PROS - Earnings call transcript Q2 2020

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the ProSight Specialty Insurance Q2 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today Mr. Joe Hathaway. ahead. go Please

Joe Hathaway

Larry Good Bailey. XXXX Amy. With Welcome the and and to on Piszel; Officer, Thank Chief and conference morning, call quarter Underwriting President, CEO are earnings call Officer, Inc. Chief for second Financial the Buddy Bob you, Risk today everyone. Hannon; ProSight me Global,

which afternoon, our second quarter Following our will call at issued the on be open website earnings we release, is prepared remarks, for available our questions. Yesterday XXXX investors.prosightspecialty.com.

during that reflect results everyone are remind call, and management for differ that me Let of We and statements comments make this results may such materially their expectations future may actual not guarantees forward-looking beliefs, from intentions, that statements. caution those the future. that forward-looking

Except with recent most update statements our of of that result obligation whether Risk of important language and some to future or future as results undertake regarding of any and otherwise. risks earnings could SEC. reports by publicly the Factors yesterday's condition, in forward-looking events our release a discussion please filings made the factors law, financial the we information, no and forward-looking new section For see the as cautionary and affect a statements required

GAAP and I'd certain With to over President, can Additionally, A release. in comparable turn we evaluating to be CEO during reconciliation measures earnings non-GAAP our found to our that, of will today's measures Larry call, believe the we most our discuss the performance. which in measures, are useful like these Hannon. presentation non-GAAP

Larry Hannon

year, profitable strong everyone. first a difficult period. a second and and during Joe, Thank very good very morning, had a you, half of the quarter ProSight

and of job. prudently outstanding done grateful the distribution an our loyalty employees appreciate am partners. their I and have Our excellent for customers efforts

talent were severely for number to COVID risk a impacted customers discipline, that and returned adjustments, and Our has states stronger. premiums. been before most of our expense chose readjust acquisition management exposures limited Even those subject never underwriting, required rate, execution around we by

second quarter, so insureds While doing negatively thing right the and impacted do our behind was to it now us. is in the growth our for

grow here niche focused identify with appetite. our positioned our approach and from are underwriting are align that We to opportunities to using

a at D&O, traded we medical write As cancellation, mortgage or health, nursing event not accident homes. do manufacturers and insurance, ProSight reminder, and travel publicly hospitals insurance, malpractice, opioid and distributors

Our tenth consecutive quarter quarter us marked second can limits niche our and strong produce profit the affirming so doing approach of results. underwriting that management

limits less. reminder excluding As work gross XX% million $X book, have our a or our of comp policies of

will I our that COVID guidance to the call. XXXX impact Next update for we first on provided quarter

X% written This XX% the exit gross from decline segments our customer XX% book. the in communicated first that For at quarter, we for from believe work previously excludes end will to excess XX% be of instead the decline the the of I now that compensation our we range. the premium to announced

point XXXX, yield we at we portfolio core the investment expect the increase the COVID-XX in versus the given X% provisioning of end ratio, point partnerships now provided I for limited confident reduction still communicated of X% And deferrals that finally, the had year quarter. I bad communicated expenses accident regards first With loss potential for to that with income while consistent impact end quarter. in expense state of at of mandated the have claims and X.X am XXXX we net collections For and loss premiums, year current written point from increase previously. the believe we end related up lower ratio we the approximately our excluding net to from income, the debt for a X to have the by fixed basis up first XXX to cost higher we potentially ratio, the

marketplace capital how approach financials, will rate to and our this number update over we couple year just position. our a a of Bob? turn timely our After you underwriting highlight stay the am of selection strong highlight for provided. examples the Bob's a close ahead. and are culture in are I expect and a expense provide and our to execution approach to confident the exposure that agility will to remainder business and very years of now in classes give I allows tailwind remarks, that guidance our risk of there review certain will Buddy of Bob, our and first niche I our with, still us in performance While optimize discipline to investment on fashion. the and dealing the I who to uncertainties us call

Bob Bailey

our Larry. Thank everyone. the how Larry's our Larry, will about tremendous lives comments pleased team with as optimistic own say through in echo change morning, I'm of our am I I and and see year. executed intensified you, you their second balance and managed more connection more and even in Good well importantly, how the I'll hope our customer quarter, has the momentum why base, to

really the execute overall adequacy at at generically we even or the for what as consumption think and primarily level giving As line, such niche. niche how rate we niche line, reminder, with I'm your line the rate aggregated more is level by a to about as it's in as by opposed not

of niches of by the work XX. rate including work in achieved XX of a work in and this We positive workers' quarters, I over level, about portfolio in the For rate improvement expect increase, not on XX is balance workers' that -- to a since and X.X% to continue the it centric. rate of including deteriorate a the through have X.X% terms achieved comp of workers' quarter is those recent the excluding one year-over-year This achieved XXXX. our line The meaning of XX XX.X% brings of the At X%. pleased acceleration XX did X.X% adequacy total. for which comp first niches This are year-to-date rate only comp. excluding XX niche comp comp and seen positive X.X year. quarter, the XX we the points an building hasn't with rate am us including of comp, and second our rate

As years, just we with done have the comp in adequacy. enough as the you too know, but one between great dinner knowing it's just difference important over also rate a makes line well that monitoring work slightly much and guest,

in have levels some decreases As rate year-on-year. compounded cases declined

the about account that willing have or We even believe presented by book we very the the with disciplined no that let premium leave commensurate where to rate risks the is niche. the longer been

the years, of line approximately from $XXX likely comp, our Due excess including this business, is of of three past highly space, there this regulated in the differentiate very accounts yes to around of driven $XX year-end have do be priced rate rate no given down nature except at in the by this million Over saying level, anyone in level. a can or adequately pool the one's when very line. reflect actually to we line, of shrinking coverage estimate little to workers' terms million and offering deliberate

ratio to the noted, we current COVID, year. X.X as the of for up potential in see Larry regarding points loss accident still Now

to the one days absorbed collections through discuss claims will hand deferred heavily that of continue uncertainty Buddy team we before early in of premiums inventory less can like that their do humane, more for still the working more well, future pick Staying financial the accident Based impacted customers negative continue and believe we techniques. and economic will note, monitor claims of wisdom actions moving be passes more results see a top it as in discuss in into feel our approach, additional and to comp of time quarter, continues from good impact exposure or what We inventory call ultimately sort a that be will very and this aggressively credit the two cone the to efforts ratio believe we year right-size greater clients were that as rather ongoing current simply auto Piszel, However, any with trickle the the on or a customers. off to this not less through confident. I our decisions seeing, appreciative COVID of work other but frankly to in risk, still results we than to of detail we on may loss the impact most impact of early narrow. need of the will detail. I prove in while crisis And only but XX%. impact continue the line who also week, for of call. that to COVID, current in the our COVID case time base suppose Buddy we just are our be work We

Buddy Piszel

insured operating accomplishment is adjusted credit was will operating line from facility. Net then segments segments, $XX.X rigorous of impact the from year's This who and premium exposures was million, expense bulk records new of customer closing we came income our an activity plummeted for on ProSight. top proactively declined COVID. in quarter. The production, Bob. written income $XX.X and was line our management, customers successfully our In comments income, performance, Adjusted of XX.X%. were this net focus the and ROE customer both strong drivers three XX% combined by my and with reduced where key Thanks media, investment impacted second quarter's quarter, as last for expectations I for transportation quarter gross our million for our our discuss the important XX%. two

the resume quarter, and X.X% entertaining, adjustments We Net our quarter Also, and up are exposure investment and be on that the in and buses were of we for last will back over confident flat and not road XX% all the segments these entertainers and year's resilient for were rest that impacted. third $XX.X negatively as million snap back. up customer recovers quarter taxis economy were go accomplished income and The the quarter. XQ as substantially year-to-date. the was they we premiums should believe fourth

double-digit up was yield reinvestment year's the guidance. X% and compression that the in resets lower in Our line from of portfolio continued Offsetting yield trend The from was last growth, core rates. XX.X% growth LIBOR with portfolio quarter. our quarter

is total turbulent high portfolio with strong investment we positioning. excellent continue of million, reduced floating And as the really At quarter's income $XX net capitalized which exposure. investment an performance, portfolio of discipline portfolio. credit to million overall, we improvement market The end, generating QX, confident from limited an and $XX.X comfortable $XX the of had quarter, again million Our $X.X feel the this watermark they further income partnerships a gain dislocations our is of for had million in recovery. and our quarter. the our In a unrealized maintained on

expense up, Next management.

$XX.X were year's quarter. flat essentially quarter the million, Our with in G&A expenses last

premium premium of excess absence the in by at the Our quarter our The last rigorous of from end additional management points as ratio pride to points earned expense we bad debt We increase COVID's by compared million as XX.X% management the starting driven XXXX. achieve and reduction year's $X.X year's overcome us continue of earned expense was all improvement expense last of company ourselves in believe quarter. well exit point comp. to the the new million two public is That of to of allowed expense that's and ratio from quarter. XX.X% XXXX on from can up X.X the $X.X costs expense

a were and close will new current has In senior maturity in able Let of and new we refi credit compared X.X%. borrowers, a at capital facility interest to bank rate our expected rate our new challenging a terms with lenders facility better of quarter on that liquidity. on me to a notes X.X% The close very group November. for

favorable from also our $XX expanded on million to We terms. $XX revolver million

or the into supported After to as into of those facility. that ever was insurance We we value end, ended at $XX capital million the growth quarter, record forma with drew at growth, Larry. stood of QX. over million in debt-to-capital our funds capitalize and share Fully than $XXX the highest quarter's insurance company that, are lenders $XXX Book five our book Pro to high new on for the we hand Organic a back manageable potential is positioned I'll of $XX.XX, revolver ever over was at as Stack And revolver $XXX diluted for a growth surplus we on company. uncertainty increase rebound our really market in strong topline pleased debt quarter the it of an coming million draw the quarters. an end the All-in-all. $XX the opportunities. our better strongly expect our increase support million injected quarter added and year-to-date value record credit ProSight. the XX.X%. X.X% the for a increase per for is million, raise, an QX. to company and a surplus a almost

Larry Hannon

could Thanks line Buddy. for the Operator, if questions. open we

Operator

of [Operator Instructions] from the Our Meyer Bruyette. first question Shields with line today comes Keefe

open. Your line is

Meyer Shields

Good morning, everyone. Thanks. Great.

Larry Hannon

Good morning, Meyer.

Bob Bailey

morning. Good

Meyer Shields

So, bit within or I sort a questions. economic for of One, premium couple volumes media? of progression of hoping within the little was activity basic on color transportation more a monthly

Larry Hannon

Sure.

I'll So that, and can on well. as chirp you get maybe Bob then started in

truly when because in impact that little out. the saw most then went of laid that And on May So, you the bit majority in quarter saw of best was negative that's what some month-to-month positive accounts, premiums then most what into to we were, was reported saw return the a April the Again, reassessed that the right? our exposures development we actually insureds of June. of that premium you the in started The that vast we a see hit, side, back Bob progress, So transportation you quarter. and and interest because those as re-rated right? April, bled thought was issues in we

of I and a second what was that be quarter predominantly April think May. perspective share will in that happens the lion's the in really and transportation from

saw little On entertainment because going ways actually biggest How in that a production business, right policies affecting the Are well. from cases versus fluctuate month-to-month right? anything side, same saw So that thing, of would reaction of got premiums the Are growth And as you've media month-to-month we add size of But month. we and a month-to-month different in early well. to as insureds then in compare the trying had immediate is perspective? You else obviously progress going exposures? that? had you are things couple those space What more the are at the extending we the that we Meyer, we to a month the adjust readjust we to on in Bob, each progress? the right? bit months request? does certain

Bob Bailey

in of the guess of question's I Not, how I seeing a rebound the different a bit navigate I perhaps Larry. And suddenly, deploy yes, think and really little we your mean, fundamentals way. answer of as sort to are sort to are. people redeploy is we

things different slight it's was. just not it's I and majority seeing penalty. the now, like of Rental are think, And the different and – We this improved right-sized kinds of It's basis it behavior forward. of are that. much finding and pickups a to different houses some media things slightly. do taken It's But what vast kind going we've just than – not.

Meyer Shields

just what trying into of translate that's No, helpful. I'm broadly to very premium we're a trajectory. sort seeing

can. Two helpful. really if is I ratio, that the So questions on expense

back back in toward normal? there start adding that estimate shutdowns is should first, we response The as expenses temporarily maybe in to any we of reduced get

Larry Hannon

in right? and assessing from and ever those to We this the trying believe interest So going right? business. anything you're starting long I is all midterm we what the anymore best hey resources Short the and needs the thing we that these to starting the as watching perspective see And we're do. say, niche what and to Larry. And or going from opportunity been we're we robust think our pipeline, and as there didn't we're or an of don't obviously is constantly to back. In a us overreact headcounts of we're to reduce niches we're bounce from to have We're we're Meyer, right Because kick-in, as now and as what more we to think term, do therefore is bridge expense perspective. that, robust sit many do was didn't those. it's new term, trying salaries which – a the see it's do right

think to resources way. those in choice part ready I on a actually prudent that respond was have our to it

very pretty So estate When would opposed obviously we're now. as can but real will information looks look we things I like we'll expense on from to what side what reevaluation would we possible something now perspective in that of at quarterly those good looking What our to staff real future as in think reflect, And And now. the in what report that share future, we're trying that those to like seeing G&A reevaluation looks the be a a that as is of on being we're that you're we're on a on much like. are perspective. smart future. remote are obviously in do from a the a employee spot update, progress to definitely right that do that have hiring those

Bob Bailey

that only us thing is I we're of we traveling we COVID. would long this benefiting to the debt continuing took lower term, once in clearly, from Meyer, add expense million I this Yeah, is, nobody also because related that past get T&E see bad $X.X don't anywhere but uncertainty environment

So, powder way a got in if expenses the little are. we've I dry think anything, our

So to I increase, a back things normal. would not go expect once big

Meyer Shields

what last its And you, Okay. asking Fantastic, from recognizing ratio that to or rate fully XX% are outlined? from loss hear. companies, increases ratio that, way improvement, other XX% current that's longer-term, the But too with we're good for hearing this expense to dramatic and the I'm early. relative the improvement on the when question prospects or

Larry Hannon

think I in and Bob please Buddy join then and start, I'll So as well.

make kind real have from we of associated be understand future that into on long is know like But a and we next, that how have recurrence look course So There's, question, We prospects right go the to sure understand should years. I a number expect this on obviously your really things are and just we that significant Do long-term. don't of uncertainty is COVID? what kind of based translate, what's we right? we would would the pieces rate that, with over long-term would environment of think the it see that Meyer? good, today, in how that, positive impact sustained. a that's

the uncertainty, there's would that we don't be XXXX think think enough to affect result. going I where

year, impact of for we've the pegged some we on right is I we get number what But get as of to kind would believe more forward, that both. looks assuming will where And anything the on through that kind think I the XX% that, really positive Bob, specific the our what to of or COVID. like you XXXX. that? niches, Buddy is going add clarity, of the have economic impacts remainder would

Bob Bailey

be behavior say, at unknown or loss as favorable, understand, with just even and too you to wouldn't expense them that -- to the early The trends be. all otherwise, no to these knew what mean, as outpacing said clear. economy on it's clear is negative, of key not I impact news. trends, would COVID or really anything right -- we good That's to the still certainly has that terms. knew dynamics I Yeah. change now, Larry's is, we really impact or comments, some we're but, that, I I really there's it's obviously had and And them think loss it

think too share be I XXXX Larry's I optimism. would early would make to that call. so But, too And

Meyer Shields

much. Thank fantastic. so you That’s

Bob Bailey

Sure.

Operator

Instructions]… [Operator

Larry Hannon

virtual but three California, ask question, from in one's what even on in Meyer got ask either today. you perspective, with didn't In one's right? this and are COVID but Florida, about one's speaking it's environment, you've even dealing this that in think this -- a didn't we're Jersey. call, New people in we're And the interesting, think I Meyer question

the what uncertainty some fuel just you if to those and that that, So about. the of that kind I how translates employees, that the that are for about personal can in each and experiences imagine what you things locations, means, think of Bob and talked of

Operator

call this no time. And to phone, on there Instructions] I'll questions the turn [Operator back the are the presenters. at further

Joe Hathaway

of you Thank a you, listening Global call. for today. great the rest day. Thank ProSight XXXX, everyone for into Have second quarter Amy. I joining appreciate earnings the

Operator

participation. this concludes call. Thank today's your conference you And for

You now disconnect. may

ProSight Global (PROS) 11 Aug 202020 Q2 Earnings call transcript