Presurance Holdings Inc (PRHI) 2023 Q3 法說會逐字稿

Good morning, and welcome to the Conifer Holdings third quarter 2023 investor call. (Operator Instructions) Please note, this event is being recorded. I'd now like to turn the conference over to Brian Roney. Please go ahead.

早上好，歡迎致電 Conifer Holdings 2023 年第三季投資者電話。 （操作員說明）請注意，正在記錄此事件。我現在想把會議交給布萊恩·羅尼。請繼續。

Thank you and good morning, everyone. Conifer issued its 2023 third quarter financial results after the close of market yesterday. You can find copies of the earnings release on the company's website, ircnfrh.com. The slide presentation accompanying management's remarks this morning is available to view or download via webcast or from the Investor Relations section of Conifer's website.

謝謝大家，早安。昨天收盤後，Conifer 發布了 2023 年第三季財務業績。您可以在公司網站 ircnfrh.com 上找到收益發布的副本。今天早上管理層演講所附帶的幻燈片簡報可透過網路廣播或從 Conifer 網站的投資者關係部分查看或下載。

Before we get started, please note that except with regards to historical information, statements made in this conference call may constitute forward looking statements within the meaning of the federal securities laws, including statements relating to trends, the company's operations and financial results, and the business and the products of the company and its subsidiaries.

在我們開始之前，請注意，除歷史資訊外，本次電話會議中的陳述可能構成聯邦證券法含義內的前瞻性陳述，包括與趨勢、公司營運和財務業績以及與公司及其子公司的業務和產品。

Actual results may differ materially from the results anticipated in these forward looking statements due to various risks and uncertainties underlying our forward-looking statements as described from time to time in Conifer's filings with the SEC, including our latest Form 10 K and subsequent reports. Conifer specifically disclaims any obligation to update or revise any forward looking statements, whether as a result of new information, future developments or otherwise.

由於Conifer 向SEC 提交的文件（包括我們最新的10 K 表格和後續報告）中不時描述的前瞻性聲明所包含的各種風險和不確定性，實際結果可能與這些前瞻性聲明中預期的結果存在重大差異。 Conifer 特別聲明不承擔更新或修改任何前瞻性陳述的義務，無論是由於新資訊、未來發展或其他原因。

In addition, a replay of this call will be provided through a link on the Investor Relations section of our website. During this call will also discuss non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are included [one] possible in our earnings release and our historical SEC filings. Statutory accounting data is process in accordance with statutory accounting rules and is therefore not reconciled to GAAP.

此外，我們網站投資者關係部分的連結將提供本次電話會議的重播。在本次電話會議期間，還將討論 SEC 法規 G 定義的非 GAAP 財務指標。這些非 GAAP 財務指標與可比較 GAAP 財務指標的調整可能包含在我們的收益發布和我們向 SEC 提交的歷史文件中。法定會計資料是根據法定會計規則處理的，因此不符合公認會計準則。

We will conduct a Q&A session after management's prepared remarks this morning. With that, I'll turn the call over to Jim Petcoff, Executive Chairman and Co-Chief Executive Officer. Jim?

今天早上管理階層準備好發言後，我們將舉行問答環節。接下來，我會將電話轉給執行董事長兼聯席執行長吉姆‧佩特科夫 (Jim Petcoff)。吉姆？

Thanks, Brian, and good morning, everyone. Also on the call with me today are Nick and Harold. Thank you for joining us today to discuss our third quarter financial results. Like the industry at large where personal lines has had a tough go, our quarter was mostly impacted by recent storm activity after several years of systemic wind exposure reduction. For example, [exiting] Florida altogether or hurricane risk is now almost negligible. Yet in the quarter, we were significantly impacted by wind in the form of convective storm.

謝謝布萊恩，大家早安。今天與我通話的還有尼克和哈羅德。感謝您今天加入我們討論我們第三季的財務表現。與個人保險業經歷了艱難的整個行業一樣，我們的季度主要受到最近風暴活動的影響，此前幾年系統性風暴露減少了。例如，完全[退出]佛羅裡達州或颶風風險現在幾乎可以忽略不計。然而在本季度，我們受到對流風暴形式的風的嚴重影響。

More specifically, our personalized book of business was hit the hardest in Oklahoma. But before the storm activity in the period, we were generally pleased with the improving results. For example, despite the unusual related losses in the period, we saw continued growth in our select key verticals. In total, gross written premiums were up roughly 17% in the third quarter and up nicely for the year as well.

更具體地說，我們的個人化商業名錄在俄克拉荷馬州受到的打擊最為嚴重。但在此期間風暴活動之前，我們總體上對改善的結果感到滿意。例如，儘管在此期間出現了不尋常的相關損失，但我們看到我們選擇的關鍵垂直行業持續成長。總體而言，第三季的總保費成長了約 17%，全年也有不錯的成長。

Overall, we continue to focus our underwriting efforts and organic growth in our historically profitable core business, which continues to generate substantial top line growth in our emphasized key specialty verticals. We remember we remain focused on executing in our historically profitable lines, which I believe speaks to the strength of our underwriting teams and their deep expertise in our [own] select markets.

總體而言，我們繼續將承保工作和有機成長重點放在歷史上盈利的核心業務上，這將繼續在我們強調的關鍵專業垂直領域帶來大幅的收入成長。我們記得我們仍然專注於執行我們歷史上盈利的產品線，我相信這證明了我們承保團隊的實力以及他們在我們[自己的]特定市場的深厚專業知識。

While the top line has been moving, we are also pleased to see the expense ratio coming into line with our ongoing expense management efforts. We posted a 34% expense ratio for the third quarter. This continuous improvement demonstrates our persistent drive to our overall expense reduction.

雖然收入一直在變化，但我們也很高興看到費用比率與我們正在進行的費用管理工作保持一致。我們公佈的第三季費用率為 34%。這種持續改進顯示了我們對降低整體費用的不懈努力。

Before I hand the call over to Nick for more color on our underwriting results, I'd like to take a moment to note the transition that will take place at the end of this year where Nick will be taking over the role of CEO for Conifer. I'm proud to hand the reins over to Nick, and I'm confident that the company is in good hands and on sound footing moving into a bright future. Nick.

在我將電話轉交給尼克以獲取有關我們承保結果的更多信息之前，我想花點時間說明一下將於今年年底發生的過渡，尼克將接任 Conifer 首席執行官的角色。我很自豪能夠將權力移交給尼克，並且我相信公司得到了良好的管理，並且基礎穩固，邁向光明的未來。缺口。

Thank you, Jim. I'm genuinely excited to take on the role as well as the opportunities and challenges that lie ahead for Conifer. As Jim noted, Conifer's long term prospects appear bright and improving in no small part due to the strategic direction and operational commitment of continuously refining our overall business mix over the last several years. You've heard us talk about this before, but we are in an even better position today than the days gone by, and I'm pleased to see the collective team effort coming to ultimate fruition.

謝謝你，吉姆。我真的很高興能夠擔任這個角色以及 Conifer 面臨的機會和挑戰。正如 Jim 指出的那樣，Conifer 的長期前景顯得光明，並且在很大程度上得益於過去幾年不斷完善我們整體業務組合的策略方向和營運承諾。您以前聽過我們談論過這一點，但今天我們的處境比過去更好，我很高興看到團隊的集體努力最終會取得成果。

Over the past few years, our underwriting teams have been keenly concentrating on refining our business mix, narrowly focusing on the select specialty lines where we have a distinct competitive advantage and where we see logical growth and historical profitability. By focusing these key select verticals and maximizing the advantage of our teams underwriting experience, our efforts are optimized for lines of business where we have deep knowledge coupled with a proven track record.

在過去的幾年裡，我們的核保團隊一直專注於完善我們的業務組合，重點是我們擁有明顯競爭優勢、邏輯成長和歷史獲利能力的精選專業產品線。透過專注於這些關鍵的精選垂直領域並最大限度地利用我們團隊承保經驗的優勢，我們的努力針對我們擁有深厚知識和良好業績記錄的業務領域進行了優化。

Gross written premiums for the third quarter were over $38 million, a 17% increase compared to the prior year period. This increase resulted from organic growth in our select operating verticals combined with ongoing rate increases. The primary driver for our top line continues to be commercial lines business, which accounted for roughly 75% of total gross written premium in the period.

第三季的毛保費超過 3,800 萬美元，比去年同期成長 17%。這一增長是由於我們選擇的垂直運營領域的有機增長以及持續的費率上漲所致。我們營收的主要動力仍是商業險業務，約佔該期間總保費的 75%。

In spite of planned premium reductions like in the state of Florida, our commercial lines production was still up 3% in the quarter to $28 million. Within commercial lines our small business segment shows great potential for continued strong performance and comprise the majority of gross written premium for the quarter.

儘管像佛羅裡達州那樣計劃降低保費，我們的商業產品線產量在本季仍成長了 3%，達到 2,800 萬美元。在商業領域，我們的小型業務部門顯示出持續強勁業績的巨大潛力，並佔本季總承保保費的大部分。

Our personal lines business stands at just over 25% of total gross written premium for the third quarter. Low-value home and dwelling insurance products are the main driver of the personal lines gross written premium, which in total was $10 million for the third quarter. While our business in Oklahoma has performed generally well over the last several years, it did severely impact our financials over the last couple of quarters leading us to decide to non-renew that book of business.

我們的個人險業務佔第三季總保費的 25% 多一點。低價值房屋和住宅保險產品是個人保險保費總額的主要動力，第三季的保費總額為 1,000 萬美元。雖然我們在俄克拉荷馬州的業務在過去幾年中總體表現良好，但它確實嚴重影響了我們在過去幾個季度的財務狀況，導致我們決定不再更新該業務。

In contrast, our low-value dwelling book has continued to perform very well, including storms, posting a 53% loss ratio through nine months this year. Before the impact of the storm-related losses, the personal lines accident year combined ratio was 91% for the third quarter of 2023, and 90% for the first nine months of the year.

相比之下，我們的低價值住宅帳簿繼續表現出色，包括風暴在內，今年九個月的損失率為 53%。在風暴相關損失影響之前，2023年第三季個人線路事故年綜合率為91%，今年前9個月為90%。

Overall, when looking at our combined ratio before the impact of storm losses, the company's accident year combined ratio was 95% for the third quarter. This highlights the fundamental strength of our book and demonstrates our commitment to attentive pricing practices and responsible claims management.

總體而言，在考慮風暴損失影響之前的綜合成本率時，該公司第三季的事故年綜合成本率為 95%。這凸顯了我們這本書的基本優勢，並表明了我們對細心的定價實踐和負責任的索賠管理的承諾。

As the effect of this quarter's storm-related losses clears the way through reveal a strong foundation below, we expect to finance the results to reflect improved combined ratios going forward. By devoting our efforts to the best performing lines of business, especially in our key select verticals the company will continue to drive toward long-term profitability.

由於本季風暴相關損失的影響為下文奠定了堅實的基礎，我們預計將為業績提供融資，以反映未來綜合比率的改善。透過致力於表現最佳的業務線，特別是在我們選擇的關鍵垂直領域，公司將繼續推動長期獲利。

With that, I'll turn the call over to Harold to discuss the financials.

這樣，我會將電話轉給哈羅德，討論財務問題。

Thank you, Nick. I'll provide a quick recap of the financial results, and I encourage investors to review our filings and presentation on the company's website for greater detail. As noted, gross written premiums increased 17% to just under $39 million in the third quarter. For the quarter, our overall combined ratio was 121% due in large part to the elevated storm activity Nick and Jim noted in their remarks.

謝謝你，尼克。我將快速回顧財務業績，並鼓勵投資者查看我們在公司網站上的文件和演示文稿，以了解更多詳細資訊。如上所述，第三季總保費成長了 17%，達到略低於 3,900 萬美元。本季度，我們的總體綜合成本率為 121%，這在很大程度上是由於尼克和吉姆在演講中指出的風暴活動增加。

Before the impact of the additional loss emergence from the second quarter storm activity, Conifer's accident year combined ratio was 95% in the third quarter. The loss ratio was 87% for the quarter, again, largely resulting from the convective storms that impacted much of the industry. This quarter's expense ratio was 34%, down 600 basis points from the same period last year and beating our target expense ratio of 35%.

在受到第二季風暴活動帶來的額外損失影響之前，針葉樹第三季的事故年綜合率為95%。該季度的損失率為 87%，這主要是由於對整個行業造成影響的對流風暴造成的。本季費用率為34%，比去年同期下降600個基點，超出了我們35%的目標費用率。

Despite lower net earned premiums, we continue to see the expense ratio improve as a result of our ongoing expense reduction efforts. Net investment income was $1.5 million during the quarter, up 69% from $860,000 in the prior year period. For the first nine months of 2023, net investment income was up 113% over last year to $4.1 million.

儘管淨賺保費有所下降，但由於我們持續努力削減費用，費用率仍然有所改善。本季淨投資收入為 150 萬美元，比去年同期的 86 萬美元成長 69%。 2023 年前 9 個月，淨投資收入比去年成長 113%，達到 410 萬美元。

Our investments remain conservatively managed with the vast majority of our investable assets in fixed income securities with an average credit quality of double A plus, an average duration of 2.8 years, and a growing tax equivalent yield of 2.9%. Also, we have a sizable portion of our investable assets and T-bills and adjustable floaters. Largely as a result of the $2.5 million in storm losses in third quarter, the company reported a net loss of $2.7 million, or $0.22 per share compared to a net loss of $1.5 million or $0.14 per share in the prior year period.

我們的投資仍維持保守管理，絕大多數可投資資產為固定收益證券，平均信用品質為雙 A+，平均久期為 2.8 年，稅等收益率持續成長，為 2.9%。此外，我們擁有相當大一部分可投資資產、國庫券和可調整浮動利率。主要由於第三季風暴造成的 250 萬美元損失，該公司報告淨虧損 270 萬美元，即每股 0.22 美元，而去年同期淨虧損為 150 萬美元，即每股 0.14 美元。

Moving to the balance sheet total assets were $293 million at quarter end with cash and total investments of $159 million. Our book value at quarter end was $0.96 per share. We have a $1.96 per share in net deferred tax assets that due to a full valuation allowance were not reflected in book value. And with that, I'd like to turn it back over to Jim for closing remarks.

資產負債表顯示，季末總資產為 2.93 億美元，其中現金和總投資為 1.59 億美元。季度末我們的帳面價值為每股 0.96 美元。我們有每股 1.96 美元的淨遞延稅資產，由於全額估價津貼，該資產並未反映在帳面價值中。說到這裡，我想把它轉回給吉姆做總結發言。

Thanks, Harold and Nick. In closing, I want to emphasize that, as we move forward, I remain confident in Conifer's ability to deliver long-term value to our shareholders. I look forward to helping Nick and his new role in any way I can. With that, I'd like to invite any questions. Operator?

謝謝，哈羅德和尼克。最後，我想強調，隨著我們的前進，我仍然對 Conifer 為股東創造長期價值的能力充滿信心。我期待盡我所能幫助尼克和他的新角色。就這樣，我想提出任何問題。操作員？

(Operator Instructions) Paul Newsome, Piper Sandler.

（操作員說明）Paul Newsome、Piper Sandler。

Good morning. Thanks for the call. Congratulations to Nick for the position. I was hoping you could start with the transaction you did with Core Specialty and how you think that will affect the results prospectively.

早安.感謝您的來電。祝賀尼克獲得該職位。我希望您能從您與 Core Specialty 進行的交易開始，以及您認為這將如何影響未來的結果。

Well, I'll start. In order to do consolidate the writings a little bit and delever the company, we looked at what the cost was of the business that we had and the acquisition costs of that business was high for us due to the front fee.

好吧，我要開始了。為了稍微鞏固文章並降低公司的槓桿率，我們研究了我們擁有的業務的成本是多少，並且由於前期費用，該業務的收購成本對我們來說很高。

And it was our higher loss ratio business that we had left on the books. So with that being gone, it enhances the statutory strength of the insurance companies. So we look to that transaction to put it sort of a position to write the other business more efficiently and with less acquisition costs. But that's my view of it. Nick?

我們留下的正是我們損失率較高的業務。因此，隨著這一點的消失，保險公司的法定實力得到增強。因此，我們希望透過該交易能夠以更低的收購成本更有效率地開展其他業務。但這就是我的看法。缺口？

No, I agree. Primarily, it bolsters the surplus level. The book was growing pretty substantially. As Jim mentioned, the acquisition costs were the highest throughout the company and we thought that the limits profiles were also very high. So from a reinsurance perspective, it was also costly and we thought it made the most sense to move away from that book for all those factors.

不，我同意。首先，它提高了盈餘水準。這本書的成長相當可觀。正如吉姆所提到的，收購成本是整個公司最高的，我們認為限製設定檔也非常高。因此，從再保險的角度來看，它的成本也很高，我們認為考慮到所有這些因素，放棄這本書是最有意義的。

So it looks like it was roughly a third of your gross premiums. So I assume that that -- there's no replacement for that. Some prospectively, we should basically assume your gross premiums are up by a third and impact on earned revenue should be, like, earned in, or -- I think they bought the premium business. So the UPR. So I would guess that next quarter, you're basically looking for a third less revenues (technical difficulty) insurance. Is that fairly right roughly?

所以看起來大約是您毛保費的三分之一。所以我認為——沒有替代品。一些前瞻性地，我們基本上應該假設你的毛保費增加了三分之一，對賺取的收入的影響應該是，例如，賺取，或者——我認為他們購買了保費業務。所以普遍定期審議。所以我猜想下個季度，你基本上會尋找收入減少三分之一（技術難度）的保險。大致是這樣嗎？

Yeah, in the near term, we will see a depth as a result of the transaction. Obviously, we seek growth in other areas. So that will offset the decline out of that book of business. So yeah, in the near term, we will see a decline in the premiums.

是的，在短期內，我們將看到交易帶來的深度。顯然，我們尋求其他領域的成長。因此，這將抵消該業務的下降。所以，是的，在短期內，我們會看到保費下降。

I would guess -- but I know this [isn't] certain because it happened at the end of the quarter. There was a difference between what you were from a gross premiums perspective and a net revenue. That was a fairly unusual. Is that the transaction happening that factor that very low net written premium number in third quarter?

我會猜 - 但我知道這[不確定]，因為它發生在季度末。從毛保費角度來看，您的收入與淨收入之間存在差異。這是一個相當不尋常的事情。交易的發生是否會導致第三季的淨承保保費非常低？

Yes, absolutely. This is Harold. When we ceded the unearned premium, that was about $30 million of unearned premium. So that shows up as ceded written. Now that does not affect any net earned premium for the third quarter, but it does affect ceded written and net written.

是的，一點沒錯。這是哈羅德。當我們放棄不勞而獲的保費時，大約有 3000 萬美元的不勞而獲的保費。所以這顯示為所寫的割讓。現在，這不會影響第三季的任何淨賺取保費，但確實會影響分出承保和淨承保。

Great. Thank you very much.

偉大的。非常感謝。

Thanks, Paul.

謝謝，保羅。

Thanks, Paul.

謝謝，保羅。

There are no more questions in the queue. This concludes our question and answer session. I would like to turn the conference back over to Jim Petcoff for any closing remarks.

隊列中沒有更多問題。我們的問答環節到此結束。我想將會議轉回吉姆·佩特科夫（Jim Petcoff）發表閉幕詞。

Thank you, everyone. We appreciate your interest in the company. We look forward to seeing you in the future. If you have any questions, please feel free to reach out to us. Thank you.

謝謝大家。我們感謝您對公司的興趣。我們期待將來見到您。如果您有任何疑問，請隨時與我們聯繫。謝謝。

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

會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。