United Fire Group Inc (UFCS) 2024 Q2 法說會逐字稿

Good day, and welcome to the United Fire Group Insurance 2024 second-quarter conference call. (Operator Instructions) Please note this event is being recorded.

大家好，歡迎參加聯合消防集團保險 2024 年第二季電話會議。（操作員說明）請注意此事件正在被記錄。

I would now like to turn the conference over to Tim Borst, Vice President of Investor Relations. Please go ahead.

我現在想將會議交給投資者關係副總裁 Tim Borst。請繼續。

Good morning, and thank you for joining this call. Yesterday afternoon, we issued a press release on our results. To find a copy of this document, please visit our website at ufginsurance.com. Press releases and slides are located under the Investors tab.

早安，感謝您參加本次通話。昨天下午，我們發布了有關結果的新聞稿。要查找本文件的副本，請訪問我們的網站 ufginsurance.com。新聞稿和投影片位於「投資者」標籤下。

Joining me today on the call are UFG President and Chief Executive Officer, Kevin Leidwinger; Executive Vice President and Chief Operating Officer, Julie Stephenson; and Executive Vice President and Chief Financial Officer, Eric Martin.

今天和我一起參加電話會議的還有 UFG 總裁兼執行長 Kevin Leidwinger；執行副總裁兼營運長 Julie Stephenson；執行副總裁兼財務長埃里克馬丁。

Before I turn the call over to Kevin, a couple of reminders. First, please note that our presentation today may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations, estimates, forecasts, and projections about the company, the industry in which we operate and beliefs and assumptions made by management. The company cautions investors that any forward-looking statements include risks and uncertainties and are not a guarantee of future performance. Any forward-looking statements made by us in this presentation is based only on information currently available to us and speaks only as of the date on which it is made. These forward-looking statements are based on management's current expectations. The actual results may differ materially due to a variety of factors, which are described in our press release and SEC filings discussed specifically in our most recent annual report on Form 10-K.

在我把電話轉給凱文之前，有幾個提醒。首先，請注意，我們今天的演示可能包含 1995 年《私人證券訴訟改革法案》中定義的前瞻性陳述。此類前瞻性陳述是基於對公司、我們經營的行業以及管理層所做的信念和假設的當前預期、估計、預測和預測。該公司提醒投資者，任何前瞻性陳述都包含風險和不確定性，並非對未來績效的保證。我們在本簡報中所做的任何前瞻性陳述僅基於我們目前掌握的信息，並且僅代表截至做出之日的情況。這些前瞻性陳述是基於管理階層目前的預期。實際結果可能會因多種因素而產生重大差異，這些因素在我們的新聞稿和 SEC 文件中進行了描述，並在我們最新的 10-K 表格年度報告中進行了專門討論。

Also, please note that in our discussion today, we may use some non-GAAP financial measures. Reconciliations of these measures to the most comparable GAAP measures are also available in our press release and SEC filings.

另請注意，在今天的討論中，我們可能會使用一些非公認會計準則財務指標。我們的新聞稿和 SEC 文件中也提供了這些指標與最具可比性的 GAAP 指標的調整表。

At this time, I will turn the call over to Mr. Kevin Leidwinger, CEO of UFG Insurance.

此時，我將把電話轉給 UFG 保險執行長 Kevin Leidwinger 先生。

Thank you, Tim. Good morning, everyone, and welcome to our second quarter conference call. I'll begin this morning by providing a high-level overview of our results. Following my comments, Julie Stephenson will discuss our underwriting results, and Eric Martin will discuss our financial results in more detail.

謝謝你，提姆。大家早上好，歡迎參加我們的第二季電話會議。今天早上我將首先對我們的結果進行高級概述。在我發表評論後，朱莉·史蒂芬森將討論我們的承保結果，埃里克·馬丁將更詳細地討論我們的財務結果。

Our second quarter results reflect continued progress in our efforts to deliver improved performance through the strategic execution of our business plan. We remain focused on engaging with our distribution partners in the pursuit of profitably growing our business, deepening expertise across the company, enhancing our capabilities and leveraging technology to improve efficiency.

我們第二季的業績反映了我們透過策略執行業務計劃來提高業績的努力不斷取得進展。我們仍然專注於與分銷合作夥伴合作，以追求業務的獲利成長、深化整個公司的專業知識、增強我們的能力並利用技術提高效率。

Net written premiums grew 9% to $326.1 million, led by ongoing growth in our core commercial and alternative distribution business units. Core commercial growth remained steady with average renewal premium increases of 12.3%, healthy retention and attractive new business opportunities, reflecting our continued focus on profitability.

在我們核心商業和另類分銷業務部門持續成長的帶動下，淨承保保費成長了 9%，達到 3.261 億美元。核心商業成長保持穩定，平均續保保費成長 12.3%，健康的保留率和有吸引力的新商機，反映了我們對獲利能力的持續關注。

Rate increases accelerated to 9.8% with all liability lines increasing in the second quarter and improving margins above loss cost trends. The second quarter combined ratio of 105.6% improved significantly over prior year, primarily due to lower prior period reserve development, lower catastrophe losses, and improvement in underlying combined ratios.

隨著第二季所有負債額度的增加以及利潤率的提高，利率上升至 9.8%，高於損失成本趨勢。第二季綜合成本率為 105.6%，較上年同期顯著改善，主要是由於前期準備金開發減少、巨災損失減少以及基礎綜合成本率改善。

Prior period reserve development in the second quarter was neutral overall, consistent with the first quarter, favorable emergence across several lines of business enabled us to further reinforce our position against the future inflationary uncertainty challenging our industry in certain liability lines. Loss emergence remains within our expectations, and we believe these proactive steps are a prudent measure to mitigate the impact of the potential further acceleration in severity trends.

第二季前期準備金發展整體呈中性，與第一季一致，多個業務領域的有利出現使我們能夠進一步鞏固我們的地位，以應對未來通膨不確定性對我們行業在某些負債領域的挑戰。損失的出現仍在我們的預期之內，我們相信這些積極主動的措施是一項謹慎的措施，可以減輕嚴重趨勢可能進一步加速的影響。

As you will recall, in the second quarter of 2023, we significantly strengthened loss reserves as a result of investments in our actuarial processes as well as increased depth of analysis that provided a more informed understanding of our reserve position. Those investments also led to greater visibility into our underlying loss trends, and we reacted quickly to recognize the increased levels of severity observed in our liability portfolio. For the last four quarters, we've been reflecting this elevated view of trend in our analysis as well as management decisions, which has fostered greater confidence in the strength of our reserve position. We remain committed to establishing a strong and stable reserve position, providing a solid foundation to grow our business.

您還記得，在 2023 年第二季度，由於對精算流程的投資以及分析深度的增加，我們顯著加強了損失準備金，從而對我們的準備金狀況有了更明智的了解。這些投資也使我們更清楚地了解了我們的潛在損失趨勢，我們迅速做出了反應，並認識到我們的負債組合中觀察到的嚴重程度有所增加。在過去的四個季度中，我們一直在分析和管理決策中反映這種對趨勢的高度看法，這增強了我們對儲備頭寸實力的信心。我們仍然致力於建立強大而穩定的儲備地位，為我們的業務發展提供堅實的基礎。

The second quarter catastrophe loss ratio of 11.2% improved nearly 2 points over prior year and was below our historical 5-year and 10-year averages in a quarter of elevated industry losses. We continue to execute a broad range of actions to improve our property catastrophe risk profile.

第二季巨災損失率為 11.2%，比去年同期提高了近 2 個百分點，低於產業損失上升季度的 5 年和 10 年歷史平均值。我們繼續採取廣泛的行動來改善我們的財產巨災風險狀況。

The second quarter underlying loss ratio of 58.9% improved 5.7 points from the prior year, reflecting strong earned rate achievement and continued disciplined underwriting. In addition, results in the second quarter of last year were impacted by elevated surety loss activity.

第二季基本損失率為 58.9%，較上年同期下降 5.7 個百分點，反映出強勁的收益率成就和持續嚴格的承保。此外，去年第二季的業績也受到擔保損失活動增加的影響。

Our intense focus on expense management has reduced our overall cost structure compared to last year. Efficiencies in nonrevenue-generating functions have funded investments in talent and technology supporting our underwriting capabilities, shifting our cost structure toward the underwriting expense ratio. As a result, the underwriting expense ratio increased to 35.5% in the second quarter while reductions in loss adjustment expenses contributed to a lower loss ratio. We will continue to diligently manage the underwriting expense ratio down over time.

與去年相比，我們對費用管理的高度重視降低了整體成本結構。非創收職能的效率為支持我們承保能力的人才和技術投資提供了資金，將我們的成本結構轉向承保費用率。因此，第二季承保費用率上升至35.5%，而損失調整費用的減少導致損失率下降。隨著時間的推移，我們將繼續努力控制承保費用率。

The second quarter underlying combined ratio of 94.4% improved 4.8 points over prior year as a result of successful execution of our ongoing actions to improve core margins as well as normalizing surety loss activity that impacted prior year's results.

由於我們成功執行了提高核心利潤率的持續行動以及使影響上一年業績的保證損失活動正常化，第二季度的基本綜合成本率為 94.4%，比上年同期提高了 4.8 個百分點。

Net investment income increased 59.2% from prior year to $18 million on improving fixed maturity income along with higher valuations on alternative assets. Fixed maturity investment income increased 19% from prior year to $16 million as we reposition portions of our fixed income portfolio to take advantage of the current attractive reinvestment rates and further support future earnings.

由於固定期限收入的提高以及另類資產估值的提高，淨投資收入較上年增長 59.2% 至 1,800 萬美元。固定期限投資收益較上年增長 19%，達到 1,600 萬美元，因為我們重新配置了部分固定收益投資組合，以利用當前有吸引力的再投資利率並進一步支持未來收益。

Recently, we identified rating errors within our core commercial business and recorded a pretax charge of $3.2 million in anticipation of voluntarily issuing refunds to certain affected policyholders. We are committed to resolving this matter as expediently as possible and have begun working with state regulators to ensure resolution. This charge was recorded in the other income and loss line and does not impact any of this quarter's combined ratio metrics.

最近，我們發現我們的核心商業業務存在評級錯誤，並記錄了 320 萬美元的稅前費用，預計會自願向某些受影響的保單持有人發放退款。我們致力於盡快解決此問題，並已開始與州監管機構合作以確保解決。該費用記錄在其他收入和損失項目中，不會影響本季的任何綜合比率指標。

The improvements in underlying profitability were sufficient to generate an operating profit in the second quarter, excluding the impact of this rating error adjustment. We remain committed to continuing to drive improvements in our performance through strategic execution of our business plan during the second half of the year.

剔除此評級誤差調整的影響，基本獲利能力的改善足以產生第二季的營業利潤。我們仍然致力於透過下半年業務計劃的策略執行來繼續推動業績改善。

I'll now turn the call over to Julie Stephenson, our Chief Operating Officer, to discuss our underwriting results in more detail.

我現在將把電話轉給我們的營運長 Julie Stephenson，更詳細地討論我們的核保結果。

Thank you, Kevin. Net written premium in our core commercial business grew 13% to $224 million in the second quarter compared to prior year with small business, middle market and construction, all showing growth for the quarter. Renewal premium change in our core commercial business accelerated to 12.3%, with rates up 9.8% and exceeding loss trends. Commercial property premium change continued to exceed 20%, while liability pricing accelerated from the first quarter.

謝謝你，凱文。第二季度，我們核心商業業務的淨保費成長 13%，達到 2.24 億美元，其中小型企業、中型市場和建築業務均在本季成長。我們核心商業業務的續保保費變化加速至 12.3%，費率上漲 9.8%，超過了虧損趨勢。商業不動產保費變動持續超過20%，負債定價較一季加快。

As Kevin reminded everyone in his remarks, a year ago, our improved actuarial insights enabled us to more quickly recognize increased severities in our underlying loss trends. The elevated levels of trend we established at that time have been holding up over the past four quarters. We see loss trends in the mid-single digits with some easing severity pressure in property observed along with ongoing frequency improvement across the portfolio. With overall rate achievement solidly exceeding loss trends, we remain confident in our ability to maintain improvement in underlying profitability.

正如凱文在一年前的演講中提醒大家的那樣，我們精算洞察力的提高使我們能夠更快地認識到潛在損失趨勢的嚴重程度。我們當時建立的較高趨勢水準在過去四個季度一直保持不變。我們看到損失趨勢為中個位數，觀察到房地產的嚴重壓力有所緩解，同時整個投資組合的頻率持續改善。由於整體收益率明顯超過虧損趨勢，我們對維持基本獲利能力改善的能力仍然充滿信心。

Core commercial new business production increased in the second quarter with contributions across our portfolio of small business, middle market and construction. We remain pleased with the quality of accounts being added to the portfolio as we continue to improve alignment with our distribution partners and deliver additional capabilities to enhance our role as an account solution provider. Retention remained consistent and within expectations at 80% as we continue to refine our portfolio profile.

第二季核心商業新業務產量增加，我們的小型企業、中間市場和建築業務組合都做出了貢獻。我們對添加到產品組合中的帳戶品質感到滿意，因為我們不斷改進與分銷合作夥伴的一致性，並提供額外的功能來增強我們作為帳戶解決方案提供者的角色。隨著我們繼續完善我們的投資組合概況，保留率保持一致，並在 80% 的預期之內。

Our alternative distribution portfolio continued to grow, supported by increased rate and exposure on existing accounts and new business. We remain pleased with the continued opportunities offered in this space to contribute profitable and diversifying business to the UFG portfolio. We continue to manage this book to stay within a 25% share.

在現有客戶和新業務的費率和曝光度增加的支持下，我們的另類分銷投資組合持續成長。我們對這一領域持續提供的機會為 UFG 投資組合貢獻盈利和多元化業務感到高興。我們繼續將這本書的份額控制在 25% 以內。

Specialty excess and surplus lines net written premiums declined approximately $7 million from prior year as we continue repositioning our portfolio to reflect a mix of business that will produce more sustainable, consistent profitability. Surety net written premium increased approximately $3 million compared to prior year, mostly as a result of the impact of reinsurance reinstatement premiums that depressed last year's results. We continue to take a measured approach to growth, reinforcing our underwriting discipline and territory management to return the portfolio to our historic levels of profitability.

隨著我們繼續重新定位我們的投資組合，以反映將產生更可持續、更一致的盈利能力的業務組合，特種超額和盈餘險種的淨承保保費比上年下降了約 700 萬美元。擔保淨承保保費比前一年增加約 300 萬美元，主要是因為再保險恢復保費壓低了去年的表現。我們繼續採取審慎的成長方式，加強我們的承保紀律和區域管理，使投資組合恢復到歷史獲利水準。

The second quarter underlying loss ratio of 58.9% improved 5.7 points from the second quarter of 2023, continuing the momentum reflected in our first quarter results. We saw improvement across all major lines of business compared to the second quarter of 2023. Rate achievement over the last four quarters has generally exceeded our elevated but stable view of loss trends and now more fully earning into the portfolio, resulting in a favorable impact on the loss ratio.

第二季基本損失率為 58.9%，較 2023 年第二季下降 5.7 個百分點，延續了第一季業績所反映的動能。與 2023 年第二季相比，我們看到所有主要業務線均有所改善。過去四個季度的利率實現總體上超出了我們對損失趨勢的較高但穩定的看法，現在更充分地將收益納入投資組合，從而對損失率產生了有利的影響。

Additionally, prior and continued underwriting actions to reposition the portfolio are producing further improvement in our frequency trends across all the major lines of business. Combined, these efforts are driving a longer-term sustainable improvement in the loss ratio. Additionally, we have seen improved large loss activity in the quarter for property and surety lines. The large loss experience can be volatile from quarter-to-quarter, we have seen similar results in property in 2023. And current surety losses are emerging more consistent with historical profitable norms. These are early but positive signs we're building a portfolio that brings stability in our results.

此外，先前和持續的重新定位投資組合的承保行動正在進一步改善我們所有主要業務線的頻率趨勢。這些努力相結合，正在推動損失率的長期可持續改善。此外，我們也看到本季財產和擔保額度的巨額損失活動有所改善。巨大的損失經驗可能會隨著季度的變化而波動，我們在 2023 年的房地產領域也看到了類似的結果。目前的擔保損失正與歷史獲利標準更加一致。這些是早期但積極的跡象，我們正在建立一個能夠為我們的績效帶來穩定性的投資組合。

There are still some areas in the portfolio requiring further attention. Automobile continues to underperform relative to our expected levels of profitability, but we're seeing gradual improvement as prior re-underwriting and changes in portfolio mix continue to show decreased frequency, while rate is covering our severity trends. General liability rate achievement has lagged other lines recently, but a renewed focus on this effort in light of relentlessly elevated loss trends has resulted in an improved result this quarter. We will continue to focus on pricing for this line.

投資組合中仍有一些領域需要進一步關注。相對於我們預期的盈利水平，汽車行業的表現繼續不佳，但我們看到，隨著先前的再承保和投資組合的變化頻率繼續下降，我們看到逐步改善，而利率覆蓋了我們的嚴重趨勢。最近，一般責任率的成績落後於其他線路，但鑑於損失趨勢不斷上升，重新關注這項努力已導致本季度的業績有所改善。我們將繼續關注該產品線的定價。

In surety, we are optimistic this line is returning to historical profit levels. However, we are retaining a cautious position in our results until further evidence emerges. Prior period reserve development was flat overall in the second quarter. Consistent with the first quarter of 2024, loss emergence was neutral to favorable across the portfolio.

當然，我們對這條線將恢復到歷史利潤水平持樂觀態度。然而，在進一步的證據出現之前，我們對我們的結果保持謹慎立場。第二季前期儲備發展整體持平。與 2024 年第一季一致，整個投資組合的虧損情況為中性到有利。

I'd like to take a step back and remind you of the actions we've taken to shore up our reserves. Beginning in the third quarter of 2022, we began responding to greater severity pressure observed in several liability lines. In 2023, we invested in additional actuarial resources to increase the level of sophistication and analysis we bring to the reserving process and build a more comprehensive and stable framework. New insights have brought greater visibility into our true underlying exposure and emerging trends, allowing us to take more proactive steps to establish a strong reserve position.

我想退後一步，提醒大家我們為鞏固儲備所採取的行動。從 2022 年第三季開始，我們開始處理多個負債項目中觀察到的更嚴重的壓力。2023年，我們投資了額外的精算資源，以提高準備金流程的複雜性和分析水平，並建立更全面、更穩定的框架。新的見解使我們能夠更清楚地了解我們真正的潛在風險和新興趨勢，使我們能夠採取更積極主動的措施來建立強大的儲備地位。

Since the third quarter of 2022, we have added nearly $90 million to our reserves. $145 million was concentrated in our general liability, umbrella and excess casualty lines, offset by some favorable movement in other lines. Much of this increase was attributable to accident years 2019 and prior. However, a full 40% of this figure was added to the more recent experience periods, anticipating a continued escalation and severity will emerge. While initial increases were reactive in nature, we are now seeing opportunities to take more proactive steps to maintain a stable reserve position.

自 2022 年第三季以來，我們的儲備金增加了近 9,000 萬美元。 1.45 億美元集中在我們的一般責任險、傘險險和超額傷亡險上，但被其他險種的一些有利變動所抵消。這一增長大部分歸因於 2019 年及之前的事故年份。然而，這一數字的 40% 是在最近的經歷期間添加的，預計局勢將持續升級並出現嚴重程度。雖然最初的增加本質上是反應性的，但我們現在看到了採取更積極主動的措施來維持穩定儲備頭寸的機會。

For the first and second quarter of 2024, actuarial analysis indicated overall favorable development, including some favorable to neutral emergence relative to expectations in these pressured lines. Despite these positive indications, management has decided to continue to build a stronger reserve base for these liability lines that are sensitive to the future uncertainty inherent in the economic and social inflation environment. While we by no means claim victory, we are pleased with the progress made in our reserve position.

對於 2024 年第一季和第二季度，精算分析顯示整體發展良好，包括相對於這些壓力線的預期有利於中性出現。儘管有這些積極跡象，管理層仍決定繼續為這些對經濟和社會通膨環境固有的未來不確定性敏感的負債線建立更強大的準備金基礎。雖然我們絕不聲稱勝利，但我們對我們的預備隊地位所取得的進展感到高興。

Our second quarter CAT loss ratio of 11.2% was 1.8 points below prior year and below our 5-year and 10-year historical averages by 1.2 points and 0.3 points, respectively. While we could feel good about showing relative improvement in the quarter with elevated industry losses, we recognize results can be uneven for this exposure over short time horizons. And we continue to execute multifaceted strategies to improve our property catastrophe risk profile.

我們第二季的 CAT 損失率為 11.2%，比去年同期低 1.8 個百分點，比 5 年和 10 年歷史平均值分別低 1.2 個百分點和 0.3 個百分點。雖然我們對本季度行業虧損增加的相對改善感到滿意，但我們認識到，短期內這種風險敞口的結果可能會參差不齊。我們繼續執行多方面的策略，以改善我們的財產巨災風險狀況。

We are managing the exposure to severe convective storms by geographically targeted concentration reduction actions while focusing growth in more diversifying areas supported by advanced analytical tools. We continue to reduce our exposure to hurricane PML risk with more restrictive risk profiles in our most exposed states and improving the fundamentals of risk selection, pricing and deductibles across the property portfolio.

我們正在透過有針對性的降低濃度行動來管理嚴重對流風暴的風險，同時在先進分析工具的支援下將成長重點放在更多樣化的領域。我們繼續減少颶風 PML 風險，在受影響最嚴重的州採取更嚴格的風險配置，並改善整個房地產投資組合的風險選擇、定價和免賠額的基本原則。

I will now turn the call over to Eric Martin to discuss the rest of our financial results.

我現在將把電話轉給埃里克馬丁，討論我們其餘的財務表現。

Thank you, Julie. Let me start by providing some additional perspective on the expense ratio. Since the beginning of 2023, we have made meaningful changes to the size and composition of the UFG team. Since last January, total headcount has come down significantly with a 20% reduction during that time. Included in that overall headcount change is a 35% reduction in the size of the claims team from process efficiencies and declining claims frequency.

謝謝你，朱莉。首先讓我提供一些關於費用比率的額外觀點。自 2023 年初以來，我們對 UFG 團隊的規模和組成進行了有意義的改變。自去年 1 月以來，總員工人數大幅下降，期間減少了 20%。整體人員變動包括由於流程效率提高和索賠頻率下降而導致索賠團隊規模減少 35%。

At the same time, we have made significant investments in technology and talent that will help us grow our business in a profitable way over the long term, and we are already seeing the benefits of blending these fresh perspectives with those of our long-tenured UFG employees. This is having a meaningful shift in the geography of our overall expense base, which has increased for underwriting, but decreased for claims.

同時，我們在技術和人才方面進行了大量投資，這將有助於我們長期以盈利的方式發展我們的業務，而且我們已經看到了將這些新鮮觀點與我們長期任職的UFG 觀點相結合所帶來的好處僱員。這使我們的整體費用基礎發生了有意義的轉變，承保費用有所增加，但索賠費用有所減少。

It's easy to see part of the impact of this shift in our underwriting expense ratio remaining elevated. However, we are seeing larger benefits from the reduced costs in our claims organization that shows up in the loss adjusting expenses included in our loss ratio. So far this year, our combined underwriting and loss adjusting expense ratio has declined from 2023. Overall, we are making progress in reducing expenses. It's just not yet showing up in the underwriting expense ratio. We will continue to manage our overall cost structure down while making the necessary investments to achieve sustainable profitable growth.

很容易看出這種轉變對我們承保費用率的部分影響仍然很高。然而，我們看到索賠組織成本降低帶來了更大的好處，這體現在我們的損失率中包含的損失調整費用中。今年到目前為止，我們的綜合承保和理賠費用率較 2023 年下降。總體而言，我們在減少開支方面正在取得進展。只是尚未體現在承保費用率上。我們將繼續控制整體成本結構，同時進行必要的投資以實現可持續的獲利成長。

Turning to the investment portfolio. Total invested assets and cash ended the second quarter at $2.1 billion, a high-quality portfolio with an overall credit rating of AA- and a duration of approximately four years. The transition of fixed income portfolio management to our partners at New England Asset Management has already begun to show benefits.

轉向投資組合。截至第二季末，總投資資產和現金為 21 億美元，這是一個高品質的投資組合，整體信用評級為 AA-，期限約為四年。將固定收益投資組合管理轉移給新英格蘭資產管理公司的合作夥伴已經開始顯現出效益。

In the second quarter, we began repositioning our portfolio away from its high allocation of tax-exempt municipals into high-quality fixed income assets, offering more attractive tax equivalent yields in order to take advantage of the current elevated interest rate environment. In total, we invested approximately 20% of the fixed income portfolio in the second quarter at an average yield of 5.6%, which is significantly higher than the total portfolio yield. This high volume of asset purchases at attractive yields will enhance shareholder returns for years to come.

第二季度，我們開始將投資組合從高配置的免稅市政資產轉向高品質的固定收益資產，提供更具吸引力的稅收等值收益率，以利用當前高利率環境。總的來說，我們在第二季投資了約20%的固定收益投資組合，平均殖利率為5.6%，明顯高於投資組合總收益率。以有吸引力的收益率進行的大量資產購買將提高股東未來幾年的回報。

Net investment income was $18 million in the second quarter, up $6.7 million or 59% compared to the second quarter of 2023. Increased valuation on limited partnership and alternative assets contributed $5 million of the increase in investment income. Fixed maturity investment income increased nearly $3 million or 19% from prior year to $16 million in the second quarter.

第二季淨投資收益為 1,800 萬美元，較 2023 年第二季增加 670 萬美元，增幅 59%。有限合夥企業和另類資產的估值增加貢獻了 500 萬美元的投資收入成長。第二季固定期限投資收入比去年同期增加近 300 萬美元，或 19%，達到 1,600 萬美元。

With the portfolio repositioning I mentioned occurring throughout the quarter, this quarter's already improved results do not fully reflect the benefits of the actions that have been taken. There was approximately $1 million of realized losses in the second quarter generated by this repositioning, which will be paid back very quickly.

隨著我提到的投資組合重新定位在整個季度發生，本季已經改善的業績並沒有完全反映已採取行動的好處。此次重新定位在第二季產生了約 100 萬美元的已實現虧損，該虧損將很快得到償還。

Second quarter net loss was $0.11 per diluted share with a non-GAAP adjusted operating loss of $0.07 per diluted share. These results, along with a slight increase in the unrealized loss position, resulted in book value per common share decreasing to $28.68. From a capital management perspective, during the second quarter, we declared and paid a $0.16 per share cash dividend to shareholders of record as of May 31, 2024, continuing our 56-year history of paying dividends dating back to March 1968.

第二季攤薄後每股淨虧損為 0.11 美元，非 GAAP 調整後營業虧損為攤薄後每股 0.07 美元。這些結果加上未實現虧損部位的略有增加，導致每股普通股帳面價值下降至 28.68 美元。從資本管理的角度來看，第二季度，我們向截至2024年5月31日在冊的股東宣布並支付了每股0.16美元的現金股息，延續了我們自1968年3月以來56年支付股息的歷史。

At the end of May, we completed a debt transaction with Ares Management Credit funds and two other partners that have provided us with $70 million of regulatory and rating agency capital. We are pleased to support the company's growth on attractive terms given the ability to reinvest these proceeds at an interest rate around 5.5%.

5 月底，我們與 Ares Management Credit 基金和其他兩個合作夥伴完成了一項債務交易，這兩個合作夥伴為我們提供了 7,000 萬美元的監管和評級機構資本。鑑於能夠以 5.5% 左右的利率再投資這些收益，我們很高興以有吸引力的條件支持該公司的成長。

This concludes our prepared remarks. I will now have the operator open the line for questions.

我們準備好的演講到此結束。我現在讓接線員打開電話詢問問題。

(Operator Instructions) Paul Newsome, Piper Sandler.

（操作員說明）Paul Newsome、Piper Sandler。

Good morning. Thanks. Thanks for the call. I wanted to ask a little bit more on the expense line. If I plotted the LAE ratio and the expense ratio combined, would I see the total fall this quarter or recently? Or is it the combined still -- I mean, maybe just ask the question, if I could -- if I had the LAE ratio, would it be up or down in the quarter --?

早安.謝謝。感謝您的來電。我想多問一些關於費用的問題。如果我將 LAE 比率和費用比率結合起來繪製，我會看到本季或最近的整體下降嗎？或者是合併後的結果 - 我的意思是，也許只是問一個問題，如果可以的話 - 如果我有 LAE 比率，該比率在本季度會上升還是下降——？

I'm sorry to interrupt. Good morning, Paul. This is Eric. Yes, you would. So if you plotted the LAE ratio from the first half of last year to the first half of this year or you looked at Q2 over Q2, you'd see that coming down a couple of points. And that's a combination of expense ratio staying flat, up a little bit and claims costs coming down over that same time.

抱歉打擾了。早安，保羅。這是埃里克。是的，你會的。因此，如果您繪製從去年上半年到今年上半年的 LAE 比率，或比較第二季的情況，您會發現該比率下降了幾個百分點。這是費用比率保持平穩、略有上升以及索賠成本同期下降的組合。

Okay. That's great. Then maybe a little bit more on the ratings error situation. Obviously, it sounds like you just discovered it, so it's early days. But I've never seen anything like this before. So I really don't know how to begin in terms of especially about the implications or the size. It looks like a manageable number, more of an earnings issue than a book value issue. But any thoughts in terms of maybe history of this or if you've seen anything like this before? And just to give us a sense of the importance of it.

好的。那太棒了。然後可能會更多地了解評級錯誤的情況。顯然，聽起來您剛剛發現它，所以現在還處於早期階段。但我以前從未見過這樣的事情。所以我真的不知道如何開始，特別是關於影響或規模。它看起來是一個可控的數字，更多的是收益問題而不是帳面價值問題。但是對於這件事的歷史或是你以前是否見過類似的事情有什麼想法嗎？只是為了讓我們意識到它的重要性。

Hi. Good morning, Paul. It's Kevin. And so I can't really speak to the broader issue around rating errors. All I can speak to this morning is the fact that you're right, this is a relatively new issue to us identified in July. And so we're in the process of doing further investigation on both the umbrella and general liability product lines as well as other lines to ensure that there are no further rating error issues in the portfolio. And obviously, we're in the process of having conversations with state regulators.

你好。早安，保羅。是凱文。因此，我無法真正談論有關評級錯誤的更廣泛的問題。今天早上我能說的就是你是對的，這對我們來說是 7 月發現的一個相對較新的問題。因此，我們正在對傘式和一般責任產品線以及其他產品線進行進一步調查，以確保投資組合中不存在進一步的評級錯誤問題。顯然，我們正在與州監管機構進行對話。

And so at this point, we've recorded an estimated liability based on the information we have available to us at this time. And as we indicated in the press release, that could change as more information becomes available to us. But we're diligently working through this issue, and we'll have more to share as it becomes available to us.

因此，此時，我們已根據目前掌握的資訊記錄了預計責任。正如我們在新聞稿中指出的那樣，隨著我們獲得更多信息，這種情況可能會發生變化。但我們正在努力解決這個問題，一旦有更多資訊可供我們分享。

Maybe a related modeling question. Is it fair to say that the $3.2 million was sort of what you overcharged those new customers last year? And so if we're looking at sort of a run rate for revenue, do we just take $3.2 million and start with that as a base? Is that a good way to approach it? Or is it more complicated or different than that?

也許是一個相關的建模問題。公平地說，這 320 萬美元是去年你們向新客戶多收的費用嗎？因此，如果我們要考慮某種收入運行率，我們是否只需要 320 萬美元並以此為基礎？這是解決這個問題的好方法嗎？或比這更複雜或更不同？

So I think as you look at the $3.2 million, we -- that's included right now in the revenue section, but as an other gain or loss. I think as we get this onetime item behind us, going forward, we don't think there's a significant premium impact from a run rate perspective after we get this onetime impact past us.

所以我認為，當你看到 320 萬美元時，我們——它現在包含在收入部分中，但作為其他收益或損失。我認為，當我們把這個一次性的項目拋在身後時，展望未來，我們認為，在我們獲得這個一次性的影響之後，從運行率的角度來看，不會產生重大的溢價影響。

Okay. We'll take it on. It doesn't make any sense to me, but I could be very confused. And anyway, that's -- those are the two big questions I had for you. Thank you. I appreciate the help as always.

好的。我們會接受它。這對我來說沒有任何意義，但我可能會感到困惑。無論如何，這是我要問你的兩個大問題。謝謝。我一如既往地感謝您的幫助。

(Operator Instructions) This concludes our question-and-answer session. I would like to turn the conference back over to Kevin Leidwinger for any closing remarks.

（操作員說明）我們的問答環節到此結束。我想將會議轉回凱文·萊德溫格 (Kevin Leidwinger) 發表閉幕詞。

Well, thanks again for joining us this morning, and we'll talk to you next quarter. Thank you.

好吧，再次感謝您今天早上加入我們，我們將在下個季度與您交談。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。