HRTG - Earnings call transcript Q3 2018 | Heritage Insurance Holdings, Inc.

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Operator

Good morning, and welcome to the Heritage Insurance Holdings Third Quarter 2018 Financial Results Conference Call. My name is Chad, and I will be the operator today. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Arash Solemani, Executive Vice President and Director of Investor Relations at Heritage. Please go ahead.

Arash Solemani

for today. thanks and morning joining us Good We our third Web to visit be quarter section of the Investors archived. will site call release our invite and you earnings earnings heritagepci.com, where the replay for available are materials or at your review convenience. These within forward-looking Securities Act Today's XXXX. of Reform meaning statements may the the call of contain Private Litigation are statements and current in circumstances. management's changes are and These expectations on based uncertainty subject to to filings, cause earnings our press results from In our detailed may risks that in SEC release expectations. material we our future differ our and

Our as have are we any of statements XXXX, today make. and no forward-looking November we may update X, obligation to statements

Form the of and With filings. on the description of differ statements, CEO; other materially the cause those us are Financial Bruce Lusk, turn Kirk call risks and For to our on the our I Chairman forward-looking results Chief our to Lucas, Officer. Bruce. XX-K that call could now over and to our please SEC in described refer today from report will annual

Bruce Lucas

you, to third would of call. all like welcome I XXXX earnings our quarter to you Thank Arash.

the begin of dedication to thank our we employees for Before I their would our to company. call, like all

Michael. everyone thoughts are our prayers Florence by with and Lane, Hurricanes and Additionally, impacted

watch issued, not only connection triggered Olivia. incurred and XXX of Zephyr The Only, Hurricane claims third events. modeled has were Hawaii under booked from The a marked Coverage $XXX,XXX XX% damage in storm incurred hurricane we this severe the to by policyholders. tropical Olivia, but an including Hawaii expectations. losses In several reported, Lane claims happen or weather we’ve quarter which was no impacted IBNR. by Hawaii, our light loss with was is outperformed also closed, were caused book loss policy did warning when of significantly event.

estimates. modeled claims Hawaii, portfolio been are book date, outperformance. outperformed Similar impacted the for reasons and to closed. quarter. are Florence our by several the There reported, in the Hurricane Our loss X,XXX third have Carolina's was XX% To

areas reinsurance to not coastal risk. rates to years ago, the decided two did Carolina, First, market North we adequate the Inland, business coastal rates given were and hurricane because from we shift our believe

Our our portfolio are policies about Carolina coastal zones. has only successful, been very areas and of North shift XX% from in coastal

Our Insurance North helpful during process has partnership this been relationship. intrinsic Carolina with highlights National value General in the very strategic this and of

for Alliance the quarter, homes $X and million loss modeled loss removing booked response quarter. our costal potential was will fourth first portfolio Second, focused covered we will instrumental remaining and a million IBNR. by at booking maximum pre-tax including be retention booked hurricane the after gross Michael. which us newer drying Florence our the booked Hurricane the constructions, during hurricane was in pre-tax, our Contractors company performs retention landfall. $XX trees $XX be $XX is on and storm. of and program. was reinsurance the This Network The Florence's capping CAN roofs, to tarping for retention our Heritage's also to more events. million In And million quickly helping was is outperformed better CAN was finally, losses estimates. in

in and Our Heritage had Prior developed quarter, quarter. loss second daily of stable. reserves favorably losses forward. current company the very premiums, Florida claims loss of well in the moving ranking year been reserves Losses end traded peer statutory publicly a portfolio consolidated on our on accident the our Despite, of any on GAAP should the for the basis. improving, third more have substantial and are reserves companies as both bode than posted

claims metrics point are trend. development, a to there loss In addition to key favorable favorable several

in policies in lower in lower claims claim the plan trend should year-to-date. result which as trend Broward company's severities, of be Evidence reduce non-catastrophe continues. to prone count, XX% Dade the this seen strategic Our diversification in and and down can reserve Tri-county new frequencies continues Tri-county and Fewer should portfolio areas particularly volatility. Counties AOB is

diversification Heritage and leading trends well lower reserves industry foreseeable Our is future. positioning the from claim for Tri-county away the

see improved operating across to company. continue We metrics the

net year-over-year to XX.X% XX.X% sales to quarter, quarter. the record per XX% numbers, year-over-year. ratio premiums in in increased acquisition. increased value prior from improvement gross Our XXX.X% combined third share, the year an new and NBIC was at grow largely increase the continue due share earned $XX.XX XX% Book per and Policy to

announce now with we're GEICO turn very Heritage its our platform. previously. versus has to and over expanded more will the the states appreciative agency only financials. I provide now with all are We NBIC to NBIC also partnered relationship call details of Heritage, excited Kirk on is to to states that relationships GEICO's and insurance our Zephyr, across

Kirk Lusk

significant Bruce. you, was year by income XXXX which of the the is prior same in earned a during the from year-over-year the The to of of loss with associated Gross The $X.X reclassified shareholders increase a XX% the prior and last in the of period reflects significant the from $X.X NBIC liability in-force $XX.X million Net to a $XXX.X increase was debt convertible in loss with was in addition of ratio, positive quarter XX%. from third up adjustment charge Thank was million partially in current million the of up to XQ was Operating one-time for decreased premium the the reported year for premiums non-cash for equity. million, past reversed $XXX.X up from reflected the Good year. NBIC. of fair income for The The offset Tri-county third quarter million due were of the issued for morning. the derivative that liability addition year charge The quarter third mostly million improvement one-time quarter quarter $X.X XXXX. derivative year-over-year quarter, was value conjunction income the NBIC the at $X acquisition. XXXX. better million of XXXX. a of

from Ceded the three to to increased assignment planned to prone period should the As that XXXX. $XXX.X primarily away to diversifications million we regions diversification for compared benefits months earned more results continue of our the premiums broad, in are moving continued of inclusion million operating improve relates our NBIC $XX.X September third XXXX. XX, quarter same of for in XXXX, the This the as increase ended forward.

As uses NBIC quarter program. extensively reinsurance in a reminder, share its

XX% for of Heritage NBIC's to expenses was gross reserves during portfolio. appropriate. XXXX. quarter $XX million and retention lower to and of adequate a The effects for of but the one ceded or due the the from higher for The third To decreased Hurricane X% $XX.X CAT from consolidated retentions quarter profit million. The synergies, diversification portfolio Hurricane quarter third decrease XXXX, the of reinsurance the our quarter and the as to retention Total third premiums XX% Value benefits compared XXXX, third third the the perspective Florence give evaluate TIV We million of XX% is Loss the of quarter a quarter from up synergies $XX third on $XX.X TIV Florida combination our Excluding represented change the quarter the of Florida is loss to portfolio. reinsurance in XXXX. premiums consolidated at continuously including that reinsurance And adjustment program, Irma earned of portfolio, Contractors of the million XX.X% Network. geographic of only down our are were Insured ensure Lane of and of to compared of they're XXXX, XXXX. Alliance of

of evaluate the on call, quarter in increased State reserves continued our mentioned litigated assignment and quarter environment benefits particularly our Florida, Tri-county ongoing basis, our focus to the the second second we've of and the State area. earnings during in in the litigated due of the to XXXX in Florida. on an As -- of We claims

mitigate actions quarter, During currently taken reevaluated claims. the impact the believe have litigated the of that position reserve future third adverse and we we've should our

in of were to at We quarter million will acquisition and been corresponding exposures, excluding NBIC, In reserves $X.X XX.X% third commissions Ceding expenses The $XX and ratio expenses G&A increased of against expense expense operating evaluate business. production of comparison, of of third the year-over-year and commissions acquisition-related profitability. of impact long-term XX.X% net XX.X% the the in continue would from have company to nonrecurring the the pricing associated to at proportion a position XXXX. XXXX XXXX. to million, offset the quarter expense ceding third ratio the for with net the costs quarter our

from quarter of which partially to XXX.X% by in net in related Our the expense premiums combined an third The improvement quarter in of ratio the down is as is a offset for loss ratio, increase the was the earned, percentage net the primarily ratio. XXXX. reduction XX.X%,

the tax effective The effective XXXX to served Hurricanes Florence income the increase and tax the XXXX income given rate tax consideration. hurricanes. increased primarily rate tax effective and related Permanent booking Michael differences to to our of our through XX.X%. our by tax quarter, the rate resulted is the year-to-date lower tax caused pre-tax Our third effective take true-up to approximately X/XX/XX rate, provision in return adjusting tax XXXX income into

September to XX, from collections balance decreases sheet, from to recoverables of asset are Moving the on are third catastrophe side losses year-end, and was of collection $XXX your XXXX, from Cash and now since in reduction million million, balance available due at take unpaid reinsurance sheet. recoverables. to side, quarter to notable the the and $XXX.X questions. on end and and reinsurance on of the related at cash equity the increased payment movements Bruce up the losses liability Shareholder's second XXXX. of the quarter equivalents of the XXXX substantial I a largely year-end

Operator

from Sandler first Instructions] [Operator ahead. you. The from Thank come O'Neill. Barnidge Please go John will question

John Barnidge

for you next Bay kind in Should the run kind once highlighted closing? a Thank said, going year Narragansett for it a you of we expense you more you. see in XQ expect I out or quarter. that 'XX? ratio Where XX.X% than do from rate normalized -- believe year of

Bruce Lucas

the that that's systems some one-time to items that it's to we’ve of to run the XXXX dual will that, less going Yes, basis, But from again, due due anticipate that. like realizing and we're have about that that operating do impact. actually by slightly of benefit the positive be be But than expenses just year a a we probably rate away to -- occurred. we're the close integration

John Barnidge

retired do you you believe around? quarter, in of convertible did I debt, any time million $XX that Last this Okay.

Bruce Lucas

retire not the third convertible did any in quarter. bonds We

John Barnidge

repurchases? And what about share

Bruce Lucas

third in We did no quarter. share the repurchases

John Barnidge

you Okay. ratio that XX.X%, And think? is premium rate was the run ceded

Bruce Lucas

Yes, it reflected gross that’s It's little year it NBIC. first higher half the was a will pretty then reduce. close. quarter the in Subsequently, that -- of at share higher

rate. of more probably that's yes, a run So

John Barnidge

my question And then last will and requeue. I

Kroll a loan have quarter? convertible talk got you price term a you rating it's about the because that's a during giving debt, retirement got options Can floaters. somewhat on You you,

Bruce Lucas

so Yes, Investment we’re to excited Kroll Grade ratings. the have

appreciate to So to all us. Kroll with the efforts we by go that process

the in of options looking where to those have sent refinance since But structure. etcetera. some right are are they’re, now the now, comment right type We’re at we motion I market to later all to really current on But whom, or of can't this with processes capital optimistic out still some color year.

John Barnidge

I will Thank you. Thanks. requeue.

Bruce Lucas

Thanks, John.

Operator

Mark will next from with Please be Our SunTrust. Hughes question go ahead.

Mark Hughes

Good morning. thank Yes, you.

Bruce Lucas

morning. Good

Mark Hughes

properly, expenses million the hear the in I or .Did that quarter, nonrecurring is in year-to-date? $X.X

Kirk Lusk

was That the quarter. for

Mark Hughes

properly. And For of points about if that about the that X I'm earned would quarter. be thinking premium,

If points, XX% out XX% a X more you the took of rate? reasonable did run ratio you and expense is

Kirk Lusk

costs NBIC, some little at going than you forward. of be going actually higher a to it's that Yes, integration look the when

it's the XX% So range. probably between XX%,

Mark Hughes

like that ratio, the you the And capita you, know offset CAN amount loss the the in on underlying favorable Network, XX%, XX% underlying Okay. the XX%? number of out is ratios, was that loss if you some took that good seems a your then loss development, -- by for

Kirk Lusk

seeing the are does Mark, so loss ratios. shift the incredibly positive is we're And loss right Yes, trends what I with in mean the that difficulty quarter-to-quarter. now, ratio

just portfolio. -- additional today, what could stats that share our we're Some on in call can you kind that with I highlight seeing the of

years, of only point in stats of litigated versus lowest when look year that claims we today now at back window Tri-County percentage that we're X.X claim right non-litigated you are the Similarly, of the at but other That's I is again, at my like the non-litigated have you counties, If X.X claims we rest XX% open lowest last Tri-County. book, in to X.X are we at -- the Tri-County in the stats, Florida in count the our are the number of have of go XX%. look my that things years. compared

at in see any So that go those periods I low to have levels. XXXX 'XX would at 'XX had we are a to back or and if if 'XX to were or record we

As we’ve example, been diversifying compared XX% period. Tri-County noticed claims year-to-date down also for claims the water to prior positive a our filed, new Tri-County, we’ve away are from just in trend water

our So new the in we existing these fraud, to in, are the is the accident starting impact positive related And positive are and inventories to that shift we’ve reserves a time are AOB while all first have litigation. come seeing and in claims a prior related as claims our on real And Tri-County, things to a they this that and very in losses. development had years.

Florida publicly top second had pay of of quarter, And And do loss think the group. Tri-County in we strategic the first business Tri-County of dividends. the away to traded reserves of the really so as the to our we source on is our more starting being end company of major in that diversify from that, shift Florida and to the pullout peer of any

set rate going loss right good now model, portfolio. think but for hard ratio we're inflection kind give of for are number me -- So a it's that an to run point really we a the seeing a in your forward, for up we you specific given

Mark Hughes

from benefit how trend? many you got the how and above beyond network? points Kind much what would of in CAN you normal the Can roughly be say quarter,

Kirk Lusk

trying it. Yes, Florida kind does, network We’ve A at quarters, miniscule, of we’ve some not it's as more [indiscernible] quarters, disclosed millions that that the here. spent that building of We significant. sauce of out what tens in view proprietary it's division. lot companies CAN to other

a here quarter-over-quarter group to the a on But throughout well year. it and give the as works to want we or that the there are We don’t something just it's benefits roadmap of our to basis. doesn't system getting works peer how

disclose not do we impact that is. So what

Mark Hughes

I’ve will other Thank questions, but I re-queue. you.

Bruce Lucas

Thank you.

Operator

next be The Christopher Instructions] from with will KBW. Campbell [Operator question

Christopher Campbell

Hi. quarter. on the Good morning. Congrats

Bruce Lucas

you. Thank

Christopher Campbell

guess, on -- core I that how Like post-storm. so about ratio -- just loss like guess, benefits the like adjustment I that like I'm the getting the long guess, claims does guess from I thinking I you're income? continue?

Bruce Lucas

throughout set mean water those I was roof look CAN Yes, get I you benefits things services, that’s year I is really focus -- fronts. up -- number and if Florida. we’ve water that. there removal repair And so claims, field a tree for, one. mean tarping the at the like mean large mitigation of for it's up it's you mitigation all division, throughout very what out it's on set in

So, I quarters ongoing. it. benefits started reduces really catch-up since back with company it earner do are the great We the CAN, in going quarter consistent mean, have booked been you’ve other when some times, it. But with XXXX and the a that expenses revenue we pretty that it's and for you

Christopher Campbell

Michael it, then missed it. That’s got current guess, may And gross losses? but I helpful. are what have just Okay, Irma and I your

Kirk Lusk

that million be being the is have is an it's and we a will cannot of have do because in we quarter. on that soon storm. too don’t or full hit. imply so million pre-tax, I that retention believe would $XX this Michael point us, I in for Yes, estimate a claims Michael, after just say event We not ton at would which may the a gross know $XX loss, just may there. really we fourth don't That time. booked

We have claims. Michael XXX about

that believed So We end that tried diligent our low. up the never really risk. were we models front AALs is to reinsurance And never up there accurately for underwriting. the the is, We grow codes that the the there. never And there we sound. pretty even on therefore, and were were for frequency capturing reason believed up construction

market share. We have low a very, very

to ton of it. Our wouldn't we much it so a devastation, avoided thought cause was, take

$XX get not, to or are that we to update, hard one number XXX million second basically book it's we will And in still because quarter we did say, we not retention. XXX. claims, fourth Michael but million the inning, have a $XX So then if full

Christopher Campbell

$XXX range million then losses, last And it. of Got million that mean like has gave gross a guys You Irma moved? to quarter? $XXX I

Kirk Lusk

we front under in I number loss, ago, Yes, But have noticed quite we of me. don't some exact of that still and at publicly time information in number. the XXX, are filed

Christopher Campbell

And amount. return a -- you, be it. also got thinking Irma investors competitor that that some loss like for potentially an of collateralable market some I know And especially concerns, reported to just Okay, was I’m prematurely, may may there continue additional there kind upward. reported losses about creep if have to

just of limit what of to the place wondering development I’m then before how have the tower? on there was a So struck? Irma that guess much follow-on when Heritage left, I are in adverse reach in question, specifically, do could based cause And top any the any you holes you in guys just tower

Kirk Lusk

have heard in a that there program, interesting you the I that it's million of $XXX because middle release hole writer was rumor Florida they that I've so heard, a and mentioned Yes, their that, collateral. has too

that clear is be me Let not us.

with the report We to for concerns It's our know. us. I for the become leave it $X.X retention up no connection somebody them number or recoveries stretches a And of completely to where know holes the at tower of Irma. are to will true don't it exhausted. nonissue reinsurance then billion-ish additional top not million top ,that’s our have if no I like those about tower. else, the amounts all and we'll Hurricane it, report rumors in to $XXX but We’ve

Christopher Campbell

I guess, forward? are be XX.X%, guess run being it's I the you rate it I idea speakers] a to on it. up you about an And ratio got just of is are doesn't -- like Okay, [multiple sound right? going give is going ratio acquisition like But the helpful. ready the loss North fine so what you expense with on guess That’s net very about with that to kind think

Kirk Lusk

going around range. right to be if If -- I’m XX%, to it's slightly going that I’m low Yes, be in that. XX%

Christopher Campbell

Okay. an guys issue are is basically, ratio ratio? you going And programs. to have I loss net with Where you movements, reinsurance there think -- books then to the loss, core net mean idea is loss on some ratio going consolidated the include, the loss know the catastrophe, combined core the those I that run? reserve maybe

I So books? those are performance you the of just at underlying looking how guess

Kirk Lusk

aggregate worked Zephyr, incredibly our you quarter Well, we NBIC, net sophisticated try layer which daily losses. gross They’ve any you record in well. was look or term Particularly, Then performed with mitigate share and start at to have risk. use quarter pretty really share at a quarter -- you share activity losses, near storm for in to first when well look if us. of but doesn't

So get the that put And we can up We one hailed amount in that a the ratio were Down by here Florida, quota impact. you the in diversification. also report significantly, the of positive in trend on ratios, events of impact first put on, one severe occasional other on event, just have Tri-County have our amount the the on that Florida pretty our that based weather a has to quarter. we’ve share way. we loss adds loss core significant an we pretty there

little as there's to quarter lot moving share of a we net for is we XXXX. layers ratio think aggregate a closer So will And we have place what pieces loss get bit a the more to NBIC, into projective good clarity that. to and moving year-end and as

Christopher Campbell

Thanks throughout of wonderful. the all luck great. Best answers. for That’s year. very helpful. Okay, the Well,

Bruce Lucas

Thank right. you. All you. Thank

Operator

ahead. The next from with Please be will question Citi. go Naklicki James

James Naklicki

quarter guys. Nice thanks. Yes,

the book? Thanks. get -- I citizens just I to property your view to guess legacy what the rate Just as for XXXX some the X? guess overall is January particularly then, book some, And environment, looking

Kirk Lusk

increase did XX% in X.XX%, filing rate believe Yes, portfolio citizens rate of Florida had effective [ph]. roughly I kind double-digit the XXXX. that put The plus when a so we some on legacy

are filing. that say And halfway we’ve think digits, terms flat. Florida, we Up go are moved happens through was got next to roughly effective year, I reinsurance to believe rate front. the voluntary increases, a filing depends XX% mean positive we’ve Northeast, modest when -- rate nothing we is losses what of structure. unusual. how of lot we with need about in I The continue and the low in filing forward what I current Hawaii on just run so So single rate also that rate a in the will that some are trend very on to Hard and X.XX%, there

James Naklicki

Thanks. you. Got

Kirk Lusk

Thank you.

Operator

Bill Broomall with Please The next Dowling question will go Partners. ahead. & be from

William Broomall

you. Thank Great.

and I follow-up Florida What magnitude split give from that quick Carolinas of to what one is don't is can opportunity terms of you the the would Just difference just on Florida you contribution out the but versus of some opportunity? the can outside And appreciate in us want help financial versus just about CAN. may Florida specifics, Florence? in kind be perfect? think in be

Kirk Lusk

Yes, because policies up give system. I Northeast, mean, mean in did there New I Jersey. mean, we We so in point particularly, there. was using loss Hawaii in XXX pick utilize Network in starting have the and we pretty have water small. New and active not York, some is so have is place CAN do are I CAN steam, XX,XXX to to and the the in that really Hawaii, network that an good The divisions no they're operating, that claims.

of operation, Southeast we're that's the of where to some see So Narragansett online general that Bay. core kind on the most the coming Florida additional is you're benefit. of revenue through in But seeing incremental going

William Broomall

Great. Thank you.

Bruce Lucas

Thank you.

Operator

from be JMP with will question Carletti Securities. Please go next The ahead. Matthew

Matthew Carletti

good Thanks, morning.

Bruce Lucas

morning. Good

Matthew Carletti

Thanks. Good morning.

Kirk Lusk

morning. Good

Matthew Carletti

should of rolling that in business we Heritage? your to kind of to that I So out still other last you I potential what it the are of the Inland, one, point? it just And you really expect But at for production couple if at about will about are think it GEICO you mentioned those if things, states, footprint has will is lastly, in you one that's kind just step. move will states states can there Two, think we of change as if to you assume kind help for like ask I more want you it good one -- partnerships the the think There work, another you help coastal then where a them? some about all? this A of Is quarter, seems want kind do? of two us relationship. It

Bruce Lucas

There fourth Matt. But we first the on quarter It it. Where a anticipating and that launch. do with more quarter quite one once are could holidays. we're Yes, into the is we'll press launches release a bleed excited about to relationship. with, on And savvy. very put launch we the I actually to mean to organization, just once great we market, PR With they're that. work some out it great professional, GEICO, respect definitely will

We are policy, absolutely and our thrilled to regions. across in not But all we a be working is we we and coming of do our agreement wherein that's an have where with amounts, producers. across platform. business in them disclose strategic different do And from have what

unfortunately, can't but to a I have -- of of size. it's information, their impact that, given of because will disclose sensitivity GEICO has a I the kind sheer the our needless nice -- production So that say, just on

Matthew Carletti

of answers luck forward. Okay, great. the best and going for Thanks

Bruce Lucas

Thank you, Matt. Great.

Operator

ahead. a John go is question next Barnidge The from O'Neill. follow-up Sandler with Please

John Barnidge

in on Maybe there? from Carolina's like Florida, quarter, the CAN [indiscernible] based or already was it that is it the were people CAN production,

Bruce Lucas

Carolina. working XX North sent crews We to

So …

John Barnidge

in Did you the have any state? working [indiscernible]

Bruce Lucas

vehicles Florida, from there, of of We the Yes, dry Florida. outs, them you rooftops, name up convoy pulled trucks, we sent basically out box Heritage it.

losses. crew were still So we’ve still one there out think, they working there. I

was we response an the Florida response, where internal moved resources to the from Carolina's. So really

John Barnidge

they last trying then what the apart? with and or Florida, of I’m you handle different be is, that had hit hit if storm Carolina's So that, year, and a would So CAN it's within storm it's state? would what get not to kind Texas be Florida to like had we you to as able pulled a the if you a Network

Bruce Lucas

our would of similar definitely between simultaneous like more resources had mean, And network the in X,XXX than North no small wouldn't I to losses and the I be if to sent and for so than you, Michael, claims with up we we in a the that Panhandle. internal but of pretty the wrapping get on Michael tell Florence two but resources. happened number those had And example, small, our were, we Carolina, We sooner pretty extent Carolina's. resources were to total hit the easy rather something apart, we pulled crews we rely losses. It's can Panhandle,

still So are in we our able -- -- and Panhandle been helping we are right the there working we’ve and to claims now customers.

John Barnidge

full or build percent throughout footprint? basis, out your of inning could say the What you CAN if in Okay. you’re

Bruce Lucas

XX% about of probably I where want the be. way are We to

John Barnidge

in the And in CAN would ratio think? be reasonable of some then the Okay. elevations build expense coming to that from out,

Bruce Lucas

book resolved comment the but I’m on not in And they’re classification. yet, given that’s just what -- numbers they’re, No, primarily disputes in the increase prudent was in going so We the their what have. third the expense to ongoing to elevate thought we those. quarter just that two it that's related, ratio. expense quarter helped are relate fully ratio to some for to They the not expense

John Barnidge

Okay. the Florida? Democratic want thought a but of an election, towed environment front a polls. out, question, I week don’t if candidate in the seems for we’ve it's ahead to My pulling governor Democrat What to be your that's last Xthat sense. makes a run is on the governor

Bruce Lucas

that’s and mean, I'm mean question. I going to bite say just Yes, comments. I my tongue interesting an no

John Barnidge

would. thought, I you Thanks.

Bruce Lucas

Thanks, John.

Operator

follow-up a from Mark Hughes SunTrust. is question with next The

Mark Hughes

Yes, for Florence, volume will you you what thank that the you. did Michael, you’ve quarter for it the in The would crews comparable, versus there work less? magnitude will quarter little of the in the fourth do be how third think you of

Bruce Lucas

in versus Florence, the severities good we to pretty that have were significantly loss higher. because traction some are think going I Michael

Mark Hughes

be in more probably a That the benefit quarter? would fourth of

Bruce Lucas

have was the have bad. I significant severities you in when that And roof so more we Michael were got so Florence very think wind Whereas, pretty Yes, claims. I all-in. lot will muted, weren't that you have water the a they ratio, penetration because a roof claims. mean, claims, higher you saw speed

comparison state. forward Michael of look higher then rest lags the you between Florence, the Panhandle in class wind speed, and so construction at no and wind And there's higher And so behind general, in the speed damageability. just

quarter. opportunity a the I So nice that presents think for really fourth us in

Mark Hughes

the you the, kind if X, to on thoughts XX? X the can in or some should GEICO in ought expansion? to rate specifics you your much what of the see the of retention, and getting Should how terms how policy look for of Just out? anything kind at anticipate other sort X Heritage grow, growth you Without be, with partners, organic production to you shake that of any say just

Bruce Lucas

Well, But for they on good rate Georgia what it and know looking a book, that impact at licenses that We yes, now those that to and on there. recently projections. are handle are in some in trying a and Virginia things are, are are is XXXX, and there. something meaningful hardcore, on throwing you we our you're online, depends where come like so mentioned feel there Alabama. your we’ve launched opportunities and online have and in your model going something like Maryland those and does agents, states in a a the impact factors. line. there that and And have on strategic producers start renewal that a that’s more new top -- internal those I concrete It's at projection that of always ton we get dependent premiums right, to lot rates, better need come states They and like, typically look it year-end. increases, we

are excellent of production seeing way. primarily the by states, those We in both England

just diversification where that but terms business the market. feeling of not out to good where pretty a are are we we we new our at and forecast are we about plans So growth, could in point

Mark Hughes

what suits? your is observation what's lawsuits, about states? AOB happening think Your overall the do penetration I your because -- the the In you're down, of level is but across think down you general

Bruce Lucas

doubt. there see, I are brought in that is AOB mean worse, only I kind you of prices getting that pockets is in no Orange see it you Dade the it's problem and the Broward in the see Hillsborough. definitely leaders of think it but we County,

note results it's scattered But lead well the right problem. throughout probably of kind and Dade as Orange of is and County and XX% It's but with know think that charge. there we seeing problems You you carriers too. other definitely Broward are the those I that here state, know,

the credit why, and underwriting. guess, with That's scores, credit run front focus end worse. I on claim we focus I shouldn't reports scores, on problem insurance So We we I say well, the getting the on -- score. end front along it's think good is

on So like your history home, good get what like you newer is many of metric improving AOB to of a litigation, end is. that front that Every in insured an it that really idea ratios, claims. significantly the the is customer, extent of in diligence We reserve areas development, construction we’ve will open Broward. monitor that cases. and And Tri-County kind due helping profile quite loss Tri-County with claims the Dade open crisis avoid the of additional and

getting note the because So we risk. mitigate on the problem the that of it to efforts getting but worse, be our to better we've seems portfolio, is that taken

Mark Hughes

opportunity? magnitude you perhaps had question. terms a any final dual anything in those of the mentioned improvement, Kirk you in systems, of And opportunities in eliminate how us -- the little large can if XXXX the for you tell

Kirk Lusk

some yes, it upon, -- because process be are it, know with at depending I And gained might the talking a in also. system. are efficiencies the of negotiating dollars, couple we current of there We million

So a just from eliminating going of to is save dollars some expenses. systems million those NBIC's old few

Mark Hughes

Thank you.

Bruce Lucas

Thanks.

Operator

like session. Lucas this turn I conference over to for would gentlemen, our any concludes back and closing remarks. the question-and-answer Ladies Bruce to

Bruce Lucas

earnings thank I their would third participation just our like call. quarter for to everyone in

Operator

now conference you sir. Thank presentation. And attending today’s thank concluded. you, for has The

You may now disconnect.

Heritage Insurance (HRTG) 3 Nov 182018 Q3 Earnings call transcript