Heritage Insurance Holdings Inc (HRTG) 2022 Q4 法說會逐字稿

Good day, and welcome to the Heritage Insurance Holdings Fourth Quarter 2022 Earnings Conference Call. (Operator Instructions)

美好的一天，歡迎來到 Heritage Insurance Holdings 2022 年第四季度收益電話會議。 （操作員說明）

Please note, today's event is being recorded.

請注意，今天的活動正在錄製中。

I would now like to turn the conference over to Kirk Lusk, Chief Financial Officer for the company. Please go ahead, sir.

我現在想將會議轉交給公司的首席財務官 Kirk Lusk。請繼續，先生。

Good morning, and thank you for joining us today. We invite you to visit the Investors section of our website, investors.heritagepci.com where the earnings release and our earnings call will be archived. These materials are available for replay or review at your convenience. Today's call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based upon management's current expectations and subject to uncertainty and changes in circumstances. In our earnings press release and our SEC filings, we detail material risks that may cause our future results to differ from our expectations. Our statements are as of today, and we have no obligation to update any forward-looking statements we may make. For a description of the forward-looking statements and the risks that could cause our results to differ materially from those described in the forward-looking statements, please refer to our annual report on Form 10-K, earnings release and other SEC filings. Our comments today will also include non-GAAP financial measures. The reconciliation of and other information regarding these measures can be found in our press release.

早上好，感謝您今天加入我們。我們邀請您訪問我們網站 investors.heritagepci.com 的投資者部分，收益發布和我們的收益電話會議將在此處存檔。您可以在方便時重播或查看這些材料。今天的電話會議可能包含 1995 年《私人證券訴訟改革法案》含義內的前瞻性陳述。這些陳述基於管理層當前的預期，並受不確定性和環境變化的影響。在我們的收益新聞稿和美國證券交易委員會備案文件中，我們詳細說明了可能導致我們未來結果與預期不同的重大風險。我們的陳述截至今天，我們沒有義務更新我們可能做出的任何前瞻性陳述。有關前瞻性陳述的描述以及可能導致我們的結果與前瞻性陳述中描述的結果存在重大差異的風險，請參閱我們關於 10-K 表格的年度報告、收益發布和其他 SEC 文件。我們今天的評論還將包括非 GAAP 財務指標。可以在我們的新聞稿中找到有關這些措施的協調信息和其他信息。

With me on the call today is Ernesto Garateix, our Chief Executive Officer. I will now turn the call over to Ernesto.

今天與我通話的是我們的首席執行官 Ernesto Garateix。我現在將把電話轉給埃內斯托。

Thank you, Kirk, and thank you all for joining us today. I will provide an overview of our strategic initiatives for the fourth quarter 2022. Kirk will provide an update on key financial performance metrics, and then we will open the call for Q&A.

謝謝你，柯克，感謝大家今天加入我們。我將概述我們 2022 年第四季度的戰略計劃。Kirk 將提供關鍵財務績效指標的最新信息，然後我們將開始徵集問答。

We are pleased to announce that we returned to positive adjusted net income in the fourth quarter. We are encouraged by the strategic initiatives that we believe will enable Heritage to achieve consistent long-term quarterly earnings and drive shareholder value. These strategic profitability initiatives include rate adequacy and selective underwriting, product selection and capital allocation as well as diversification of our portfolio of policies throughout 16 states.

我們很高興地宣布，我們在第四季度恢復了調整後的正淨收入。我們對戰略舉措感到鼓舞，我們認為這些舉措將使 Heritage 能夠實現穩定的長期季度收益並推動股東價值。這些戰略盈利舉措包括利率充足和選擇性承保、產品選擇和資本配置，以及我們在 16 個州的政策組合的多元化。

We remain encouraged by our improving metrics and the long-term positive impact we believe it will have on our underwriting income. We took significant rating actions throughout the book of business this quarter, resulting in an increase in average premium per policy of 18.1% over the prior year quarter and 5.6% over third quarter 2022. These higher rates are the primary driver of our 15.5% increase in gross premiums written, and we expect this trend to continue.

我們對不斷改進的指標以及我們認為這將對我們的承保收入產生的長期積極影響感到鼓舞。本季度我們在整個業務範圍內採取了重大的評級行動，導致每份保單的平均保費比去年同期增長 18.1%，比 2022 年第三季度增長 5.6%。這些較高的費率是我們增長 15.5% 的主要驅動力在毛保費收入中，我們預計這一趨勢將繼續下去。

Our underwriting continues to be more selective, and we continue to evaluate coverage changes so our product serves our markets, but also produces margin. The considerable market disruption this past year has sharpened our focus on timely rate actions, tightening underwriting criteria and expanding restrictions on new business written and over concentrated markets or products. Even with the tightening of our criteria and limiting new business, our premiums in-force are up 9.6% at a historic high of $1.3 billion at the end of the year, while policy count is down. We continue to align our capital with the products and geographies that maximize long-term returns.

我們的承保繼續更具選擇性，我們繼續評估承保範圍的變化，以便我們的產品服務於我們的市場，同時也產生利潤。過去一年的相當大的市場混亂使我們更加關注及時的利率行動、收緊承保標準以及擴大對新業務承保和過度集中市場或產品的限制。即使收緊我們的標準並限制新業務，我們的有效保費在年底仍增長 9.6%，達到 13 億美元的歷史新高，而保單數量卻有所下降。我們繼續將我們的資本與可實現長期回報最大化的產品和地區相結合。

These efforts have led to a reduced policy count for Florida personal lines business by 16.2% as compared to the prior year period. Our disciplined underwriting and rating actions have reduced our Florida personal lines total insured value by 11.1%, while driving a 1.9% decrease in premiums in-force. This disciplined underwriting approach resulted in a policy count reduction of 2.5% in other states, while generating an 11.9% increase in premiums in-force.

與去年同期相比，這些努力導致佛羅里達州個人專線業務的保單數量減少了 16.2%。我們嚴格的承保和評級行動使我們佛羅里達州的個人保險總保險價值降低了 11.1%，同時使有效保費下降了 1.9%。這種有紀律的承保方法導致其他州的保單數量減少了 2.5%，同時有效保費增加了 11.9%。

We will continue to reduce our exposure in products and geographies that we don't believe will generate long-term returns or have limited upside potential in compliance with regulatory requirements. Our focus on maintaining a balanced and diversified portfolio this quarter resulted in our top 5 personal line states representing 79.2% of all TIV at fourth quarter 2022 compared to 79.8% of all TIV at fourth quarter 2021. This was further evidenced by the fact that our top 4 states grew TIV by an average of 2.2%, while the smallest 5 states grew by 56.7%, with no state representing more than 26% of our total insured value.

我們將繼續減少我們認為不會產生長期回報或符合監管要求的上行潛力有限的產品和地區的風險敞口。本季度我們專注於保持平衡和多元化的投資組合，導致我們的前 5 大個人險種在 2022 年第四季度佔所有 TIV 的 79.2%，而在 2021 年第四季度佔所有 TIV 的 79.8%。我們的以下事實進一步證明了這一點前 4 個州的 TIV 平均增長 2.2%，而最小的 5 個州增長了 56.7%，沒有一個州占我們總保險價值的 26%。

Product selection is also key to our long-term success. As we reduced business in products or geographies that don't believe -- provides sufficient margin, we are entering markets we believe offer opportunity for our company and our customers. For example, in addition to the California market, we entered the Florida market last quarter on an excess and surplus line basis, which we believe allows us to be nimble and responsive to pricing and product offerings.

產品選擇也是我們取得長期成功的關鍵。由於我們減少了不相信的產品或地區的業務 - 提供足夠的利潤，我們正在進入我們認為為我們的公司和客戶提供機會的市場。例如，除了加利福尼亞市場外，我們上個季度還以超額和盈餘線的形式進入了佛羅里達市場，我們相信這使我們能夠對定價和產品供應保持靈活和敏感。

We have since evaluated an expansion of E&S policies to include South Carolina, where we anticipate offering E&S policies in the second quarter of 2023. And while we continue to analyze and evaluate E&S offerings in other states and markets. We are encouraged by our improving metrics and the long-term positive impact we believe they will have on our underwriting income. We believe this discipline also better positions Heritage for the upcoming June reinsurance season.

此後，我們評估了 E&S 政策的擴展，將南卡羅來納州包括在內，我們預計在 2023 年第二季度在那裡提供 E&S 政策。同時我們繼續分析和評估其他州和市場的 E&S 產品。我們對不斷改進的指標以及我們相信它們將對我們的承保收入產生的長期積極影響感到鼓舞。我們相信，這一紀律也能更好地為即將到來的 6 月再保險季定位 Heritage。

Speaking of reinsurance season, reinsurance capacity and pricing is a factor in how we allocate capital by product and state. As we discussed in last quarter's call, the cost of reinsurance is expected to continue to increase and capacity constraints are on the horizon.

說到再保險季節，再保險能力和定價是我們如何按產品和州分配資本的一個因素。正如我們在上一季度的電話會議中所討論的那樣，再保險成本預計將繼續增加，容量限制即將出現。

We appreciate our reinsurance trading partners with whom we have developed a long-term consistent relationship. The higher reinsurance cost will be partially mitigated through participation by our Florida affiliate in a program created by the Florida legislature last year, which will provide us with some reinsurance limit at no cost to the company. We also expect to have the ability to access the capital markets through Citrus Re, which provided a $100 million limit on last year's Northeast CAT XOL program. Given the expected pricing and capacity for catastrophe reinsurance going forward, we will continue to evaluate and adjust our portfolio to manage exposure concentration, which can drive up reinsurance costs. This includes limiting the amount of new business we expect to write and the amount of existing businesses we may renew while maintaining compliance with individual state regulations.

我們感謝與我們建立了長期穩定關係的再保險貿易夥伴。較高的再保險成本將通過我們佛羅里達州的子公司參與佛羅里達州立法機構去年制定的計劃來部分緩解，該計劃將為我們提供一些再保險限額，而公司無需支付任何費用。我們還希望能夠通過 Citrus Re 進入資本市場，Citrus Re 為去年的 Northeast CAT XOL 計劃提供了 1 億美元的限額。鑑於未來巨災再保險的預期定價和容量，我們將繼續評估和調整我們的投資組合以管理風險集中度，這可能會推高再保險成本。這包括限制我們期望承保的新業務數量和我們可能續約的現有業務數量，同時保持對各州法規的遵守。

We are also exiting relationships with agents who are not producing good business for us. We are pleased with the progress we continue to make towards sustainable profitability. Rate increases continue to meaningfully benefit written premiums throughout the book of business, and we remain committed to proactively and appropriately raising rates to offset higher cost for reinsurance as well as higher loss costs as well as taking underwriting actions to improve profitability.

我們也正在退出與不能為我們帶來良好業務的代理商的關係。我們對我們在可持續盈利方面繼續取得的進展感到高興。費率上漲繼續顯著有益於整個業務賬簿的承保保費，我們仍然致力於積極和適當地提高費率以抵消更高的再保險成本和更高的損失成本，並採取承保行動來提高盈利能力。

Before turning the call over to Kirk, I wanted to express my encouragement for the recently passed Florida Senate Bill 2A during the December special session of the Florida legislature. I am cautiously optimistic that it will accomplish the goals of the legislature, our governor and the state CFO to stabilize the Florida property insurance market and curtail abusive claim practices. Our strategy will remain unchanged until we see the impacts of the legislative changes in our results.

在將電話轉給柯克之前，我想表達我對佛羅里達州立法機構 12 月特別會議期間最近通過的佛羅里達州參議院法案 2A 的鼓勵。我謹慎樂觀地認為，它將實現立法機關、我們的州長和州首席財務官的目標，即穩定佛羅里達州的財產保險市場並減少濫用索賠的做法。在我們看到立法變化對我們結果的影響之前，我們的戰略將保持不變。

This concludes my remarks. Let me now turn things over to Kirk Lusk for a review of the results in the quarter and key financial performance metrics.

我的發言到此結束。現在讓我將事情轉交給 Kirk Lusk，以審查本季度的結果和關鍵財務績效指標。

Thank you, Ernesto. Good morning, everyone. Fourth quarter net income was $12.5 million or $0.48 per diluted share and up from a net loss of $49.2 million or $1.79 per diluted share in the prior year quarter. This represents a return on average equity during the quarter of 40% annualized. Our in-force premiums at an all-time high of $1.3 billion, while policies in-force are at the lowest level since the third quarter of 2019. Our average premiums increased 18% from the fourth quarter of 2021, and of that increase, 9.7% out of it occurred in the last 6 months and 8.6% of it in the fourth quarter alone.

謝謝你，埃內斯托。大家，早安。第四季度淨收入為 1250 萬美元或攤薄後每股收益 0.48 美元，高於去年同期的淨虧損 4920 萬美元或攤薄後每股收益 1.79 美元。這代表本季度平均股本回報率為 40% 的年化率。我們的有效保費達到 13 億美元的歷史新高，而有效保單處於 2019 年第三季度以來的最低水平。我們的平均保費比 2021 年第四季度增長了 18%，其中，其中 9.7% 發生在過去 6 個月，僅第四季度就有 8.6%。

This shows the impact of the continued rate increases in the portfolio as well as the inflation guard factor. We expect rate increases to continue and potentially accelerate throughout 2023. We did see an opportunity in the commercial/residential market to capture profitable premiums and expand that product line. Commercial residential in-force premium increased 41% year-over-year, while the policies in-force increased less -- by less than 1%. In addition, we see opportunities in the E&S market and are now offering E&S homeowners policies in Florida, which we expect to expand into other states.

這顯示了投資組合中持續加息以及通脹保護因素的影響。我們預計加息將在整個 2023 年繼續並可能加速。我們確實看到商業/住宅市場有機會獲得可盈利的溢價並擴大該產品線。商業住宅有效保費同比增長 41%，而有效保單增幅較小——不到 1%。此外，我們看到了 E&S 市場的機會，現在正在佛羅里達州提供 E&S 房主政策，我們希望將其擴展到其他州。

We've been writing E&S business in the state of California for several years and has been a profitable product due to our specific underwriting criteria and the ability to change forms and adjust rates as needed. Gross written premiums are up 15.5% and gross earned premiums are up 8% year-over-year. Net premiums earned are only up 3.9% compared to the last year's fourth quarter due to the increase in ceded premium. The increase in ceded premium is primarily driven by the increase in the 2022 to 2023 CAT XOL program as well as a higher ceded premium on our net quota share program in the Northeast.

多年來，我們一直在加利福尼亞州從事 E&S 業務，並且由於我們特定的承保標準以及根據需要更改表格和調整費率的能力，它一直是一種有利可圖的產品。承保保費總額同比增長 15.5%，已賺保費總額同比增長 8%。由於分出保費的增加，與去年第四季度相比，已賺取的淨保費僅增長 3.9%。分出溢價的增加主要是由於 2022 年至 2023 年 CAT XOL 計劃的增加以及我們在東北部的淨配額份額計劃的更高分出溢價。

Total revenue for the quarter increased 4.7% from the prior year quarter, reflecting the increase in net earned premiums just mentioned and higher investment income due to an increase in return, partially offset by lower other revenue, which is driven by lower policy fees associated with the lower policies in-force. Net loss and LAE for the quarter was $103.8 million, which was an increase of 4.8% over the prior year. Losses for the quarter included $10.3 million in losses from Hurricane Nicole and prior adverse development of $2.2 million. The adverse development includes net losses of $14.1 million related to Hurricane Irma. We reestimated our ultimate losses for Hurricane Irma in the fourth quarter, recognizing most of the open claims are late-reported litigated claims. As a result of that reestimation, Heritage has exhausted the private layers of reinsurance that has 40% participation in the FHCF limit remaining. The increase in losses caused an increase in the net loss ratio of 50 basis points.

本季度總收入較上年同期增長 4.7%，反映了剛剛提到的淨已賺保費的增加以及由於回報增加而導致的更高投資收入，部分被其他收入減少所抵消，這是由於與較低的政策生效。本季度的淨虧損和 LAE 為 1.038 億美元，比去年同期增長 4.8%。本季度的損失包括颶風妮可造成的 1030 萬美元損失和之前不利發展帶來的 220 萬美元損失。不利發展包括與颶風艾爾瑪相關的 1410 萬美元淨損失。我們重新估計了第四季度颶風艾爾瑪的最終損失，認識到大部分未結索賠是延遲報告的訴訟索賠。作為重新估計的結果，Heritage 已經耗盡了私人再保險層，這些再保險層有 40% 參與 FHCF 剩餘限額。虧損增加導致淨虧損率增加50個基點。

Expenses are up due to higher policy acquisition costs related to the increase in gross written premiums and benefits costs along with investments in IT. The impact of the increase in cost has increased the expense ratio by 2.3 points, of which 1.4 points relates to policy acquisition costs. The net combined ratio for the quarter of 2022 was 96.1%, up 2.9 points from 93.2% in the prior year quarter, driven by a higher net loss ratio and net expense ratio just described.

由於承保保費總額和福利成本的增加以及 IT 投資的增加，保單獲取成本增加，導致費用增加。成本增加的影響使費用率增加了 2.3 個百分點，其中 1.4 個百分點與政策獲取成本有關。 2022 年季度的淨綜合成本率為 96.1%，比上年同期的 93.2% 上升 2.9 個百分點，這主要是受到剛才描述的更高的淨虧損率和淨費用率的推動。

Book value per share is $5.13, but when adding back the $53.6 million unrealized losses in the investment portfolio, the adjusted book value is $7.23. With over $280 million in cash and cash equivalents, we don't anticipate a need to sell these investments in advance of maturity. Our duration is a short 3.2 years, and the average credit rating on our invested fixed income portfolio is A+.

每股賬面價值為 5.13 美元，但加上投資組合中 5360 萬美元的未實現虧損，調整後的賬面價值為 7.23 美元。我們擁有超過 2.8 億美元的現金和現金等價物，預計不需要提前出售這些投資。我們的期限只有短短的 3.2 年，我們投資的固定收益投資組合的平均信用評級為 A+。

As such, we expect the unrealized losses to roll off as investments mature. Our focus continues to be on profitability, and we expect to continue to drive reductions in policy count to manage our TIV and CAT XOL reinsurance costs, which are expected to rise. Despite the recent favorable legislative changes in Florida, we don't expect to shift our strategy of reducing exposures until we see meaningful improvements in our loss results and metrics. We expect rate increases to exceed inflation and loss cost, and we'll take the steps necessary to adjust rates as soon as possible to reflect any increase in reinsurance costs.

因此，我們預計未實現的虧損會隨著投資的成熟而減少。我們的重點仍然是盈利能力，我們希望繼續推動政策數量的減少，以管理我們的 TIV 和 CAT XOL 再保險成本，這些成本預計會上升。儘管最近佛羅里達州的立法發生了有利的變化，但在我們看到損失結果和指標出現有意義的改善之前，我們預計不會改變我們減少風險敞口的策略。我們預計費率增長將超過通貨膨脹和損失成本，我們將採取必要措施盡快調整費率，以反映再保險成本的任何增加。

We include inflation guard in our pricing for all states to address rising loss cost due to material and labor. We continue to restrict underwriting across the portfolio to avoid unprofitable business, especially in dislocated markets, and also to keep our exposures relatively flat given the expected tight reinsurance capacity of our CAT XOL renewal in the spring.

我們在所有州的定價中都包含通貨膨脹保護措施，以解決由於材料和人工造成的損失成本上升。我們繼續限制整個投資組合的承保，以避免無利可圖的業務，尤其是在混亂的市場中，同時考慮到春季 CAT XOL 續保的預期再保險能力緊張，我們的風險敞口也保持相對平穩。

Our focus is on rate adequacy, efficiency of CAT XOL reinsurance program, underwriting integrity, providing the right product for the market and a balanced portfolio and operational and efficiency and effectiveness. We will focus on these initiatives to provide our policies holders with the service they expect and to provide consistent returns for our shareholders. We will continue to analyze and evaluate our portfolio to optimize returns and reduce volatility. We remain dissatisfied with our share price and do not believe that it reflects the true value of the company. We firmly believe that each of our current operating companies are worth more than the total market capitalization of the company, particularly given the statutory surplus of each of the insurance companies are worth more than the total market capitalization of the company. Management and the Board are committed to providing shareholder value and will take the steps necessary to drive that value. We remain focused on sustainable profitability and long-term shareholder returns. As I have stated before, we will consider all options to realize the value of our entities and will also take the actions necessary to improve margins.

我們的重點是費率充足、CAT XOL 再保險計劃的效率、承保完整性、為市場提供合適的產品以及平衡的投資組合和運營以及效率和有效性。我們將專注於這些舉措，為我們的保單持有人提供他們期望的服務，並為我們的股東提供穩定的回報。我們將繼續分析和評估我們的投資組合，以優化回報並降低波動性。我們對我們的股價仍然不滿意，不認為它反映了公司的真實價值。我們堅信，我們目前運營的每家公司的價值都超過了公司的總市值，特別是考慮到每家保險公司的法定盈餘都超過了公司的總市值。管理層和董事會致力於為股東創造價值，並將採取必要措施來推動該價值。我們仍然專注於可持續的盈利能力和長期股東回報。正如我之前所說，我們將考慮所有選項來實現我們實體的價值，並將採取必要的行動來提高利潤率。

That concludes our prepared remarks. Operator, we are ready to begin the question-and-answer portion of the call.

我們準備好的發言到此結束。接線員，我們已準備好開始通話的問答部分。

(Operator Instructions) Today's first question comes from Paul Newsome with Piper Sandler.

（操作員說明）今天的第一個問題來自 Paul Newsome 和 Piper Sandler。

Congratulations on the profit in the quarter. That's wonderful. Can you walk us through what actually is going to get renewed in for reinsurance over the course of the year? I think it's not everything, right? It's a part of pieces, but there's also that quota share in there. Maybe if you can just kind of walk us through exactly what's going to be renewed? And what would potentially face higher prices?

祝賀本季度的利潤。那好極了。您能否向我們介紹一下在這一年中實際將要更新的再保險內容？我認為這不是全部，對吧？它是片段的一部分，但其中也有配額份額。或許你可以帶我們了解一下將要更新的內容？什麼可能會面臨更高的價格？

Yes. Well, the 2 largest ones are the net quota share, which is a 12/31. So that's already been renewed for the bulk of the year. And the other real large one is the CAT XOL, which is a (inaudible)

是的。那麼，最大的兩個是淨配額份額，即 12/31。所以這已經在今年的大部分時間裡得到了更新。另一個真正的大型是 CAT XOL，它是（聽不清）

And as part of that CAT XOL, there is a cat bond for the Northeast, which is already in place from the previous year. It's a multiyear.

作為該 CAT XOL 的一部分，東北部有一個巨災債券，該債券從前一年就已經到位。這是一個多年。

Right. Is it the entire XOL that can renew or just part of it?

正確的。是可以更新整個 XOL 還是只是其中的一部分？

It's the entire CAT XOL, that's on (inaudible)

這是整個 CAT XOL，它在（聽不清）

Got it. Got it. In the end...

知道了。知道了。到底...

Excluding the cat bond portion, yes.

不包括巨災債券部分，是的。

Excluding the cat one. The net quota share we see, any changes in the economics of that, that we should have put into our model for respectively?

貓一除外。我們看到的淨配額份額，其經濟方面的任何變化，我們應該分別放入我們的模型中嗎？

Yes. Yes, the net quota share, we did drop that slightly from a percentage standpoint, although the cost was up. So from a ceded premium standpoint, it's probably going to be a slight increase.

是的。是的，淨配額份額，從百分比的角度來看，我們確實略有下降，儘管成本有所上升。因此，從分出保費的角度來看，它可能會略有增加。

Right. And then maybe you could just address as your view of what -- on the margin you're getting with rate versus claims inflation, particularly in Florida, but maybe even more broadly, given the book isn't just...

正確的。然後，也許你可以作為你對什麼的看法來闡述——在利率與索賠通脹之間的邊際上，尤其是在佛羅里達州，但也許更廣泛，因為這本書不僅僅是……

Yes. Well, claims inflation are -- as we've seen, that actually drop recently. I mean we're still looking at it in the high single digits, low double digits. And what we have is, we have an inflation guard factor of 7.5% in the Northeast and then 10% in the Southeast California and Hawaii. And on top of that, I would say, the bulk of our rate increases almost across the footprint, our double-digit rate increases this year. So when you look at it as the difference there, again, because of some of the claims inflation we've seen in the past, you can expect that probably the difference between the current claims inflation and that rate is going to be close to double digits.

是的。好吧，正如我們所見，聲稱通貨膨脹最近實際上有所下降。我的意思是我們仍在以高個位數、低兩位數來看待它。我們所擁有的是，東北部的通貨膨脹保護係數為 7.5%，然後是加利福尼亞東南部和夏威夷的 10%。最重要的是，我想說的是，我們的大部分利率幾乎都在整個足跡上增長，今年我們的利率增長了兩位數。因此，當您再次將其視為差異時，由於我們過去看到的一些索賠通貨膨脹，您可以預期當前索賠通貨膨脹率與該比率之間的差異可能接近兩倍數字。

Right. And then one more question unless somebody else ask. Any update on RBC ratios and capital levels in the various subsidiaries at year-end?

正確的。然後再問一個問題，除非有人問。年底各子公司的 RBC 比率和資本水平有何更新？

Yes. Each of our subsidiaries, the RBC, particularly at Heritage, is going up from last year. NBIC is down slightly, but it's still well over 350%. And then Zephyr actually increased also. It was 440 last year, and it's up. Last year, Heritage was 311. We expect that number to be actually in the 330 range this year. So again, improvement in our RBCs, and so we feel pretty good as far as where each of the statutory entities is from a capital standpoint.

是的。我們的每個子公司，RBC，尤其是 Heritage，都比去年有所增長。 NBIC 略有下降，但仍遠高於 350%。然後 Zephyr 實際上也增加了。去年是 440，現在已經上升了。去年，Heritage 為 311。我們預計今年該數字實際上會在 330 左右。再次，我們的 RBC 有所改善，因此我們對每個法定實體從資本的角度來看都感覺非常好。

(Operator Instructions) our next question today comes from Mark Hughes of Truist.

（操作員說明）我們今天的下一個問題來自 Truist 的馬克休斯。

How was the weather this quarter? Was this an unusually good weather quarter? Or was this normal weather quarter? Just sort of thinking and certainly of seasonality, but is this kind of run rate? Or was this something unusual?

這個季度的天氣如何？這是一個異常好的天氣季度嗎？或者這是一個正常的天氣季度？只是一種思考，當然還有季節性，但這是一種運行率嗎？或者這是什麼不尋常的事情？

So, are you referring to the fourth quarter or the first quarter? Fourth, right?

那麼，你指的是第四季度還是第一季度？第四，對吧？

Fourth quarter, but you can talk about first quarter, too.

第四季度，但你也可以談論第一季度。

If you want us to, yes.

如果您希望我們這樣做，是的。

Yes. The fourth quarter was almost about what you would expect from a -- when you look at the non-cat weather, the non-hurricane cats and then the hurricane cats, it was very comparable to last year. So I would say, it was about kind of a flat year.

是的。第四季度幾乎是你所期望的——當你看看非颶風天氣、非颶風貓和颶風貓時，它與去年非常相似。所以我想說，這是平淡的一年。

Yes. Okay. And then anything you want to say about the first quarter?

是的。好的。關於第一季度你有什麼想說的嗎？

No. At this year, so far, the first quarter is kind of mirroring what we've seen in the past. So...

不。今年，到目前為止，第一季度在某種程度上反映了我們過去所看到的情況。所以...

Okay. So normal, similar to the fourth quarter, seasonality adjusted?

好的。如此正常，類似於第四季度，季節性調整？

Yes.

是的。

You mentioned pricing. You expect to continue and perhaps, accelerate with the rate actions you're taking will that kind of keep this pace of rate increase is going? If I'm thinking to accelerate, do you need to see what happens with the reinsurance renewals and then that would drive the acceleration? Or how are you thinking about that?

你提到了定價。你希望繼續，也許，加速你正在採取的利率行動，這會保持這種利率增長的步伐嗎？如果我正在考慮加速，你是否需要看看再保險續保會發生什麼，然後這會推動加速？或者你是怎麼想的？

So there's definitely a component with the reinsurance, right? As we mentioned over with Paul, CAT XOL is placed (inaudible) Once we have what that pricing would be, then we would kind of evaluate that and obviously, rates would be adjusted accordingly to that piece. So in some areas of our portfolio, you might see rates go up further because of the increase in reinsurance from that perspective.

所以肯定有再保險的組成部分，對吧？正如我們與 Paul 提到的那樣，CAT XOL 被放置（聽不清）一旦我們有了定價，那麼我們就會對其進行評估，顯然，費率將根據該作品進行相應調整。因此，在我們投資組合的某些領域，您可能會看到利率進一步上漲，因為從這個角度來看，再保險的增加。

Yes. And I think it's a good question. I mean we do expect reinsurance rates to continue to go up. Last year, they went up rather substantially. And so I mean that is actually contributing to the some of the substantial rate increases that we are taking. And I think that, that is probably going to continue, and we'll actually be looking at each state to see what we need to do, based upon those reinsurance rates because yes, unfortunately, I think that the overall market is going to see increases across our footprint. Even despite some of the positive recent legislative actions, which we're very pleased about, but I don't think that, that's going to ease reinsurance rates at this point.

是的。我認為這是一個很好的問題。我的意思是我們確實預計再保險費率會繼續上升。去年，它們大幅上漲。所以我的意思是，這實際上促成了我們正在採取的一些大幅加息。而且我認為，這可能會繼續下去，我們實際上會根據這些再保險費率來研究每個州，看看我們需要做什麼，因為是的，不幸的是，我認為整個市場將會看到增加我們的足跡。儘管最近採取了一些積極的立法行動，我們對此感到非常高興，但我認為這不會在這一點上降低再保險費率。

What was the dollar amount of that CAT XOL spend last year roughly, just so we sort of get a sense of what the base is when we think about potential increases?

去年 CAT XOL 支出的金額大致是多少，這樣我們就可以在考慮潛在增長時大致了解基數是多少？

Yes. That net spend was -- I'll confirm that number up, and it was around -- one second. Yes, about $370 million.

是的。那個淨支出是——我會確認這個數字，大約是——一秒鐘。是的，大約 3.7 億美元。

Okay. And then the E&S in Florida, what is that bringing for you? When did you say you started offering E&S policies? And then is that driving business that you're -- you feel is adequately priced?

好的。然後是佛羅里達州的 E&S，它能為您帶來什麼？您說什麼時候開始提供 E&S 政策？然後你認為推動業務的價格是否合理？

So it definitely is adequately priced. We've been in the Florida E&S business for a little bit over a year. As we saw some of the conditions in the market, we basically paused or suspend to be admitted. So we'll continue focusing on the E&S with select agents in the area, but it is adequately priced. We do have the flexibility there as market conditions change to make those pricing changes accordingly.

所以它絕對是足夠的價格。我們從事佛羅里達 E&S 業務已有一年多了。當我們看到市場上的一些情況時，我們基本上暫停或暫停入場。因此，我們將繼續關注該地區精選代理商的 E&S，但價格合理。隨著市場條件的變化，我們確實可以靈活地做出相應的定價變化。

And then the commercial business, what gives you confidence that you're getting reasonable pricing there? How open is that market for additional growth?

然後是商業業務，是什麼讓您有信心在那裡獲得合理的定價？該市場對額外增長的開放程度如何？

So a couple of things there on the commercial. Each risk is modeled individually, and we do have some flexibility on the pricing side with an IRPM factor that we can adjust accordingly to make sure that again, we're adequately priced to the market conditions even for the residential piece.

廣告中有幾件事。每個風險都是單獨建模的，我們在定價方面確實有一定的靈活性，我們可以根據 IRPM 因素進行相應調整，以再次確保即使對於住宅部分，我們也能根據市場條件進行充分定價。

Yes. I assume you're making some assumption about what your reinsurance costs are going to be looking like if you're still growing that commercial piece.

是的。我假設你正在假設你的再保險成本會是什麼樣子，如果你還在增加那個商業片斷的話。

Correct. Now that is a correct assumption, yes.

正確的。現在這是一個正確的假設，是的。

Yes. Well, and also, I mean, I think the -- when you look -- think about that commercial portfolio, it did grow last year. Premiums were up substantially. Actually, our policy count was down, but premiums were up substantially. I would expect that growth to slow to be flat this year as we manage our exposures for the reinsurance process. So I think that the growth we had last year is probably not going to repeat itself in 2023. Yes, the other thing on the commercial is we do write just the garden style, of course, habitational. So from an underwriting standpoint, we are not going to deviate from that to actually getting more premium also.

是的。嗯，而且，我的意思是，我認為——當你看的時候——想想那個商業投資組合，它去年確實有所增長。保費大幅上漲。實際上，我們的保單數量減少了，但保費大幅增加。我預計，隨著我們管理再保險流程的風險敞口，今年的增長將放緩至持平。所以我認為我們去年的增長可能不會在 2023 年重演。是的，廣告中的另一件事是我們只寫花園風格，當然，住宅。因此，從承保的角度來看，我們不會偏離實際獲得更多保費。

Let me ask one more, the California E&S. How much are you leaning into that market at this point?

讓我再問一個，California E&S。在這一點上，你在多大程度上傾向於那個市場？

We're not leaning heavily. Again, we do think that's a long-term play. It is a small portfolio. It's a disciplined underwriting approach, and I guess, on an E&S basis. So we do have our toe in the water there. It is a profitable business that we're writing out there, and we'll kind of see long term where that plays out.

我們沒有嚴重傾斜。同樣，我們確實認為這是一個長期的遊戲。這是一個小投資組合。這是一種有紀律的承銷方式，我想，是在 E&S 的基礎上。所以我們確實在那裡涉足了水域。我們正在寫的是一項有利可圖的業務，我們會看到長期的結果。

Maybe the estimate on what you think the reforms in Florida could mean? I've heard 10 points on the loss ratio. What do you think of that number?

也許是對您認為佛羅里達州改革可能意味著什麼的估計？我聽說損失率有10分。你覺得這個數字怎麼樣？

I don't think we have a number at this point. I think it's early. I think we are looking at all the metrics and the trends to kind of see where this will eventually end up. Am I cautiously optimistic that it is going to stabilize the property market in Florida? Absolutely. But until we have a little bit more time and data, I think we kind of refrain from exactly what that would mean, but everything that was passed by the legislature in December is absolutely a promising sign for the Florida market.

我認為我們目前沒有數字。我覺得還早我認為我們正在研究所有指標和趨勢，以了解這最終會走向何方。我是否謹慎樂觀地認為它將穩定佛羅里達州的房地產市場？絕對地。但在我們有更多的時間和數據之前，我認為我們有點迴避這到底意味著什麼，但立法機構在 12 月通過的一切絕對是佛羅里達市場的一個有希望的跡象。

Ladies and gentlemen, our next question today is a follow-up from Paul Newsome with Piper Sandler.

女士們，先生們，我們今天的下一個問題是保羅紐瑟姆和派珀桑德勒的後續行動。

So are you seeing any regulatory pushback with some of your rates? It sounds -- it feels like -- it sounds like Florida is very accommodated, but obviously, California is much in the news. And I think even New York has been in the news with being resisting some of these rate increases. What's your perspective on it? And what has your experience been so far?

那麼，您是否看到某些利率受到監管阻力？聽上去——感覺上——聽起來佛羅里達州非常適合，但很明顯，加利福尼亞州經常出現在新聞中。而且我認為甚至紐約也因抵制其中一些加息而成為新聞。你對此有何看法？到目前為止你的經驗是什麼？

So what I would say is that we have very good relationship with each of our regulatory environments, and we are always proactive to provide them information of what's going on. So a case in point, as we go out and are placing our reinsurance, we are not waiting until the reinsurances place to have the discussions. We are giving them some insight as to what's going on and working with them on that piece. So again, everything from a rate perspective is backed up actuarially, right? We're not looking at numbers and saying, this is what we think. This is based on metrics that are coming in from loss costs, reinsurance pricing that the actuaries put together and then make the case on that piece. So I think we will continue those conversations with them proactively in front so they understand what is happening in the marketplace and why these rates are necessary.

所以我要說的是，我們與每個監管環境都有很好的關係，我們總是主動向他們提供正在發生的事情的信息。因此，一個恰當的例子是，當我們出去並進行再保險時，我們不會等到再保險地點進行討論。我們正在向他們提供一些關於正在發生的事情的見解，並在這方面與他們合作。那麼，從利率的角度來看，一切都得到了精算的支持，對吧？我們不是在看數字然後說，這就是我們的想法。這是基於來自損失成本的指標，精算師匯總的再保險定價，然後就此進行論證。因此，我認為我們將繼續主動與他們進行對話，以便他們了解市場上正在發生的事情以及為什麼需要這些費率。

And it does vary by state, but in general, they're seeing the reality of the reinsurance rate increases. And I would say, the bulk of them understand the situation. So therefore, are understanding how we're approaching it.

它確實因州而異，但總的來說，他們看到了再保險費率增加的現實。我會說，他們中的大多數人都了解情況。因此，正在了解我們如何處理它。

Ladies and gentlemen, this concludes our question-and-answer session. I'd like to turn the conference back over to the management team for any final remarks.

女士們，先生們，我們的問答環節到此結束。我想將會議轉回給管理團隊，聽取任何最後的評論。

Thank you. We'd like to thank everyone for joining the call today and appreciate the interest in Heritage. We're encouraged by these fourth quarter results and look forward to the balance of 2023 as we continue to execute against our strategic profitability initiatives to achieve consistent long-term quarterly earnings and drive shareholder value. Thank you, and have a great weekend.

謝謝。我們要感謝大家今天加入電話會議，感謝大家對 Heritage 的興趣。我們對第四季度的業績感到鼓舞，並期待著 2023 年的平衡，因為我們將繼續執行我們的戰略盈利計劃，以實現一致的長期季度收益並推動股東價值。謝謝，祝週末愉快。

Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.

謝謝。今天的電話會議到此結束。感謝大家出席今天的演講。您現在可以斷開線路，度過美好的一天。