Q2 2020 BRP Group Inc Earnings Call

Greetings and welcome to the B R. P group Inc. second quarter 2020 earnings call.

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It's now my pleasure to introduce your host also rock director of strategy and partnerships. Thank you you may begin.

Thank you operator, and good afternoon by now everyone should have access to our earnings announcement in slide presentation, which where do we used prior to this call and which May also be found on the Investor relations portion of our let's say I bought one risk partners dotcom.

Where we got began our formal remarks or a minor that part of our discussion. Today may include forward looking statements, which are based on the expectations estimates and projections of management as of today.

The forward looking statements in our discussion are subject to various assumptions risks uncertainties and other factors that are difficult to predict and which could cause actual results to differ materially from those expressed or implied in the forward looking statement.

These statements are not guarantees of future performance and therefore undue reliance should not be placed upon that.

We refer you to our recent filings with the FCC, including our form 10-Q filed today for a more detailed discussion of the assumptions risks uncertainties and other factors that could impact the future operating results and financial conditions I'd be RP group, including those related to the potential effects of the covert 19 pandemic on our business.

Financial condition and results of operation.

On this call we refer to the effects of covert 19 and related government shutdown stay at home orders business closures travel restrictions, social dispensing and other preventative matters business disruption economic contraction and covert 19 related developments by generally referencing Kobe 19 or the pandemic.

We disclaim any intention or obligation to update or revise any forward looking statements except to the extent required by applicable law.

Also our discussion today will include references to certain non-GAAP measures. A reconciliation of these measures to the most comparable GAAP measures can be found within our earnings announcement and earning supplement slide presentation. Both both posted on our website at <unk> Dot ball wouldn't Miss partner Dot com or in our SEC filings. In addition.

This call is being webcast and an archived version will be available after the call on our Investor Relations portion of our website with that I'll now hand, the call. It the Trevor Baldwin Chief Executive Officer up ERP grip.

Thanks, Austin and good afternoon, everyone welcome to our second quarter 2020 earnings call. We appreciate youre, taking the time to join US and your interest in the RP group during today's call I'll provide some brief highlights on our accomplishments during the quarter, Brad Hail, our Chief Accounting Officer will then provide a more.

Detailed review of our Q2 results and Chris we back our Chief Financial Officer, well wrap up with a few quick comments on our balance sheet and certain expectations regarding our outlook for the future well then open up the line for questions to start off and said simply Q2, what's the best quarter, we've had as a public company.

And potentially ever when you consider the broader economic landscape for the quarter, we recorded year over year organic revenue growth of 19% and total revenue growth of 55%, marking another quarter of industry, leading growth highlighting our differentiated go to market strategies across our business.

And our ability to nimbly adapt to a rapidly evolving and challenging operating environment, notably we continue to see accelerating momentum in our EMEA the future business, which grew revenue 39% in the quarter and for the first time is now included in our organic growth figure we could not have accomplish these.

Results without the incredible commitment and engagement of our colleagues of home I could not be more proud and their unwavering support of our valued clients. During this challenging time on the partnership front, we continued to execute on our strategy successfully adding five new partners. The gen.

<unk> rated annualized revenue of over 47 million, including significant additions in our middle market group that we covered previously on our announcement call in early June.

Including two new partnerships announced in July our year to date total stands at 11 completed partnerships, representing 82 million of annualized revenues looking ahead in terms of number size and quality of opportunities. We believe that our current partnership pipeline is the best has been an account.

And he's history. This allows us to continue being highly selective and laser focused on firms with industry leading talent.

Unique and additive expertise and firms that we feel confident will help facilitate our goal to deliver double digit organic growth well into the future regarding covert 19.

Situation continues to evolve, but as evidenced by this quarter's results our business is performing well and we believe that remains well positioned to do so going forward, taking a step back since inception, we have been exceptionally thoughtful about building a resilient business, they can thrive and tougher economic conditions and.

We think our Q2 results are confirmed validation of our efforts. This is the culmination of years, a sensible investing in our infrastructure. Our go to market strategies, our partnership strategy and the hiring in development of fantastic people to serve and support our clients.

One final note on the colleague front before I turn the call over to Brad. The I'd go in announcement, we made in early July we're thrilled to welcome Aaron King as our new Chief colleague Officer earn joins us from publics, a fortune 100 company, where she most recently served as human resources director.

Publix isn't a lead list is on an elite list of just a few companies to be awarded fortune. One hundreds distinction of that's companies to work for 21 consecutive years since the awards inception in 1998.

And environment, Aaron was integral to creating and nurturing.

She is aligned to our colleague and client first vision and as walk the road. We plan to continue building with that I'll turn the call over to Brad to go into more detail on our Q2 results.

Thanks, Trevor and good afternoon, everyone on the call.

For the second quarter, we generated revenue grew 55% to $51.3 million.

Revenue growth was driven once again by our hybrid growth model, namely organic growth combined with contributions from new partnerships.

Organic revenue growth for the quarter up 19% include the first time, our MGM the future platform, which we onboarded on April 1st of last year.

Given the partnerships are an important portion of our ongoing growth strategy and our regulatory filings. We also provide revenue metrics on an unaudited pro forma basis.

This provides investors with a more apples to apples comparison as if our 2020 partnerships had been acquired on January 1st 2020.

Our second quarter 2020, unaudited pro forma revenue was 55.8 million.

60% from the prior year.

Not at a pro forma information should not be relied upon as being indicative of the historical results. It would have been obtained if the partnerships that occurred on that day, nor the results that may be obtained in the future.

GAAP net loss for the second quarter, 2020 was 7.9 million or 18 cents per fully diluted share.

Adjusted net income for the second quarter off 2020, which excludes share based compensation amortization and other onetime expenses were 6.5 million or 10 cents per fully diluted share a.

Hey table reconciling GAAP net income to adjusted net income can be found in our earnings release, and our 10-Q filed with the FCC adjusted EBITDA for the second quarter of 2020 rose 84% over the prior year period to 8.4 million.

Adjusted EBITDA margin was 16% the second quarter 2020, compared to 14% and the second quarter 2019.

Recall, we had noted on our prior call we'd expected adjusted EBITDA margin for the second quarter 2020 to be akin to fourth quarter level, given the pandemic and our ongoing investment.

Three things to note as we think about our business is seasonality and the timing of our revenue recognition over the next few quarters.

First as we mentioned in the past our adjusted EBITDA margins are seasonal in nature with Q1 being the strongest quarter, while we usually record lower margins in the second half the year.

Second as we do every quarter in the earnings supplement available on our IR website, we updated the quarterly pro forma financial statement.

Reflect the partnerships we closed in the second quarter as if we on those partners businesses since the beginning of the year.

You will see a significant increase in Q1 revenue versus what we presented last quarter, which is predominately driven by the two deals we announced on June 1st Rosenthal in TV, a RV yet.

Hi, some additional clarity regarding aggregate seasonality of partner firms. We have also added a new line to our year to date completed partnerships disclosure on page 10 of the earning supplement we released earlier this afternoon.

As a reminder, the pro forma financials, we present, our not projections of future performance.

Lastly, as Trevor mentioned, our partnership pipeline is as strong as it's ever been.

The timing standpoint related to future acquired revenue. We currently anticipate deal closings to be almost exclusively in the fourth quarter.

As a reminder, the exact timing of partnerships are subject to change.

As we have provided in the past results for our individual operating segment can be found in the earnings up on that on our Investor Relations website.

We won't go into all four segments in detail in our prepared remarks.

It didn't want to spend a moment R.M. here the future platform given the continued momentum in that business.

CNG a continued to outperform in the quarter growing 39% compared to the prior year period.

During the quarter policies enforced increased by nearly 45000 from March 30, Onest 2020.

We expect the M. Jay will continue to significantly contribute to our goal of sustainable double digit organic revenue growth and as we've previously mentioned, we remain focused on deploying extremely efficient and highly scalable AMG technology within new products that can be distributed across the entire PRP platform with limited.

And in many cases, no customer acquisition costs.

Also as a number of analysts and investors had been more focused on their renters insurance space over the past few months, we thought it may be helpful to provide a few specific incremental highlights in our business.

Well, we ended the quarter with 445988 policies as of August 12 policies enforced climb to over 474000 has no meant and continues to accelerate.

On June Thirtyth, we had our single largest new business they ever selling 2483, new policies. However that is now only the third best ever eclipsed on July Thirtyth, and then again on Friday July 31st when we sold 3218 policy the third.

First of July is traditionally our largest new business day of the year.

Despite growing this quickly we continue to many maintain loss ratios materially better than what we believe is the industry average of approximately 65%.

As of July 31st our MGM the future business employed just 29 full time colleagues, which includes the colleagues currently focused on the rollout of our home and flood insurance products.

As such our 474000 policies enforced gives us a ratio of one colleague poor little over every 16000 policies, which we believe is industry, leading comparing favorably to both industry incumbent and those in the ensure tech arena and a testament to the quality and efficiency.

The technology.

Lastly, a few stat on our success penetrating our current footprint and continued runway for growth.

We said in the past that amongst our distribution partners, we have around 15 million renters units and our cooler current footprint.

Which is a third of the approximately 45 million total rental units across the that.

As of July 1st 2020 are renter solution was turned on within buildings that represent approximately 6.7 million units versus 4.6 million units a year ago.

So we are having very good success working with distribution partners to make our solution available and more of their buildings.

It's still have ample running space in terms of turning on our solution and all 15 million units and our current distribution partners footprint.

And this is even before considering the opportunity set tied to additional future distribution partners.

From a penetration standpoint, we've also been doing a better job capturing a higher percentage of renters within the buildings in which our solution is available.

As an example, a year ago, our penetration of the 4.6 million units in which our solution was available was 6.6%.

Among those same 4.6 million units today, our penetration stands at 7.5%.

So in summary, we feel good about the runway ahead of us in the Mg of the future as we continue to turn on units in our footprint add new distribution partners and increased penetration amongst our existing distribution partner network.

With that I'll now turn the call Chris.

Thanks, Brad and good afternoon, everyone on the call a few closing remarks before we hit today.

During the quarter, we took multiple steps to bolster our balance sheet, which positioned us positions us to continue investing in the growth of our business our people and new partners in June we upsized, our revolving credit facility by 100 million to a total size at 400 million importantly, with no adverse changes the terms or duration, expanding our bank group and maintaining our low cost of capital.

We also brought 135 million of new equity capital onto the balance sheet be a follow on offering which leaves our large today slightly over onex, which we believe positions us to capitalize on the news on the partnership pipeline that Trevor mentioned at the outset and that is as good as it's ever been.

As we've said in the past we continue to believe that three and a half to four acts as a prudent run rate for our business and we'd be comfortable taking leverage opportunistically up to around four and a half the situation warranted.

As we move ahead, we expect the broader economy will continue to be impacted by coven 19 for the balance of this year and into 2021. However, the resiliency of our business model and growth strategy continues to be evident in our performance. Thanks to our commitment to investing in our technology our tools at our people as such going forward, we still feel confident.

And our ability to generate low double digit organic growth in this environment.

In closing, we will obviously continue to closely monitor the macro environment, but as we stand here today, we're very happy with our second quarter results, where as confident as ever and the quality durability and growth of the business and we have never been more bullish on our partnership pipeline.

With that I. Thank you for your time, we'll now open up the call for to you in <unk> operator.

Thank you we will now be conducting a question and answer session.

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Our first question has come from the line of Greg Peters of Raymond James. Please proceed with your question.

Good afternoon, PRP group, Oh, I guess I'd like to.

Go back to a bunch of the commentary Brad provided around the retro product.

And maybe you just start from a perspective of talk to us about the persistency of your customers in all four of your segments and I know in particular, it's been an issue of concerned with other companies and Medicare and in the apartment business. So maybe you can give us.

Some perspective on how your persistency is holding up.

Yeah, Hey, Greg This is Trevor I hope you're doing while this afternoon. So as we think about and and look at persistency in our business doing our middle market segment, we believe that in a low ninetys and we've not seen any material change to that over the path.

Few months and into the coven period.

When we looked at our Medicare business.

We believe our approach of going to market, where we're engaging through communities to bring solutions to our clients where are they feel most comfortable that enables us to build a very strong relationship with our clients and.

So as planned to change where their providers decide.

That they may change their network of plans that they accept.

That relationship in turn enables us to be their trusted advisor ultimately.

The one that they come back and reach out to two provide advice on what other plan options may be available. So ultimately we believe that our go to market approach enables us to deliver I, you know more or a more favorable retention rate than many of our appeal.

There's a that are focused on a maybe more internet or call center driven sales styles.

And our energy the future business and in particular, the renters product you know persistency on a policyholder basis.

As you know certainly not what you would see in a traditional homeowners or middle market client segment, but what we get more focused on is the kind of persistency of the unit in the building because that's what we're really tied to his distributing through.

The property management and software providers.

That are overseeing those buildings and so while one renter may.

End up moving out and not necessarily retaining our products. What we're focused on as are we obtaining the next ran or that's coming into that unit.

And we haven't disclose specifics around that retention rate.

But we believe that our overall retention relative to peer renters solutions is above average.

And the main street business.

Yeah. The mainstream business. We you know, we see high eightys to low Ninetys overall retention.

And Craig I would add on <unk> on the renters were Brad commented on it was probably how we look at persistency, where you know if you look at the kind of buildings, we're active in at our penetration.

Increased year over year June 30, the June 30, and so that's exciting to see from the business and that's kind of more how we think about it.

I guess, you know just sticking with the renters for a second you know if maybe you could comment on how your.

Acquisitions costs match up with the revenue you're generating because in some of these other models.

Its become.

Painfully clear that they're in reality cashflow negative for a couple of years and really need the persistency to.

To.

To be high in order for them to actually get to the promised land up cash flow positive surprise apps. You can just comment on your business model interest relates to cash flow and acquisition costs.

Good question, Greg So the day, we bind renters policy its cash flow positive for us our acquisition cost on that business.

Is built in a in a manner that as soon as that policy is is bound we have we have made a profit ER and as such that's why.

The Jay the future business has been profitable now for over three years and has no growing healthy stream of cash flow.

And then just you stick on the renters. The how's the integration going I know when you talked about the Rosenthal.

Ah acquisition, you talked about revenue synergies in part through the M. She has a future.

How does how are you doing with progress in that front.

Yeah. So we've held a couple of strategy calls between the MD the future team and the Rosenthal team.

You know the first really kind of 90 days in a new partnership is focused on really successfully onboarding and welcoming our new colleagues in a manner that is consistent with who we are and in our culture.

And then we really get focused on deploying our go to market capabilities and tools to really help enable you know accelerated growth. So I'd say, we're in the beginning stages of rolling out those kind of cross sell revenue opportunities between.

Them in the energy of the future and and that's probably a process that's going to take a few quarters before we really began to see some real traction.

Got it thanks for those answers Oh, one last numbers question I noticed that you had a.

An increase in payables and the cash flow statement can you talk about what was going on there.

Yeah, Greg. Thanks. This is Brad it's a it's just a function of a building of advanced premium payments for a lot of July effective.

Which was just a timing thing for the core.

Got it thanks transfers.

Yeah. Thanks, Greg.

Thank you. Our next question is coming from the line of at least Greenspan with Wells Fargo. Please proceed with your question.

Hi, Thanks, Good evening on my first question.

Get more color on on nice deal pipeline. So I guess, a couple of questions related to that I think you like need some comments about field.

Fourth quarter.

Just wanted to understand what we're told that supports the Q4 and then I had said that.

Likewise.

Yes, we ended the quarter right and then <unk> down.

25 million in July so what's the pay down just due to the fact that.

It's still would have to GAAP cash on hand for deals that might be immediately and see the leverage jobs no pick off ads.

I just trying to tie.

Yes.

Hey at least it's Chris I'll, probably take 'em backwards, absolutely to the to the second you're seeing kind of where the the pipeline is hitting as we said, it's the best pipeline we've ever had.

And so knowing that it's probably going to close in Q4, we basically paid down the line. It's a revolving line. It gives us 300 million more a a buying power to execute on stuff in Q4, and so it's purely kind of treasury management in terms of why we we paid down we had done something similar last December if you remember I'm just just say the you know.

Tens to hundreds of thousands of dollars incrementally you know again, the pipelines that the strongest as Brad said in the comments as we look to win closings may happen, we feel like we closed a couple of small things in Q3, but the majority would be in Q4.

And again those things are always little subject to to change, but its the best pipeline, we've ever had theres a lot of reasons why some folks depending what happens with the election would Wanna get stuff done in Q4, and that's where we're trying to provide some guidance as people try to plan you know when they acquired revenue hit.

That's why I'd also point out in the Investor supplement we did try to take what we've closed year to date and as Brad said lay that out from a phasing standpoint.

So that you all can can more easily see how things may have happened historically, what with the revenue that we closed on year to date.

Okay. That's helpful. And then in terms of pipeline you in there on can you give us a sense the size of deal.

No maybe.

[laughter], let's just like the smaller deals.

The in the pipeline. It like you know just to give us a sense right up what side.

For the number of deals than just revenue to think about what could potentially close in the point where.

Yeah, Hey lease this is Trevor what we can say is a the pipeline of partnership opportunities and the firms were and meaningful dialogue with today represent the largest overall pipeline.

Collection of the largest firms we've been in dialogue with in the history of our organization and frankly, among the highest quality organizations.

That remain independent across the U.S., we are exceptionally excited about the organization that that were in dialogue with.

Okay. That's helpful and then in terms of margin.

Hi.

Well Mark he points out right your seasonality there.

And that typically or.

No we fund.

Obviously, there was some level that's going into Q2, so how should we think about investment combined with by somebody else.

Oh, so you're usually for a margin. So how should we think about excuse me into Q4 markets either compared to last year.

Yeah.

Yeah, well you sell taste I want a a couple of things you know we laid out the six so sticks phasing and kinda pro forma margins and what you'll see is a decent amount of revenue did end up kind of hitting in Q1, I think we took pro forma revenue in Q1, all the way up to 78 million and so that's important when looking at the rest of the.

Year in terms of where margin is gonna be.

From.

A statement, we definitely are seeing a big opportunity to keep investing in this market right. I think we made the right call. In Q2, two you know be kind of front footed and lean into investment opportunities and we've seen a few of those already pay off.

Here and we think there in a pay off going forward and so we continue to make investments into Q3, So I'd say just from a promote.

Modeling standpoint, you know probably we don't want to take margin back from Q2, but if he wants something for Q3, probably hold the Q2 on a pro forma margin is a good place to be <unk>, a little bit of it. It's just you know how many investments will make but we probably won't take it back so I would say hold it study for now.

Okay, and then last one from me graduate 40 jobs that 11% organic in the quarter Backout, yes.

Which is still just to back it out because that's pretty good growth.

Other business days on it sounds like from your commentary that there was nothing really one time. It just if we were you provided some good growth figures on the policies within the energy business, but well then everything else. The you know that 11% also feel like a good run rate.

Right, the or even given some of that called big related headwinds.

Yeah, I mean, I think look 19% organic overall, what the NJ, obviously, you know when it countries down 32% on GDP and were plus 19, that's 50 points better.

We don't want people to reset say or they're going to grow at 19%. All the time right. We've said, we think this business, 10% to 15% in the long run you know for Q3 itself I think you've heard from other brokers, it's probably going to be the low quarter a for the industry in terms of you know the covert impact, especially depending what happens a stimulus so.

I would say on the lower side of the 10 to 15 or if you're looking for kind of in the interim where we think we're going to be you know obviously you know.

It's a fluid situation, but you know we still feel really good as you pointed out you know Q2 was exceptionally strong we feel good about that kind of double digit going forward, but would would tell folks to think on the lower aside for now just given the uncertainty.

Okay. Thank you I appreciate all the color.

Thankfully.

Thank you. Our next question is going through a line of Meyer Shields KBW. Please proceed with your question.

Thanks.

Hello, Hello, I guess I'm seeing question I know last quarter, we talk about how a lot of the regions are operating in we're doing relatively well with pandemic and I know I'm thinking, Florida, specifically that were increases in infection, hopefully, they're slowing down now, but if you could talk a little bit about sort of the month to month.

On the progress in your geographic footprint.

Yeah, Hey, Mayor this Trevor so you know a few things as we look at the impact the combined impact of rate and exposure.

On our book through July in the Middle market business. It sits at roughly 3%.

And and you know and the commercial line side of our business it fits at roughly 1%.

So do you think about kind of the the relative impact of rate and and then client exposure or you know, we're seeing pretty healthy rates similar to our peers you know so call it high single digits and and so think about the offset to that as shrinkage.

And the exposure units out of our client base, you know revenues payrolls headcount, but you know importantly, what I would say is that despite the fact that kind of the relative you know tailwind or impact of combined rate and exposure was was.

Call. It you know plus three for US, we meaningfully outgrew that and that's a function of our ability to continue to win in onboard new clients at a rate that meaningfully exceeds our industry peers, you know some more specifics on kind of how that's that's too.

Trending is you know, we've really seen it kind of hold steady and and that you know a plus three plus two for the past few months. So it's not you know, it's not materially moving up or down and I think it's worth thinking about.

What the future looks like there is a sense that Q3, and potentially Q4 could end up being tougher as a lot of businesses burn through the stimulus dollars that came out in March and April and have to make some tough decisions about read sizing their businesses to the amount of economic that activity.

But that's occurring you know as we look at our existing client days and you know what the impact of been year to date I think about as an example, or.

Restaurant hospitality in lodging clients, who are on a through July.

The that revenue that's been renewed is down about 24%.

And so that you know includes exposure units shrinkage, but then offset by you know the positive rate were saying, so I'm pretty material impact and I think you know were this you know our performance. Despite these headwinds really comes back to the investments we've been making.

On our platform the ability we had to quickly pivot and equip our risk advisors with the tools needed to really be successful and this virtual environment.

As we look at the M. Jay the future as is just another kind of data point and we think about some of the geography that for more meaningfully impacted.

Over the coming on net older back half of Q2, new policies issued and the state of Florida, a were up 45% new policies issued in the state of California were up 45% year over year. So I think really again high.

Lighting, the resiliency and durability of that tech enabled distribution model that we've built out there.

Okay, but that's really highlights that quick question I guess for better for credit looking at the slide with pro forma revenues.

This year's partnership and it's tremendously helpful. There unusual in the seasonality of expenses for those companies.

No not per se only in that obviously, our commission expenses Mirror Our commission revenue.

So you know when commission revenue is higher we'd be accruing the associated Commission expenses.

But but nothing to call out specifically on the expense side.

Maybe this trend right I would add you know when when you looked at our business when when you've got seasonally high revenues margin tends to be meaningfully higher because we do have certain costs that are more fixed such as you know our operating expenses client service and admin payroll that doesn't fluctuate.

With the revenue base you know so you know in those periods that are seasonally high you would expect to see materially better margin and in those periods. There was seasonally low you would expect to see lower margin.

Okay. That's helpful. And then just final question you touched on just a little bit, but im just trying to get a sense as to.

Hello, sellers or thinking about the prospect of.

A political change or higher capital gains.

Coming into effect next year, how material that seems to be.

You know over the past probably 30 days mayor. It then something that's become that started coming up I wouldn't say it is a deciding factor for why people or are making decision to potentially partner, but it's a contributing factor.

Sure.

Particularly as we get closer to the election.

And and so you know on the margin I'd say, it's it's probably helpful. As we look at the kind of pipeline and amount of deal flow we have in the back half the year, but it's it's really only you know for people that are saying, okay. If I'm going to do potentially do something in the next three to five years.

As.

There's there's probably a reason to accelerate that into 2020 <unk> rather than wait.

Perfect Okay, great. Thanks much.

Yep.

Thank you. Our next question comes from the line.

Hello, saying zone of JP Morgan. Please proceed with your question.

Hi, good afternoon, I wanted to dig a bit more in the segment organic growth numbers. So if I'm doing my math correctly seems like middle market had a pretty good quarter about 15% organic.

That means treat the Medicare a bit soft I just wanted to talk that talk about that a bit was it the same factors driving the softness there as the first quarter.

[noise]. So you know Pablo as we said with Mainstreet, Yeah. There was some contingent income headwind that we're going to serve a you know that we're going to proved to be headwinds through the second quarter and and then in our Medicare business, you know, where we do serve a arqule.

And you know in the communities in places where they are feel most comfortable the you know the kogan environment, certainly impacts our ability to get in front of people in the same way.

So as we think about you know what that means for the Medicare business you know weve.

And making some pretty meaningful investments to position ourselves for success in the back half the year and ATP and we launched our digital marketplace under the guided Medicare solutions brand.

About a month and a half ago and we've already sold our first are enrolled our first members on Medicare advantage plans do that platform.

Which is really enabling our agents to be able to have a completely digital enrollment experience with their clients and plant members. So we're excited about that and as we think about the Medicare or the main street business as we discussed you know the contingent income headwinds.

Will likely begin turning into real Tailwinds, you know and in Q4 and through a 2021 as the rate action against flowing through the book of business that that we're saying.

Got it and then.

Second question is about that Miss I. My question is how do you sort of square the strong performances emphasize again see no rental market that seems to be seeing some laws Trust you know whether in terms of renewals or new Lisa I guess. The question is are you seeing some of those trust us in your portfolio and how come how comfortable are you going around and like what are you doing that's helping you.

Grew around those potential headwinds.

Yeah. So you know Pablo I I think what a highlight to that our ability to grow you know the renters. A book of business is not necessarily tied to people signing leases.

And because of our tech enabled distribution model of integrating through you know the software providers. The times are managing rent payments or other kind of interfaces with the tenant. It really provides a venue for us to be providing a renters insurance solution to them.

Got it on an ongoing basis and so we continue to improve our ability in partnership with our distribution partners.

To go to market that solution and to get in front of them as highlighted by the increasing penetration and a kind of turned on units in our and our distribution partners. So portfolios.

Got it and just a follow up on that Trevor would it be fair to say that as long as occupancy rates stay stable and they have been stable I guess in you know that section of the portfolio that you were company Records now we should sort of expect continued growth is is that a fair sort of way to think about the renters market from a macro level that's really.

Hi.

Yeah, I think that's a fair way to think about a problem.

Okay. Thank you.

As a reminder, if he would like to ask your question. Please press star one on your telephone keypad.

Uh huh.

There are no further questions at this time I will now turn the call back over to Trevor Baldwin for any closing remarks.

Thank you everyone for joining us a we are super pleased with the performance of our business and the strength of our colleagues to help us.

Really deliver for for our clients there and what was a really challenging environment and we look forward to speak went to everyone.

And in a few months to talk about Q3. Thank you.

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

Have a great day.