownership how General leading ourselves of our to we’ve at we’ve set as excited the that as for from then technology position by independent distribution own of lead positions advantage result able of for well together. of the of within side the well. proper internal being able of over so Hopefully to that for be our radar that really take means as leading product main now software we a all

Randy Binner

major Thank before, it And that’s of I supplemental -- on kind to commentary opportunity, you. then supplement, No, What a guess products. is there the also of so of or medical is mean about was - I an new you’ve opportunity? seem most great. be is to the think products offered I what that there product more

Barry Karfunkel

Yes.

expense suite dent accidental supplemental event there or our to a accident other those well well the couple are a really gap medical in to medical great products them as a the got critical term from to attaching been got medical growth we've And from products short critical able that payout all. to be product unforeseen as to we've solid a -- illness, well first we've here able been as as we've of deductible bridge dismemberment, way illness really products. with to bridge seeing gap accidental broad the dollar a attaching major death So, of carriers them occurring others

Randy Binner

that. unusual is then that Great. And investment you onetime -- in $XX run-ratable this million anything Did there income. is that on reported pretty net number Or or a for good. And was investment income? was if

Michael Weiner

that quite well. number. two obviously drove really We we're Well, things have, doing

actually retaining So, we're more earnings.

So, gone a amount variable we're has investing up. rate little some increased of our instruments. that principle has The our interest on rates environment

So, there. in there is nothing substantially one-timer

it volumes to flow So, floating higher principle interest a we number and it take picked will flowed a in Because of project ebb the this rate and environment rate and little. obviously securities it's quarter hard some the out. particular had on

So, it's number. fair a

Randy Binner

Matt's covered I Okay. you PIP kind then on if you in Q&A showing some or section, And on this have casualty larger that more. know there? in activity a in the Is addressed something and loss the side. category don't all California I property one but mentioned that is was there saw all BI

Barry Karfunkel

think business. I homeowner’s you're referring to our

Randy Binner

That it was, okay.

auto. not fires, in just that's So

Barry Karfunkel

really no. it's two things. Well

Coast loss the that and in the activity But been we in obviously probably non-CAT in have out totality. higher I seen West seen loss been of bigger related our you've of driving think in catastrophes And the ratios Coast. So the has industry that the there. fires a water non-CAT the the some have West attritional one of drivers a

Randy Binner

okay, Okay understood. Got it. you. thank

Operator

you. Thank

post from then Our today call Please your coming your Shields. is question. affiliations Meyer next announce

Meyer Shields

of physical guess Can a for got the get Great, ratio? this auto loss damage impact I quarters loss sort I in the in thanks. for KBW. if run-rate again, XXXX? a late. the was little the ratio apologize you of I covered So revision quantify previous to the normalized

Barry Karfunkel

we're that. do it us collective some to on assign I is of to a look think what We really quarters. individual at seeing to you're basis year-to-date what on asking

for At So us it’s couple best very do. a of hard points. to

Meyer Shields

that's Okay. No, fair.

but question individual then, can me good the loss have let run-rate quarters. of So, the the underlying for use year-to-date rephrase we ratio sort

Barry Karfunkel

going, exactly. I was where That's

predominantly net unfavorable seeing probably year So, we're any in that's have what of development a on against number cumulative a basis XXXX. fair year-to-date Obviously, that. you to and accident the favorable

Michael Weiner

obviously. X And years

Meyer Shields

terms development you. property little in Right. but of was casualty? we No, that the I the bit, that's small you talk perfect. Thank Can adverse know number a in saw

Michael Weiner

basis, on of segment well, Yeah about actually our year-to-date million. in favorable development $XX P&C saw a we

auto look is development I XXXX, on like de some the referring of to I $X things I little think accident number adverse on you're of longer bit relates to saw But kind a of it's to $X what quarter, in about of these we basis. it's individual our like roughly about million. again, think The is some way older to this minimis XXXX really premium. I years, on billion a at think lines. of

a or should cumulative it for look on was say. you I million meaning nine if favorable about positive $XX at months So, year-to-date,

Meyer Shields

are current fair. older for Yes, understand that's if accident implications relates there pricing years. I no too perfectly because And much correctly it then

Michael Weiner

You got it.

XX you year. basis an really de your of which and the minimis it collective, in to ratio got alluded at you on million. You in net earlier as And quite Look tell know look business frankly current that nine-month viewing accident we're at our months a loss I quarter favorability that against is the comments. nine

Meyer Shields

thanks sense, makes so That much.

Operator

you. Thank

pose note Our your is question. Please your then Kai final Pan. affiliation, question today coming

Kai Pan

Thank you. Good Stanley. morning, Morgan

started up on give is could how you and Can a Just a some follow as of a well understand on the changes similar there the Xst. see regulation in as I sense the term be you big whole? others this medical. as A&H us business signs Do the to and fast how as Because or short is question ratio October profitability Randy's recently early of business combined any market growing? the of trauma cells

Michael Weiner

segment benefit the Sure, we to open for enrollment said earnings difficult be to to period the the combined for be the question A&H case that low we up Kai. short-term able of well. as be as the we've whole should this in for a in product definitely past a we've targeted And front in XXs. And ratio of to expect your and really us. able to we'll able market that and believe we while next call the changing to have so answer with It's is given where place come having that projection hope be definitely rapidly have that the

Kai Pan

prior then strong. The is ratio that and prior And this XX% year. than very the follow-on being great. A&H is much around lower that’s quarter just Okay, quarter

like Is my look rate, it. a should of business? this or forward going like sort for number a this as should how at it ratio the also run one-off of XX% rate in we So, sort year-to-date of line run

Michael Weiner

so Yes, I agree well, what you're with saying.

it. two-thirds this those the small is about So, cumulative look cumulative at get rating our our enrollment as current really feel a last you business. short vintage with more seeing that or on on performance forward. as in of the I'd it's experience bit what businesses nine-month benefit products. But starts in individual open of duration in look we about is of segmentation, again, again, [indiscernible] one this little a book, of on at our way self-funded it's best over it probably to the on performance basis good we're has hopping lot And so overall very the it come that go tomorrow. year A versus we on basis group the said a Barry And tail

So be the things indication go an new that’ll short-term medical initial some of on products. of how

Kai Pan

That’s good.

you is because XX long-term say you a your mentioned year-to-date also low like mentioned XXs. You goal

or So, is XX sustainable?

Michael Weiner

it's about right. tell, mix business to the of all Hard

big mix right to low a mix target we everything our get think of So, that's seeing obviously we driver growth shrink if of more as the that of top environment. are tailwind business, to But we for we’ll top grow this and have of state a due going push driven business which a going back that regulatory what limited or -- to now, but changing Again, be we and that be the will disproportionately going XXs distribution be on number nice specific really low of to XXs to at decrease shift. it's short-term that. because growth with some on to the medical will consider medical it line. probably It's that of to our some we coupled get

Kai Pan

premium on you Good My LPI shrinking. gross is helpful. growing is luck season. at net but enrollment your business very the and look question last with is That's your

terms So, you the also is and it could give seeded premiums, in and down also potential update more road? us just an the gross wonder profitability business on of

Michael Weiner

business first quarter and last you terms of in on we recall the think property address like share difference I increased let's the gross our XX%. net, management, one to so to something the quota Yes, if

our property business, of. on basis, we're is LPI year-over-year So, more which a seeding part of

we’re between much to grow clients, on some seen business. in the and slowly of you and you're again, on the it correct a that upfront But and We've and these you comes really clients that's little. boarded have retain. So difference new net the gross the you've cost gross just how of we a onboard later, the nature and that the premium basis

that’s biggest overall we’re some markets really onboarding the the the rates So, and business driven totality clients property. product in going aggregate going and penetration to usage of that’s early and seeing then success in and of Again, and clients. the it’s credit new driver obviously be to be by in

Kai Pan

of What the the about probability Great. business?

Michael Weiner

look P&C as We segment. totality the business don’t larger of really at in part our

in all I’ll our is roll performances that, as synergies additional infrastructure. looking and the business. in the is what a spent of of addressing that to So, say year it threshold continue costs into quite We’ve bit larger and our in this it shared for business of target as we time meeting some

Kai Pan

Okay. This great. good luck. much you very and Thank is

Michael Weiner

Thank you.

Operator

you. Thank

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

Christine Worley

much Thank earnings look quarter speaking you you call. to again and the very fourth on with we forward

Operator

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

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

National General (NTTNP) 31 Oct 182018 Q3 Earnings call transcript