Q2 2020 Protective Insurance Corp Earnings Call

2 million of the gain related to fixed income.

9.2 million gain related to equities.

And we did have a 600000 loss from limited partnerships.

What's not seen in the income statement is another 22 million and pre tax fixed income gains that were recognized through comprehensive income.

Total pretax investment gains for the quarter were approximately 33 million.

During the quarter, we recovered and most of the fixed income portfolio losses experienced in the prior quarter.

Fixed income gains in the quarter were driven by high quality corporate and treasuries.

Our CMBS investments have yet to recover value. However, we review portfolio and securities regularly and remain confident in their performance.

We estimate that our investment portfolio gained approximately seven and a half million.

In value during July, which equates to approximately 53 cents per share pretax.

Given the pandemic driven market volatility and economic uncertainty, we further de risks our investments by reducing ex equity exposure by $34 million during the quarter.

At the end of the first quarter of 2020, we recorded a valuation allowance on our deferred tax asset tax assets of 4.9 million.

Due to the gains on our investment portfolio during the second quarter of 2020, the value valuation allowance was reduced by 2.5 million to 2.4 million.

Finally, due to our strong investment gains and income from core business operations book value per share increase.

By $2.11 during the quarter to $23.64 per share.

As a reminder, we have posted our press release quarterly financial statements and a brief presentation reviewing our first quarter results on our website.

With that we will now open up for QNX.

Thank you if you would like to ask your question. Please press star one I knew telephone keypad.

For me should kill indicate your line is in the question Keith.

You May press star too if you like to remove your question for the Q.

Participants easy speaker equipment and may be necessary to pick up your handset before pressing the sorry.

Once again in this star one on your telephone keypad Lilo size fairway Momenta poll for questions.

There are no questions at this time.

Actually we just got a question come in and that is from.

Gee, we Wiggins with pain Valley capital. Please proceed.

Hey, Thank you very much good morning.

Good good to see what's happening on the underwriting side. My question was was about the investment portfolio.

Appreciate the comments.

Giving a little bit of color about what you're doing with fixed income, but specifically on the CMS.

Sort of sounded like you had a meeting with de risk that part of the portfolio because the prices.

I haven't really recovered.

I assume the underlying performance of this property is still pretty ugly.

And even if the prices haven't recovered.

You can always get worse, especially is that.

It's not as involved in the markets at some point if that ever happened so or is your plan just to ride it out and LCOS prices come back for better or worse.

Thanks.

Yes, great question, obviously, one that we spend a lot of time.

Asking ourselves.

Thank you kind of disposal on with your analysis.

Certainly wouldn't use the word hope.

We we we are planning on.

On writing out those assets until they until they mature.

And the way that we participate in the structures are those CMBS, we feel that we are in an excellent position in those structures.

And we we do not view them as being anything other than ultimately money good.

Okay. Thanks.

As a reminder to star one on your telephone keypad, if he would like to ask a question and we will just size propane now that could pull for questions.

Our next question is from Brett Reece with Janney. Please proceed.

Hi, gentlemen.

The.

Progress on the reduction in the combined ratio, which was encouraging to see.

But if if.

Driving traffic to return to.

Pre coal good level.

We'll let you know.

Well, we see that kind of like buy back up can you talk about that a little bit.

Yeah.

First of all night nice to hear me Brett.

Yes, and instead theory I'm going to think about was how I asked that question because I as I said to you in the last two earnings calls.

We believe we'll hit that 99.9 combined ratio in Q4 this year and we believe it will hit that irrespective of any frequency benefit caused by kogut.

We we did get a.

And I hate to cooler benefit.

The mathematical advantage and keep this quarter because of frequency because as fuel vehicles and the roads.

However, our loss ratio also came down significantly because of the work that we've done on underwriting with rate, earning through for the shifted the mix of business.

And that loss ratio.

Our plan our full cost in our conviction is that the loss ratio will continue to come down given earnings patents on the premium that was written over the last 12 months next quarter and the following quarter and into 2000 and and 21.

We we anticipate a small frequency benefit in the next quarter and possibly even in the fourth quarter, but that's that's pretty good.

Going to how to look about in the rear view mirror with how many vehicles are on the roads, but weve, but we certainly anticipate that our run rate loss ratio and combined ratio.

I would continue to come down.

Prospective all the frequency benefit and we still feel very good about the 99.9 target that we've put out there for a full for Q4.

Then obviously.

Moving into an underwriting profit for full year in 2021.

Great all right. Thanks for taking my question Dave.

Yeah, you too.

Hi, I once again, we look is really a brief momenta poll for questions.

Yeah, I know my questions at this time I would like to turn the conference back over to management for closing remarks.

Okay.

Thank you very much thank you for listening.

As I said in my opening comments, so we feel really good about our progress.

I feel really good about where we where where we are and what opportunities are in a in all markets.

We appreciate your your continued support.

Thank you and and stay safe.

Thank you. This does conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

Please hang up and try your call again, if you like assistance, please dial zero and Italys operator, we'll be happy to help you.

Please hang up enjoy your call again, if you like assistance, please dial zero and Italys operator, we'll be happy to help you.

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[laughter].

Okay.

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