Q1 2024 Heritage Insurance Holdings Inc Earnings Call
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Good morning, and welcome to the Heritage Insurance Holdings first quarter 2024 earnings conference call at.
Operator: Good morning, and welcome to the Heritage Insurance Holdings first quarter 2024 earnings conference call. At this time, all lines are in listen-only mode.
Operator: Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, May 2, 2024. I would now like to turn the conference over to Cliff Lusk, Chief Financial Officer of the company.
Operator: At this time all lines are in listen only mode.
Operator: Following the presentation, we will conduct a question and answer session. If at any time during this call. Your great immediate assistance. Please press star zero for the operator.
Kirk Howard Lusk: Call is being recorded on Thursday may 2nd 2024, I would now like to turn the conference over to request.
Kirk Howard Lusk: Financial officer for the company.
Kirk Howard Lusk: Good morning, and thank you for joining US today, we invite you to visit the investors section of our website investors Dot heritage PCI Dot com, where the earnings release and our earnings call will be archived. These materials are available for replay or review at your convenience.
Kirk Howard Lusk: Good morning, and thank you for joining us today. We invite you to visit the Investors section of our website, investors.heritagepci.com, where the earnings release and our earnings call will be archived. These materials are available for replay or review at your convenience. Statements made during today's call may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based upon management's current expectations and are subject to uncertainty and changes in circumstances.
Kirk Howard Lusk: Today's call May contain forward looking statements within the meaning of the private Securities Litigation Reform Act of $19 95. These statements are based upon management's current expectations and subject to uncertainty and changes in circumstances.
Kirk Howard Lusk: In our earnings press release and our SEC filings, we detail material risks that may cause our future results to differ from our expectations. Our statements are as of today, and we have no obligation to update any forward-looking statements we may make. For a description of these forward-looking statements and the risks that could cause our results to differ materially from those described in the forward-looking statements, please refer to our annual report on Form 10-K, earnings release, and other SEC filings.
Kirk Howard Lusk: In our earnings press release, and our SEC filings, we detailed material risks that may cause our future results to differ from our expectations. Our statements are as of today and we have no obligation to update any forward looking statements we may make.
Kirk Howard Lusk: For a description of the forward looking statements and the risks that could cause our results to differ materially from those described in the forward looking statements. Please refer to our annual report on Form 10-K earnings release and other SEC filings.
Kirk Howard Lusk: Our comments today will also include non-GAAP financial measures the reconciliations of and other information regarding these measures can be found in our press release.
Kirk Howard Lusk: Our comments today will also include non-GAAP financial measures. The reconciliations of and other information regarding these measures can be found in our press release. With me on the call today is Ernie Garateix, our Chief Executive Officer. I will now turn the call over to Ernie.
Ernesto Jose Garateix: With me on the call today as Ernie guarantee our Chief Executive Officer, I will now turn the call over to Ernie.
Ernesto Jose Garateix: Thank you, Kirk, and thank you all for joining us today. I will provide some highlights of our first quarter performance, discuss our progress in achieving key objectives, and offer insights into our strategic initiatives. Following my remarks, Kirk will provide details on key financial performance metrics, after which we will open the call for Q&A. I am pleased to report a solid start to 2024 with a first quarter net income of $14.2 million, which is a slight increase from the $14 million reported in the same period last year.
Ernesto Jose Garateix: Thank you Kirk and thank you all for joining us today.
Ernesto Jose Garateix: I will provide some highlights of our first quarter performance discuss our progress in achieving key objectives.
Ernesto Jose Garateix: Offer insights into our strategic initiatives.
Ernesto Jose Garateix: Following my remarks, Kirk will provide details on key financial performance metrics after which we will open the call for Q&A.
Ernesto Jose Garateix: I am pleased to report a solid start to 2024 with a first quarter net income of $14 2 million, which is a slight increase from the $14 million reported in the same period last year.
Ernesto Jose Garateix: This improvement primarily reflects the success of our ongoing strategic initiatives aimed at achieving rate adequacy, underwriting discipline, and capital allocation. We've expanded our portfolio where rates are adequate and where we have modest concentrations, while reducing our exposures where either rates are inadequate or we have overconcentration. We've continued to receive approval from our regulators to take rates or indicate. These actions represent the key strategic objectives that have been implemented over the past two years. While our exposure management initiatives have intensely reduced our policies in force, premiums in force have increased for each of the last nine consecutive quarters. Imports premiums in Q1 2024 were $1.4 billion, a 6.2% increase over the first quarter of 2023.
Ernesto Jose Garateix: This improvement primarily reflects the success of our ongoing strategic initiatives aimed at achieving rate adequacy underwriting discipline and capital allocation.
Ernesto Jose Garateix: We've expanded our portfolio where rates are adequate and where we have modest concentration, while reducing our exposures where either rates or inadequate or we have over concentration.
Ernesto Jose Garateix: We've continued to receive approval from our regulators to take rate where indicated.
Ernesto Jose Garateix: These actions represent the key strategic objectives that have been implemented over the past two years.
Ernesto Jose Garateix: Well, our exposure management initiatives have intentionally reduced our policies in force.
Ernesto Jose Garateix: <unk> enforced has increased for each of the last nine consecutive quarters.
Ernesto Jose Garateix: In force premiums at Q1, 2024 was $1 4 billion, a six 2% increase over the first quarter of 2023.
Ernesto Jose Garateix: The costs associated with variety of property insurance in recent years has increased materially due to more frequent and severe weather.
Ernesto Jose Garateix: The cost associated with riding property insurance in recent years has increased materially due to more frequent and severe weather, excessive claim litigation in Florida, higher reinsurance costs, and general inflationary impacts on the cost to repair property. As such, our rate need has escalated over the last several years. We sought and were approved for rate increases that were substantial in certain geographic areas, and those new rates are being earned over the life of the associated policy.
Ernesto Jose Garateix: That's a claim litigation in Florida, higher reinsurance costs and general inflationary impacts on the cost to repair properties.
Ernesto Jose Garateix: As such our rate need has escalated over the last several years.
Ernesto Jose Garateix: We saw and were approved for rate increases that were substantial in certain geographic areas and those new rates are being earned over the life of the associated policies.
Ernesto Jose Garateix: For 2024, we anticipate higher gross premiums, driven by rates approved in 2022, 2023, and 2024 as the associated premiums are earned. For geographies where rates are becoming more adequate, we would therefore expect the percentage increase to rates to be smaller than in recent years. Even with the opportunistic growth in certain lines of business and geographies, we have maintained a balanced and diversified portfolio, with no single state representing more than 26.7% of the company's total insured value.
Ernesto Jose Garateix: For 2024, we anticipate higher gross premiums driven by rates approved in 2022, 2023 and 2024 as the associated premiums are earned.
Ernesto Jose Garateix: For geographies, where rates are becoming more adequate we would therefore expect the percentage increased to rates to be smaller than recent years.
Ernesto Jose Garateix: Even with the opportunistic growth in certain lines of business and geographies, we have maintained a balanced and diversified portfolio with no single state representing more than 26, 7% of the company's total insured value.
Ernesto Jose Garateix: This strategic diversification helps mitigate risk and stabilize our earnings across various geographic areas. The decrease in our policies in force has been intentional, driven by our strategic initiatives to get adequate rate, non-renewable, unprofitable policies to the extent permitted by individual state requirements, reduce concentrations, and fine-tune our distribution network. These activities achieve the intended impact and now put us in a position that the number of policies is no longer expected to decline at the same rate we experienced over the past few years.
Ernesto Jose Garateix: This strategic diversification helps mitigate risk and stabilize our earnings across various geographic regions.
Ernesto Jose Garateix: The decrease in our policies enforced has been intentional.
Ernesto Jose Garateix: Driven by our strategic initiatives to get adequate rate nonrenewed unprofitable policies to the extent permitted by individual state requirements reduce concentrations and fine tune our distribution network.
Ernesto Jose Garateix: These activities achieved the intended impact and now puts us in a position that policy count is no longer expected to decline at the same rate we experienced over the past few years.
Ernesto Jose Garateix: We are pleased to announce that we have finalized our catastrophe <unk> reinsurance program for 2020 for 2025 earlier than in previous years, reflecting our commitment to our reinsurance partners and their corresponding commitment to our strategy.
Ernesto Jose Garateix: We are pleased to announce that we have finalized our Catastrophe XOL reinsurance program for 2024-2025 earlier than in previous years, reflecting our commitment to our reinsurance partners and their corresponding commitment to our strategy. This year's program includes a new Southeast-only catastrophe bond, providing a limit of $100 million.
Ernesto Jose Garateix: This year's program includes a new southeast only catastrophe bond, providing a limit of $100 million.
Ernesto Jose Garateix: The inclusion of catastrophe bonds is an important element of our risk transfer program because it includes the capital markets as a supplier of reinsurance. Contracts are multi-year, and the reinsurance we secure is fully collateralized. As we continue to navigate forward, our focus remains steadfast on enhancing shareholder value through disciplined capital management and strategic growth initiatives. The challenges of the litigated claims environment in Florida continue to be noteworthy.
Ernesto Jose Garateix: The inclusion of catastrophe bonds is an important element of our risk transfer program.
Ernesto Jose Garateix: Does it includes the capital markets as a supplier of reinsurance.
Ernesto Jose Garateix: Contracts are multi year and the reinsurance through secure is fully collateralized.
Ernesto Jose Garateix: As we continue to navigate forward our focus remains steadfast on enhancing shareholder value through disciplined capital management and strategic growth initiatives.
Ernesto Jose Garateix: The challenges of the litigated claims environment in Florida continue to be noteworthy but.
Ernesto Jose Garateix: But with targeted underwriting and rate actions, as well as legislative actions taken to reduce the influence of claims abuse and one-way attorney fees, we believe we are positioned to successfully return to a policy count growth trajectory. Before I turn the call over to Kirk, I want to reaffirm our commitment to navigating the complexities of our market with a strategic focus that prioritizes long-term profitability and driving shareholder value. We are optimistic about the benefits of recent legislative changes in Florida and remain adaptable in our strategies to ensure a sustained, positive outcome. Now, I will turn things over to Kirk for a detailed review of our financial performance this quarter. Thank you, Ernesto.
Ernesto Jose Garateix: With targeted underwriting and rate actions as well as legislative actions taken to reduce the influence of claims abuse and one way attorney fees. We believe we are positioned to successfully returned to a policy count growth trajectory.
Ernesto Jose Garateix: Before I turn the call over to Kirk I want to reaffirm our commitment to navigating the complexities of our market with a strategic focus that prioritizes long term profitability and driving shareholder value.
Kirk: We're optimistic about the benefits of recent legislative changes in Florida, and remain adaptable and our strategies to ensure sustained positive outcomes.
Ernesto Jose Garateix: Now, let me turn things over to Kirk for a detailed review of our financial performance this quarter.
Kirk Howard Lusk: Thank you, Ernie. Good morning, everyone.
Kirk: Thank you Ernie and good morning, everyone.
Kirk Howard Lusk: As Ernie highlighted, we began 2024 on a strong note with first quarter net income of $14.2 million, or 47 cents per diluted share. This result represents an improvement in our net income over the prior year, driven by an 8% increase in net premiums earned and a notable rise in investment income. Additionally, it is important to note that the decrease in earnings per share was influenced by a higher average weighted number of shares outstanding due to the equity issuance and stock grants. Our gross premiums written this quarter were $356.7 million, a 14.9% increase from the prior year quarter, reflecting our strategic focus on enhancing our product offerings and expanding into profitable segments.
Kirk: As Ernie highlighted we began 2024 on a strong note with first quarter net income of $14 2 million or <unk> 47 per diluted share. This result represents an improvement in our net income over the prior year driven by an 8% increase in net premiums earned and a noticeable rise in investment income. Additionally.
Kirk Howard Lusk: Gross premiums earned followed suit, rising to $341.4 million, up 7.7% from the prior quarter. Net premiums earned increased by 8.1%, reflecting the increase in gross earned premiums outpacing the increase in seeded premiums. We expect an improvement in our seeded premium ratio going forward and for the growth in net premiums earned to accelerate throughout 2024. Total revenue for the quarter reached $191.3 million, marking an 8.1% increase compared to $176.9 million in the prior year.
Kirk Howard Lusk: Additionally, it is important to note that the decrease in earnings per share was influenced by higher average weighted number of shares outstanding due to the equity issuance and stock grants net of forfeitures.
Kirk Howard Lusk: Our gross premiums written this quarter were $356 7 million, a 14, 9% increase from the prior year quarter, reflecting our strategic focus on enhancing our product offerings and expanding into profitable segments. Gross premiums earned followed suit rising to $341 4 million up seven 7% from the prior year.
Kirk Howard Lusk: Quarter.
Kirk Howard Lusk: Net premiums earned increased by eight 1%, reflecting the increase in gross earned premiums outpacing the increase in ceded premiums we expect an improvement in our ceded premium ratio going forward and for the growth in net premiums earned to accelerate throughout 2024.
Kirk Howard Lusk: Total revenue for the quarter reached $191 3 million, marking an eight 1% increase compared to $176 9 million in the prior year quarter. This increase in revenue is bolstered by a higher net earned premiums and an increase in net investment income, which rose due to our positioning amidst current yield curve opportunities.
Kirk Howard Lusk: This increase in revenue is bolstered by our hard net earned premiums and an increase in net investment income, which rose due to our positioning amidst current yield curve opportunities. Losses and loss adjustment expenses were $102 million for the quarter compared to $97.5 million in the first quarter of 2020. The net loss ratio improved to 56.9%, down from 58.7% in the prior year quarter, even with higher weather-related losses of 5.6 million and unfavorable loss development of 6.7 million compared to favorable development of 1.5 million in the prior quarter.
Kirk Howard Lusk: <unk>.
Kirk Howard Lusk: Losses, and loss adjustment expenses were $102 million for the quarter compared to $97 5 million in the first quarter of 2023, the net loss ratio improved to 56, 9% down from 58, 7% the prior year quarter, even with higher weather related losses of $5 6 million.
Kirk Howard Lusk: An unfavorable loss development of $6 7 million compared to favorable development of $1 5 million in the prior quarter.
Kirk Howard Lusk: The improvement in the loss ratio, which included a reduction in attritional losses, highlights the positive impact on our rate actions as well as what we believe is a better performing portfolio driven by the various strategic underwriting changes made over the past two years. The net expense ratio saw a slight increase to 37.1 percent, primarily due to a reduction in seating commissions from our net quota share contract. This will have the most impact in the first quarter since it is the result of contracts that were run off in 2020.
Kirk Howard Lusk: The improvement in the loss ratio, which included a reduction of Attritional losses highlights the positive impact on our rate actions as well as what we believe is a better performing portfolio driven by the various strategic underwriting changes made over the past two years.
Kirk Howard Lusk: The net expense ratio saw a slight increase to 37, 1% primarily due to a reduction in ceding commissions from our net quota share contract. This will have the most impact in the first quarter.
Kirk Howard Lusk: As a result of contracts that were run off in 2023.
Kirk Howard Lusk: Our net combined ratio improved slightly to 94%, reflecting an improvement in the loss ratio driven by the strategic initiatives Ernie and I have discussed. Turning to our balance sheet, the book value per share has risen to $7.67, an increase of 26.8% compared to the prior quarter. This growth in book value is primarily driven by net income and a reduction in unrealized losses on our fixed income security.
Kirk Howard Lusk: Our net combined ratio improved slightly to 94% reflect the improvement in the loss ratio driven by the strategic initiatives Ernie and I have discussed.
Kirk Howard Lusk: Turning to our balance sheet the book value per share has risen to $7 67.
Kirk Howard Lusk: An increase of 26, 8% compared to the prior year quarter.
Kirk Howard Lusk: This growth in book value is primarily driven by net income and a reduction in unrealized losses on our fixed income securities. Our financial strength is further evidenced by our case reserves, which exceed $380 million in case in case equivalents, providing us with stansell liquidity to meet our operational needs.
Kirk Howard Lusk: Our financial strength is further evidenced by our cash reserves, which exceed $380 million in cash-in-cash equivalents, providing us with substantial liquidity to meet our operations. Importantly, as of the closing price on March 30, 2024, we have met the threshold necessary to qualify for inclusion in the Russell 2000. While formal inclusion will be confirmed in the coming updates from the index, meeting this threshold is a testament to our financial health and market valuation.
Kirk Howard Lusk: Importantly, as of the closing price on March 32024, we have met the threshold necessary to qualify our inclusion in the Russell 2000 index, while formal inclusion will be confirmed in the coming updates from the index being the threshold is a testament to our financial health and market valuation.
Kirk Howard Lusk: The Board of Directors continues to evaluate our dividend distribution and stock repurchase strategy. As part of this prudent capital management approach, our board has decided to continue the suspension of the quarterly dividend to further strengthen our financial position and support strategic growth initiatives. In conclusion, our financial results for the first quarter of 2024 demonstrate the effectiveness of our strategic initiatives and our ability to adapt to market conditions. We remain committed to driving shareholder value and ensuring the long-term sustainability of our operations. Thank you. We are now ready for your questions.
Kirk Howard Lusk: Board of directors continues to evaluate our dividend distribution and stock repurchase strategy.
Kirk Howard Lusk: As part of this prudent capital management approach. Our board has decided to continue the suspension of the quarterly dividend to further strengthen our financial position and support strategic growth initiatives in conclusion, our financial results for the first quarter of 2024 demonstrate the effectiveness of our strategic initiatives and our ability to adapt to market conditions.
Kirk Howard Lusk: We remain committed to driving shareholder value and ensuring the long term sustainability of our operations. Thank you. We are now ready for your questions.
Operator: Thank you. And, ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline the polling process, please press the star followed by the number two. If you are using a speakerphone, please lift the handset before pressing any keys. And our first question will come from Maxwell Fritscher from Truist. Please go ahead.
Speaker Change: Thank you and ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the number one on your Touchtone phone.
Maxwell Fritscher: Prompt Mr. Han has showed you reached a decline from the polling process. Please.
Operator: <unk> followed by the number too.
Maxwell Fritscher: Are using a speaker phone please lift the handset before pressing.
Maxwell Fritscher: And our first question will come from Maxwell Fitzgerald.
Maxwell Fritscher: Please go ahead.
Maxwell Fritscher: Different sources have been modeling a more active storm season this year. What is your internal model saying, and do you think the rate and the rate adequacy in Florida are there?
Maxwell Fritscher: Hey, good morning.
Speaker Change: Good morning, if this was answered but.
Maxwell Fritscher: Different sources have been modeling more active storm season this year.
Maxwell Fritscher: What is your internal model of phone and do you think the.
Maxwell Fritscher: The rate and the rate adequacy in Florida.
Maxwell Fritscher: Is there.
Ernesto Jose Garateix: Okay, yeah, I mean, we're hearing that there is, you know, a slight uptick as far as the possibilities go. But there's always the issue as far as whether it's going to make landfall or not.
Maxwell Fritscher: Okay, Yes.
Ernesto Jose Garateix: We are hearing that there is.
Ernesto Jose Garateix: A slight uptick as far as the possibilities I mean, there's always the issue as far as whether we can make landfall or not.
Ernesto Jose Garateix: I mean, our internal models actually show a slight increase, not quite to the extent of some of the others. As far as rate adequacy in Florida is concerned, that is looking, you know, extremely positive. I think that a lot of the rate actions that we've taken over the last several years, including the underwriting, you know, activities, have really kind of fine-tuned the portfolio. The legislative changes that have occurred, I would say we are, you know, cautiously optimistic, and I'm sure you've heard that term before, about what we're seeing there. But right now, you know, it looks like it is having the desired effect. So, yeah, overall, it's looking pretty good.
Ernesto Jose Garateix: So our model is actually slow like slight increase not quite to the extent that some of the others.
Ernesto Jose Garateix: As far as the rate adequacy in Florida.
Ernesto Jose Garateix: That is looking.
Ernesto Jose Garateix: Extremely positive I think.
Ernesto Jose Garateix: That the light of the rate actions that we've taken over the last several years, including the underwriting activities have really kind of fine tune the portfolio.
Ernesto Jose Garateix: The legislative changes that occurred I would say we are.
Ernesto Jose Garateix: Consciously optimistic and I'm sure you've heard that term before about kind of what we're seeing there, but right now it looks like it is having the desired effect. So yes overall, it's looking pretty good.
Kirk Howard Lusk: Yep, that's helpful. And then secondly, not big numbers here, but the policy acquisition cost picked up a bit in the quarter. Looks like it was running in the mid 12% in 24. What should we expect the run rate to be in 20, or sorry, that was in 23. What should we expect the run rate to be in 24?
Speaker Change: Yes, that's helpful. And then secondly, not big numbers here, but the policy acquisition cost ticked up a bit in the quarter.
Kirk Howard Lusk: It's like it was running in the mid <unk>.
Kirk Howard Lusk: 12%.
Kirk Howard Lusk: For which.
Kirk Howard Lusk: Should we expect the run rate to be in <unk>.
Kirk Howard Lusk: Sorry that was 23, what should we expect a run rate to be in 'twenty four.
Kirk Howard Lusk: in 24. Policy acquisition costs I think you're going to see go back to, you know, closer to the historic norm. Simply from the standpoint of, you know, we had about three million dollars worth of reduced seating commissions in the first quarter. That had to do with some runoff of the last year's quota share, and so it'll actually go more into the norm going forward. Thank you. Great, thank you.
Kirk Howard Lusk: In 24 <unk>.
Kirk Howard Lusk: Policy acquisition cost I think youre going to see go back to the closer to the historic norm.
Kirk Howard Lusk: Simply from the standpoint, we had about.
Kirk Howard Lusk: $3 million worth of reduced ceding commissions in the first quarter that had to do with some some run off of the last year's.
Kirk Howard Lusk: Quota share and so it will actually go more into the norm going forward.
Maxwell Fritscher: Thank you. That's all for me.
Speaker Change: Got it. Thank you that's all for me.
Speaker Change: Okay, great. Thank you. Thank you.
Operator: Thank you. And our next question comes.
Maxwell Fritscher: Thank you and our next question comes from Mark Hughes.
Curious: From curious please go ahead.
Mark Douglas Hughes: Good morning, Mark. Thank you. Good morning. Good morning.
Speaker Change: Hey, good morning, Mark Thank you and good morning.
Mark Douglas Hughes: I just joined the call, so I apologize. But did you make any commentary regarding your kind of posture around top line growth? You know, how do you view the adequacy of pricing at this point? And is it, are we at a juncture where you can feel better about it? Adding to the top line, and of course, that takes into account capital considerations, but anything you might be able to, if you've already commented, leave that one go, but any elaboration would be appreciated.
Speaker Change: Morning, just jumped on the call so I apologize.
Mark Douglas Hughes: But did you make any commentary just regarding your kind of posture around the top line growth.
Mark Douglas Hughes: How do you view adequacy of pricing at this point.
Mark Douglas Hughes: Are we at a juncture, where you can feel better about.
Mark Douglas Hughes: Adding to the topline and of course that takes into account capital considerations, but.
Mark Douglas Hughes: Anything you might be able to.
Mark Douglas Hughes: If you've already commented leave that one go but any elaboration would be appreciated.
Ernesto Jose Garateix: No, no, we can make a comment on that. So, I think, you know, we've been taking rates over the past two years. We're much more comfortable in specific geographic areas and where that rate adequacy is, and then looking to grow that top line very specifically. I would say, since we are a super regional carrier, there are other areas that we're still focusing on getting some more rates. But I would say, overall, as you look into 24 and going forward, right, that the rate adequacy in specific regions that we are focusing on to grow that Yeah, it is a good idea.
Speaker Change: We can make a comment on that so I think we've been taking rate over the past two years, we're much more comfortable in specific geographic areas and where that rate adequacy is.
Ernesto Jose Garateix: And then looking to grow that topline very specifically I would say since we are superregional carrier. There are other areas that we're still focusing on getting some more rates, but I would say overall as you look into 'twenty for them going forward right that E rate adequacy in specific regions that we are focusing on to grow that top line to a policy counts.
Ernesto Jose Garateix: Youll see that coming through.
Kirk Howard Lusk: Yeah, in addition, I'd like to make two other comments. One is, you know, when you look at our non-regulated cash as far as, you know, how we're sitting for growth, we do have over $50 million worth of non-regulated cash in the entities that, you know, we can push down, you know, and utilize that for growth opportunities in the future where we see fit. The other comment I think we always make about that type of stuff is due to seasonality, and winter storms in the Northeast typically, you know, the first quarter is our worst quarter.
Speaker Change: Just to add one other comment I'd like to add one is when you look at our nonregulated cash as far as how were sitting for growth. We do have over $50 million worth of nonregulated cash in the entities that we can push down and utilize that for growth opportunities in the future, where we see fit yes. The.
Kirk Howard Lusk: The comment I think you're always making that type of stuff is due to seasonality and the winter storms in the northeast. It's typically the first quarter is our worst quarter.
Speaker Change: Understood and then did you touch on the Takeouts, whether takeouts would be of interest to you at all.
Ernesto Jose Garateix: And then, did you touch on takeouts, whether takeouts would be of interest to you at all?
Ernesto Jose Garateix: So we always do our due diligence and look at the takeout. I think right now we're more optimistic with the rate adequacy we're seeing in certain regions that going through organic growth with our value partners and the agents is a better opportunity for us. But that doesn't mean we won't be considering the takeout. So it'll all be something that we do as part of our due diligence every year.
Ernesto Jose Garateix: So we always do our due diligence and look at the take out I think right now we're pretty optimistic with the rate adequacy, we are seeing in certain regions that going through organic growth with our valued partners in the agents is a better opportunity for us, but that doesn't mean, we won't be considering the takeouts at all be something that we do as part of our due diligence every quarter.
Mark Douglas Hughes: I understand. Thank you very much. All right, thank you. Thank you. And, as a reminder,
Speaker Change: Understood. Thank you very much.
Mark Douglas Hughes: Alright, thank you.
Mark Douglas Hughes: Thank you.
Operator: And as a reminder, if you wish to ask a question, please press start one. Again, if you wish to ask a question, please press star 1. There are no further questions at this time, so ladies and gentlemen, this concludes our question and answer session. I'd like to turn the conference back over to the management team for final remarks.
Mark Douglas Hughes: And as a reminder, if you wish to ask a question. Please press star one.
Operator: Again, if you wish to ask a question. Please press star one.
Operator: There are no further questions at this time, ladies and gentlemen, this concludes our question and answer session.
Speaker Change: I'd like to turn the conference back over to management team for final remarks.
Operator: Okay.
Ernesto Jose Garateix: I'd like to take this opportunity to thank all our employees for their dedication, as well as shareholders, our reinsurance partners, and agents for their continued support. I appreciate everybody joining the call today and hope everyone has a great day.
Management team: I'd like to take this opportunity to thank all our employees for their dedication as well as shareholders, our reinsurance partners and agents for the continued support I appreciate everybody joining the call today and hope everyone has a great day.
Operator: The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.
Operator: The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
Operator: Okay.
Operator: Yes.