MCY - Earnings call transcript Q1 2019 | Mercury General Corporation

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Operator

Good morning. My name is Deadra and I will be your conference operator today. At this time I would like to welcome everyone to the Mercury General, First Quarter Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question-and-answer session. Instructions]. [Operator future may events forward-looking trends, and affect General's call current based which comments financial Mercury expectations, and plans, financial first contain conference statements and on may position. This results operating and industry Such discussed predicted quantified statements here activities results today. and be differ to future or of cause involve operations uncertainties may materially cannot and and risks which which from those Mr. now I turn to to over like would call the Tirador. Gabriel Sir, ahead. please go

Gabriel Tirador

quarter conference welcome Thank first you everyone would and President to much. I’m very to call. CEO. I like Tirador, Gab Mercury’s

On Ted the President and Chris Joseph, phone we have Vice Mr. CFO; Stalick, George Chairman; and Graves, Officer. President Senior Investment Chief Vice and

questions, the will we a few we quarter. take comments regarding Before make

in of the operating Our The earnings XX.X% earnings primarily after in in and XXXX. of were first was of losses $XX reserve combined $X from first operating of share income. Gross in improvement $X year’s $XX XXX.X% lower as primarily resulting unfavorable California in increase in first was to ratio homeowner quarter, quarter in quarter, reduced $X was Gross to was XXXX. to Rain in losses due million where prior the from in development storms Unfavorable XXXX. quarter in in to compared primarily tax the first the impacted more XX% storms first quarter the were combined first in homeowner investment XXXX. rain development million quarter in in catastrophe of combined quarter reserve compared to of The in million the improvement a first the an reduction due to of losses. the quarter quarter results quarter million the reported XXXX. reported compared compared $X compared reserve we the XXXX. the catastrophe share million of The $XX to California in per compared negatively sales $X.XX than the million of the first quarter in ratio catastrophe $X.XX the quarter per ratio claims our quarter increase in XXXX the million to development a to

of implemented reinstatement combined implemented personal these increase X.X% our catastrophe was Excluding the losses of have XX.X% combined to ceded March of we in of ratio Automobile reserve premium rate earned, quarter rates for auto of Company was compared thirds states. the personnel unfavorable XXXX auto a the for In development, Insurance the California ratio most rate California companies and two in XXXX. XXXX. XX% insurance of first in most companywide the premiums improve To earned. will directly a X.X% first represent increase impact Collectively been be May increasing and XXXX in quarter in

now that and from primarily due primarily in XXXX. take In in costs, in California Insurance. pending expense higher was the addition, were The written With about lower a California premiums acquisition lower Homeowners quarter to written. is ratio background, a average our The increase homeowners due Premiums XX% Department XX.X% brief X.X% the to first quarter, we and home-owners in from questions. of of represent earned. decrease XX.X% direct compared first per savings. company-wide conditions The approval lines efficiency increase of primarily rate in cost ratio the was expense quarter premiums to X.X% policy the California in Premiums policies average an will

Operator

the Christopher have question a do Campbell [Operator with from Instructions]. you line KBW. And of

Christopher Campbell

hi morning. Yes, good

Gabriel Tirador

Good morning Chris.

Christopher Campbell

the the receivables. I guess fire subrogation sale question all my understand the to behind first trying I'm is, of just math

because $XX the the the of not pretax just much this were I premium reserves? the how how the just cats much think counting you guess walk were growth, it's I I'm I'm us parts quarter, that and trying on to sure million impacted make and cats like within could math double the benefit through So that, – then reserves like

Gabriel Tirador

Ted. why Ted, don’t go and Sure, I’ll ahead? you go ahead ask

Ted Stalick

Okay Chris.

a That favorable includes benefit the and quarter. cats. those in of benefit cats. includes had The on million million development adverse premiums a the premiums, development XXXX $X from from from for we development $XX and reinstatement favorable So is the of reinstatement XXXX also million cats, $X the reduction

Christopher Campbell

Okay, got it.

treat gives we it really absent we so favorable have factor cats and is know million just just that storms to quarter right sales treat this adverse if with or adverse, if in it’s it's benefit So million okay, the million $X if way that the you one as because subro It the then to quarter. $XX been think you in about – the think we this happening it. $X that development your would development, about then way it what's

Ted Stalick

that’s Yes, correct.

Christopher Campbell

from benefit reinstatement Okay, of there $X And lower be got correct? the it. additional an pre-tax premiums, then benefit million would

Ted Stalick

Correct.

Christopher Campbell

it. Okay, got

Gabriel Tirador

I think I would $X.X booked the this the $X.X benefit premiums. We from was quarter the booked normally we in in million Well, million think and quarter. million reinstatement have $X.X at quarter the

I the about $X.X earned reinstatement in believe benefited million. was So premiums

Christopher Campbell

reinstatement $X then and where development, about ROE million $X around million, million million premium. that, to you $X I Okay, guess to because the would have would it the, $X.X favorable of balance the be for up the reserve

the So the does in $X million other fall financial? where

Gabriel Tirador

do you the What other $X mean, million?

Christopher Campbell

the $XX subrogation I’m benefit you sales the a receivables. there press million release from was thinking in the pretax had the of –

Gabriel Tirador

Okay.

Christopher Campbell

premiums, million of $X million subtract the if favorable of from you development got Yeah, reinstatement so and then the out balance million. of those a you that know $X there's reserve $X selling

Gabriel Tirador

that. you Ted, the to know answer is what do

Ted Stalick

the the and is $XX combination of favorable reinstatement development million. the We the have

Christopher Campbell

I – California guess Got got it, after can X.X% the guess then a in just, rate you big I and just you kind the of great should Okay. picture, you market like how know it hopped. recent increase fires. more homeowners

there? you rate there increases are affordability you may planned rate be about, those DOI about like just out and if increases, not concerned becomes achieve is have able to that additional I regulatory guess beyond you the homeowners California So risk that thinking do insurance any

Gabriel Tirador

have mention and prepared a to do be a that know remarks, for soon. that probably we been pending the as time a expect has come to you to on after closure filing Well, that X.X% we're We now expecting some approved. X.X% is

if with figures produces formulaic you Now your approve have template Department you take figures or that know that pretty rate would can respect with to you if template increase. a not of the the a a – increase a Insurance whether that, insert they rate then and output those in process

our basis. a take at quarterly at indications on a know you So this we point basically look

yet we’ll couple in meeting taking our of indication; quarter finished it. not on have first at and We that weeks be look the a next

expect would probably that indication would though So meeting. that I we probably file do after I again –

Christopher Campbell

any changes potential how Okay, rate guess reinsurance how any got filing then you to that that increases How making that the you the additional? program renewal renewals program for an that, see. might it. And would into to would you factor timing would the in like reinsurance would or be or the could of looking at, immediately upcoming be want I you file

Gabriel Tirador

whatever would would happens not, We be independent. of would it It independently file It not. with really the reinsurance. would

Christopher Campbell

to…? changes like thinking the Got for guess are what just about it. getting program, you're And I as know into you then closer you

Gabriel Tirador

know reinsurers that process in – and Actuary, are we that we'll out of know we our comments for going $XXX any the Ted where they think How later. you soon are pretty do that million extra Chief Underwriter other and a Actually with of Ted are know. much to the be you pretty on going buy meeting that? here. million, Chief our $XXX you are more going don’t more? have purchase and sure the more we to Well, later certain that I

Ted Stalick

No, starting we are limit just on – than but reinsurers. kind we process the with of now the that are it have, buying right will planning just more we just currently be

Christopher Campbell

got in you get I you take X.X% to guess X.X% rates these and know Okay, lines? auto Cal more got any you Auto, looking guys in in are increases, at do know implemented, rate those Mercury. you a that it you have then

Gabriel Tirador

think two. after two yeah pretty think honest we Chris, with to you I I Yeah, these feel where be at are after these good we

quarter we as a X.X% great With But now we'll we after and the discovered go take need, Cal good ahead take we well. caveat the rates see Auto and need the it. and we look that in very our that at right we that MYC feel pretty X.X%

filing You away right at are that where know two at. like lines. those I good we in will but are don’t with monitoring every We pretty I anticipate feel this we say quarter, point

Christopher Campbell

growth more trends Okay, at pure good you pivot that you you severity, guys terms it to stage? frequency, in Should are of we the to more just towards premium seeing in – this auto. feel expect

Gabriel Tirador

rate Yes, has action so. I There I the say so, is less going in say on too industry there would would more recently. been

look our where got just two at, take at underlying pretty you our that California, we ratio these especially So of fact good when combined auto auto, tested feel in and prior we're light we the in a in X.X%.

of yeah, more So growth chance.

Christopher Campbell

for luck in Well, it. Okay, the XQ. all got thanks answers. Good

Gabriel Tirador

thank Okay, you.

Operator

[Operator Samir from Khare. question Instructions]. And of we do the a line have

Samir Khare

morning. Hi, good

about fires the what was and gross off question loss of? the that the quick of for Subrogation were the gross Subrogation as the well. is What three Subrogation received, proceeds a amounts you Just total based amount

Gabriel Tirador

handle you can Ted, that?

Ted Stalick

question. part Well, I didn't first get your the of

Samir Khare

received. gross asking about just subrogation you proceeds amount was I the of

Ted Stalick

signed they agreement, an is its Subrogation confidential. the So

we're benefits the I back of not of terms to reinsurers, went that. you discuss to Subrogation So agreement. the majority at tell liberty our the The can

Samir Khare

just that gross million million? $XXX the Is Okay. want Campfire or I around for to of balance where the And stands? see losses $XXX

Ted Stalick

the After Subrogation?

Samir Khare

Yes.

Ted Stalick

I $XXX million million. think and it’s between $XXX

Samir Khare

thanks. great, Okay

Operator

[Operator we at Instructions]. time. no questions further have And this

Gabriel Tirador

quarter. for much. to quarter, Thank very look everyone joining this you next we forward to you thank and speaking you us Okay,

Operator

This does participation. your conclude for call. Thank you today's conference

You disconnect. may now

Mercury General (MCY) 29 Apr 192019 Q1 Earnings call transcript