Presurance Holdings Inc (PRHI) 2024 Q2 法說會逐字稿

Good morning and welcome to Conifer Holdings' second quarter 2024 Investor conference call. All participants will be in listen-only mode. (Operator Instructions). After today’s presentation there will be an opportunity to ask questions. Please note this event is being recorded.

早安，歡迎參加 Conifer Holdings 2024 年第二季投資者電話會議。所有參與者將處於僅聽模式。（操作員說明）。今天的演講結束後，將有機會提問。請注意此事件正在被記錄。

I would now like to turn the conference over to Brian Roney. Please go ahead.

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 2024 second quarter financial results after the close of market yesterday. You can find copies of the earnings release on the company's website at ir.cnfrh.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。Conifer 在昨天收盤後發布了 2024 年第二季財務業績。您可以在該公司網站 ir.cnfrh.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 regard 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有關的陳述，以及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.

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 specifically disclaims any obligation to update or revise any forward-looking statements, whether due to new information, future developments or otherwise. In addition, a replay of this call will be provided through a link on the Investor Relations section of our website.

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。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。

During this call, we'll 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 when possible in our earnings release and our historical SEC filings.

在本次電話會議中，我們還將討論 SEC G 條例所定義的非 GAAP 財務指標。

Statutory accounting data is prepared in accordance with statutory accounting rules and is therefore not reconciled to GAAP. We will conduct a Q&A session after management's prepared remarks this morning. With that, I'll turn the call over to Nick Petcoff, our Chief Executive Officer. Nick?

法定會計資料是根據法定會計規則編制的，因此不符合公認會計準則。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，我會將電話轉給我們的執行長尼克·佩特科夫 (Nick Petcoff)。缺口？

Thanks, Brian and good morning, everyone. Also on the call with us today is Harold Meloche. As you review our second quarter results, you'll notice a significant change in our top line figures. This is a deliberate and strategic decision on our part as we continue our shift towards a commission-based revenue model, channeling premium through our wholly-owned managing general agency, Conifer Insurance Services.

謝謝布萊恩，大家早安。今天與我們通話的還有 Harold Meloche。當您查看我們第二季的業績時，您會注意到我們的營收數據發生了重大變化。這是我們深思熟慮的策略決定，因為我們繼續轉向基於佣金的收入模式，透過我們全資擁有的管理總代理商 Conifer Insurance Services 輸送保費。

Our focus is on ramping up the optimization of our commercial lines by running gross written premium through our MGA. This move aligns with our long-term strategy to achieve more stable and predictable revenue streams through commissions rather than the traditional risk-bearing carrier revenue model.

我們的重點是透過我們的 MGA 運行毛保費來加強我們的商業產品線的優化。此舉符合我們的長期策略，即透過佣金而不是傳統的承擔風險的營運商收入模式來實現更穩定和可預測的收入流。

While this has resulted in a lower top line compared to previous periods, it is a critical step in enhancing our overall profitability and creating a more scalable and sustainable business model. Under this model, we can leverage the expertise and network of our agency partners, enhancing our distribution channels, and expanding our reach in key markets. Through this approach, our business is directly written by third-party insurers with A.M. Best ratings of A minus or better.

雖然這導致營收較之前時期有所下降，但這是提高我們整體獲利能力和創建更具可擴展性和可持續性的業務模式的關鍵一步。在這種模式下，我們可以利用代理商合作夥伴的專業知識和網絡，增強我們的分銷管道，並擴大我們在主要市場的影響力。透過這種方式，我們的業務直接由第三方保險公司與 A.M. 承保。最佳評級為 A 減或更好。

Utilizing third-party A-rated capacity providers for MGA-produced business provides a much broader reach for existing profitable programs, enabling us to offer insurers superior coverage and paper while simultaneously governing risk through a scalable and sustainable production-based revenue model.

利用第三方A 級容量提供者來開展MGA 生產的業務，可以為現有的盈利計劃提供更廣泛的覆蓋範圍，使我們能夠為保險公司提供卓越的承保範圍和紙張，同時通過可擴展且可持續的以生產為基礎的收入模式來管理風險。

During the second quarter of 2024, we made significant strides in channeling premiums to our capacity providers across various commercial lines of business.

2024 年第二季度，我們在向各個商業業務領域的容量提供者輸送溢價方面取得了重大進展。

Specifically, we have started to accelerate the transfer of cannabis premiums to our capacity partner, Palomar, enabling us to expand into new markets and solidify our position as a leading provider of cannabis-related coverage across the US.

具體來說，我們已開始加速將大麻保費轉移給我們的產能合作夥伴 Palomar，使我們能夠擴展到新市場並鞏固我們作為全美大麻相關保險領先提供者的地位。

As planned, our commercial lines production decreased significantly in the second quarter compared to the prior year period. This is largely the result of more time required to ramp up our other complementary capacity providers in the period.

按照計劃，第二季我們的商業生產線產量與去年同期相比大幅下降。這主要是因為在此期間需要更多時間來提高我們其他補充產能提供者的能力。

For the quarter, our commercial lines combined ratio came in at 105% and the accident year combined ratio was a solid 81%. Overall, commercial lines represented roughly 36% of total production for the quarter.

本季度，我們的商業線路綜合成本率為 105%，事故年綜合成本率為 81%。整體而言，商業生產線約佔本季總產量的 36%。

Switching to our personal lines, these results were significantly impacted in the quarter by spring storms. Most of the loss came from our Oklahoma business, which is currently in run-off. We expect that the run-off process will be largely completed by year-end.

轉向我們的個人產品線，這些結果在本季度受到春季風暴的嚴重影響。大部分損失來自我們俄克拉荷馬州的業務，目前正處於虧損狀態。我們預計決選過程將在年底前基本完成。

With Oklahoma going away, our production for this segment will primarily come from low-valued homeowner’s business in Texas and the Midwest. In general, personal lines production was retained through our traditional carrier-based revenue model and represented a larger percentage of gross written premium in the second quarter. We expect this trend to continue in the quarters ahead as we further transition our revenue model.

隨著俄克拉荷馬州的消失，我們該細分市場的生產將主要來自德克薩斯州和中西部的低價值房主業務。總體而言，個人線路生產是透過我們傳統的基於運營商的收入模式保留的，並在第二季度佔總保費的比例較大。隨著我們進一步轉變收入模式，我們預計這一趨勢將在未來幾季持續下去。

Overall, we remain confident that this approach will yield market benefits over time, not only improving our margins but also equipping us to better serve our insurers and agency partners with a more flexible and responsive offering.

總體而言，我們仍然相信，隨著時間的推移，這種方法將產生市場效益，不僅提高我們的利潤率，而且使我們能夠透過更靈活和響應更快的產品更好地為我們的保險公司和代理商合作夥伴提供服務。

As we continue this transition, we remain committed to preserving a strong and consistent top line, continuing to streamline our expense structure, and generating operational profitability over the long term to achieve favorable returns for our shareholders. With that, I'll turn the call over to Harold to discuss the numbers. Harold.

在我們繼續這項轉型的過程中，我們仍然致力於保持強勁且一致的營收，繼續簡化我們的費用結構，並產生長期的營運獲利能力，為股東實現良好的回報。這樣，我會將電話轉給 Harold 討論這些數字。哈羅德.

Thank you, Nick. I'll provide a brief recap of the financial results, and I encourage investors to review our filings and presentation on the company's website for further detail. In the second quarter, overall gross written premium decreased 58% to $19 million, reflecting our decision to reduce premium leverage on our operating subsidiaries and to focus instead on the commission-based revenue through our MGA, Conifer Insurance Services.

謝謝你，尼克。我將簡要回顧財務業績，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。第二季度，總承保保費下降 58% 至 1,900 萬美元，反映出我們決定減少營運子公司的保費槓桿，轉而透過我們的 MGA、Conifer Insurance Services 專注於基於佣金的收入。

The breakout for second quarter total gross written premium was 36% commercial lines and 64% personal lines. Overall, Conifer's combined ratio was 124% in the second quarter which was impacted by the Oklahoma storms. We stopped writing Oklahoma premium in May, which should reduce which should result in improved mix of business of homeowners going forward.

第二季總保費的突破是商業險種佔 36%，個人險種佔 64%。整體而言，受到俄克拉荷馬州風暴的影響，Conifer第二季的綜合成本率為124%。我們在五月停止了俄克拉荷馬州的溢價，這應該會減少，從而改善未來房主的業務組合。

Our expense ratio continues to improve despite lower net earned premiums due to the success of our ongoing expense reduction efforts. The expense ratio was 32% in the second quarter, down 580 basis points from the same period last year and well below our near-term target of 35%.

儘管由於我們持續的費用削減努力取得了成功，淨賺保費有所下降，但我們的費用率仍在繼續改善。第二季費用率為32%，較去年同期下降580個基點，遠低於我們35%的近期目標。

Agency commission in the second quarter was nearly $9 million compared to $211,000 in the second quarter of 2023, illustrating the progress the company has made in its initiative to drive commission-based revenue and shift to a managing general agency business model.

第二季的代理佣金接近 900 萬美元，而 2023 年第二季為 211,000 美元，這表明該公司在推動基於佣金的收入和轉向管理一般代理業務模式方面取得了進展。

Net investment income was $1.5 million during the second quarter, up 11% from $1.4 million in the prior year period. We recorded $196,000 decrease in the fair value of equity investments in the second quarter, leading to a net realized investment loss of $118,000.

第二季淨投資收入為 150 萬美元，比去年同期的 140 萬美元成長 11%。第二季度，我們的股權投資公允價值下降了 196,000 美元，導致已實現投資淨損失為 118,000 美元。

Our investments remain conservatively managed with the vast majority of our investable assets and fixed income securities with an average credit quality of AA+ on average duration of 2.6 years and a tax equivalent yield of 3.4%.

我們的投資仍維持保守管理，絕大多數可投資資產和固定收益證券的平均信用品質為 AA+，平均期限為 2.6 年，稅等收益率為 3.4%。

Our company reported net loss allocable to common shareholders of $4 million or $0.32 per share and adjusted operating loss of $3.6 million or $0.30 per share for the second quarter of 2024.

我們公司公佈的 2024 年第二季可分配給普通股股東的淨虧損為 400 萬美元，即每股 0.32 美元，調整後的營運虧損為 360 萬美元，即每股 0.30 美元。

Moving to the balance sheet. Total assets were $293 million at quarter end, with cash and total investments of $154 million. And with that, I'd like to turn it back over to Nick for closing remarks.

轉向資產負債表。截至季末，總資產為 2.93 億美元，現金和總投資為 1.54 億美元。說到這裡，我想把它轉回給尼克做總結發言。

Thanks, Harold. In summary, as we wrap up, this strategic shift is positioning us for stronger and more sustainable growth. We're excited about the future and confident that our focused approach will deliver long-term value to our shareholders. Thank you for your continued support. With that, I'd like to invite any questions. Operator?

謝謝，哈羅德。總之，正如我們總結的那樣，這一戰略轉變使我們能夠實現更強勁、更永續的成長。我們對未來感到興奮，並相信我們專注的方法將為股東帶來長期價值。感謝您一直以來的支持。就這樣，我想提出任何問題。操作員？

(Operator Instructions).

（操作員說明）。

Robert Bairman from Retail.

來自零售業的羅伯特·貝爾曼。

Thank you. I'm a long-standing shareholder and like management, has suffered through a string of losses here. And I'd like to get some color on when you expect to become profitable and if that is not achieved, what are your sources of liquidity and additional capital?

謝謝。我是長期股東，和管理階層一樣，在這裡遭受了一系列損失。我想了解您何時期望實現盈利，如果沒有實現，您的流動性和額外資本來源是什麼？

Yes, I can lead that off. Appreciate the question. We do feel that with the pivot to the MGA model on the commercial lines side and the support of the A-rated paper, we do feel that the commission-based model that we're moving to does allow us to achieve profitability more quickly than we had as a carrier-based model.

是的，我可以引導它。感謝這個問題。我們確實認為，隨著商業線方面轉向 MGA 模式以及 A 級票據的支持，我們確實認為我們正在轉向的基於佣金的模式確實能讓我們比傳統模式更快地實現盈利。模型。

The personal lines obviously had a big impact on us in the second quarter with weather. We do feel good about the personal lines book that we have moving forward. Typically, the second quarter is a difficult quarter for us.

個人台詞顯然對我們第二季的天氣產生了很大的影響。我們確實對我們正在推進的個人台詞書感到滿意。通常，第二季對我們來說是一個困難的季度。

So with the move to the revenue model based on commissions rather than balance sheet risk on the commercial lines side, getting A-rated paper on all of that business, allowing us to grow, and improved weather results in the personal lines, we do think that, that's a combination that will get us to profitability, and that's what we're focused on.

因此，隨著商業業務方面轉向基於佣金而不是資產負債表風險的收入模式，在所有業務上獲得 A 級票據，使我們能夠成長，並改善個人業務的天氣結果，我們確實認為這將使我們實現盈利，這就是我們所關注的重點。

As it relates to liquidity, I'll let Harold tackle that one and talk a little bit about that.

由於它與流動性有關，我將讓 Harold 解決這個問題並對此進行一些討論。

So we did have expense reductions over the last several years, which does help align our expense structure with our revenues. Also, we are -- we did mention in our 10-Q that to the extent that we need additional liquidity, we are considering other asset sales.

因此，過去幾年我們確實減少了費用，這確實有助於使我們的費用結構與收入保持一致。此外，我們確實在 10-Q 中提到，如果我們需要額外的流動性，我們正在考慮其他資產出售。

With no further questions, this will conclude the question-and-answer session. Mr. Petcoff, you may conclude the call.

如果沒有其他問題，問答環節就結束了。佩特科夫先生，您可以結束通話了。

Thank you. And we appreciate the question, and we appreciate everyone's time and interest in the company and invite any of you to reach out to us at any time. And thank you, and have a good day.

謝謝。我們感謝您提出這個問題，也感謝每個人投入的時間和對公司的興趣，並邀請大家隨時與我們聯繫。謝謝你，祝你有美好的一天。

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。