Q2 2020 Fednat Holding Co Earnings Call
And welcome to the said not holding company second quarter.
Conference call My name is excellent and I'll be your conference operator this morning.
All participants will be ambition.
Before we begin to be school I'd like to remind everyone that discomfort scored being recorded the smell broad gaslog <unk>.
Oh gosh.
Finally, today's call will be at billable by webcast with me later this afternoon and capital by visiting.
Investor Relations section sadness website at Www Dot dot dot com.
Now I'd like to turn the call Mr. Bruce Kelley.
For Fednat Investor Relations right.
Thank you operator.
Good morning, and welcome again, but not second quarter 2020 conference call.
Our earnings release and prepared remarks include references to non-GAAP measures such as adjusted operating income.
We use these non-GAAP measures to provide greater transparency and a more meaningful they shouldn't comparison to prior years results.
Our non-GAAP.
Reconciliations from GAAP measures to the non-GAAP measures are available in our earnings release.
Dick mentioned this conference call that are not historical facts are forward looking statements.
Words, such as you anticipate estimate expect predict project and other similar words or phrases aren't tended to identify forward looking statement.
The matters discussed on this call that are forward looking statements are based on current management expectations involving risks and uncertainties that may result in these expectations not being realized.
Actual events outcomes and results may differ materially from what is expressed or forecasted in forward looking statements made on this call due to numerous risks and uncertainties, including but not limited to the risks and uncertainties described in this conference call. Our press release issued yesterday and other filings made by.
The company with the FCC from time to time.
Forward looking statements made during this conference call speak only as of today's date and fed not specifically disclaims any obligation to update or revise any forward looking statements to reflect new information future events or circumstances or otherwise.
Now I will turn the call over to pet not Chief Executive Officer, Mike Braun.
Thank you good morning, and welcome to our second quarter 2020 Conference call Rod Jordan, Our Chief Financial Officer, and Air Fernandez, Our Chief accounting officer or on the call with me today.
I'm going to give an overview of the quarter then Ron will provide more details on the financial results. Then we will open the call to questions.
Before we discuss our second quarter results, we wanted to acknowledge the ongoing challenges that countless Americans are experiencing within the states in communities in which we operate our hearts continue to go out everyone affected by the coded 19 pandemic.
That is committed to the safety and well being of all of our stakeholders, especially our staff policyholders and partner agents.
I want to recognize our employees, who continue to demonstrate incredible resilience and dedication while providing the highest quality service to our policyholders agents during the crisis. The vast majority of our staff continue to work remotely as they have since we put our business contingency plans in place back in March as we restated going away.
Released or first quarter results in May we do not expect the code at 90 pandemic to directly impact said, that's underwriting results, but since the pandemic is having such a wide spread impact on the economy, there could be impacts to fed Nat.
We are continuing to closely monitored the situation and more specifically within the states in communities in which we operate to track and adjust our operations to any long term effects that may develop.
Turning now to our second quarter results as previously announced early in July. The main story line in the quarter was 48.3 million a pretax net catastrophe losses, driven by high number of severe weather events in Florida and across the entire southeast region of the country.
We also preannounce that we strengthened reserves my 7.5 million pretax and our Florida homeowners line of business for prior accident years, primarily related to the 2019 accident year.
We proactively took this action because the property claims environment within Florida continues to be challenging.
While the number eight it'll be lawsuits continues to decline sharply a powerful plaintiffs bar in Florida remains diligent in finding avenues to bring the litigation against insurers as a result adverse experience continues to impact our financial results plus outpace the rate increases that we have implemented.
As such we continue to limit or appetite to write new business within Florida until our premiums more accurately reflect these increased costs.
Our strong 2021 reinsurance program has been successfully plays with our reinsurance providers and provides us approximately 650 million a private reinsurance for our non Florida States plus an additional 650 million alignment within Florida for approximately one.
Point $3 billion first event coverage in excess of 31 million at an aggregate cover of 1.9 billion.
Total cost of 265 million.
Subject to adjustments at different points in time in the coming months [laughter]. We also recently purchased additional reinsurance that lowers our retention.
As low as 10 million for potential second and third events inside of Florida as detailed in our prior public disclosures. We are pleased with a high quality of the participants in our reinsurance tower and we continue to appreciate the strong support we receive from our reinsurance partners.
Having addressed our primary headwinds, let me turn to the execution of our strategy to drive improved operating results and capital efficiency in the second half of 2020 and beyond.
Our efforts are ongoing to improve the profitability of our Florida homeowners book of business by continuing to raise rates and restrict new business. We have a 7.4% statewide average increase that took effect on June 15th and have since filed for an additional 5.6% increase related to.
Higher reinsurance costs, which if approved will take effect in October.
Monarch also also recently filed for rate increases within Florida, averaging over 12% plus we have rate filings pending in Texas, and Louisiana, which I will touch on in a moment.
Ron will share additional specifics, but in aggregate filed rate increases across all states all along with cost increases that are still early now well add $65 million of incremental gross earned premiums on our existing book of business within calendar year 2020.
One compared to Twentytwenty.
Throughout Florida during wind season unexpected policies in force to continue to decline throughout the balance of this year.
I have continued our long term strategy of shutting policies that are not meeting our expectations.
Comparison to 2017 athlete illustrates the point.
Policies enforced in Florida at the end of the second quarter in 2017, I'm sorry in the current years 230000, a decline or 15% from 272000 at the end of 27 team.
Premiums and for Us in Florida are down by less than that due to our rate increases, indicating a strong trending higher average premiums per policy. We expect that trend to continue given the filed rate increases that are yet to earn out.
To put a finer point on it over the past three and a half years, our cumulative rate increases in Florida have reached 36%.
And factoring in the impact of compounding the cumulative percentage grows to 42%.
We have clearly demonstrated that we have the discipline to limit growth in our Florida book until our proved range or more in line with higher claims and reinsurance costs that we continue to incur.
The profitability of our non Florida homeowners business, excluding the impact of severe weather jobs continue to meet our expectations in the second quarter.
We remain focused on our long term growth strategy of expanding profitably and more attractive coastal homeowner markets outside of Florida.
Markets continually I'm, sorry, currently have a more favorable operating environment, including less litigation and more flexibility in terms of setting rates.
We continue to be pleased with the performance of makes on and what our strong partnership assayed shore, we significantly improved capital efficiency of our relationship with Sage during the second quarter by entering into a new 50% quota share reinsurance treaty with anchor read and Arizona domiciled wholly owned.
Reinsurance subsidiary of same store.
This treaty became effective on July one and will run through June 30, 2021, with the expectation of an annual renewal.
This quota share will not have any impact on said mats pretax operating results as it essentially mirrors the existing 50% profit share arrangement, which continues to be in place, but it will affect components of the combined ratio, including a reduction to net earned premium.
We expect that our insurance carrier said now well received statutory surplus relief from this quota share treaty.
Just as we're doing in Florida, we continue to seek rate increases and maintained strict underwriting discipline in our non Florida markets to increase profitability.
And I see has filed for a rate increase of over 9.5% in Texas and Louisiana to take effect in November and if approved.
Matt.
If approved in November and May scientists file for 15.9% increase in Louisiana to take effect in November if approved.
Our investment portfolio performance was solid in the second quarter, which Ron will discuss in more detail.
Quarter was highlighted by a strong rebound in the equity markets. After the declines of the first quarter.
I'd now its balance sheet and capital position remains solid and will enable us to maintain a strong commitment to returning value to our shareholders through our dividends.
On a periodic share repurchases.
After several successful months of purchasing back our shares at below book value, We paused US initiative early in the second quarter.
In light of the unknown challenges associated with the macroeconomic environment.
Well as weather losses at that time.
Prudently focusing on the maintenance of our capital base.
We have remaining authorization 10 million in buybacks at our disposal for the balance of Twentytwenty.
Our board will continue to make decisions on repurchases based on market conditions and the capital needs of the company.
No our repurchases typically are quite limited during wind season.
Looking ahead, we are continue to move forward with our strategy of optimizing homeowners book in Florida until we achieve adequate rates and focusing on profitable growth and more attractive markets outside of war.
A dedicated staff and network a partner agents will allow us to continue to meet the needs of our policyholders and generate value for our shareholders.
Now I'll turn the call over to Ron to go with the financials in more detail.
Thanks, Mike and good morning, everyone.
As Mike mentioned, our results were impacted in the second quarter by a high number of severe weather events, which included hail windstorms tornadoes and even a wildfire. We also stepped up to ongoing challenges in our Florida homeowners business. Both in terms of prior year and current your accident reserves, including having book the current.
Accident year at 42.5% year to date for F and Icees, Florida business.
At the same time, we were pleased with the profitability of our non Florida business, excluding the cat losses and remain committed to our long term strategy of focusing on profitable growth opportunities outside of Florida.
Now, let's dive deeper into our second quarter results as previously disclosed in our 8-K filed a few weeks ago. Our pretax net income was reduced by 48.3 million from catastrophe losses net of all recoveries, including reinsurance.
There were 14 Pcis designated cat events in the quarter, including tropical storm Crystal ball, plus a Florida Panhandle wildfire.
Aggregate gross losses from these events, where $94.2 million. These gross losses were reduced by approximately 46 million of recoveries from three sources 33 million under our excess of loss reinsurance treaties 2 million under our Florida quota share Treaty and 11 mill.
In pursuant to the profit share agreement in place related to F and Icees non Florida business.
Net pre tax cat losses in Florida were 21.5 million, followed by Texas with 14.8 million and Louisiana with 11.3 million the remaining $700000 of losses related to South Carolina and Alabama.
In terms of income statement geography, the result, as approximately 59 million of losses flowing through the loss and LAE E line item with the $11 million profit share benefit flowing through commissions and other writing underwriting expense as such these storms added approximately 53 points to our loss.
[noise] ratio.
And 43 points to our combined ratio in the quarter and reduced our earnings by approximately 30.7 million or $2.24 per share.
Consequently, our net loss in the quarter was 21, and a half million or $1.57 per share compared to net income in last year's second quarter, a 7.1 million or 55 cents per share.
Adjusted operating loss in this years second quarter was 28.1 million or $2.05 per share compared with adjusted operating income of 5.7 million or 44 cents per share in last year's quarter.
The primary adjustment between net income and adjusted operating income and this year second quarter was 10.4 million of pretax investment gains, which I'll touch on a little later.
Gross written premiums grew 21% year over year to approximately 205 million eclipsing the 200 million Mark for the first time with non Florida gross premiums written up 114% offset by a decline in Florida premiums of 5%.
Impacts that are the direct result of the execution of our strategy.
We are continuing to restrict underwriting in our Florida book until our rates are stronger with respect to higher claims in reinsurance costs.
We continue to be pleased with our expansion into coastal homeowners markets outside of Florida, which we believe provide attractive opportunities for profitable growth our percentage mix of non Florida gross written premiums increased to 39% in the second quarter compared to 22% for the same period last year.
Our policies in force in non Florida markets increased to 149000 at the end of the second quarter compared to 60000 last year up 148%.
While we're pleased with this growth in policies, we are focused on profitable growth and as Mike discussed we have file for additional rate increases in Texas, and Louisiana that would go into effect in November different proved.
Now let me give you some specifics on the total impact of our rate increases are expected to have based on the multiple rate increases we have filed including past increases that are still earning out.
We are on track to generate over 31 million of incremental premium in 2020 compared to 2019, including over $20 million more in the second half of 2020 as compared to the second half of 2019.
This is a critical point of comparison, given the higher ceded catastrophe reinsurance costs that took effect on July one of this year.
And to round out this particular topic, we expect that once fully earned out in the fourth quarter of 2021. These increases will have contributed over $65 million of incremental premium as compared to 2020 and over 97 million of incremental premium as compared to 2019. So as you can see.
We have a clear path to enhanced profitability in the next 12 to 18 months.
Now, let's turn to our investment portfolio, we generated investment gains of 10.4 million in the second quarter due primarily to $7.1 million of realized gains from fixed income securities as part of our overall approach to de risking the portfolio and managing our statutory capital.
We also had 3.3 million of equity unrealized gains from mark to market adjustments as equity markets rebound in in the second quarter. Following declines in the first quarter as of June 32020 are fixed income portfolio carries an overall composite rating of a up from a minus as of March 31.
And does not include a single below investment grade security.
Portfolio duration stands at 2.8 down from 3.5 as of March 31, we were pleased with our demonstrated ability to continue to execute our investment thesis preserving capital and maintaining liquidity as we look to mitigate risk across any economic scenario.
Our balance sheet capital structure and capital position remains solid during the quarter. We ended the quarter with cash and cash equivalents of 164 million and liquidity of approximately 70 million in our holdco and non regulated subsidiaries as of June Thirtyth.
Book value per share was impacted by the cat losses and reserve strengthening in the quarter end declined by about $1 sequentially to $16 in 18 cents per share.
We slowed our repurchases in the second quarter not buying back any stock. After the end of April we repurchased approximately 277000 shares in the quarter at an aggregate cost of 3.25 million in total we have repurchased 1.038 million shares since the close of the May.
Action on December 2nd 2019, representing well over 7% of shares then outstanding we remain committed to responsibly returning value to shareholders through our dividend and share repurchases as appropriate.
To wrap up we remain focused on growing profitably in our more attractive non Florida homeowners markets and continuing to raise rates under strict growth in Florida. As stated a few moments ago filed rate increases that are either pending or already approved are expected to largely offset the impact of higher cat reinsurance costs.
The second half of 2020, and we'll add $65 million of incremental premium in 21 as compared to 20.
As we continue to closer and we continue to closely monitor our business for any potential impact from the pandemic, including managing our investment portfolio conservatively to enhance capital preservation and liquidity and with that I'll turn the call back over to Mike.
Great. Thank you Ron operator with that we would like to take some questions. If you can open up the lines. Please.
Okay.
As a reminder to ask the question Weve depressed far one on or telephone.
A question press the pound again, that's our wanted to ask questions.
First question comes from the write off.
Greg Peters.
Okay.
Let's.
The step back I know you provided some comments around Florida.
I would like to get a better understanding on.
At this point going forward, how youre setting your reserves for the 2020 accident year. So we don't have another.
Reserve head when we're at this point next year in other words, Yeah, maybe you can tie this and Mike and Ron with the discussion around what are the legal challenges you're facing and this post a or b.
Reform of marketplace. The continue to challenge the company.
Okay in terms of the in terms of the legal environment Greg.
Clearly ASV was a significant headwind for a number of years and we did have a or B reform.
In July of last year, so that piece of the puzzle has decreased but but there continues to be some of that.
Those scenarios that work through the book with the data loss prior to that but really what I would say is.
The legal environment has evolved.
Around that that that's cure and while our it'll be suits are down massively and our total suits are down.
From prior year, we're still seeing some challenges with that Ron can go in more detail on the math, but in terms of what we're picking for reserves. This is the highest ratio at 42 and a half that we've ever been reserving at this is a book of business that was trending at about 30.
For for a number of years up until five years ago and since then we have continuously raise rates as we've seen challenges in the claims environment.
And have not seen any corresponding relief in the Attritional loss ratio, let me say slightly different our attritional loss ratio has actually increased faster than our rate increases have so I think line can give more color on that.
[noise] yeah.
I guess to start 42.5% loss ratio.
On a book that had all of these rate increases.
Is the equivalent is even stronger than that relative to the book that we had two years ago three years ago before these rate increases.
I you know we use a big four actuarial firm.
And they don't like to Miss and we don't like them to Miss and our board doesn't like them to Miss.
So what I can tell you is we're always appropriately booked and recorded.
Relative to the actuarial best estimates.
That's always been the case, but I can also tell you Greg that with recording this 42.5% year to date for 2020.
In my time here, you know as CFO I, certainly would say I am I'm as confident or or more confident in our reserves of prior years and current year as I've ever been.
In my time here as far as they will be reform goes.
Our attitude is that it would look there has clearly been us a sharp drop in it'll be related suits.
But there are other avenues for losses as we all know.
And the plane as far as creative and and.
You know worked hard at their crap.
With that said.
We are seeing in the first half of 2020, we have seen a decline in the total number of suits not just say obesity split total suits, we've seen a decline in the first half of 20 versus the first half of 19 with all that said.
We and our actuaries are not assuming any goodness, we're not counting any chickens before they hatched.
And till beneficial trends show up in the last triangles, they don't exist and that's our attitude and we feel good about.
Our reserve position on both prior year end current year.
Thanks for that answer maybe as a follow up on that Ron maybe you can give us an idea when you. When there is a first notice of loss. How do you go about setting you know a case reserve and I'd be NRE and how do you go about.
Stablex showing that number for potential litigation.
Yeah, and I'm sure, Mike will jump in and supplement but it all starts Greg with with careful historical analysis of our past trends in our past cost triangles. So if our average severity for a given cause of loss, let's say is $8500.
Then the second that Fnl comes in we put up that average severity that historical average severity of $8500 at that point. The claims adjusting process begins including claims adjusters getting out and inspecting and so within a fairly quick timeframe.
Of.
The the ethanol well that 8500 dollar historical would be adjusted to an actual expectation based on the.
Adjusters review of the case.
From there obviously.
You know there's different path it could go.
Our strong objective is to quickly and fairly pay and settle that claim.
Because that's going to be the best outcome in the long run for both the policy holder and for us.
When there are delays that's when a third parties may get themselves involved and that can end up being a worst experience for the for the policyholder as well as for Us and Mike I don't know if you have anything to add.
Yeah, absolutely Greg I mean based on once again, Ron said, we set the initial reserves at ethanol, while the adjuster continuously works to file and adjusts case reserves as appropriate throughout the claim life and in terms of bulk reserves those are lost strike.
Goals that are continuously monitor.
And once again going from a 30% attritional loss ratio in five years time to 42% that is a massive increase it's been painful for us for our shareholders for our policyholders and we have felt that but it's even more remarkable when you. When you look at the amount of great that we've taken Simon.
Pena's, which is 36%.
Which is compounded to 42% simultaneous to that Weve restricted the book of business in excess of 50 to 60000 policies it's truly.
An interesting time and what we've seen in Florida, I believe Florida has taken a small bites of the Apple They will be reform I think more work is needed and chill the legislators and act more reform.
It's going to limit to limit the appetite of us another insurance companies.
And so our rates more accurately reflect these trends and that's why you're seeing the state entity citizens experience, a quite a bit growth and there's a lot of documentation out there as well.
So so now that you're at a 42% attritional.
Loss ratio.
And Thats your assumption why what why are you not approaching the Florida, all IR and saying we need even more rates what is our governor at this point at this juncture on how much more rate you can get to get that number back down.
Yes, Greg where we're going back continuously.
So in terms of rate not only did we take rate in the beginning of the year.
We we took seven and a half 7.4% we filed in January that became effective in June add that immediately the day, we announced our reinsurance we filed an additional 5.6%.
And then we've.
We've also having another rate filing and I'm speaking about Florida, Nic homeowners and we already have another filing ready to go and right now as it stands I believe that the current rate filings should be approved within the next 30 days.
And I anticipate another rate filing going end of approximately 8%. So let me clarify you can only have one rate filing in at a time based on that line of business.
And the question may be well why would you need additional rate increases and what we're doing as we're taking the indication as these numbers become available. So soon is that reinsurance cost was known to us and those policies were bound the reinsurance contracts, we went and filed and now that we're seeing them.
Current year in prior year were immediately going back to the department and asking for additional rate to ensure that thats.
Reflecting in our in our premiums.
Got it thanks, Thank you for the detail.
The other question I have would be around the relationship assayed sure.
And you know you in the reinsurance the new reinsurance program. There is a quota share which means that now when there's catastrophe losses et cetera outside well in the business related to that they're going to share in some of those losses. So can you spend a minute.
And talk to us about.
The capital position assayed sure. If they have you know if we have an active hurricane season outside of Florida in the markets, where they've written business on your behalf.
Do they have the capital to pay for these claims is there going to be a reinsurance collection issue.
We're going to be facing at some point in the next year.
You know Greg.
Same store has been a long term partner of ours for more than a decade in a variety of.
Businesses that you know that we've been involved with them. They are there they produce business for us. Its 100 5000 $60 million plus book of business. There's always been a profit sharing 50 50 profit share.
With them that Weve never had issues and they are a well run well managed company.
That are that have a capital to support those operations. We've recently transitioned the profit share into a quota share, which really does not impact financials from a.
A simplistic statement however from a statutory perspective it provides capital relief on a statutory base for the carrier, which which creates benefit obviously, so so we're comfortable with their capital position. We're we appreciate the partnership we it's been.
Been successful and we're going to continue continue with that we believe they've got the capital to to maintain and the operations that they've always had.
Got it thanks for the answers.
Thank you Greg have a good day.
Again, if you'd like to ask a question press Star then the number one on your telephone keypad.
Your next question comes from the non US dollars from beginning to National Sir Your line is open.
Hi, good morning, gentlemen.
Good morning.
I think a lot of these issues are way up you know include Fad nap, but they also are bigger industry issues.
When I read that the industry he add up the Florida in terms into three had a 684 million dollar underwriting loss and.
In 2019.
And then a net loss of $340 million. This he asked to get some people's attention.
Can you can you talk about the at and I do you see.
Anybody standing up and helping fashion at any other Florida carriers.
Yes. Good question, Doug So there's been a substantial headwinds in the Florida property market not only for fed Nat it's not exclusive to us at all and it's the whole, Florida property markets and I think the Florida or why are the office of insurance regulation and specifically the Commissioner Commissioner.
There has been very vocal and has tried to educate the legislators.
And inform people as best we can but but honestly, we have not yet seen.
The action that we need to see.
To contain these costs absent that well, we will not grow the book of business. We will therefore take additional rate and its truly amazing how much rate that we've taken over the last four to five years ice as I just stated we've got rate filings pending.
We've got more rate filings going in.
And it's unfortunate because I think these costs can be better contains with a more fare environment.
We're adapting and once once our rates is more reflective of these costs. We may increase at appetite. The biggest challenge we see in the state of Florida is primarily related to Orlando, where that the change in the Attritional losses.
But to have moved materially over the last three to four years materially and we've seen our rates go up in excess of 50% that's really unfortunate for the policyholders really goes.
So a lot of its related to the attritional losses to a lesser extend it is related to our increased reinsurance costs.
As well as weather events and the reinsurance costs went up this year and in particular it was noted that the reinsurers have re evaluated the risk of weather within Florida, driven by the claims of arb and and or Ammos losses for the industry have continued to.
To come in on nearly three years out so so rate as needed.
I'm hopeful for legislative action to make it a more fare environment to contain costs, but I don't see anything on the the near horizon for that Doug.
Yeah, well the other thing that I'm reading as citizens now with the adding to 2000 policies a week, which shows that I mean, the crisis in Florida.
He is growing.
They were hit a lot of success shrinking their book and now it's going the other way it seems like it's going to rapidly expand again.
Yes, so very good way run citizens and I think he does a great job not only running it but but really the transparency in the being an advocate for reform. He does not want to grow he's been very successful and shrinking that.
So I do see citizens continuing to grow.
Back to what we can do with that.
We have no problems growing the business within Florida, but but have no desire to do so on the only challenge that could occur would be citizens as count that how much rate. They can take so they're kept at a color of 10%. So if the industry continues to move at double digit.
Rates and citizens does not citizens will become even that much more competitive and will attract that much more business and it's well documented the risk to the entire state of Florida, when citizens becomes too large a decade ago, They had 1.5 million policies.
Not the amount of risk retained by the state in that scenario.
What is a significant so once again hope to see reform and sell that we're going to continue to restrict business until our rates more accurately reflect these increased costs.
Okay I think that's all good and I also would hope that maybe the the five Florida companies. The five publicly comp public companies could maybe worked together to talk.
And get the the word out.
Right from news about one of the law firms and Florida that was involved in a large number a large number of litigation a large amount of litigation being powered by the Supreme Court.
I doubt that would seem to indicate that there is really.
Oh, you know organized and organized approach to ripping off these insurance companies could you maybe talk about that for a minute.
Yes in terms of.
The the plaintiffs bar, there very well organized and their effective in what they do.
You're correct the industry could probably do a better job.
There are different organizations, but that that the insurance carriers work with and participate in but but I think the carriers are always reluctant to do that.
For a variety of reasons, so so I think that education.
That the commissioner has provided in the past.
There is very effective and hopefully the legislators are receptive to that information and that education and not only the commissioner has done a great job of that I think a very getaway running citizens I think he's done a great job as well and I think as these rate increases our felt by the policy holders across the state of Florida by all carriers.
Hopefully then.
That will stimulate a response.
For meaningful reform to hold these rates now, but until then rates are going to continue decline.
Okay, well, thank you for answering the questions and being available to the shareholders.
Thank you didn't have a good day.
Okay grants to ask a question for 100 telephone keypad.
Yeah. The question for from field Bromo from valued partners. Your line is open.
Great. Thank you I had a quick question Mike on your comment a moment ago about the rate increases.
I think you mentioned seven point.
0.4% January the 5.6% after the reinsurance and then you have another 8% for.
Later this year plant and that's all for if I might have and I see.
The question I had was.
Is there any limitation on a 12 month period.
How much right you can file for.
For you might have to go before a public rate hearing to and then.
You might slow down the process at all because if I, if I add those all up and it seems like they're all over cumulatively, we would be over like 15% that I think of.
Requiring a public rate hearing it I just wondering if that if there's any.
Road blocks or anything that could slow down the approval process.
Yes in terms of rate filings your corrective, it's 15% or more statutorily that there needs to be and rate here.
And the department has the ability I believe that they can wave off an under certain circumstances, if it's less than 15% if the if the department would like they can how they raise hearing so it really becomes mandatory once you're at 13 and above so my my statement, what these rate filings expense.
Finally, when you need so much rates and I say, so much rate when it's more than one or 2% I call that so much rain and and tying the time elements is significant in regards to these rate filings. So we do take a smaller bite any apple we try to keep these rate filings as cleaner and.
As possible so that they can get through as quick as possible.
So it is possible that we will have a hearing it is possible it could be delayed and that is part of our strategy, which is taking what we believe is appropriate and these indications are not being afraid to take these these rate increases as quick as possible. So what's driving this rate.
That we're going to be taking once this one's approved and the answer is additional pressure on these loss ratios. So were quick to act on that we are telling you that we have new information that the attritional loss ratio is continuing to have pressure and we're passing that through unfortunately, it hurts the income statement as an expense, but as you recognize.
Is that as you feel that.
It allows you to go ahead and put these filings and with the state not to remediate the challenge on a go forward basis. That's time is important.
Got it okay.
So it's still really.
Summer, it's really up to the away our whether they want to look at the three rate filings as a combined filing.
Whether they ask you additional question that's fair you're correct.
This could we could have a rate hearings and we have no issue with the rate hearing.
Once again, we are preferences is to keep these rate these rate filings quick and simple.
However, we will not shy away from from a rate hearing there are a few rate hearings that are scheduled to have them I believe in the next week or so for a few of our competitors and others that have occurred and there's there's really no fear of them.
And I think it actually may create additional transparency.
For the for the public benefit.
But once again.
Our our indications are inclination is to take rate as quick as we can one we're seeing such such large movement in our experience.
Got it okay that makes sense and then just switching gears for the your quota share with that you renewed was there any major changes to the structure and I'm thinking of any changes to cat sub limits or.
Ceding commissions or anything in that quota share.
No no stance changes.
Yeah.
Great. Thank you that's all ahead.
Thank you will have a good day.
Okay. There are no further question at this time.
I would now like because there are no flowerings back to Mike.
Thank you.
Thank you all for participating on today's call before we close I want to once again recognize our fed Nat community, including our staff partner agents and policyholders. Our team continues to rise to the occasion in these unprecedented times, maintaining our commitments excellent service and stringent underwriting. These efforts along with the continued strength of our balance sheet and.
Natural position will enable fed that to continue returning capital to shareholders and build long term value with that everyone have a great day and thank you for procure participation.
Ladies and gentlemen, this concludes todays conference call thing from Tony You May now disconnect.
[music].