Q1 2024 HCI Group Inc Earnings Call
Kelly: Good afternoon, and welcome to HCI Group's first quarter 2024 earnings call. My name is Kelly, and I will be your conference operator. At this time, all participants will be in a listen-only mode. Before we begin today's call, I would like to remind everyone that this conference call is being recorded and will be available for replay through June 7, 2024, starting later today. The call is also being broadcast live via webcast and available via webcast replay until May 8, 2025, on the Investor Information section of HCI Group's website, www.hcigroup.com. I would now like to turn the call over to Matt Glover, Gateway Investor Relations. Matt, please go ahead.
Good afternoon, and welcome to HCI groups first quarter 'twenty 'twenty four earnings call. My name is Kelly and I will be your conference operator.
Matt Glover: At this time, all participants will be in a listen only mode. Before we begin today's call I would like to remind everyone that this conference call is being recorded and will be available for replay through June 7th 2024. Starting later today. The call is also being broadcast live via webcast and available via webcast replay until may.
Kelly: 820, 25 on the Investor information section of HCI group's website Www Dot HCI group Dot Com I would now like to turn the call over to Matt Glover Gateway Investor Relations Ma'am. Please go ahead.
Matt Glover: Thank you, Kelly, and good afternoon, everyone. Welcome to HCI Group's first quarter 2024 earnings call. On today's call is Karin Coleman, HCI's Chief Operating Officer, Mark Harmsworth, HCI's Chief Financial Officer, and Paresh Patel, HCI's Chairman and Chief Executive Officer. Full and Karin's operational update.
Matt Glover: Thank you Kelly and good afternoon, everyone welcome to HCI groups first quarter 2024 earnings call.
Operator: On today's call is Kevin Coleman.
Speaker Change: As Chief operating Officer, Mark <unk>, Chief Financial Officer Paresh.
Matt Glover: Paresh Patel, Hei's, Chairman and Chief Executive Officer.
Pareshbhai Suryakant Patel: Following <unk> operational update Mark will review, our financial performance for the first quarter of 2024, and the parents will provide a strategic update.
Matt Glover: Mark will review our financial performance for the first quarter of 2024, and then Paresh will provide a strategic update. To access today's webcast, please visit the investor information section of our corporate website at www.hcigroup.com. Before we begin, I would like to take the opportunity to remind our listeners that today's presentation and responses to questions may contain forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Words such as anticipate, estimate, expect, intend, plan, and project, and other similar words and expressions are intended to signify forward-looking statements.
Matt Glover: To access todays webcast. Please visit the Investor information section of our corporate website at Www Dot HCI group Dotcom.
Matt Glover: Before we begin I would like to take the opportunity to remind our listeners that todays presentation and responses to questions may contain forward looking statements made pursuant to the private Securities Litigation Reform Act of 1095.
Matt Glover: Words, such as anticipate estimate expect intend plan and project and other similar words and expressions are intended to signify forward looking statements.
Matt Glover: Poor-looking statements are not guarantees of future results and conditions but rather are subject to various risks and uncertainties. Some of these risks and uncertainties are identified in the company's filings with the Securities and Exchange Commission. Should any risks or uncertainties develop into actual events, these developments could have material adverse effects on the company's business, financial conditions, and results of operations. HCI Group disclaims all obligations to update any forward-looking statements.
Matt Glover: Forward looking statements are not guarantees of future results and conditions, but rather are subject to various risks and uncertainties.
Matt Glover: These risks and uncertainties are identified in the company's filings with the Securities and Exchange Commission.
Matt Glover: Should any risks or uncertainties develop into actual events. These developments could have material adverse effects on the company's business financial conditions and results of operations.
Matt Glover: CAGR disclaims all the obligations to update any forward looking statements now with that I'd like to turn the call over to Kevin Coleman, Chief Operating Officer Karen.
Matt Glover: Now with that, I would like to turn the call over to Karin Coleman, Chief Operating Officer. Karin?
Karin Sue Coleman: Thank you, Matt and welcome everyone in the first quarter HCI group reported pretax income of $77 $4 million and earnings per share of $3.81.
Karin Sue Coleman: Similar to my comments last quarter, each business unit made a positive contribution to our results, including another quarter of homeowners choice and chip chat both being solidly profitable.
Karin Sue Coleman: In force premiums grew in the first quarter and remained above $1 billion.
Karin Sue Coleman: We reported another quarter of improvement in our underwriting results despite modest weather losses in the quarter, our gross loss ratio improved to 31% compared to 34% in the prior year's quarter.
Speaker Change: <unk> continued to deliver on its commitment to shareholders paying a dividend of <unk> 40 per share our 54th consecutive quarterly dividend.
Karin Sue Coleman: Also in the quarter, we completed our first assumption that condo owners reciprocal exchange or as we call it core which totaled $40 million of in force premium.
Pareshbhai Suryakant Patel: Following quarter end core completed a second assumption in April which brings total enforced premium to $55 million.
Pareshbhai Suryakant Patel: Before I turn it over to Mark I wanted to provide a quick update on the business that homeowners choice in Tiptop has assumed from citizens since November 2023.
Karin Sue Coleman: Overall, the power of the technology, we built is showing its value and we've seen results exceed our expectations.
Karin Sue Coleman: We were able to evaluate citizens entire portfolio and select best 70000 policies that that's met our underwriting standards.
Karin Sue Coleman: So far what we have observed is we were able to offer the majority of policyholders are no offer that was comparable to or less than if they had stayed with citizens.
Karin Sue Coleman: We've retained more policy holders than we had expected.
Karin Sue Coleman: The loss ratio in the business, we've assumed as better than anticipated and we've added more than a quarter of $1 billion of premiums in a few months with almost no added expense.
Karin Sue Coleman: Now I'll turn it over to Mark to provide more details on our financials.
Karin Sue Coleman: Thanks, Karen So as Karen mentioned this was another good quarter for the company.
Speaker Change: Pretax income was just over $77 million and diluted earnings per share were $3 81 sense. These results are being driven by the same positive trends, we've been discussing for a while premium growth higher investment income better loss trends and declining expense ratios.
Karin Sue Coleman: Gross premiums earned were 42% higher than the same quarter last year driven by growth in Florida earned premium includes $67 million.
Operator: Premium assumed from citizens of which $3 6 million relates to core which I'll talk about in a minute.
Karin Sue Coleman: Investment income of $14 million this quarter was about 40% higher than the fourth quarter last year, continuing the trend of higher investment income each consecutive quarter, driven by higher cash and investment balances combined with higher rates as we mentioned on the last call. We are starting to lock in some of the higher rates by strategically add.
Karin Sue Coleman: Adding term to our bond portfolio, we recently purchased $170 million of.
Matt Glover: Two year treasuries at just under 5%.
Karin Sue Coleman: The consolidated gross loss ratio this quarter was 31% down from 33, 6% in the same quarter last year when the legislative changes were announced in 2022, we expected the gross loss ratio to come down to around 30%, which it has the loss ratio was slightly higher than in Q4, because as Karen mentioned.
Karin Sue Coleman: And we had some weather this quarter.
Karin Sue Coleman: Maybe more important the positive loss trends, we've been discussing for over a year now have continued as an example litigation propensity or the number of lawsuits for any given number of claims is 35% lower than it was before the legislative changes took effect.
Karin Sue Coleman: I mentioned declining expense ratios in my introduction labor and operating expense as a percentage of gross premiums earned have been declining with each consecutive quarter why because of our operational leverage in the past 12 months, we've added more than $300 million of premium and added only a handful of people.
Karin Sue Coleman: Along with the lower loss ratio. This helps lead to a lower combined ratio, which was around 70% in the fourth quarter last year and just under 67% this quarter.
Karin Sue Coleman: This of course is being impacted by the citizens assumptions for which we have limited reinsurance and policy acquisition expenses, but once these normalize we expect the combined ratio to be in the low to mid eighties, which is indicative of a very healthy insurance company and reflects the operational efficiencies we've generated with our technology platform in Tiptop.
Matt Glover: Yeah.
Karin Sue Coleman: Before I move to the balance sheet I wanted to mention one more thing in the income statement.
Karin Sue Coleman: Karen mentioned, we recently started core which is a new operating model for us and that we only administer the policies, even though we do not own. The underwriter. We are required to consolidate its income statement into ours that means consolidated premiums include core premiums consolidated reinsurance includes core reinsurance and the.
Karin Sue Coleman: Same for loss expense and policy acquisition expense then of course, there is an adjustment to net income for any economic gains or losses, which are not ours.
Karin Sue Coleman: Order for a reader to be able to see the impact of core we now show it separately in our segmented financial information in the 10-Q.
Karin Sue Coleman: Now to the balance sheet, which continues to improve driven by profitability debt management and capital management. You May recall, we recently completed a number of capital transactions and when combined with growing profitability. The result is a much stronger balance sheet.
Karin Sue Coleman: In the last 12 months consolidated cash and investments have gone up by $340 million.
Pareshbhai Suryakant Patel: Holding company liquidity has grown by $30 million debt has dropped by more than $60 million. The debt to cap ratio has declined from 62% to 37% shareholder equity has more than doubled to $395 million and lastly book value per share has gone up.
Karin Sue Coleman: From just under $21 per share to over $38 per share.
Karin Sue Coleman: In summary, this was another great quarter for the company revenues up all of our expense ratios are down and the balance sheet has continued to strengthen and with that I'll hand, it over to Paresh.
Karin Sue Coleman: Thank you Mark.
Karin Sue Coleman: As highlighted by current marks comments Hei posted outstanding results in the first quarter.
Karin Sue Coleman: This is because of our technology.
Karin Sue Coleman: And it is not just a talking point it is driving our operational capabilities as well as our financial results.
Karin Sue Coleman: And even though we've grown to over $1 billion of in force premium.
Karin Sue Coleman: This is just a fraction of the $150 billion of homeowners premium market across the U S.
Karin Sue Coleman: So there is still plenty of room for growth.
Karin Sue Coleman: But more interesting is something new that we're noticing let me elaborate.
Karin Sue Coleman: We have added 70000, new customers across homeowners choice in Tiptop.
Karin Sue Coleman: In addition to that we've added over 400 condo Association policies at core.
Karin Sue Coleman: The process was seamless because we have the platform to efficiently onboard these policies and as we've demonstrated we can do it profitably.
Karin Sue Coleman: But we're also noticing that as these policies policyholders come up for renewal.
Karin Sue Coleman: They are staying with us they never greater numbers.
Karin Sue Coleman: This is true across homeowners choice tipped up and core.
Matt Glover: Furthermore.
Karin Sue Coleman: We have seen strong interest from others do also enjoying.
Karin Sue Coleman: Our phones have been ringing with prospective customers interested in getting a policy from one of the HCI group of companies.
Karin Sue Coleman: And it extends even further than that.
Karin Sue Coleman: We're also hearing from agents brokers and investors asking if we can do more.
Karin Sue Coleman: So in summary, the opportunity that's unfolding in front of us isn't to add some incremental policies. It is much bigger than that.
Speaker Change: We are looking.
Karin Sue Coleman: To see how we can double or triple the size of the business.
Karin Sue Coleman: We think large numbers of policies are out there still searching for a better solution.
Pareshbhai Suryakant Patel: And this is just the beginning.
Karin Sue Coleman: There is a growing sense that these trends are expanding throughout the country.
Pareshbhai Suryakant Patel: And we can use our technology platforms to capture the various opportunities out there in the market as they arise.
Karin Sue Coleman: But as always we will it will be done in our typical prudent fashion.
Pareshbhai Suryakant Patel: And we are setting ourselves up to be ready to take advantage of as these opportunities present themselves.
Karin Sue Coleman: With that I will turn it over for questions.
Karin Sue Coleman: Thank you Sir the floor is now open for questions. If you have any questions or comments. Please press star one on your phone at this time.
Karin Sue Coleman: Posing your question please pickup your handset.
Karin Sue Coleman: Speaker phone to provide optimal sound quality. Please hold just a moment, while we poll for <unk>.
Matt Glover: Question.
Karin Sue Coleman: Your first question is coming from Michael Phillips with Oppenheimer. Please pose your question your line is live.
Pareshbhai Suryakant Patel: Thanks, Good afternoon, everybody first.
Karin Sue Coleman: First question Mark when you when you mentioned the combined ratio expectations, you said low to mid eighties, what timeframe was that this year or just kind of a it wasn't a longer term timeframe.
Karin Sue Coleman: No I mean, I mean this year yeah.
Karin Sue Coleman: Right now I mean at the point, what it's obviously significantly lower than that right now, but once once we normalize.
Karin Sue Coleman: You know in the.
Karin Sue Coleman: Toward the end of the second quarter with with reinsurance and pack for Sid.
Karin Sue Coleman: Citizens policies.
Karin Sue Coleman: That's that's that's our expectation for combined ratio like the second half of the year.
Karin Sue Coleman: Okay. Okay, great. Thank you.
Pareshbhai Suryakant Patel: And then.
Operator: I guess, just curious how you guys reinsurance renewals coming up pretty soon.
Karin Sue Coleman: How do you think about that given the big growth from citizens.
Karin Sue Coleman: I don't know if it's in one direction, you're most of your 2020 for growth is going to be in Florida. So maybe more concentrated than you otherwise would have been to the buy more or are you just bigger companies. So you need less or just how you're thinking about the need for reinsurance relative to the prior years because of the citizens.
Karin Sue Coleman: Hey, Michael Lewis Parrish look.
Pareshbhai Suryakant Patel: Well we have.
Karin Sue Coleman: Manage this business to grow it from around $50 million of premium back in 2007, all the way to what it is now so as the business grows and shrinks, which it has done occasionally as well.
Karin Sue Coleman: We buy an appropriate amount of reinsurance so.
Karin Sue Coleman: Yes, the business has grown but we are already in the market trying to buy an appropriate tower for the upcoming wind season, we are right in the middle of those negotiations and everything else. So the two items that are there as we are buying an appropriate <unk> tower for the appropriate sized business.
Karin Sue Coleman: The only item that is not finished yet is what will the cost of that.
Karin Sue Coleman: Reinsurance fee.
Karin Sue Coleman: One presumes, because you're buying a lot more quantity it might be the overall dollars will go but is a question of will it go up as a percentage of revenue yes.
Karin Sue Coleman: Alright, okay. Good thank you.
Pareshbhai Suryakant Patel: And then I guess lastly.
Karin Sue Coleman: You mentioned the phone calls that are coming in and Youre not looking to grow the company policy by policy, but it may be looking to be more stuff.
Matt Glover: <unk>.
Operator: I guess are you also considering or are you getting any calls and would you consider.
Karin Sue Coleman: Maybe being fronting for other homeowners companies that already write business that don't have your technology in front for them as you expand outside of Florida and into more nationwide would that be an option.
Pareshbhai Suryakant Patel: Yes, there's there are a number of options that people have approached us with and obviously, we are evaluating them, including people wanting us to buy books of business or by small carriers kind of thing. So theres a broad range of options that are unfolding in front of US obviously, we're trying to make sure we're prudent as to where we deploy our technology.
Karin Sue Coleman: So that it has maximum long term value.
Karin Sue Coleman: But front and could be an example, as well.
Pareshbhai Suryakant Patel: Okay, Yeah sure. Thank you.
Speaker Change: Last one for now.
Operator: Numbers question, you had mentioned the enforce premium from core April to $55 million I think before you said you were targeting around 75 is that still the case for Gore.
Karin Sue Coleman: Ultimately yes.
Karin Sue Coleman: And that's this year correct right.
Operator: Yeah.
Operator: Okay.
Karin Sue Coleman: And I think that you brought up Florida look I also want to point out.
Operator: How amazing this is ray.
Operator: <unk> had zero revenue on January one this year.
Karin Sue Coleman: It's may eight five less than five and a half months later and you're already up to $55 million as as we had sort of laid out and we will be doing this right. This is how easily and seamlessly we can add to this yet.
Karin Sue Coleman: Okay, great. Thank you guys.
Karin Sue Coleman: Your next question is coming from Mark Hughes materially. Please pose your question your line is live.
Karin Sue Coleman: Yes. Thank you good afternoon.
Karin Sue Coleman: They are already a low that low to mid <unk> low to mid Eighty's combined ratio just to be clear that's is that gross or net earned.
Operator: Net earned.
Karin Sue Coleman: On net earned.
Speaker Change: Yeah Yeah.
Operator: Okay.
Karin Sue Coleman: And then the cash at the Holdco at this point.
Speaker Change: The holding company liquidity at the end of Q1 is about $220 million.
Matt Glover: Okay.
Karin Sue Coleman: And then did you give the earned premium number or the take out this quarter.
Karin Sue Coleman: So that the what I had said was the.
Karin Sue Coleman: In earned premium.
Karin Sue Coleman: $67 million of that relates to citizens assumptions and of that 67, $3 6 million of it is core.
Karin Sue Coleman: Okay and that.
Karin Sue Coleman: Of course.
Karin Sue Coleman: Some of that is direct some of that is assumed in Q1 most of that is assumed right.
Operator: Yes.
Karin Sue Coleman: How do you feel about the citizens.
Karin Sue Coleman: Go ahead.
Karin Sue Coleman: No no I'm, sorry, I was coughing sorry about that.
Matt Glover: Okay.
Karin Sue Coleman: How do you feel about the takeout opportunity or there's still attractive policies. After what you've done in others. How do you feel about the.
Karin Sue Coleman: The potential the next the next time around.
Pareshbhai Suryakant Patel: Hey, Mark is Parrish.
Operator: As we had said previously there's still $1 1 million policies in citizens right.
Matt Glover:
Operator: We can clearly see using our technology that a large number of them are green a large number of them are red.
Pareshbhai Suryakant Patel: So there is set of opportunity there. It's just a question of when and when when do go after them and what is the most prudent fashion and wish to do so yet.
Matt Glover: Yep.
Matt Glover: <unk>.
Karin Sue Coleman: And then.
Karin Sue Coleman: Is there a written number associated with the takeout.
Operator: Obviously, you just gave the earned but is there a <unk>.
Speaker Change: Written just for.
Operator: Referencing.
Speaker Change: For written.
Pareshbhai Suryakant Patel: Yeah. So.
Karin Sue Coleman: There is about the total assumed written in Q1 was about $43 million.
Karin Sue Coleman: And that was that was that already.
Speaker Change: Incorporated into the.
Karin Sue Coleman: Homeowners choice and kitkat.
Karin Sue Coleman: And Uh huh.
Karin Sue Coleman: Well, Yeah of course, yeah, Yeah, I mean, I can give it to you by underwriter, if you need it that way.
Karin Sue Coleman: But of that of that fourth year.
Karin Sue Coleman: Of that $43 19, a that was core.
Karin Sue Coleman: Yeah and Mark.
Operator: From previous conversations you know it looks like definitely would citizens because you original and premium is only the.
Karin Sue Coleman: The earned premium that youre, assuming so if somebody comes in a lumpy fashion Toledo renewals and got them onto our paper yet.
Operator: Yeah.
Operator: You were talking about the success.
Karin Sue Coleman: Success Youre, having with the citizens take out I think you said.
Karin Sue Coleman: The renewals are coming in better than expected.
Karin Sue Coleman: Your pricing.
Karin Sue Coleman: Generally you are able to offer pricing that's in line or less for renewal.
Karin Sue Coleman: Was there another aspect of.
Matt Glover: About.
Pareshbhai Suryakant Patel: Yeah again as you were describing the success you've had with the <unk>.
Karin Sue Coleman: Citizens take outs is that was that covering that.
Karin Sue Coleman: Yeah, you know the benefit or the better experience.
Operator: The other item is the loss ratio on the business we've assumed is better.
Matt Glover: Hey.
Operator: Alright.
Operator: Sure.
Karin Sue Coleman: And you know that you've added that quarter of $1 billion of premium with almost no added expenses.
Operator: Exactly.
Karin Sue Coleman: Alright, Thank you very much.
Pareshbhai Suryakant Patel: Thanks Mark.
Operator: Once again, if you do have any remaining questions or comments. Please press star one on your phone at this time better than kind of what the market is.
Operator: Yeah.
Operator: But I think we think of it in a slightly different context, but just to sort of this right. So if you imagine that the <unk> billion and these are the numbers yet.
Pareshbhai Suryakant Patel: When we write the second billion.
Operator: Alright.
Operator: Losses will go proportionally because you double the business you might end up with a similar number.
Karin Sue Coleman: You didn't commissions will probably double up as well, but all the other kinds of exit corporate overhead other expenses right.
Speaker Change: Those will not double up.
Speaker Change: They will increase somewhat but it's very easy to see that they will not double up.
James Mark Harmsworth: That's where I think the leverage increases.
Pareshbhai Suryakant Patel: There will be some additional expense because it won't be zero, but its we just added $280 million.
Operator: Premium almost 300 million of premium and we've hardly had any dollar increase in operating expenses, that's where that leverage is coming from yes.
Pareshbhai Suryakant Patel: Yes, and the automation it again, yes.
Operator: Yes.
Pareshbhai Suryakant Patel: Yeah, Great and then if I could just a couple I guess, one I guess.
Speaker Change: One numbers question, one maybe maybe numbers.
Operator: You mentioned Q1 had a little weather to it and that's maybe why you're like a point or a fraction of a point higher on gross loss ratio.
Speaker Change: No it's only about halfway through the quarter, but any early insights on Q2 is it looking normal looking active just from what you guys see.
Speaker Change: So so far it looks it looks pretty normal nothing unusual at this point in April.
Speaker Change: Okay, Great and then last one just numbers do you have net written premiums.
Speaker Change: All data handy, yeah, 180 $687 million.
Pareshbhai Suryakant Patel: Wonderful alright, thanks, very much I appreciate it.
Pareshbhai Suryakant Patel: Thanks, Matt.
Operator: Matt.
Speaker Change: The thing up on a question from before.
Operator: Hum.
Speaker Change: The other thing by the way and this is why I'm. So excited in my what I was saying in my prepared remarks right.
Pareshbhai Suryakant Patel: We've long talked about technology and in personal lines in homeowners policies and that kind of thing.
Operator: The interesting thing is getting core up and running we suddenly realized how much of our technology platform.
Speaker Change: It speeds up time to market of a new of a new line of business commercial residential is different to do residential yeah.
Pareshbhai Suryakant Patel: Sure. It is it has opened our eyes that this platform can be used.
Operator: Not only in different geographies, but also in different lines of business right.
Speaker Change: You can go from residential to commercial residential to why not go to commercial et cetera, I'm, not saying, we're doing that today, but.
Pareshbhai Suryakant Patel: We are certainly looking at this platform could be used in lots of ways that we've never used it before because once it successful you can just add on to it. So that's what is creating that opportunity about maybe doubling or tripling. There is more here than just writing more policies yet.
Speaker Change: Yes, no that makes a lot of sense.
Pareshbhai Suryakant Patel: Thank you and congrats on a really nice start to the year.
Pareshbhai Suryakant Patel: Thank you.
Operator: Your next question is coming from Michael Phillips again with Oppenheimer. Please pose your question your line is live.
Pareshbhai Suryakant Patel: Hey, Thanks, one more thanks for let me back again.
Speaker Change: Kind of a follow up to Mark.
Operator: Comments about the litigation propensity down around 35% can you remind us how are you handling your prior year loss picks and reserves given what you're seeing there for that propensity to come down.
Speaker Change: Yeah. It's a good question I mean, we leave.
Operator: For all of the accident quarters.
Operator: You know prior we've made assumptions about what we think the ultimate cost.
Operator: Loss costs will be for any of those accident quarters and that includes assumptions that we've made for the number of lawsuits that we will ultimately get.
Operator: And so I mean literally every quarter, we're updating that estimate of how many lawsuits we will ultimately get.
Pareshbhai Suryakant Patel: And and what I would say is that things are developing.
Pareshbhai Suryakant Patel: You know for the older accident quarters prior to the legislative changes things are developing pretty much as we expected them to be nothing unusual we didn't have any adverse development in the.
Operator: We didn't have any adverse development at all in the first quarter.
Operator: For the accident quarters.
Pareshbhai Suryakant Patel: After the legislative changes, we're still being we made selections that took into account the changes in legislation, we're still evaluating those as to whether we should you know potentially bring them down a little bit, but we haven't really done much of that yet and we will have to we need a little bit more time to go by.
Speaker Change: So you know the.
Speaker Change: The way those those accident quarters are developing.
Speaker Change: As you know, we've got about 35% fewer lawsuits than we than we would have gotten in the old world. If you will or the old rules.
Speaker Change: And but we haven't we haven't reserved quite that optimistically if that makes sense.
Operator: No. It does yeah. So you Didnt reserve for a call it whatever the number at 35% drop.
Speaker Change: It's probably not the right number but as you said you you build something in but it wasn't.
Speaker Change: So the level that you are currently seeing right. Okay. Yeah, I mean, we knew it was going to be better.
Speaker Change: But it is better than it it's better than we thought it was going to be so it's good.
Operator: Hey.
Operator: Michael.
Pareshbhai Suryakant Patel: Outside of that as we actually go back we had stated that many a time that we expect the numbers to be better, but we didn't have enough evidence to book to a better number so we've tended to be conservative in the quarters since the legislation got passed.
Speaker Change: But eventually reality whatever it is will manifest itself and I think mark whether at that point and make appropriate adjustments.
Pareshbhai Suryakant Patel: Okay, great. Thanks, a lot guys.
Pareshbhai Suryakant Patel: Thank you.
Operator: At this time. This concludes our question and answer session I would now like to turn the call back over to Paresh Patel, who has a few closing remarks.
Pareshbhai Suryakant Patel: On behalf of the entire management team I would like to thank our shareholders employees agents brokers and most importantly, our policyholders for their continued support.
Pareshbhai Suryakant Patel: This does conclude today's conference call you may now disconnect your phone lines and have a wonderful day. Thank you for your participation.