Heritage Insurance Holdings Inc (HRTG) 2024 Q2 法說會逐字稿

Good morning, and welcome to the Heritage Insurance Holdings second-quarter 2024 earnings call. (Operator Instructions) Please note today's event is being recorded. I would now like to turn the conference over to Kirk Lusk, Chief Financial Officer for the company. Please go ahead sir.

早安，歡迎參加 Heritage Insurance Holdings 2024 年第二季財報電話會議。（操作員說明）請注意今天的活動正在錄製中。我現在想將會議轉交給公司財務長柯克‧拉斯克 (Kirk Lusk)。請先生繼續。

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.

早安，感謝您今天加入我們。我們邀請您造訪我們網站 Investors.heritagepci.com 的投資者部分，其中將存檔收益發布和收益電話會議。這些材料可供您在方便時重播或查看。

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.

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。這些陳述是基於管理層目前的預期，並可能受到環境的不確定性和變化的影響。在我們的收益新聞稿和向美國證券交易委員會提交的文件中，我們詳細介紹了可能導致我們未來業績與預期不同的重大風險。

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

我們的聲明截至今天，我們沒有義務更新我們可能做出的任何前瞻性聲明。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 表格收益發布的年度報告和其他 SEC 文件。今天與我一起參加電話會議的是我們的執行長 Ernie Garateix。我現在將把電話轉給厄尼。

Thank you, Kirk. Good morning, everyone, and thank you for joining us today. Before I discuss the second quarter, I and the entire Heritage family wish a swift and complete recovery to all those impacted by Hurricane Debbie. Our team has been responding to policyholder needs and remains ready to provide outstanding claims service.

謝謝你，柯克。大家早安，感謝您今天加入我們。在討論第二季之前，我和整個 Heritage 家族希望所有受颶風黛比影響的人都能迅速完全康復。我們的團隊一直在回應保單持有人的需求，並隨時準備提供優質的理賠服務。

With regard to the second quarter, we achieved another period of strong performance per Heritage as we continued to execute on our strategic initiatives focused on achieving rate adequacy, maintaining our underwriting discipline and allocating capital to drive growth and returns as we strive to deliver solid financial results.

就第二季而言，我們繼續執行我們的策略舉措，重點是實現利率充足性、維持我們的承保紀律以及分配資本以推動成長和回報，同時我們努力提供穩健的財務狀況，因此我們在Heritage 上取得了又一個強勁表現。

As part of our strategic initiatives, we significantly curtailed writing personal new business in most of the Northeast and in the majority of the states in the Southeast, starting in 2022. Over the last two years, we have grown our top line through organic growth in our commercial residential portfolio and our E&S products, combined with rate actions across our Personal Lines portfolio.

作為我們策略舉措的一部分，從 2022 年開始，我們大幅減少了東北部大部分地區和東南部大部分州的個人新業務寫作。在過去的兩年裡，我們透過商業住宅投資組合和 E&S 產品的有機成長，以及個人產品組合的利率行動，實現了收入的成長。

At the same time, we undertook significant underwriting initiatives aimed at improving the quality of our portfolio. These efforts had significantly improved both our underwriting results and profitability in 2023 and through the first six months of 2024. Our results this quarter are indicative of these actions with our top line gross written premium growing $28 million or 7.1%, while our second quarter, net income grew by $11 million or 143%.

同時，我們採取了重大承保舉措，旨在提高我們的投資組合品質。這些努力顯著改善了我們 2023 年和 2024 年前六個月的承保業績和獲利能力。我們本季的業績表明了這些行動，我們的總保費增長了 2800 萬美元，即 7.1%，而第二季度的淨利潤增長了 1100 萬美元，即 143%。

Both as compared to the second quarter of 2023. A key highlight of the quarter is the continued execution of our underwriting and rate adequacy initiatives, which have had meaningfully benefited our bottom line. From an underwriting perspective, we continue to strategically reduce our exposure in over concentrated and unprofitable areas while selectively increasing our presence in profitable geographies and products.

兩者均與 2023 年第二季相比。本季的一個關鍵亮點是我們繼續執行承保和利率充足性舉措，這對我們的利潤產生了重大影響。從承保的角度來看，我們繼續策略性地減少在過度集中和無利可圖領域的風險敞口，同時有選擇地增加在盈利地區和產品中的業務。

This disciplined underwriting approach resulted in a policy count reduction of just over 69,000 policies or 14.1% throughout our footprint compared to the second quarter of 2023, while our premium in-force increased by $81.2 million or 6.1%. Through our risk-based management of policy count in total insured value and proactive engagement with our reinsurance partners, we have maintained a stable supply of indemnity based reinsurance at manageable costs. Importantly, we expect the headwind from declining policies to begin to moderate as we look forward over the next few quarters.

與 2023 年第二季相比，這種嚴格的承保方法使我們的保單數量減少了略多於 69,000 份保單，即減少了 14.1%，而我們的有效保費增加了 8,120 萬美元，即 6.1%。透過我們對總保險價值中的保單數量進行基於風險的管理以及與再保險合作夥伴的積極合作，我們以可管理的成本維持了基於賠償的再保險的穩定供應。重要的是，我們預期政策下滑帶來的阻力將開始減弱，展望未來幾季。

Turning to our rate adequacy initiatives, they have delivered significant rate increases, which are earning through our portfolio in 2024 as evidenced by our growing unearned premium balance.

談到我們的利率充足性舉措，他們實現了大幅利率上調，這些利率將在 2024 年透過我們的投資組合獲利，我們不斷增長的未賺保費餘額就證明了這一點。

Looking to 2025, we anticipate an even more meaningful amount of rate to earn through our portfolio, which we believe will provide a healthy tailwind to our financial results. More importantly, we have reached an inflection point in our business, which positions us to selectively resume writing new business in these geographies.

展望 2025 年，我們預計透過我們的投資組合可以獲得更有意義的利率，我們相信這將為我們的財務表現提供健康的推動力。更重要的是，我們的業務已經達到了轉折點，這使我們能夠有選擇地恢復在這些地區開展新業務。

As a result, we are now pivoting our strategy to one of controlled growth, anchored by our continued focus on risk management and stringent underwriting. This is an opportune time to accelerate growth, given the disruption in many of our markets that we expect will open up significant market share. Additionally, recent legislative changes in Florida are having a positive impact on the economics of writing new profitable business in the state.

因此，我們現在正在將我們的策略轉向可控成長，並以我們持續關注風險管理和嚴格承保為基礎。鑑於我們許多市場的混亂，我們預計這將打開巨大的市場份額，現在是加速成長的好時機。此外，佛羅裡達州最近的立法變化對該州開展新的盈利業務的經濟產生了積極影響。

In fact, we started writing business again in July and are optimistic with the growth perspectives that lie ahead. As we turn our new business engine back on, we expect to leverage our existing sales and marketing teams that have largely been in place and will not require incremental expense.

事實上，我們在七月再次開始撰寫業務，並對未來的成長前景感到樂觀。當我們重新啟動新的業務引擎時，我們希望利用現有的銷售和行銷團隊，這些團隊基本上已經到位，不需要增加費用。

Our E&S business is another growth lever for Heritage as premiums grew nearly $30 million or 177% as compared to the year ago second quarter, as we continued to write business in California, Florida and South Carolina. What makes this business so attractive is that we can more nimbly, adjust our rates and coverages to the changing dynamics state by state to ensure that we continue to earn appropriate risk-adjusted returns.

我們的 E&S 業務是 Heritage 的另一個成長槓桿，隨著我們繼續在加州、佛羅裡達州和南卡羅來納州開展業務，保費與去年同期相比增長了近 3000 萬美元，即 177%。這項業務如此有吸引力的原因在於，我們可以更靈活地根據各州不斷變化的動態調整我們的費率和承保範圍，以確保我們繼續獲得適當的風險調整回報。

Looking forward, we will continue to evaluate more states for E&S opportunities as we focus on our controlled growth strategy. Importantly, we remain committed to maintaining a balanced and diversified portfolio as no single state represents over 27.3% of our total insured value. This selective diversification helps reduce performance volatility and ensures our long term stability, which we will believe will be reflected in the value of our company over time.

展望未來，我們將繼續評估更多州的 E&S 機會，同時專注於我們的控製成長策略。重要的是，我們仍然致力於維持平衡和多元化的投資組合，因為沒有一個州占我們總保險價值的 27.3% 以上。這種選擇性多元化有助於減少業績波動並確保我們的長期穩定性，我們相信隨著時間的推移，這將反映在我們公司的價值中。

We remain committed to maintaining our focus on disciplined growth, operational excellence and effective capital management. We believe our strategic initiatives will continue to yield positive results, drive long-term profitability and enhance shareholder value. With the improvements we have made to the portfolio, we expect our net income to grow and build off the first half results.

我們仍然致力於維持對規範成長、卓越營運和有效資本管理的關注。我們相信，我們的策略舉措將繼續產生正面成果，推動長期獲利能力並提高股東價值。隨著我們對投資組合的改進，我們預計我們的淨利潤將成長並鞏固上半年業績。

To conclude, I would like to reiterate our dedication to navigating the complexity of our market with a strategic focus that prioritizes long-term profitability and shareholder value driven by our dedicated workforce. Kirk, I'll turn it over to you.

最後，我想重申，我們致力於應對複雜的市場，其策略重點是優先考慮由我們敬業的員工驅動的長期獲利能力和股東價值。柯克，我會把它交給你。

Thank you, Ernie, and good morning, everyone. As already highlighted, the second quarter of 2024 was reflective of our efforts and an indication of the earnings we expect to deliver in the future. Our results this quarter reflect the success of our strategic initiatives and the positive impact of our disciplined underwriting rate adequacy efforts and prudent capital management.

謝謝你，厄尼，大家早安。正如已經強調的那樣，2024 年第二季反映了我們的努力，也顯示了我們預計未來將實現的收益。我們本季的業績反映了我們策略性舉措的成功以及我們嚴格的承保率充足性努力和審慎的資本管理的正面影響。

Starting with our financial highlights, we reported net income at $18.9 million or $0.61 per diluted share compared to $7.8 million or $0.3 per diluted share in the prior year quarter. This substantial increase in net income was driven primarily by higher net premiums earned and a significant increase in net investment income, which was partially offset by higher operating expenses.

從我們的財務亮點開始，我們公佈的淨利潤為 1890 萬美元，即稀釋後每股收益 0.61 美元，而去年同期淨利潤為 780 萬美元，即稀釋後每股收益 0.3 美元。淨收入大幅成長主要是由於所賺取的淨保費增加和淨投資收入大幅增加，但部分被較高的營運費用所抵消。

Our total revenues for the quarter were $203.6 million, up 9.9% from $185.3 million in the prior year quarter. This increase was driven by several factors. Gross premiums earned rose to $350 million, up 6.1% from $330 million in the prior year quarter, reflecting our strategic focus on rate adequacy and organic growth in our commercial and residential lines.

我們本季的總營收為 2.036 億美元，比去年同期的 1.853 億美元成長 9.9%。這一增長是由多個因素推動的。毛保費增至 3.5 億美元，比去年同期的 3.3 億美元增長 6.1%，反映出我們對商業和住宅產品線的費率充足性和有機增長的戰略重點。

Net premiums earned increased to $190.3 million, up 7.6% from $176.8 million in the prior year quarter as the growth in gross premiums earned outpaced the increase in ceded premiums. Our strategic focus on organic growth of our commercial residential business have paid off with substantial premium into segment, contributing positively to our overall profitability.

由於毛保費的成長超過了分出保費的成長，淨賺保費增至 1.903 億美元，較去年同期的 1.768 億美元成長 7.6%。我們對商業住宅業務有機成長的策略重點已獲得回報，為該細分市場帶來了可觀的溢價，為我們的整體盈利能力做出了積極貢獻。

The commercial residential business, which tended to have lower attritional loss ratio, but in-force premium grow by 29.4% compared to the second quarter of 2023, while the total insured value only increased by 9.9%. This segment now accounts for 21.3% of our in-force premiums, up from 17.5% in the prior year period.

商品住宅業務的損耗率往往較低，但有效保費較2023年第二季成長29.4%，而總保額僅成長9.9%。該細分市場目前占我們有效保費的 21.3%，高於去年同期的 17.5%。

Due to improvements in our reinsurance program from a cost and structure standpoint, coupled with growing gross premiums earned, we expect to have meaningful reduction in our ceded premium ratio going forward. We did incur reinstatement premiums from hurricane Ian this year, which were $8.7 million in the first quarter and $10 million in the second quarter for a full half year impact of $18.7 million.

由於我們的再保險計劃從成本和結構的角度進行了改進，加上所賺取的毛保費不斷增長，我們預計未來的分出保費將大幅下降。今年，我們確實因伊恩颶風而產生了恢復保費，第一季為 870 萬美元，第二季為 1,000 萬美元，整個半年的影響為 1,870 萬美元。

Net investment income was $9.8 million, up $3.2 million from $6.6 million in the prior year quarter, reflecting actions to align the investments with the yield curve and take advantage of higher short-term yields.

淨投資收入為 980 萬美元，比上年同期的 660 萬美元增加 320 萬美元，反映出為使投資與收益率曲線保持一致並利用較高的短期收益率而採取的行動。

Revenue in the prior year quarter was also impacted by a realized loss of $1.6 million on equity investments. Net loss ratio for the quarter improved to 55.7%, down 4.6% from 60.3% in the same quarter last year. This improvement was driven by higher net premiums earned and slightly lower net losses and loss adjustment expense.

去年同期營收也受到股權投資已實現虧損 160 萬美元的影響。本季淨虧損率改善至55.7%，較去年同期的60.3%下降4.6%。這一改善是由於所賺取的淨保費增加以及淨損失和損失調整費用略有下降所致。

Net weather losses for the current quarter were $19.7 million, a decrease of $14.1 million from $33.8 million in the prior year quarter. Additionally, the net loss ratio was impacted by net unfavorable loss development of $8.7 million during the second quarter of 2024 compared to net favorable development of $2.7 million in the second quarter of 2023.

本季的淨天氣損失為 1,970 萬美元，比去年同期的 3,380 萬美元減少了 1,410 萬美元。此外，淨虧損率也受到 2024 年第二季淨不利虧損 870 萬美元的影響，而 2023 年第二季淨利虧損為 270 萬美元。

The loss ratio improvement reflects the positive impact on our underwriting efforts and the legislative changes in Florida aimed at reducing claims abuse. We have continued to see favorable trends in the current year loss costs attributable to legislative changes made in Florida and the improvements in our underlying portfolio in all states. We will continue to evaluate each state on an ongoing basis to make adjustments necessary to maintain rate adequacy and improved underwriting results.

賠付率的改善反映了對我們承保工作的積極影響以及佛羅裡達州旨在減少索賠濫用的立法變化。由於佛羅裡達州的立法變化以及我們在所有州的基礎投資組合的改善，我們繼續看到今年損失成本的有利趨勢。我們將繼續持續評估每個州，以做出必要的調整，以維持費率充足性並改善承保績效。

Our net expense ratio increased to 36.8%, up from 34.8% in the prior year quarter. This increase was due to higher acquisition costs associated with the rise in gross premiums written to higher general administrative expenses from reduced ceding commission income and higher technology spend.

我們的淨費用率從去年同期的 34.8% 增至 36.8%。這一增長是由於分保佣金收入減少和技術支出增加導致總保費增加而導致的購置成本增加導致一般管理費用增加。

The higher investments in technology includes a new claim system and prudent spending on cybersecurity as well as higher costs for liability insurance. These strategic investments in technology and infrastructure are essential for our long-term growth. The net combined ratio for the quarter improved to 92.5%, down 2.6 points from 95.1% in the prior year quarter, driven by the lower net loss ratio, partially offset by higher net expense ratio.

對技術的更高投資包括新的索賠系統和網路安全方面的謹慎支出以及更高的責任保險成本。這些對技術和基礎設施的策略性投資對於我們的長期成長至關重要。本季的淨綜合成本率改善至 92.5%，比去年同期的 95.1% 下降 2.6 個百分點，原因是淨虧損率較低，但淨費用率較高，部分抵銷了這一影響。

Turning to our balance sheet, we ended the quarter with total assets of $2.6 billion and shareholders' equity of $255.3 million. Our book value per share increased to $8.32, up 32.7% from $6.27 in the prior-year quarter. This increase is primarily attributed to our strong net income and a reduction in unrealized losses on our fixed income securities portfolio.

談到我們的資產負債表，本季末我們的總資產為 26 億美元，股東權益為 2.553 億美元。我們的每股帳面價值增至 8.32 美元，比去年同期的 6.27 美元成長 32.7%。這一成長主要歸功於我們強勁的淨利潤以及固定收益證券投資組合未實現損失的減少。

We expect unrealized losses will continue to decline as the bonds mature and with any reductions in overall interest rates. The average rating on our portfolio is A+ with a duration of 2.68 years. Our return on equity for the quarter was 30.8%, an improvement of 11.1 points from the 19.7 in the prior year quarter, reflecting our team's profitability and effective capital management.

我們預計，隨著債券到期以及整體利率的下降，未實現損失將繼續下降。我們投資組合的平均評級為 A+，期限為 2.68 年。本季我們的股本回報率為 30.8%，比去年同期的 19.7% 提高了 11.1 個百分點，反映了我們團隊的盈利能力和有效的資本管理。

In terms of capital management, our Board of Directors has decided to continue the suspension of the quarterly dividend. This decision aligns with our strategy strengthen our financial position and support our long-term growth initiatives. We will continue to evaluate our dividend distribution and stock repurchase strategies on a quarterly basis.

在資金管理方面，公司董事會決定繼續暫停派發季度股利。這項決定符合我們的策略，增強了我們的財務狀況並支持我們的長期成長計劃。我們將繼續按季度評估我們的股利分配和股票回購策略。

Looking ahead, we remain focused on executing our strategic initiatives, which include achieving consistent long-term earnings, maintaining underwriting discipline and driving shareholder value. We believe that our proactive approach to managing exposure, enhancing rate adequacy and investing in technology and infrastructure will position us well for continued success.

展望未來，我們仍然專注於執行我們的策略舉措，其中包括實現持續的長期收益、維持承銷紀律和推動股東價值。我們相信，我們主動管理風險、提高利率充足性以及投資技術和基礎設施的方法將為我們持續成功奠定基礎。

Lastly, we are excited to embark on the next phase of our strategic initiatives as we initiated our controlled growth strategy and begin writing personal lines policies in Florida and the Northeast. We expect these to have a positive impact on our future earnings and build upon the results of the first half of the year.

最後，我們很高興能夠開始下一階段的策略性舉措，因為我們啟動了控製成長策略，並開始在佛羅裡達州和東北部製定個人保險政策。我們預計這些將對我們未來的收益產生正面影響，並以今年上半年的業績為基礎。

Thank you for your attention. We are now ready to take your questions.

感謝您的關注。我們現在準備好回答您的問題。

(inaudible) We will now begin the question-and-answer session. (Operator Instructions)

（聽不清楚）我們現在開始問答環節。（操作員說明）

Paul Newsome, Piper Sandler.

保羅‧紐瑟姆，派珀‧桑德勒。

Good morning, congratulations on your quarter.

早上好，恭喜你的季度。

(multiple speakers) Morning.

（多名發言者）早安。

A couple few questions here. I want to ask a little bit more about the new growth effort. There are obviously multiple levers, one of which is -- just allowing new business to happen. The other is a whole host of non-rate actions that companies often do. So could you talk a little bit about sort of where you are from, do you essentially start from you weren't actually writing any at all, and then where you are from a non-rate action perspective in terms of turning on the spigot?

這裡有幾個問題。我想多問一些關於新的成長努力的問題。顯然有多種槓桿，其中之一就是——允許新業務發生。另一個是公司經常採取的一系列非利率行動。那麼你能談談你來自哪裡嗎？

Yeah, I can talk a little bit about that. So obviously, we've taken some action over the past couple of years on our underwriting appetite and where we're writing, especially in geographic areas, right, where we can see profitability.

是的，我可以談談這一點。顯然，過去幾年我們已經針對我們的承保意願和我們正在承保的地區採取了一些行動，特別是在我們可以看到盈利能力的地理區域。

So as we mentioned, is we will selectively be writing in those area anchored again by the underwriting criteria that we have. Some of it will be rate. Some of it will not be rate on those portions of it. So we'll continue kind of doing that because that's proven to us that we can kind of make profit in those areas in the long term.

正如我們所提到的，我們將有選擇地在那些再次以我們現有的承保標準為基礎的領域進行寫作。其中一些將是利率。其中一些不會對它的那些部分進行評級。因此，我們將繼續這樣做，因為這向我們證明，從長遠來看，我們可以在這些領域獲利。

So it is very selective and strategic of what we're writing the new business.

因此，我們對新業務的編寫是非常有選擇性和策略性的。

Right. So you're not turning this spigot on completely at this point

正確的。所以此時你還沒有完全打開這個龍頭

No, we are very directive and focused on where we're writing and making sure that I get from a long-term perspective, we are very focused on underwriting profitability. So we understand that as you take rate in some areas we can write there quickly, others is to take a little bit longer. So it is not turning on the fire hydrant.

不，我們非常有指導性，專注於我們所寫的內容，並確保我從長遠的角度來看，我們非常注重承保獲利能力。因此，我們知道，當您在某些領域進行評分時，我們可以很快地寫下來，而其他領域則需要更長的時間。所以它沒有打開消防栓。

That's great. Could you talk a little bit about the reserve development in the quarter and the sources and pieces and what drove it?

那太棒了。您能否談談本季的儲備發展、來源和部分以及推動其發展的因素？

Yea, we actually, yes, there were some basically that was due to Hurricane Irma. Yeah we still have a few claims outstanding on that. We're about 99.2% closed on that one, but there still are a few outstanding claims that were resolving and it really had to do with those claims.

是的，我們實際上，是的，有些基本上是由於颶風艾爾瑪造成的。是的，我們對此仍有一些未決索賠。我們已經解決了該問題的大約 99.2%，但仍有一些未決索賠正在解決，這確實與這些索賠有關。

So those are essentially case reserves that were put through to be larger than we expected?

那麼這些本質上就是案件準備金，其金額超出了我們的預期？

Correct.

正確的。

Fantastic. And then just a final question, I'll let some other people ask. Hurricane Debbie, obviously not the worst Hurricane, thank god, but is there anything similar to, an event in the past that you found that was similar to Hurricane Debbie?

極好的。最後一個問題，我會讓其他人問。颶風黛比，顯然不是最嚴重的颶風，謝天謝地，但有沒有類似的事情，你發現過去發生的事件與颶風黛比相似？

Yes, so if you remember last year, Hurricane Idalia, it kind of took a similar path, stronger Hurricane, but similar path is where it made landfall. But again, in that area is pretty rural, less populated. We don't have a large book in that area very early right now. Now the difference between Debbie, as Debbie seems to be larger, slower, less powerful, but a lot of rain. So we expect more flooding type claims, not covered by us, but we still are taking those calls and helping people where we can.

是的，如果你還記得去年的颶風伊達利亞，它採取了類似的路徑，更強的颶風，但登陸的路徑也類似。但同樣，該地區非常鄉村，人口較少。我們現在還沒有關於該領域的大書。現在黛比之間的差異，因為黛比似乎更大、更慢、力量更弱，但是下雨很多。因此，我們預計會出現更多洪水類型的索賠，這些索賠不在我們的承保範圍內，但我們仍在接聽這些電話並盡我們所能幫助人們。

Makes sense. Do you recall how big a dollar was just in general, obviously, rough comparison like?

有道理。您還記得一般而言，顯然粗略比較一美元有多大嗎？

Yeah, our ultimate on Idalia ended up being just a little over $7 million.

是的，我們在《Idalia》上的最終花費剛剛超過 700 萬美元。

Fantastic. I'll let some other folks ask questions. I appreciate it.

極好的。我會讓其他人提問。我很感激。

(multiple speakers) Thanks, Paul.

（多位發言者）謝謝，保羅。

Mark Hughes, Truist.

馬克‧休斯，真理主義者。

Yeah, thank you good morning.

是的，謝謝你早安。

(multiple speakers)

（多個發言者）

Could you talk about the growth in the E&S? I think you've highlighted that's been a good strong growth vector for you. I guess I'm thinking if you're seeing maybe more adequate rates in the admitted market, are you still seeing as much momentum in E&S? How are you seeing the interplay between the two different markets and maybe function different states. But if you could expand on that, that would be great?

能談談 E&S 的成長嗎？我認為您已經強調了這對您來說是一個良好的強勁成長載體。我想我在想，如果您在承認的市場中看到了更充足的利率，那麼您是否仍然看到 E&S 的強勁勢頭？您如何看待兩個不同市場以及不同狀態之間的互動？但如果你能擴展這一點，那就太好了？

Sure. So we have seen growth in the E&S market. As, we're in 16 different markets and each of those markets are quite different. So we look at as another tool, a tool set to address not just rate, there's coverage issues and other things that we can address. So we still see that E&S market continuing to grow, particularly in California, Florida and South Carolina.

當然。因此，我們看到了 E&S 市場的成長。因為，我們處於 16 個不同的市場，每個市場都有很大不同。因此，我們將其視為另一種工具，該工具集不僅可以解決速率問題，還可以解決覆蓋範圍問題以及我們可以解決的其他問題。因此，我們仍然看到 E&S 市場繼續成長，特別是在加州、佛羅裡達州和南卡羅來納州。

So as you're right in some admitted markets, we're getting the rate that's rate adequacy, but we still see the E&S market growing for us in selective areas.

因此，正如您在某些已認可的市場中所言，我們得到的利率是充足的，但我們仍然看到 E&S 市場在某些特定領域不斷增長。

Yeah, And what do you think the general trend is going to be in terms of rate increases, you're getting to a better spot. But as we think about, say, over the next 12 months across your book of business, what would you anticipate and I might ask a Florida specifically then maybe overall, just kind of rough sense of how much rate do you think you'll be pursuing?

是的，您認為利率上漲的整體趨勢會怎樣，您正處於一個更好的位置。但是，當我們考慮，比如說，在接下來的12 個月裡，您的業務範圍內，您的預期是什麼，我可能會具體詢問佛羅裡達州，然後也許總體而言，只是粗略地了解您認為您會獲得多少利率追求？

Okay. Well, first of all, let me address the Northeast where I think that we are still going to see fairly substantial rate increases due to loss trends and also reinsurance costs. I would say in the Florida market that is starting to moderate substantially due to the legislative changes and some of the other loss cost decreases we've seen.

好的。好吧，首先，讓我談談東北地區，我認為由於損失趨勢和再保險成本，我們仍然會看到相當大幅度的費率上漲。我想說的是，由於立法變化和我們看到的其他一些損失成本下降，佛羅裡達市場開始大幅放緩。

So from that standpoint, we think it's going to moderate, but I think the, there still is some loss cost inflation that will probably be pushing rates, a modestly higher, but not significantly and probably not to the level we've seen in the past several years.

因此，從這個角度來看，我們認為利率將會放緩，但我認為，仍然存在一些損失成本通膨，這可能會推動利率適度上升，但不會顯著，而且可能不會達到我們在過去幾年。

Yeah, I mean (multiple speakers) --

是的，我的意思是（多位發言者）——

Those rates are they are indicative that the loss costs that we're seeing. And again, because the trends right now are very favorable.

這些比率顯示了我們所看到的損失成本。再說一次，因為現在的趨勢非常有利。

Yeah, yeah. And I think your initial take on legislative changes was a kind of wait-and-see. If I'm interpreting correctly, you seem more upbeat here. Is that a fair reading? Is there as you look at the events over the last quarter two, three, if you have (multiple speakers) real meaningful change and how that, you've experienced that?

是啊是啊。我認為您對立法改革的最初看法是一種觀望。如果我的理解正確的話，你看起來更樂觀。這是一個公平的閱讀嗎？當您回顧過去第二季、第三季的事件時，是否有（多位發言者）真正有意義的變化？

Yes, Mark, I mean, we've always said I'll use the words right. You've heard me say, cautiously optimistic, and that was because early on there wasn't really any data as we've now been through a couple months, couple of quarters here, we've actually seen the data coming through the numbers. So we have said that, those legislative reforms have made an impact.

是的，馬克，我的意思是，我們一直說我會正確使用這些字。你聽我說過，謹慎樂觀，那是因為早期並沒有真正的任何數據，因為我們現在已經經歷了幾個月、幾個季度，我們實際上已經透過數字看到了數據。所以我們說過，這些立法改革產生了影響。

We can see it in the actual numbers whereas a year ago, I would use the term cautiously optimistic. So I would now say that we're looking forward the optimistic right to those trends continuing through the data that we've seen.

我們可以從實際數字中看到這一點，而一年前，我會使用「謹慎樂觀」這個詞。所以我現在想說的是，我們期待透過我們所看到的數據繼續看到這些趨勢。

Yeah, yeah, very good. Thank you.

是啊是啊，非常好。謝謝。

(multiple speakers)

（多個發言者）

Karol Chmiel, JMP.

卡羅爾·奇米爾，JMP。

Yeah, hi. Good morning. I got one question here regard -- yeah hi, regarding the investment income for the quarter, it was a nice beat and I read that it was mainly because of the higher yields on the shorter side of the yield curve that you utilize. And I'm wondering, is this yields a run rate for the projections, or do you think you'll go longer duration assets going forward.

是的，嗨。早安.我在這裡有一個問題——是的，嗨，關於本季度的投資收入，這是一個不錯的節拍，我讀到這主要是因為您利用的收益率曲線較短一側的收益率較高。我想知道，這是否會產生預測的運行率，或者您認為您未來會選擇更長期限的資產。

Well, we are anticipating interest rates to drop. We are starting to go, we actually already started that at the beginning of the quarter to start going out longer on the yield curve in anticipation of rates dropping.

嗯，我們預計利率會下降。我們正在開始，實際上我們在本季初就已經開始在殖利率曲線上延長利率，以期利率下降。

So yeah, we are starting to go a little bit longer. I mean, our duration is still short. It is still under three years is like 2.69 years, A+ rated, but we are trying to go a little bit out on the yield curve anticipating that rates are going to drop.

所以，是的，我們開始走得更遠一點。我的意思是，我們的持續時間還很短。還不到三年，相當於 2.69 年，A+ 評級，但我們正試圖在殖利率曲線上稍微走一步，預計利率將會下降。

Okay. But do you think net investment income of $9 million to $10 million per quarter would be a good run rate?

好的。但您認為每季 900 萬至 1000 萬美元的淨投資收入是一個好的運行率嗎？

Yes.

是的。

Okay, great. And then just to -- just another question, just a random question. I mean, I know you said that you're being cautious with Florida. And then in the past, you guys were always very cautious with Tri-County and trying to get out of Tri-County. But do you think that the Florida dynamic has slowly changed in favor of maybe looking into the possibility of Tri-County again?

好的，太好了。然後只是另一個問題，只是一個隨機問題。我的意思是，我知道你說過你對佛羅裡達州持謹慎態度。過去，你們對三縣總是非常謹慎，並試圖離開三縣。但您是否認為佛羅裡達州的動態已經慢慢發生變化，有利於再次考慮三縣的可能性？

So, what I would say to that is yes, there's a size for us right in the state. And we do believe that Tri-County, there's a certain amount of concentration that we're comfortable with. As I mentioned earlier to Paul, we're not turning on the fire hydrant and writing everything that comes across, but we will be selective, including into the Tri-County area.

所以，我想說的是，是的，該州有適合我們的規模。我們確實相信三縣有一定程度的集中度，我們對此感到滿意。正如我之前向保羅提到的，我們不會打開消防栓並寫下遇到的所有事情，但我們會有所選擇，包括三縣地區。

Great. Thank you. That's all from me.

偉大的。謝謝。這就是我的全部。

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

女士們先生們，我們的問答環節到此結束。我想將會議轉回管理團隊進行最後發言。

We appreciate everyone joining the call today, and we wish everyone a great day. Thank you.

我們感謝今天加入電話會議的每個人，並祝福每個人都有美好的一天。謝謝。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.

會議現已結束。感謝您參加今天的演講。現在您可以斷開線路。