Kemper (KMPR) 4 Nov 192019 Q3 Earnings call transcript

Company Profile

Participants

Christine Patrick	Vice President of Investor Relations
Joe Lacher	President, Chief Executive Officer
Jim McKinney	Executive Vice President, Chief Financial Officer
Duane Sanders	Executive Vice President, President of Property & Casualty Division
Greg Peters	Raymond James
Paul Newsome	Sandler O'Neill
Seth Rosenberg	UBS
Christopher Campbell	KBW
Matthew Carletti	JMP Securities

Call transcript

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Operator

Good afternoon ladies and gentlemen and welcome to Kemper's third quarter 2019 earnings conference call. My name is Chuck and I will be your coordinator today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time.

As a reminder, the conference call is being recorded for replay purposes.

to Vice host President like Christine today's now Kemper's Patrick, of would introduce for your call, I Investor Relations. Ms. begin. may you Patrick,

Christine Patrick

& Thank and Jim XXXX Officer Kemper's everyone Division of afternoon Lacher, Chief Kemper's Casualty will you Financial to Chief Joe the Executive Chuck. discussion Executive Executive Vice and Kemper's and Officer, hear and from Sanders, our Kemper's This Vice and results. welcome quarter Property Duane President President afternoon, McKinney, you President. third Good President

We a around opening will to our for remarks third the we a up will then few make provide question-and-answer session. quarter context results open call and

and the Life by the Kemper's and President. Executive Health portion of will Officer Executive presenters President Division John Green, President Vice call, Mark During & Kemper's and Boschelli, joined be Vice interactive Investment our Chief

After earnings our presentation financial we supplement. the quarter release and afternoon, closed earnings markets our third and issued this published

addition, we our with Form XX-Q In SEC. filed the

Investors website these documents You of at section on can kemper.com. find the our

discussion statements. today forward-looking may Our contain

differ results actual these statements. materially Our from may

earnings please potential quarter on statements, on XXXX forward-looking our Form to XX-Q well our with XXXX Form and relying information risks XX-K, third associated as For refer as release.

the that also to understand like measure our reported we discussion financial acquisition It including One important to clearly Infinity is impact acquisition. has is highlight are includes afternoon's as investors. non-GAAP again that meaningful to This to Kemper believe would measures such I adjusted overall. the for results,

results are closing accounting, information the in as-reported the visible. purchase of the don't of combined our the an to easily investors financials our acquisition of underlying However, and impact performance have historical Infinity's businesses. expressed understanding trends current the the organic not interest include underlying also include Since prior

the prior the businesses, In an meaningful removes acquisition into as closing for acquisition. periods to and more Infinity adjusted the insight comparison. for provide a underlying also to easily This combined the view of includes effort historical impact purchase information provide our of display we financials accounting performance to of year-over-year

presentation all we and SEC supplement, in measures In reconciled accordance earnings our to defined and have financial release, rules. financial GAAP, where with required, non-GAAP

You the on of kemper.com. documents find Investors our website at can these section

corresponding references stated. otherwise will be Finally, unless to the all XXXX period, comparative

I call over will the now turn Joe. to

Joe Lacher

Christine. thanks on everyone performance. you afternoon call. Thank another quarter to joining of am and financial us announce Good pleased today's for strong operational and I yet

You can looking see four. from this page

This of Infinity XX% respectively. numbers These quarter are million will acquisition slide. per million and This X%, adjusting share $XXX following on of net the we for and respectively. up net which $X.XX made translates income to of the $XXX and you income, on $X.XX basis a

in value equity, a average increase per excluding in and return XX%. this XX% Additionally, unrealized share on tangible of gains resulted book

we generated strong balance strengthened and Kemper growth, sheet. very maintained margins industry-leading we Overall, organic our

continue business significant industry-leading auto creating strong remains and well. diversified perform which, coupled drive opportunity organic strong producing within to value. to business strategy for business profitability Kemper's shareholder should Our continue The expansion portfolio, while long-term and model our growth topline specialty with

generated We of XX% growth We quarter while XX%. in adjusted growth. The policy topline force an reported results. ratio this combined segment accelerating P&C maintaining strong underlying with specialty very sequential did

These cost tailored competition. specialized outperform our comes advantage a The expanding interconnected. advantages sustainable of focused our a from strength and increasing three our customers, and to continued model and target sophistication. are We on product

enable these and advantages should outperformance. amplifies future success Our

evidence our set of see can of to more in growth ability strength You a geographies. this across generate diverse increasing

California accelerating. of and outside growth profitable its double-digit had we quarter, This

opportunities has continue Our combined company created platform to the auto that market specialty within and expect dynamic strong we life.

shareholder delivered normal benefits level enhance continue it value. and modest to Kemper provides of earnings stable business health The returned diversification cash to and Our growth. more and to life a flows

positive changes ongoing the underlying Our size Despite preferred volatility a catastrophe quarterly P&C level this introducing, and expect we in we business given to higher the of results. of continue modest are all both business, continues. turnaround

From liquidity. This current significant capital provides coupled financial to our maintain debt flexibility. a strength financial liquidity, standpoint, contingent XX.X% and of committed we ratio of with million roughly us currently $XXX with available

We also sheet range. fully the roughly took liability fortify through pension million contribution quarter action this further of within our to a $XX the our to funded balance bringing

the And Jim with quarterly to the more that, I results over call financial in consolidated discuss will to detail. hand

Jim McKinney

the call. Thank Joe to afternoon good you and on everyone

discuss Let's results. the to financial turn third quarter to page five

income adjusted for quarter premiums to another top per share with This to billion. in net Earned $X.X and quartile operating per net was quarter income X.X% leading consolidating premium, Kemper solid share. growth earned results strong grew

Excluding purchase net increased was operating of X%, income discrete when adjusted flat XX%. net items, the have consolidated per normalized declined share share for and accounting, would per one-time impact which income

value We fixed per on gains will shareholder ultimate share a creation XX% unrealized quarter's drive discuss net detail the return equity. page. this on book net value excluding XX% maturities point on tangible in in next numbers These growth in more tangible and reflected this

XXXX arbitration quarter six. the by Turning I the tax reform. from benefit was judgment you to remind and to page a satisfaction would partial impacted of positively that like third of an

Excluding those XXXX, items a items net and operating income XX%. by in grew few a consolidated adjusted discrete robust

seven. page to Moving

combined creation. substantially these underlying our strong gains related year. Here profitability over value for key operating increase largely result in we shareholder previous Kemper operating sources of drive is performance the This isolate share continues of auto to is market earnings. Adjusting and our sources helping a strong company to to The the platform our of volatility, platform. volatility

long-term this life our flows model. sales the cash operating with provides we stability addition, In pleased and the in are the of increase

our to call discuss P&C over segments. Duane now turn the the will results to I of

Duane Sanders

Jim good afternoon and everyone. you Thank

specialty segment P&C insurance on page Let's start the with X. results

quarter, in quarter strong X%, increased $XXX XX% Policies competitive Our the topline XXXX. to over within the specialty auto market. Kemper's the leading increased see continued third up growth. premiums to million of force for demonstrating Earned position

ended combined as XX%, improvement the underlying year-to-date adjusted June quarter six point ratio one a Our XX. was third months over

we mentioned believe, We outperforming by As our driven this are three earlier, the of competition. strengths the Joe model. is

and First, combination targets in our Hispanic geographies. focus and customers challenging customers nonstandard specialty market a of

of their needs Our that a nuances competitive these in drive success markets provide deep the advantage. understanding and

also are of expense products' and goods efficiencies costs provider We are with on allows leading This loss low-cost manage markets. our more accurately sold. within sophistication specialty combined is our ultimate us effectively which cost to achieving focused product which price

mutually distinct systematic, to We industry-leading as of competitive a continue are fully advantages franchise deliver us the drive each and our other realizing and benefits advantage enable sustainable to these results. strengthen

X% the quarter reflecting of the P&C of over combined On past the of the up page rate see XXXX, third the preferred our insurance actions XX%, $XXX of year. quarter, premiums Earned from over impact was X, third primarily ratio growing you quarter XXXX. quarter results were slightly the segment. underlying the million for can taken The for

this Turning to elevated reported our catastrophes. losses quarter. Many of competitors

compared benign, however, reporting quarter in losses, to million XXXX. of $XX $XX experience, the was in Our relatively third million

quarter on good results. distribution is our the catastrophe losses size past. overall of book, we predictor and in Based is industry This another example have of of and combining the what a not our share noted market

development. the $XX year included XXXX California recognized subrogation negotiated also and from million This which as benefit our catastrophe quarter wildfires was sale XXXX of favorable a from in rights prior

will we remain below desired in this move results. While towards actions underwriting improved our goals, our and in us claims profitability results segment underwriting expect pricing

back the call turn will to Jim. I now

Jim McKinney

Thank you Duane.

are the XX on health life division's page Our and of results presentation.

focus improving growth continued in Our resulted on distribution premium of earned capabilities X%.

operating the of normal a This volatility. returned the a more range with to profit quarter, expense levels benefit for business typical ratio within

related in to million During reserves we policy insurance our life ongoing process. released the $XX claims quarter, efforts in outreach payment

XX. page on Turning to investments

diversified the as Our portfolio page. and demonstrated on remains bottom left the highly rated of

Looking past quarters. at the investment see the on could the you upper chart over performance the five left,

P&C insurance the produced the result creates $X the annualized largely continue owned life to to we other a with million prior the with short-term from liability. million a This in XXXX, million contributed is investments options in in the in in yield, our quarter our yield pretax is X.X%, the income, returns investment in asset net net increased investment operating with shift This that how over of book third equivalent in to an portfolio. we addition on mix all with impact enhances income This net match fund the insurance. corporate allocation income. its of decrease line Infinity XXXX. volatility quarter due The maximize X.X% and attractive The of our from $X of to corresponding compared connection risk investment down business evaluate in shareholder year. example line, to permits Also, characteristics portfolio is model value. $XX quarter, performance us The liquidity third life we

compared million, year. third On to flows to and page of liquidity capital quarter increased $XX third quarter, position. XX, the we cash million $XXX our highlight In the operating last strong

to and and Our enable these results. continue increased operational scale disciplined management financial

can to insurance borrowings our flexibility and Turning million investments the you with substantial revolver our the in had our cash in end, company well financial corner, left capitalized. we At we see attention XX, chart the $XXX hand $XXX that page parent In right present our groups liquidity. and upper upper available quarter subsidiaries. in and million are of from

ratio range. substantial provides continued capital growth to was to of shareholder flexibility value The all somewhat below normal our creation. XX.X%, items of debt and these Our support combination

turn call will the back to for I that, Joe With closing comments.

Joe Lacher

took at where press core and now a will release responsibilities, development take to first years was four role. evolution organization he today. talent life we I Green business of a of each ago, Kemper needed in fix people, point reached the get those division board moving Jim. I a on Mark the like the health two on issued to one note We leading would a on area needed broad from our leadership. benefit When we the you quickly. in and the arrived brought focused and and things Thank number to to fixes other we moment

I entrepreneurial and business search As efforts to and He past role three with career. such, new development This that background responsibility over lead division I skills he health over and had years the developed leverages assume the a the will position appreciate while strong we reinsurance. many continued for look Mark's to success. for his in has forward asked Mark's I of leader continue life a and to role. greatly Mark

the quarter demonstrated focus of Kemper's to this continuation our overall value. build conclusion, In

shareholder attractive solid model results quarter's efforts to confirm and of continues our returns. Our well. growth, our specialized team, and Thanks continue to revenue profile produce this strategy committed ongoing businesses that perform the to earnings business of

to We expanding ability our specialty insurance and financial reach Kemper's affordable markets are with easy-to-use, and serve appropriate solutions. and

to turn we to operator call your Now back take the the questions. will

Operator

ahead. [Operator question from Please first Instructions]. with go Greg James. And Raymond come will Peters our

Greg Peters

team. had Good afternoon I of a questions. couple

heard the of picture from trends just management some your think big of all, your maybe with in back and frequency would team comment that severity outside on, clarification it California both perspective, others And the and growth in of have your California stepping dovetail specialty comments to we outside P&C? California. that of in can around weigh Joe, for appropriate you and I be First on

Joe Lacher

anybody Sure, if And top add Greg. do I then we I at else almost shot it. see a order. wants will And will to take them in it. will reverse of on

of a Our growth don't We we that been it. has like California not like focus strategic do It's outside California. of ours.

We continue to California of distinct us have California. there. franchise the and a outside grow continue take of state grow been and It's an doing well to strength for opportunity that. of We perform to and we our saw important inside

been after transaction, a that described Infinity We the the focus It's of Infinity the to transaction. organization. prior

excited things to take and are needed to and capability growth expense of come to a fully synergies, fruit One outside after fruition are California. do synergies and but of realize we internal transaction with liking we might opportunity the about got those get, nothing the of time not the again some we seeing It's of bear bit state. to that not synergies little the expected

I Relative to am Go -- sorry. ahead.

Greg Peters

outside the of sorry California. interrupt It's That rude. to Joe. I you, am was

Joe Lacher

ahead Go Greg. shifting I No. was comments.

So go ahead.

Greg Peters

wanted existing involved? or are new Yes. geographies I geographies there to clarify, within that is just

Joe Lacher

some to the existing the definition with either or But at in Infinity Kemper cases, states. were newer transaction. largely they prior they were relatively It's that existing geographies

in significant We and growth Florida have got Texas.

got also degrees other lesser have We significant spots growth Louisiana, Arizona, in around very to Georgia, some that.

not just it's So are that seeing state. one we

states All begun activity to our those with Infinity. prior of had transaction

are as bigger more smaller one having than Some than the ones answers and others much think were that your I But and rates. more sizeable it's growth question. such

Greg Peters

little a though? Why I does. and guys It frequency Yes. don't do severity, you bit more think

Joe Lacher

severity, in frequency. general describing, people Frequency trends other seeing we to are and have folks described are similar what on

a California, on in more BI. in We are severity, seeing a modest little little upticks more

I that anything describe not crazy are We seeing would particularly as outsized.

the We are of folks inflation on of lot social bandwagon. a talk folks know about lot jumping interesting, you seeing a and that's

We would through perhaps not. on numbers maybe have where just believe that's a something. there. to it, other running not coin looked our are little point It's seeing the it uptick to seeing if why normal folks and We run just blame it phrase we are are a we that

specialized focus have it. Our less little customer that's group to might a a exposed

profile. We it a seeing that wouldn't highlight. something any be we There have different lower have may got of us but a limits at be would have poked to reasons little something number

Greg Peters

it. Got

Just another improvement follow-on was in The the substantial. violent specialty. and

of et in cost achieved, in on one possibility dovetail can maybe you savings? the going think mentioned for cetera. XX% where have somewhere your comments, are cost comments forward you had you I and been of your think savings that I volatility said also you with around

Joe Lacher

Okay.

understand, me help So Greg.

background either a I have So little in or got got noise question. lost we your

relative were was business. smaller. were the we to about So asking It's you our specialty? preferred volatility describing What

Greg Peters

the There violent improvement was a in results.

I I the And looking for what ultimately is sustainability so am these going guess forward. results of

Joe Lacher

So which the specifically you underlying at looking you Are results specialty? combined on pointing? ratio are

Greg Peters

focused. I Yes, am That's exactly where

Duane Sanders

last We quarter. again highlight Hi we highlighted this will quarter it Greg. and this

to I elements. the the is other think read numbers at picks the for the in numbers to look way the year-to-date loss

through of that's It You doesn't is this the loss have development, what intra-year quarter. rolling overly bit intra-year development entire little the year. our for got a favorable picks change quarter

year-over-year supplement results XX seeing, line XX, or relatively page quarter you picks. in and the with with are of to first relatively in if line XX You and XX go the and

It's So just rolls volatility. that not of whole how a through. lot intra-year

seeing the the we third of really development and a little you so second to year, and get Greg, really, put for version were were of quarter in you positive a it, a intra-year quarter, quarter. temperature of from got a And fine bit in on point little thought the the bit the have first we wrong we that

is look a you really fairly is So what think the view And number profitability the that. way you if year-to-date throughout year. at see together, to the of those consistent right would on

Greg Peters

Right. had [Indiscernible] so you and XX, -- XX page

Duane Sanders

breaking little Can You restate up Greg. that? you are a bit,

Greg Peters

sorry. am I

XX, questions. Thanks. I XX think [indiscernible] pages the and

Duane Sanders

your XX and XX was question. show will you, if that

Greg Peters

Yes. Thank you.

Duane Sanders

quarter. Yes. just are Greg, months highlight XX.X% for are numbers they for the adjusted as to nine your XX.X% the and

business. you the year about relatively at of flat you look to that relative prior If thinking XX.X%, when are specialty auto

you in have results If total improved a the we on roughly include year-over-year terms point basis, in combined one CD the of ratio.

Greg Peters

Thank you.

Operator

of And Please our next question will come from O'Neill. Paul Sandler Newsome go ahead.

Paul Newsome

was a hoping well on nonstandard business the the is on Congratulations I more as give preferred? for both if environment bit between Great. And auto contrast quarter. maybe competitive you would little there the a color just two? as the

Joe Lacher

you faint, So little were a Paul.

different preferred was on looking on or commentary were think they I I you said recognition environment for what confirming likely nonstandard the separately and color competitive that. just competitive a and am environments.

Paul Newsome

Yes.

that. about Sorry

Joe Lacher

a take Duane, problem. to shot? want No you

Duane Sanders

Joe. Thanks it. Got Yes.

products. would those that it different changes increases, see, dynamic between players to on have Florida done two, on state very because first will introducing on And good across rate from had primarily your But for spaces have the I players. say, different the significant we you taking in you say well, is not that will would others results they the I will see albeit both are So specialty the new state. are some example, that competitors specialty side, take are a side,

would and variation a of swings. say real there it's it's just few, down. across maybe and So large marginal that but, is lot outside nuanced a no up of I

specialty activities than lower taking place, may be we you on distribution a of limit where impact. things not mentioned, what of have players the there. more adverse and you Joe are got have And preferred might much of that see then seeing the finding bit little where limit the that of based space, lot a and some that and distribution kind And again products trend sophisticated the social of inside course, as

Paul Newsome

from quick, later? book come you Great. a Or And subrogation a that of may the there fully piece just the rights all did wildfire? returns

Joe Lacher

we net full the impact results That's expecting receive, Paul. No. that are

Paul Newsome

Thank Great. Congrats on the quarter. you,

Joe Lacher

on because that a us the we of and environment the period And relatively that seen think have, transitioned, capability, during that be sophistication of that important just think I a discipline. one to force stable from the competitive result are an is what's had purely management strength said our Duane overall of look it's this of that Paul, we and one our out the versus add just competitive in what as in increased environment what competitive We bit it is, its past important have increasing you cost second I just I terms both just to inside little other thing the to cost and that is time, think to continue and touch highlight our think I to loss on our to basis point on relative relative to as company And at seeing space. product scale that net own. Duane.

Paul Newsome

Great. Thank you.

Operator

will Rosenberg go question from of Seth come UBS. next Our Please ahead.

Seth Rosenberg

Hi. Thanks for you. couple A of Great. guys. questions

with asking But very was the on strong. this this So commercial are specialty auto severity. maybe looking frequency results had quarter, at you they dovetails in and what in the Greg

others higher what's severity us can not are You involvement of there. talking seeing are attorney any same regards that remind you the Maybe to about in that trends in book? and

Duane Sanders

yes, as that, descriptor think Joe kind say, consistent. that that the I and of gave I explained Yes. we would is

what specialty similar on write the is too to there we profile side. Our very

have bigger got is limits with So pickup car. I prominent certainly a a two a and one, truck. you immune activity it, where the are business. It's again, not but to It have don't artisan, contractor we we fleet an it's where more think, is

today, pretty showing Again, not in not you but telling finding a it, we are ourselves immune from we we up. spot So right good seeing I are everything to now. are am that's

Joe Lacher

as where that the sometimes like way where of are business, commercial the bigger given either of do there different underwriting vehicles they run different books, more selecting it as they they are fleets a pricing and look some and that it operate a are to profile its it lines at trying just books big they individual we vehicle produces broader account and it's Seth, policy, about result. manage much auto two, and is three book might or of and commercial one, We risks, a a personal the thinking way industry and are limits

We we are managing market that results degree, to commercial policies the to because and a you business than can you continue highly these the the it's look achieve goo different when and way we confident the line and selecting just stat the at see customers of are a vehicle. that somebody of

Seth Rosenberg

terms it. about discount, it loss of about moving like Got then the mix? sense. material any should it's just And Makes versus the that on ratio sale ratio in classic impact auto to book, that Does but small of expense looks how think the thinking forward? we

Joe Lacher

it's $XX out start at a million X. I We all. again, November a March book. Minimally And to business transition mean percentage to overall. write will the very ceased book minor X. actually Renewals it's to new

Seth Rosenberg

just And -- it. Got one

Joe Lacher

think at looked be we than not better at a you and at impact the else. bigger would are about business we a sort To question strategically. great it, us Yes. when looked the with specific said we do that are issue can answer it your it's on we and it are If I it, of well. margin, pretty its I making is, but somewhere And we said things question. think how numbers, Duane We highlighted asking highlighted follow-on, reasonable we good

probably outsized for there, specialty our and weren't better term to shareholder They business Hagerty with And going are it create long overall. a that Moving better to to ability customers. a creation. value job doing job did a we generate growth

for So a us strategic than focus. of hobby it was more a

what let somebody to about with more how and thrive the it time numbers was think is it it item less bigger strategy. to else. So The our we does there

Seth Rosenberg

then And sense. makes if last one, one it just I And it. can. Got

a made geographies effective So I look of makeup losses. good book, thought and but given that really the cat it's the not point, state think at to you about

you any quarter fourth just are early about the guys in think indications how So California? on wildfires

Duane Sanders

Duane. expectations. Yes. Yes, This they I within say, are would is

of We anything either not of are seeing losses. terms in count individual the there size outsized or terms in

So really report. nothing to

Seth Rosenberg

Thanks. Okay.

Operator

question [Operator ahead. Christopher from go next will KBW. Campbell Instructions]. our come of Please And

Christopher Campbell

Hi. gentlemen. Good afternoon

Joe Lacher

How are you doing, Chris?

Christopher Campbell

Okay. and yourselves? Doing good

Joe Lacher

Wonderful.

Christopher Campbell

All right.

ratio. guys a question on in you gap So that's there like It stuff much year-over-year. DPAC of for guys quick normalized you the seeing expense P&C as specialty aren't and the looks

where looks more expect Now I would normal it it.

to going that is So a good forward? we like XX% be like should about XX% way thinking

Jim McKinney

Yes.

at there expectation. in of of really off I book a quarters was to And kind amortization point, highlighted VOBA think the due a life both that's the reasonable then acquisition to the the we of a your time of just as overall quick that run and policy whole. subsequent business of

I again and will pages in both XX. see think XX you that

think reasonable I a is kind expense the of to what that to you a referencing XX% of think for incur. expense kind of load about normal ratios us to that XX% range kind are

Joe Lacher

Yes.

that think XX the as will in give I you on supplemental too. some page insight well

Christopher Campbell

Great. am Okay. sorry. ahead. I Go

Joe Lacher

That it. No. was

Christopher Campbell

what potential expand, pretty upside number? are I are where for growing would scale-driven that? now? is we at the you Great. then you Or mean, as Like And like right Okay. on lean mean that be I should that economies

Jim McKinney

a half lean basis, point, it's that of But I on it book thinking $X be a would to $XX that of point. number move will million-plus that's a kind about or additional an we point over kind terms of highly business you just billion, There if about you obviously. additional Chris. ratio in would of thinking is be know fairly get. dollars impacting that

more I the will kind incremental at of about think should that think dollars as you add.

will overtime, the terms half accrue those on that in things. point five, having is impact XX there of if So But forecasting I not that. we ratio, a am

that about XX% think XX% type in really should range. you think that I to

Joe Lacher

be and we If business we growing have expense margins. point that more per this and be the range expanding share be down. were to the reasonable believe and into more Said creates book share those deploying the per the margin to margin than margins think than pushing value we that would grows we got and that's attractive earnings because rather very would growing synergies, business differently, value at likely savings attractive find it Chris, we grows at shareholder

And shareholder that we is may best how when little we point do at that, in value ratio a believe on are we these with based but our bit creation where growth move dealing pricing, we are around a served by expanding margins.

you different margins. So we to these may, to work I how be would model because down about it's is the goal but encourage not business. driving going of as thinking expense mix primary growth is trying that not a just the ratio we things, piece the are It

Christopher Campbell

it. Okay. am sorry. sense. That makes Got I

bips. or year growth, Well like Probably Okay. current loss right? in But the the down ratios ratios are that then the non-cat So accident on and dovetailing up segment. earned the $XX then XX loss up. premiums they are million are

expected Now I kind would to be have penalty. new business there of a

grow getting then guess, by XX%? year I dynamic margins? on to the like, premiums happening able like So where were you And there lower accident you what's are

Joe Lacher

management. now allow us of cost attractive our stronger at a focus advantage that right together generate got do loss those sizable an Everyone have on target be at I organization scale you a bringing benefits the margins. the think, sophistication, the to have geographies, model. target the on specialized better our customers, job ability and that good at into product being And stronger that to increasing being went growth we items to sort its good Duane do to of of the fact business those and us allows through are we points, and Chris, attractive hitting expense works on

play it of to you things all have allows the you So accelerate. those together once and advantages,

Christopher Campbell

just what like areas ahead saturated? like share about greenfield be. way market could I like Okay. is some are and a starting versus much am Got if good market? nonstandard you that there about don't what get to your then in is target I where have of of guess market thinking mean are Or And it. potential like your I you? thinking of just like I there really geographies the your

Joe Lacher

I and force we probably Chris, are at a it, can for time. sit at ride we this look point, think when we a long

thoughtfully We the California most are you said, concentration. that's outside growing we and might where boy, of might have where looked very have

of We are grow and outside there. strengths be our successful geographies continuing those to to leveraging

know are you growth start your $XX our on long Give or size. it. we I and us being think a I worrying from probably will way billion about at $XX out tapped billion

Christopher Campbell

Okay. on question The auto combined last numbers the any Perfect. color up I P&C then that? just on bips And year-over-year. piece. one preferred guess underlying was ratio XXX driving what's

Duane Sanders

bit Yes. think pressure a there little This is seeing you new on Duane. And I are of the business side.

May rolled product. would last As you new year. We platform recall, in in this we our have of new and product introduced a actually

in. in are in. we to we to in, course go it going now we got it's to dial back now And going everywhere and we So that are are be of have

and preferred we what business two see there in the in. the is business terms new it you still will perfect the and do strength are and working same making questions those its that you don't So have penalty way of really our enhancing penalty advantages It hard business work capabilities expect drivers the we to have that's where and combination seeing would specialty got that competitive and a little bit are understanding we a on we there Chris, corrections. new of and gang in those is are working in of in example, there

We have got a longer average customer life.

that way through. work So to of time got its longer we period have for a

But specialty can we franchise, the get long over comfortable you two. strength the real compare value-added the the term. when may you transaction So that a are be seeing of

Christopher Campbell

answers. of Thanks the in fourth all Best for Great. quarter. luck the

Joe Lacher

you. Thank

Operator

of Our Securities. next from go question Please JMP Carletti come Matthew will ahead.

Matthew Carletti

Hi. Good afternoon. Thanks.

a progress think inning you of, we analogy, I you much rate? the advantages a one, been pulling more an those how give proverbial path a Or kind competitive think the we Joe made? there. you question point to of get in? or till idea on follow-up old of Duane, Just are about us Chris's quick last that how can baseball together, has what kind is have there ahead business's run feel should How much we and preferred

Duane Sanders

Yes. Good question.

to say have terms fifth innings, terms say albeit are think some of with we the strides, would I do. in game and the the fourth, I efforts wanted, would where the I in probably inning middle more work huge getting of it of in hide to made we progress, the we

on I you think feedback get get Joe anytime and results. have to an market basis, you annual policy launch have product got a mentioned, and to you new got

so with truing And we all we need done what insight But that do it into what still in effort our are time. marketplace, are terms have to the we those the now terms and have what in of of the build, to segmentation we up. and spending went more in get we the that's

Joe Lacher

When we a recall and more have the issues off to following sophisticated dealing was enough the policy its dealt company written that been first version you administration organization system administration policy Matt, system. the first long early thing on, with the had the needed business different a at a

the of most time. that didn't recovered award. we from But recover Fortunately, our we arbitration

That system. enables us could put start capabilities. had ministration these much done we We That be in nimble to effective. more of be some and more much policy to Guidewire's deploying before

So that's in.

normally updated a disruption expect normally you rating and from rating we in have penalties when system through running one the new new system the having one would and new that a to a program or taken business the We convert programs occurs new and and first program. having product shot

now. right through running that's So

our XX expect of improve get months that continue another capabilities probably And inside we system. space. will We that to to the to through take

We claim department to tailwind preferred. use We are help we parts from side specialty and the of specialty get parts some that because a and clearly our hopefully are preferred. of have on claims going some this between some auto that are uniquely focus

the on works with physical the metal are But pieces vehicles that damage between there when some two you adjustments, the back groups. and much are dealing very like forth

preferred. effect And little are and as and strengthen its specialty work that XX Duane have of that a moves side it slower into said, with advantage month we just a scale Some eventually policies. getting way bit the will halo

Matthew Carletti

on helpful. color. Very Thanks going the Okay. forward. for best quarter luck of and the Great. Congrats

Joe Lacher

Thanks a lot.

Operator

back question-and-answer would to I conference Joe Lacher over turn our concludes closing to remarks. for like the session. any This

Joe Lacher

time Kemper. for your speaking and look in again with next quarter. you Thanks. your We and interest Thank to thanks you operator forward everyone today

Operator

The conference has today's now concluded. Thank you presentation. for attending

now may You disconnect.

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