Q2 2024 United Fire Group Inc Earnings Call
Speaker Change: Good day and welcome to the United Fire Group Insurance 2024 second quarter conference call.
Operator: In 2024, second quarter conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the start key followed by zero.
Operator: For the second quarter conference call, all participants will be in a listen-only mode.
Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on a touch-tone phone. To withdraw your question, please press star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to Tim Borst, Vice President of Investor Relations. Please go ahead.
Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two.
Operator: Please note, this event is being recorded.
Tim Borst: I would now like to turn the conference over to Tim Borst, Vice President of Investor Relations. Please go ahead.
Tim Borst: Good morning, and thank you for joining us call. Yesterday afternoon, we issued a press release on our results. To find a copy of this document, please visit our website at ufginsurance.com. Press releases and slides are located under the Investors tab.
Speaker Change: Good morning, and thank you for joining this call yesterday afternoon, we issued a press release on our results to find a copy of this document. Please visit our website at USG insurance Dotcom press releases and slides are located under the investors tab.
Tim Borst: Good morning, and thank you for joining this call. Yesterday afternoon, we issued a press release on our results. To find a copy of this document, please visit our website at ufginsurance.com. Press releases and slides are located under the Investors tab. Joining me today on the call are UFG President and Chief Executive Officer Kevin Leidwinger, Executive Vice President and Chief Operating Officer Julie Stephenson, and Executive Vice President and Chief Financial Officer Eric Martin. Before I turn the call over to Kevin, a couple of reminders.
Tim Borst: Joining me today on the call are UFG President and Chief Executive Officer Kevin Leidwinger, Executive Vice President and Chief Operating Officer Julie Stephenson, and Executive Vice President and Chief Financial Officer Eric Martin.
Speaker Change: Joining me today on the call are U F G President and Chief Executive Officer, Kevin White winger Executive Vice President and Chief Operating Officer, Julie Stevenson, and Executive Vice President and Chief Financial Officer, Eric Martin.
Tim Borst: Before I turn the call over to Kevin, a couple of reminders. First, please note that our presentation today may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations, estimates, forecasts, and projections about the company, the industry in which we operate, and beliefs and assumptions made by management. Company questions and investors at any forward-looking statements include risks and uncertainties and are not a guarantee of future performance. Any forward-looking statements made by us in this presentation are based only on information currently available to us and speak only as of the date on which they are made.
Speaker Change: I turn the call over to Kevin a couple of reminders first please note that our presentation. Today may include forward looking statements as defined in the private Securities Litigation Reform Act of 1995, such forward looking statements are based on current expectations estimates forecasts and projections about the company the industry in which we operate and beliefs and assumptions made by them.
Tim Borst: First, please note that our presentation today may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations, estimates, forecasts, and projections about the company, the industry in which we operate, and beliefs and assumptions made by management. The company cautions investors that any forward-looking statements include risks and uncertainties and are not a guarantee of future performance. Any forward-looking statement made by us in this presentation is based only on information currently available to us and speaks only as of the date on which it is made.
Speaker Change: Management company cautions investors that any forward looking statements include risks and uncertainties and are not a guarantee of future performance.
Kevin: Any forward looking statements made by US in this presentation is based only on information currently available to us and speaks only as of the date on which it is made.
Tim Borst: These forward-looking statements are based on management's current expectations. The actual results may differ materially due to a variety of factors, which are described in our press release and SEC filings, discussed specifically in our most recent annual report on Form 10-K.
Tim Borst: These forward-looking statements are based on management's current expectations, and the actual results may differ materially due to a variety of factors discussed specifically in our most recent annual report on Form 10-K. Also, please note that in our discussion today, we may use some non-GAAP financial measures. Reconciliations of these measures to the most comparable GAAP measures are also available in our press release and SEC filing. At this time, I will turn the call over to Mr. Kevin Leidwinger, CEO of UFG Insurance. Thank you, Tim.
Kevin: These forward looking statements are based on management's current expectations actual results may differ materially due to a variety of factors, which are described in our press release and SEC filings discuss specifically in our most recent annual report on Form 10-K.
Tim Borst: Also, please note that in our discussion today we may use some non-GAAP financial measures. Reconciliation of these measures to the most comparable GAAP measures is also available in our press release and SEC filings.
Speaker Change: Also please note that in our discussion today, we may use some non-GAAP financial measures reconciliations of these measures to the most comparable GAAP measures are also available in our press release and SEC filings at this time I will turn the call over to Mr. Kevin lied winger CEO of U F. G insurance. Thank you Tim Good morning, everyone and welcome to our second quarter Conference call.
Kevin Leidwinger: At this time, I will turn the call over to Mr. Kevin Leidwinger, CEO of UFG Insurance. Thank you, Tim. Good morning, everyone, and welcome to our second quarter conference call. I'll begin this morning by providing a high-level overview of our results.
Kevin Leidwinger: Thank you, Tim. Good morning, everyone, and welcome to our second quarter conference call. I'll begin this morning by providing a high-level overview of our results. Following my comments, Julie Stephenson will discuss our underwriting results, and Eric Martin will discuss our financial results in more detail. Our second quarter results reflect continued progress in our efforts to deliver improved performance through the strategic execution of our business plan. We remain focused on engaging with our distribution partners in the pursuit of profitably growing our business, deepening expertise across the company, enhancing our capabilities, and leveraging technology to improve efficiency.
Kevin Leidwinger: Net written premiums grew 9% to $326.1 million, led by ongoing growth in our core commercial and alternative distribution business units. Core commercial growth remains steady with average renewal premium increases of 12.3%, healthy retention, and attractive new business opportunities reflecting our continued focus on profitability. Rate increases accelerated to 9.8% with all liability lines increasing in the second quarter and improving margins above lost cost trends. The second quarter combined ratio of 105.6% improved significantly over the prior year, primarily due to lower prior period reserve development, lower catastrophe losses, and improvement in underlying combined ratios. Prior period reserve development in the second quarter was neutral overall.
Speaker Change: I'll begin this morning by providing a high level overview of our results. Following my comments, Julie Stephen Kim will discuss our underwriting results and Eric Martin will discuss our financial results in more detail.
Kevin Leidwinger: Following my comments, Julie Stevens and we'll discuss our underwriting results, and Eric Martin will discuss our financial results in more detail. Our second quarter results reflect continued progress in our efforts to deliver improved performance through the strategic execution of our business plan. We remain focused on engaging with our distribution partners in the pursuit of profitably growing our business, deepening expertise across the company, enhancing our capabilities, and leveraging technology to improve efficiency. Network and premiums grew 9% to 326.1 million dollars, led by ongoing growth in our core commercial and alternative distribution business units. Core commercial growth remains steady with average or no premium increases of 12.3%.
Speaker Change: Our second quarter results reflect continued progress in our efforts to deliver improved performance through the strategic execution of our business plan.
Speaker Change: We remain focused on engaging with our distribution partners in the pursuit of profitably growing our business deepening expertise across the company enhancing our capabilities and leveraging technology to improve efficiency.
Speaker Change: Net written premiums grew 9% to $326 $1 million led by ongoing growth in our core commercial and alternative distribution business units.
Speaker Change: Core commercial growth remained steady with average renewal premium increases of 12.3% healthy retention and attractive new business opportunities, reflecting our continued focus on profitability.
Kevin Leidwinger: Healthy retention and attractive new business opportunities reflecting our continued focus on profitability. Raid increases accelerated to 9.8% with all liability lines increasing in the second quarter and improving margin above lost cost trends. The second quarter combined ratio of 105.6% improved significantly over prior year. Primarily due to lower prior period reserve development, lower catastrophe losses, and improvement in underlying combined ratios. Prior period reserve development in the second quarter was neutral overall. Consistent with the first quarter, favorable emergence across several lines of business enabled us to further reinforce our position against the future inflationary uncertainty challenging our industry in certain liability lines.
Speaker Change: Rate increases accelerated to nine 8% with all liability lines, increasing in the second quarter and improving margins above loss cost trends. The second quarter combined ratio of 105, 6% improved significantly over prior year, primarily due to lower prior period reserve development, lower catastrophe losses and improvement in underlying combined.
Speaker Change: Shoes prior period reserve development in the second quarter was neutral overall.
Kevin Leidwinger: Consistent with the first quarter, favorable emergence across several lines of business enabled us to further reinforce our position against the future inflationary uncertainty challenging our industry in certain liability lines. Loss emergence remains within our expectations, and we believe these proactive steps are a prudent measure to mitigate the impact of a potential further acceleration in severity trends. As you will recall, in the second quarter of 2023, we significantly strengthened loss reserves as a result of investments in our actuarial processes, as well as increased depth of analysis that provided a more informed understanding of our reserve position.
Speaker Change: Consistent with the first quarter favorable emergence across several lines of business enabled us to further reinforce our position against the future inflationary uncertainty challenging our industry and certain liability lines.
Kevin Leidwinger: Laws Emergence remains within our expectations, and we believe these proactive steps are a prudent measure to mitigate the impact of a potential further acceleration in severity trends. As you will recall, in the second quarter of 2023, we significantly strengthened loss reserves as a result of investments in our actual process, as well as increased depth of analysis that provided a more informed understanding of our reserve position. Those investments also led to greater visibility into our underlying loss trends, and we reacted quickly to recognize increased levels of severity observed in our liability portfolio. For the last four quarters, we've been reflecting this elevated view of trend in our analysis as well as management decisions, which has fostered greater confidence in the strength of our reserve position.
Speaker Change: Loss emergence remains within our expectations and we believe these proactive steps are a prudent measure to mitigate the impact of a potential further acceleration and severity trends as you will recall in the second quarter of 'twenty twenty-three, we significantly strengthened loss reserves as a result of investments in our actuarial processes as well as increased depth of analysis that provided a more informed.
Speaker Change: Armed understanding of our reserve position.
Speaker Change: Those investments also led to greater visibility into our underlying loss trends and we reacted quickly to recognize increased levels of severity observed in our liability portfolio.
Kevin Leidwinger: Those investments also led to greater visibility into our underlying loss trends, and we reacted quickly to recognize the increased levels of severity observed in our liability portfolio. For the last four quarters, we've been reflecting this elevated view of trends in our analysis, as well as management decisions, which has fostered greater confidence in the strength of our reserve position. We remain committed to establishing a strong and stable reserve position, providing a solid foundation to grow our business.
Speaker Change: For the last four quarters, we've been reflecting this elevated view of trend in our analysis as well as management decisions, which is foster greater confidence in the strength of our reserve position.
Kevin Leidwinger: We remain committed to establishing a strong and stable reserve position, providing a solid foundation to grow our business. The second quarter catastrophe loss ratio of 11.2% improved nearly two points over prior year and was below our historical five year and 10 year averages in a quarter of elevated industry losses. We continue to execute a broad range of actions to improve our property catastrophe risk profile. The second quarter underlying loss ratio of 58.9% improved 5.7 points from the prior year, reflecting strong earned rate achievement and continued disciplined underwriting. In addition, results in the second quarter of last year were impacted by elevated surety loss activity.
Speaker Change: We remain committed to establishing a strong and stable reserve position, providing a solid foundation to grow our business.
Speaker Change: The second quarter catastrophe loss ratio of 11.2% improved nearly two points over prior year and was below our historical five year, and 10 year averages and a quarter of elevated industry losses.
Kevin Leidwinger: The second quarter catastrophe loss ratio of 11.2% improved nearly two points over the prior year and was below our historical five year and 10 year averages in a quarter of elevated industry losses. We continue to execute a broad range of actions to improve our property catastrophe risk profile. The second quarter underlying loss ratio of 58.9% improved 5.7 points from the prior year, reflecting strong earned rate achievement and continued disciplined underwriting. In addition, results from the second quarter of last year were impacted by elevated surety loss equity.
Speaker Change: We continue to execute a broad range of actions to improve our property catastrophe risk profile.
Speaker Change: The second quarter underlying loss ratio of 58.9% improved five points seven points from the prior year, reflecting strong earned rate achievement and continued disciplined underwriting.
Speaker Change: In addition results in the second quarter of last year were impacted by elevated surety loss activity.
Kevin Leidwinger: Our intense focus on expense management has reduced our overall cost structure compared to last year. Efficiency and non-revenue generating functions have funded investments in talent and technology supporting our underwriting capabilities, shifting our cost structure toward the underwriting expense ratio. As a result, the underwriting expense ratio increased at 35.5% in the second quarter, while reductions in loss adjustment expenses contributed to a lower loss ratio. We will continue to diligently manage the underwriting expense ratio down over time. The second quarter underlying combined ratio of 94.4% improved 4.8 points over prior year as a result of successful execution of our ongoing actions to improve core margins, as well as normalizing surety loss activity that impacted prior years' results.
Speaker Change: Our intense focus on expense management has reduced our overall cost structure compared to last year.
Kevin Leidwinger: Our intense focus on expense management has reduced our overall cost structure compared to last year. Efficiencies in non-revenue-generating functions have funded investments in talent and technology supporting our underwriting capabilities, shifting our cost structure toward the underwriting expense ratio. As a result, the underwriting expense ratio increased to 35.5% in the second quarter, while reductions in loss adjustment expenses contributed to a lower loss ratio. We will continue to diligently manage the underwriting expense ratio down over time.
Speaker Change: Efficiencies in non revenue generating functions have funded investments in talent and technology supporting our underwriting capabilities shifting our cost structure towards the underwriting expense ratio.
As a result, the underwriting expense ratio increased to 35, 5% in the second quarter, while reductions in loss adjustment expenses contributed to a lower loss ratio. We will continue to diligently manage the underwriting expense ratio down over time.
Speaker Change: Second quarter underlying combined ratio of 94.4% improved four eight points over prior year as a result of successful execution of our ongoing actions to improve core margins as well as normalizing surety loss activity that impacted prior year's results.
Kevin Leidwinger: The second quarter underlying combined ratio of 94.4% improved 4.8 points over the prior year as a result of successful execution of our ongoing actions to improve core margins, as well as normalizing surety loss activity that impacted the prior year's results. Net investment income increased 59.2% from the prior year to $18 million on improving fixed maturity income along with higher valuations on alternative assets. Fixed maturity investment income increased 19% from the prior year to $16 million as we reposition portions of our fixed income portfolio to take advantage of the current attractive reinvestment rates and further support future earnings.
Kevin Leidwinger: That investment income increased 59.2% from prior year to 18 million dollars on improving fixed maturity income along with higher valuations on alternative assets. Fixed maturity investment income increased 19% from prior year to 16 million dollars as we reposition portions of our fixed income portfolio to take advantage of the current attractive reinvestment rates and further support future earnings. Recently, we identified rating errors within our core commercial business and recorded a pre-tax charge of $3.2 million in anticipation of voluntarily issuing refunds to certain effective policy orders. We are committed to resolving this matter as expediently as possible, and it began working with state regulators to ensure resolution.
Speaker Change: Net investment income increased 59, 2% from prior year to $18 million on improving fixed maturity income along with higher valuations on alternative assets fixed maturity investment income increased 19% from prior year to $16 million as we reposition portions of our fixed income portfolio to take advantage of the current attractive reinvestment rates.
Speaker Change: And further support future earnings.
Speaker Change: Recently, we identified rating errors within our core commercial business and recorded a pretax charge of $3 $2 million in anticipation of voluntarily issuing refunds to certain affected policyholders.
Kevin Leidwinger: Recently, we identified rating errors within our core commercial business and recorded a pre-tax charge of $3.2 million in anticipation of voluntarily issuing refunds to certain affected policyholders. We are committed to resolving this matter as expeditiously as possible and have begun working with state regulators to ensure resolution. This charge was recorded in the Other Income and Loss line and does not impact any of this quarter's combined ratio metrics. However, the improvements in underlying profitability were sufficient to generate an operating profit in the second quarter, excluding the impact of this rating error adjustment.
Speaker Change: We are committed to resolving this matter as expediently as possible and have begun working with state regulators to ensure resolution.
Kevin Leidwinger: This charge was recorded in the other income and loss line and does not impact any of this quarter's combined ratio metrics. The improvements in underlying profitability were sufficient to generate an operating profit in the second quarter, excluding the impact of this rating error adjustment. We remain committed to continuing to drive improvements in our performance through strategic execution of our business plan during the second half of the year.
Speaker Change: This charge was recorded in the other income and loss line and does not impact any of this quarter's combined ratio metrics. The improvements in underlying profitability were sufficient to generate an operating profit in the second quarter. Excluding the impact of this reading error adjustment, we remain committed to continuing to drive improvements in our performance through strategic execution of our business plan.
Kevin Leidwinger: We remain committed to continuing to drive improvements in our performance through strategic execution of our business plan during the second half of the year. I'll now turn the call over to Julie Stephenson, our Chief Operating Officer, to discuss her underwriting results in more detail.
Speaker Change: During the second half of the year.
Julie Stephenson: I will now turn the call over to Julie Stevens and our Chief Operating Officer to discuss our underwriting results in more detail. Thank you, Kevin. Networking premium in our core commercial business grew 13% to $224 million in the second quarter compared to prior year, with small business, middle market, and construction all showing growth for the quarter. Kevin reminded everyone in his remarks a year ago are improved actual insights and able us to more quickly recognize increased severities in our underlying loss trends. The elevated levels of trend we established at that time have been holding up over the past four quarters.
Speaker Change: I'll now turn the call over to Julie Stephenson and our Chief operating officer to discuss our underwriting results in more detail.
Julie Stephenson: Thank you, Kevin. Net rent premium in our core commercial business grew 13% to $224 million in the second quarter compared to the prior year, with small business, middle market, and construction all showing growth for the quarter. Renewal premium change in our core commercial business accelerated to 12.3%, which rates up 9.8% and exceeds loss trends. Commercial property premium change continued to exceed 20% while liability pricing accelerated from the first quarter.
Julie Stephenson: Thank you Kevin net written premium in our core commercial business grew 13% to $224 million in the second quarter compared to prior year, the small business middle market and construction all showing growth for the quarter.
Speaker Change: At what premium change in our core commercial business accelerated to 12, 3% with rates up nine 8% and exceeding loss trends.
Speaker Change: Actual property premium change continue to exceed 20%, while liability pricing accelerated from the first quarter.
Julie Stephenson: As Kevin reminded everyone in his remarks, a year ago, our improved actuarial insights enabled us to more quickly recognize increased severities in our underlying loss trends. The elevated levels of trend we established at that time have been holding up over the past four quarters. We see loss trends in the mid-single digits, with some easing severity pressure on property observed along with ongoing frequency improvement across the portfolio. With overall rate achievement solidly exceeding loss trends, we remain confident in our ability to maintain improvement in underlying profitability. Core commercial new business production increased in the second quarter with contributions across our portfolio of small business, middle market, and construction.
This is Kevin reminded everyone in his remarks, a year ago, our improved actuarial insights enabled us to more quickly recognize increased severities in our underlying loss trends.
Speaker Change: The elevated levels of trend we established at that time had been holding up over the past four quarters, we see loss trends in the mid single digits with some easing severity pressure in property observed along with ongoing frequency improvement across the portfolio.
Julie Stephenson: We see loss trends in the mid-single digits, with some easing severity pressure and property observed, along with ongoing frequency improvement across the portfolio. With overall rate achievement, solidly exceeding loss trends, we remain confident in our ability to maintain improvement in underlying profitability. Core commercial new business production increased in the second quarter, with contributions across our portfolio of small business, middle market, and construction. We remain pleased with the quality of accounts being added to the portfolio as we continue to improve alignment with our distribution partners and deliver additional capabilities to enhance our role as an account solution provider.
Speaker Change: With overall rate achievement solidly exceeding loss trends, we remain confident in our ability to maintain improvement in underlying profitability.
Speaker Change: Core commercial new business production increased in the second quarter with contributions across our portfolio of small business middle market and construction. We remain pleased with the quality of accounts being added to the portfolio as we continue to improve alignment with our distribution partners and deliver additional capabilities to enhance our role as an account solution provider.
Julie Stephenson: We remain pleased with the quality of accounts being added to the portfolio as we continue to improve alignment with our distribution partners and deliver additional capabilities to enhance our role as an account solution provider. Retention will remain consistent and within expectations at 80% as we continue to refine our portfolio profile. Our alternative distribution portfolio continues to grow, supported by increased rates and exposure on existing accounts and new business. We remain pleased with the continued opportunities offered in this space to contribute profitable and diversifying business to the UFG portfolio. We continue to manage this book to stay within a 25% share.
Julie Stephenson: Retention and remain consistent and within expectations at 80% as we continue to refine our portfolio profile. Our alternative distribution portfolio continued to grow, supported by increased rate and exposure on existing accounts and new business. We remain pleased with the continued opportunities offered in this space to contribute profitable and diversifying business to the UFG portfolio. We continue to manage this book to stay within a 25% share. Specialty excess and surplus lines net-written premiums declined approximately $7 million from prior year, as we continued repositioning our portfolio to reflect a mix of business that produced or sustainable consistent profitability.
Speaker Change: We remain consistent in within expectations at 80% as we continue to refine our portfolio profile.
Speaker Change: Our alternative distribution portfolio continued to grow supported by increased rate and exposure on existing accounts and new business.
Speaker Change: We remain pleased with the continued opportunities to operate in this space to contribute profitable and diversifying business to the U F T portfolio.
Speaker Change: We continue to manage this but stay within a 25% share.
Speaker Change: Specialty excess and surplus lines net written premiums declined approximately $7 million from prior year.
Julie Stephenson: Specialty excess and surplus lines net written premiums declined approximately $7 million from the prior year as we continued repositioning our portfolio to reflect a mix of business that will produce more sustainable, consistent profitability. Shirdi net written premiums increased approximately $3 million compared to the prior year, mostly as a result of the impact of reinsurance reinstatement premiums that depressed last year's results. We continue to take a measured approach to growth, reinforcing our underwriting discipline and territory management to return the portfolio to our historic levels of profitability.
Speaker Change: Continued repositioning our portfolio to reflect the mix of business that will produce more sustainable consistent profitability.
Julie Stephenson: Surety net-written premium increased approximately $3 million compared to prior year, mostly as a result of the impact of reinsurance, reinstatement premiums that depress last year's results. We continue to take a measured approach to growth, reinforcing our underwriting discipline and territory management to return the portfolio to our historic levels of profitability. The second quarter underlying loss ratio of 58.9% improved 5.7 points from the second quarter of 2023, continuing the momentum reflected in our first quarter results. We saw improvement across all major lines of business compared to the second quarter of 2023. Rate achievement over the last four quarters has generally exceeded our elevated but stable view of loss trends, and now more fully earning into the portfolio, resulting in a favorable impact on the loss ratio.
Speaker Change: Surety net written premium increased approximately $3 million compared to prior year, mostly as a result of the impact of reinsurance reinstatement premiums that depressed last year's result.
Speaker Change: We continue to take a measured approach to growth reinforcing our underwriting discipline and territory management to return the portfolio to our historic levels of profitability.
Speaker Change: The second quarter underlying loss ratio of 58.9% improved five seven points from the second quarter of 2023 continuing the momentum reflected in our first quarter result.
Julie Stephenson: The second quarter underlying loss ratio of 58.9% improved 5.7 points from the second quarter of 2023, continuing the momentum reflected in our first quarter results. We saw improvement across all major lines of business compared to the second quarter of 2023.
Speaker Change: We saw improvement across all major lines of business compared to the second quarter of 2023.
Julie Stephenson: Great achievement over the last four quarters has generally exceeded our elevated but stable view of loss trends and is now more fully earning into the portfolio, resulting in a favorable impact on the loss ratio. Additionally, prior and continued underwriting actions to reposition the portfolio are producing further improvement in our frequency trends across all the major lines of business. Combined, these efforts are driving a longer-term, sustainable improvement in the loss ratio. Additionally, we have seen improved large loss activity in the quarter for property and surety lines.
Speaker Change: Great achievement over the last four quarters has generally exceeded our elevated but stable view of loss trend and now more fully earning into the portfolio, resulting in a favorable impact on the loss ratio.
Julie Stephenson: Additionally, prior and continued underwriting actions to reposition the portfolio are producing further improvement in our frequency trends across all the major lines of business. Combined, these efforts are driving a longer-term sustainable improvement in the loss ratio. Additionally, we have seen improved large loss activity in the quarter for property and surety lines. The large loss experience can be volatile from quarter to quarter. We have seen similar results in property in 2023, and current surety losses are emerging more consistent with historical profitable norms. These are early but positive signs we’re building a portfolio that brings stability in our results.
Speaker Change: Additionally, prior and continued underwriting actions to reposition the portfolio are producing further improvement in our frequency trends across all the major lines of business.
Speaker Change: Combined these efforts are driving a longer term sustainable improvement in the loss ratio.
Speaker Change: Additionally, we have seen improved large loss activity in the quarter for property and surety lines.
Julie Stephenson: The large loss experience can be volatile from quarter to quarter. We have seen similar results in property in 2023, and current surety losses are emerging more consistent with historical profitable norms. These are early but positive signs we're building a portfolio that brings stability to our results. There are still some areas in the portfolio requiring further attention.
Speaker Change: The large loss experience can be volatile from quarter to quarter. We have seen similar results in property in 2023 and current surety losses are emerging more consistent with historical profitable norms. These are early but positive signs we're building a portfolio that brings stability in our results.
Julie Stephenson: There are still some areas in the portfolio requiring further attention. Ottawa Bill continues to underperform relative to our expected levels of profitability, but we're seeing gradual improvement as prior re-underwriting and changes in portfolio mix continue to show decreased frequency while rate is covering our severity trends. General liability rate achievement has lagged other lines recently, but a renewed focus on this effort in light of relentlessly elevated loss trends has resulted in an improved result this quarter. We will continue to focus on pricing for this line. Insured, we are optimistic this line is returning to historical profit levels; however, we are retaining a cautious position in our results until further evidence emerges.
Speaker Change: There are still some areas in the portfolio requiring further attention automobile continues to underperform relative to our expected levels of profitability that we're seeing gradual improvement as prior re underwriting and changes in portfolio mix continue to show decreased frequency while rate is covering our severity trends.
Julie Stephenson: Automobile continues to underperform relative to our expected levels of profitability, but we're seeing gradual improvement as prior re-underwriting and changes in portfolio mix continue to show decreased frequency, while rates are covering our severity trends. General liability rate achievement has lagged other lines recently, but a renewed focus on this effort in light of relentlessly elevated loss trends has resulted in an improved result this quarter. We will continue to focus on pricing for this line.
Speaker Change: General liability rate achievement has lagged other lines recently put a renewed focus on this effort in light of relentlessly elevated loss trend has resulted in an improved result this quarter.
Speaker Change: We will continue to focus on pricing for the fine.
Julie Stephenson: In surety, we are optimistic this line is returning to historical profit levels, but we are retaining a cautious position in our results until further evidence emerges. Prior period reserve development was flat overall in the second quarter.
Speaker Change: And surety were optimistic this line is returning to historical profit levels. However, we are retaining a cautious position in our results until further evidence emerges.
Speaker Change: Prior period Reserve development was flat overall in the second quarter consistent with the first quarter of 'twenty 'twenty four blocks to merchants with neutral to favorable across the portfolio.
Julie Stephenson: Prior period reserve development was flat overall in the second quarter. Consistent with the first quarter of 2024, loss emergence was neutral to favorable across the portfolio.
Eric Martin: Consistent with the first quarter of 2024, loss emergence was neutral to favorable across the portfolio. I'd like to take a step back and remind you of the actions we've taken to shore up our reserves. Beginning in the third quarter of 2022, we began responding to greater severity pressure observed in several liability lines. In 2023, we invested in additional X-ray resources to increase the level of sophistication and analysis we bring to the reserving process and build a more comprehensive and stable framework.
Julie Stephenson: I'd like to take a step back and remind you of the actions we've taken to show up our reserves. Beginning in the third quarter of 2022, we began responding to greater severity pressure observed in several liability lines. In 2023, we invested in additional extra rail resources to increase the level of sophistication and analysis we bring to the reserving process and build a more comprehensive and stable framework. New insights have brought greater visibility into our true underlying exposure and emerging trends, allowing us to take more proactive steps to establish a strong reserve position. Since the third quarter of 2022, we have added nearly $90 million to our reserves.
Speaker Change: I'd like to take a step back and remind you of the actions we've taken to shore up our reserves.
Speaker Change: Beginning in the third quarter of 2022 we began responding to greater severity pressure observed in several liability lines.
Speaker Change: In 2023, we invested in additional actuarial resources to increase the level of sophistication and analysis, we bring to the reserving process and build a more comprehensive and stable framework.
Eric Martin: New insights have brought greater visibility into our true underlying exposure and emerging trends, allowing us to take more proactive steps to establish a strong reserve position. Since the third quarter of 2022, we have added nearly $90 million to our reserves. $145 million was concentrated in our General Liability, Umbrella, and Excess Casualty lines, offset by some favorable movement in other lines. Much of this increase was attributable to accident years 2019 and prior.
Speaker Change: New insights have brought greater visibility into our true underlying exposure and emerging trends, allowing us to take more proactive steps to establish a strong reserve position.
Speaker Change: Since the third quarter of 2022, we have added nearly $90 million to our reserves.
Julie Stephenson: $145 million was concentrated in our general liability, umbrella, and excess casualty lines, offset by some favorable movement and other lines. Much of this increase was attributable to accident years 2019 and prior; however, a full 40% of this figure was added to the more recent experience periods, anticipating a continued escalation and severity will emerge. While initial increases were reactive in nature, we are now seeing opportunities to take more proactive steps to maintain a stable reserve position. For the first and second quarter of 2024, actual analysis indicated overall favorable development, including some favorable and neutral emergence relative to expectations and these pressured lines.
Speaker Change: $145 million was concentrated in our general liability umbrella and excess casualty lines offset by some favorable movement in other lines. Much of this increase was attributable to accident years 2019, and Pryor. However, a full 40% of this figure was added to the more recent experience periods anticipating a continued escalation that's.
Eric Martin: However, a full 40% of this figure was added to the more recent experience periods, anticipating a continued escalation in severity would emerge. While initial increases were reactive in nature, we are now seeing opportunities to take more proactive steps to maintain a stable reserve position. For the first and second quarters of 2024, X-ray analysis indicated overall favorable development, including some favorable to neutral emergence relative to expectations in these pressured lines. However, despite these positive indications, management has decided to continue to build a stronger reserve base for these liability lines that are sensitive to the future uncertainty inherent in the economic and social inflation environment.
Bernie: Bernie will emerge.
Bernie: While initial increases we're reactive in nature, we are now seeing opportunities to take more proactive steps to maintain a stable reserve position.
Bernie: The first and second quarter of 'twenty 'twenty four actuarial analysis indicated overall favorable development, including some favorable than neutral emergence relative to expectations and these pressured lines disc.
Julie Stephenson: Despite these positive indications, management has decided to continue to build a stronger reserve base for these liability lines that are sensitive to the future uncertainty inherent in the economic and social inflation environment. While we by no means claim victory, we are pleased with the progress made in our reserve position. Our second quarter cat loss ratio of 11.2% was 1.8 points below prior year and below our 5-year and 10-year historical averages by 1.2 points and 0.3 points, respectively. While we could feel good about showing relative improvement in a quarter with elevated industry losses, we recognize results can be uneven for this exposure over short time horizons, and we continue to execute multifaceted strategies to improve our property catastrophe risk profile.
Bernie: Despite these positive indications management has decided to continue to build a stronger reserve base for these liability lines that are sensitive to the future uncertainty inherent in the economic and social inflation environment.
Eric Martin: While we by no means claim victory, we are pleased with the progress made in our reserve position. Our second quarter cap loss ratio of 11.2% was 1.8 points below the prior year and below our 5-year and 10-year historical averages by 1.2 points and 0.3 points, respectively. While we could feel good about showing relative improvement in a quarter with elevated industry losses, we recognize results can be uneven for this exposure over short time horizons, and we continue to execute multifaceted strategies to improve our property catastrophe risk profile, where I'm managing the exposure to severe convective storms by geographically targeted concentration reduction actions while focusing growth in more diversifying areas supported by advanced analytical tools.
Bernie: While we by no means claim victory. We are pleased with the progress made in our reserve position.
Bernie: Our second quarter Cat loss ratio of 11, 2% was one eight points below prior year and below our five year and 10 year historical averages a 1.2 points and 0.3 points respectively.
Bernie: Well, we could feel good about showing relative improvement in a quarter with elevated industry losses. We recognize results can be uneven for this exposure over short time horizons and we continue to execute multifaceted strategy is to improve our property catastrophe risk profile.
Julie Stephenson: We are managing the exposure to severe convective storms by geographically targeted concentration reduction actions while focusing growth in more diversifying areas supported by advanced and analytical tools. We continue to reduce our exposure to Hurricane PML risk with more restrictive risk profiles in our most exposed dates and improving the fundamentals of risk selection, pricing, and deductibles across the property portfolio.
Bernie: We're managing exposure to severe convective storms by geographically targeted concentration reduction actions, all focusing growth and more diversifying areas supported by advanced analytical tools.
Eric Martin: We continue to reduce our exposure to hurricane PML risk with more restrictive risk profiles in our most exposed states and improve the fundamentals of risk selection, pricing, and deductibles across the property portfolio. I will now turn the call over to Eric Martin to discuss the rest of our financial results.
Bernie: We continue to reduce our exposure to hurricane P&L risk with more restrictive risk profiles and our most exposed states and improving the fundamentals of risk selection pricing and deductibles across the property portfolio.
Eric Martin: I will now turn the call over to Eric Martin to discuss the rest of our financial results. Thank you, Julie. Let me start by providing some additional perspective on the expense ratio. Since the beginning of 2023, we have made meaningful changes to the size and composition of the UFG team. Since last January, total headcount has come down significantly, with a 20% reduction during that time. Included in that overall headcount change is a 35% reduction in the size of the claims team from process efficiencies and declining claims frequency. At the same time, we have made significant investments in technology and talent that will help us grow our business in a profitable way over the long term, and we are already seeing the benefits of blending these fresh perspectives with those of our long-tenured UFG employees.
Bernie: I will now turn the call over to Eric Martin to discuss the rest of our financial results.
Eric Martin: Thank you Julie let me start by providing some additional perspective on the expense ratio.
Eric Martin: Thank you, Julie. Let me start by providing some additional perspective on the expense ratio. Since the beginning of 2023, we have made meaningful changes to the size and composition of the UFG team. Since last January, the total head count has come down significantly, with a 20% reduction during that time.
Eric Martin: Since the beginning of 2023 we have made meaningful changes to the size and composition of the U F. G team.
Eric Martin: Since last January total head count has come down significantly with a 20% reduction during that time.
Eric Martin: Included in that overall headcount change is a 35% reduction in the size of the claims team due to process efficiencies and declining claims frequency. At the same time, we have made significant investments in technology and talent that will help us grow our business in a profitable way over the long term. And we are already seeing the benefits of blending these fresh perspectives with those of our long-tenured UFG employees. This is having a meaningful shift in the geography of our overall expense base, which has increased for underwriting but decreased for claims.
Eric Martin: Included in that overall head count changes at 35% reduction.
Eric Martin: And the size of the claims team from process efficiencies and decline in claims frequency.
Eric Martin: At the same time, we've made significant investments in technology and talent that will help us grow our business in a profitable way over the long term.
Eric Martin: And we are already seeing the benefits of blending these fresh perspectives.
Eric Martin: With those of our long tenured UFC employees.
Eric Martin: This is having a meaningful shift in the geography of our overall expense base, which has increased for underwriting but decreased for claims. It's easy to see part of the impact of the shift in our underwriting expense ratio remaining elevated. However, we are seeing larger benefits from the reduced costs in our claims organization that shows up in the loss of adjusting expenses included in our loss ratio. So far this year, our combined underwriting and loss of adjusting expense ratio has declined from 2023. Overall, we are making progress in reducing expenses. It's just not yet showing up in the underwriting expense ratio.
Eric Martin: This is having a meaningful shift in the geography of our overall expense base, which is increase for underwriting but decrease for claims.
Eric Martin: It's easy to see part of the impact of this shift in our underwriting expense ratio remaining elevated. However, we are seeing larger benefits from the reduced costs in our claims organization, which shows up in the loss-adjusting expenses included in our loss ratio. So far this year, our combined underwriting and loss-adjusting expense ratio has declined from 2023. Overall, we are making progress in reducing expenses; it's just not yet showing up in the underwriting expense ratio. We will continue to manage our overall cost structure down while making the necessary investments to achieve sustainable, profitable growth.
Eric Martin: It's easy to see part of the impact of the shift in our underwriting expense ratio remaining elevated. However, we are seeing larger benefits from the reduced costs in our claims organization that shows up in the loss adjusting expenses included in our loss ratio. So.
Eric Martin: So far this year, our combined underwriting and loss adjusting expense ratio has declined from 'twenty to 'twenty. Three overall, we are making progress in reducing expenses. Its just not yet showing up in the underwriting expense ratio.
Eric Martin: We will continue to manage our overall cost structure down while making the necessary investments to achieve sustainable, profitable growth. Turning to the investment portfolio, total invested assets and cash ended the second quarter at $2.1 billion. A high-quality portfolio with an overall credit rating of double A- and a duration of approximately four years. The transition of fixed-income portfolio management to our partners at New England Asset Management has already begun to show benefits. In the second quarter, we begin repositioning our portfolio away from its high allocation of tax-exempt municipals into high-quality fixed-income assets offering more attractive tax-equivalent yields in order to take advantage of the current elevated interest rate environment.
Eric Martin: We will continue to manage our overall cost structure down while making the necessary investments to achieve sustainable profitable growth turning to the investment portfolio total invested assets and cash ended the second quarter at $2 $1 billion.
Eric Martin: Turning to the investment portfolio, total invested assets and cash ended the second quarter at $2.1 billion, a high-quality portfolio with an overall credit rating of AA- and a duration of approximately four years. The transition of fixed income portfolio management to our partners at New England Asset Management has already begun to show benefits. In the second quarter, we began repositioning our portfolio away from its high allocation of tax-exempt municipal bonds into high quality fixed income assets offering more attractive tax equivalent yields in order to take advantage of the current elevated interest rate environment.
Eric Martin: Our high quality portfolio with an overall credit rating of double a minus and.
Eric Martin: And a duration of approximately four years.
Eric Martin: The transition of fixed income portfolio management to our partners at New England asset management has already begun to show benefits.
Eric Martin: In the second quarter, we began repositioning our portfolio away from its high allocation of tax exempt municipal.
Eric Martin: And the high quality fixed income assets offer a more attractive tax equivalent yields.
In order to take advantage of the current elevated interest rate environment.
Eric Martin: In total, we invested approximately 20% of the fixed-income portfolio in the second quarter at an average yield of 5.6%, which is significantly higher than the total portfolio yield. This high volume of asset purchases at attractive yields will enhance shareholder returns for years to come. Net investment income was $18 million in the second quarter, up $6.7 million, or 59%, compared to the second quarter of 2023. Increased valuation on limited partnership and alternative assets contributed $5 million of the increase in investment income. Maturity investment income increased nearly $3 million, or 19%, from prior year to $16 million in the second quarter.
Eric Martin: In total, we invested approximately 20% of the fixed income portfolio in the second quarter at an average yield of 5.6%, which is significantly higher than the total portfolio yield. This high volume of asset purchases at attractive yields will enhance shareholder returns for years to come. Net investment income was $18 million in the second quarter, up $6.7 million, or 59%, compared to the second quarter of 2023. Increased valuation on Limited Partnerships and Alternative Assets contributed $5 million of the increase in investment income.
Eric Martin: In total we invested approximately 20% of the fixed income portfolio in the second quarter at an average yield of five 6%.
Eric Martin: Which is significantly higher than the total portfolio yield.
Eric Martin: This high volume of asset purchases at attractive yields.
Eric Martin: Well enhanced shareholder returns for years to come.
Eric Martin: Net investment income was $18 million in the second quarter.
Eric Martin: $6 $7 million or 59% compared to the second quarter of 2023.
Eric Martin: Increased valuation on limited partnership and alternative assets contributed 5 million of the increase in investment income.
Eric Martin: Fixed maturity investment income increased nearly $3 million, or 19% from the prior year to $16 million in the second quarter, with the portfolio repositioning I mentioned occurring throughout the quarter. This quarter's already improved results do not fully reflect the benefits of the actions that have been taken. There was approximately $1 million of realized losses in the second quarter generated by this repositioning, which will be paid back very quickly. Second quarter net loss was $0.11 per diluted share, with a non-gap adjusted operating loss of $0.07 per diluted share. These results, along with a slight increase in the unrealized loss position, resulted in book value per common share decreasing to $28.68.
Eric Martin: Fixed maturity investment income increased nearly $3 million or 19% from prior year to $16 million in the second quarter.
Eric Martin: with the portfolio repositioning I mentioned occurring throughout the quarter. This quarter has already improved results; do not fully reflect the benefits of the actions that have been taken. There was approximately one million dollars of realized losses in the second quarter generated by this repositioning, which will be paid back very quickly. Second quarter net loss was 11 cents per diluted share with the non-GAAP adjusted operating loss of seven cents per diluted share. These results, along with a slight increase in the un-realized loss position, resulted in book value per common share decreasing to $28.68. From a capital management perspective, during the second quarter, we declared and paid 16 cents per share cash dividend to shareholders of record as of May 31, 2024, continuing our 56-year history of paying dividends dating back to March 1968.
Eric Martin: With the portfolio repositioning I mentioned occurring throughout the quarter.
Eric Martin: This quarter's already improved results do not fully reflect the benefits of the actions that have been taken.
Eric Martin: There was approximately $1 million of realized losses in the second quarter generated by this repositioning.
Eric Martin: Which will be paid back very quickly.
Eric Martin: Second quarter net loss was 11 cents per diluted share with a non-GAAP adjusted operating loss of seven cents per diluted share.
Eric Martin: These results along with a slight increase in the unrealized loss position resulted in book value per common share decreasing to $28.68 from a capital management perspective during the second quarter, we declared and paid 16 cent per share cash dividend.
Eric Martin: From a capital management perspective, during the second quarter, we declared and paid $0.16 per share cash dividend to shareholders of record as of May 31, 2024, continuing our 56-year history of paying dividends dating back to March 1968. At the end of May, we completed a debt transaction with Aries Management Credit Funds and two other partners that have provided us with $70 million of Regulatory and Rating Agency Capital. We are pleased to support the company's growth on attractive terms, given the ability to reinvest these proceeds at an interest rate around 5.5%. This concludes our prepared remarks. I will now have the operator open the line for questions.
Eric Martin: To shareholders of record as of May 31, 'twenty 'twenty four.
Eric Martin: Continuing our 56 year history of paying dividends dating back to March 1968.
Eric Martin: At the end of May, we completed a debt transaction with Aries Management Credit Funds and two other partners that have provided us with $70 million of regulatory and rating agency capital. We are pleased to support the company's growth on attractive terms, given the ability to reinvest these proceeds at an interest rate around five and a half percent.
Eric Martin: At the end of May we completed a debt transaction with Ares management credit funds and two other partners that have provided us with $70 million.
Eric Martin: A regulatory and rating agency capital.
Speaker Change: We are pleased to support the company's growth on attractive terms given the ability to reinvest these proceeds at an interest rate around five 5%.
Operator: This concludes our prepared remarks. I will now have the operator open the line for questions. We will now begin the question and answer session. To ask the question, you may press star and one on your touch-tone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and two. At this time, we will pause momentarily to assemble our roster.
Speaker Change: This concludes our prepared remarks I will now have the operator open the line for questions.
Speaker Change: We will now begin the question and answer session.
Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been answered and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question today comes from Paul Newsome with Piper Fandler. Please go ahead.
Speaker Change: To ask a question you May press Star then one on you touched on phone.
Speaker Change: If you were using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Paul Newsom: The first question today comes from Paul Newsom with Hypersandler.
Speaker Change: The first question today comes from Paul Newsome with Piper Sandler. Please go ahead.
Paul Newsom: Please go ahead.
Paul Newsome: Good morning. Thanks for the call. I wanted to ask a little bit more on the expense line. If I plotted the LAE ratio and the expense ratio combined, would I see the total fall this quarter or last?
Paul Newsom: Good morning. Thanks for the call. I wanted to ask a little bit more on the expense line. If I plotted the LAE ratio and the expense ratio combined, would I see the total fall this quarter or recently, or is it the combined still maybe just ask the question. If I had the LAE ratio, would be up or down.
Paul Newsome: Good morning, Thanks, Thanks for the call.
Paul Newsome: I wanted to ask a little bit more on the expense line.
Speaker Change: If I applauded the LAE ratio and the expense ratio combined.
Speaker Change: I see the total fall.
Paul Newsome: Or is it the combined still? Maybe just ask the question. If I could, if I had the LAE ratio, would it be up or down?
Speaker Change: This quarter or recently or is it the combined still.
Speaker Change: Maybe just ask the question.
Speaker Change: If I could if I heard the LAE ratio with it will be up or down.
Eric Martin: Good morning, Paul. Oh, sorry to interrupt. Good morning, Paul. This is Eric. Yes, you would. So if you plotted the LAE ratio from, you know, the first half of last year to the first half of this year, or you looked at Q2 over Q2, you'd see that coming down a couple of points. And that's a combination of staying flat up a little bit and claims costs coming down over that same time
Eric Martin: Good morning, Paul. Yes, you would. If you plotted the LAE ratio from the first half of last year to the first half of this year, or you looked at Q2 or Q2, you would see that coming down a couple of points.
Speaker Change: Good quarter and good morning, Paul.
Eric Martin: I'm sorry to interrupt good morning, Paul This is Eric Yes, you would so if you plotted the LAE ratio.
Speaker Change: From you know the first half of last year to the first half of this year or have you looked at Q2 over Q2, you'd see that coming down a couple of points and that's a combination of.
Eric Martin: That is the combination of expense ratio, staying flat up a little bit, and claims costs coming down over that same time.
Speaker Change: Expense ratio staying flat up a little bit in and claims cost coming down over that same time.
Paul Newsom: That is great.
Speaker Change: Okay, that's great.
Paul Newsome: Then maybe a little bit more on the ratings error situation. Obviously, it sounds like you just discovered it, so it's early days.
Speaker Change: And then maybe a little bit more on the.
Paul Newsom: Maybe a little bit more on the ratings error situation. Obviously, it sounds like it's just you just discovered it.
Speaker Change: Ratings.
Speaker Change: Ratings your situation.
Speaker Change: Obviously it sounds like it's just you just discovered it it's early days, but.
Kevin Leidwinger: It's early days, but you know I've never seen anything like this before, so I really don't need to know how to begin in terms of is thinking about implications of the size. It looks like a manageable number, more on the earnings issue than a hook value issue, but any thoughts in terms of, you know, maybe history is this or if you've seen anything like this before and just to give us a sense of, you know, the importance of it.
Kevin Leidwinger: But, you know, I've never seen anything like this before, so I really don't know how to begin in terms of... And I'm thinking about the implications of the size; it looks like a manageable number, more of an earnings issue than a book value issue. But any thoughts in terms of, you know, maybe the history of this? If you've seen anything like this before, and just to give us a sense of, you know, the importance
Speaker Change: Yeah.
Speaker Change: I've never seen anything like this before so I really don't know how to begin in terms of.
Speaker Change: About.
Speaker Change: Implications in size.
Speaker Change: It looks like a manageable number Moody's issued in it.
Book value issue, but any.
Speaker Change: Any thoughts in terms of you know.
Speaker Change: Maybe the history of this or is it you've seen like this before and just to give us a sense of you know.
Speaker Change: Yeah.
Speaker Change: Important to them.
Kevin Leidwinger: Hi, good morning, Paul. It's Kevin. And so, you know, I can't really speak to the broader issue around rating errors. All I can can speak to this morning is the fact that you're right. This is a relatively new issue to us identified in July. And so we're in the process of doing further investigation on both the umbrella and general liability product lines, as well as other lines to ensure that there are no further rating error issues in the portfolio. And obviously we're in the process of having conversations with state regulators. And so, you know, at this point, we've recorded an estimated liability based on the information we have available to us at this time. And, as we indicated in the press release, you know, that could change as more information becomes available to us.
Speaker Change: Hi, Good morning, Paul It's Kevin So I can't really speak to the to the broader issue around rating errors. All I can speak to this morning is the fact that you're right. This is a relatively.
Kevin Leidwinger: Hi, good morning, Paul, it's Kevin. And so I can't really speak to the broader issue around rating errors. All I can speak to this morning is the fact that you're right, this is a relatively new issue to us that was identified in July. And so we're in the process of doing further investigation on both the umbrella and general liability product lines, as well as other lines to ensure that there are no further rating error issues in the portfolio.
Speaker Change: New issue to us identified in July and so we're in the process of doing further investigation on both the umbrella and general liability product lines as well as other lines to ensure that there are no further rating are issues in the portfolio and obviously, we're in the process of having conversations with state regulators and so.
Kevin Leidwinger: And obviously, we're in the process of having conversations with state regulators. And so, you know, at this point, we've recorded an estimated liability based on the information we have available to us at this time. And as we indicated in the press release, that could change as more information becomes available to us, but we're diligently working through this issue, and we'll have more to share as it becomes available to us.
Speaker Change: You know at this point, we've recorded an estimated liability based on the information we have available to us at this time and as we indicated the press release, you know that could change as more information becomes available to us, but we're diligently working through this issue and.
Kevin Leidwinger: But we're diligently working through this issue, and we don't have more to share as it becomes available to us.
Speaker Change: We don't have more to share as it becomes available to us.
Paul Newsome: Maybe a related modeling question. Is it fair to say that 3.2 million was sort of what you overcharged your customers last year? And so if we're looking at sort of a run rate for
Speaker Change: Maybe a related modeling question.
Paul Newsom: Maybe a related modeling question. Is it fair to say that the 3.2 million was sort of what you overcharged those customers last year. And so, if we're looking at sort of a run rate for revenue, do we just take 2.2 million and start with that as a base? Is that a good way to approach it? Or is it more complicated or different than that? So, I think as you look at the 3.2 million, that's included right now in the revenue section, but as a other gain or loss. I think as we get this one time item behind us, going forward, we don't think there's a significant premium impact from a run rate perspective.
Speaker Change: Is it fair to say that the $3 2 million was sort of what.
Speaker Change: You over charge your customers last year.
Speaker Change: So if we were looking at sort of a run rate for us.
Speaker Change:
Speaker Change: Revenue.
Speaker Change: Do you see if one two.
Speaker Change: 2 million short with that as the base is that a good way to approach it.
Speaker Change: Or or is it more complicated and different than that.
Speaker Change: So I think as you look at the $3 2 million. We that's included right now in the revenue section, but as our other gain or loss.
Eric Martin: I think as you look at the $3.2 million that's included right now in the revenue section, but as a other gain or loss, I think as we get this one-time item behind us going forward, we don't think there's a significant premium impact from a run rate perspective after we get this one-time impact past us. Okay.
As we get this.
Speaker Change: One time item behind us going forward, we don't think there's a a.
Speaker Change: Significant premium manpack from a run rate perspective.
Speaker Change:
Paul Newsom: After we get this one time impact, pass this.
Speaker Change: After after we get this one time impact past us.
Speaker Change: Okay.
Paul Newsome: Okay, we'll take it online. It doesn't make any sense to me, but I could be very confused. Those are the two big questions I have for you. Thank you. I appreciate the help as always.
Paul Newsom: Okay. We'll take it online. It doesn't make any sense to me, but I could be confused. Anyway, that's a big question. I want to thank you. Appreciate the help as always. As a reminder, if you would like to ask a question, please press star, then one to enter the question queue.
Speaker Change: We'll take it offline as it make any sense to me, but I keep getting confused.
Speaker Change:
Speaker Change: And.
Speaker Change: Uh huh.
Speaker Change: You should be question. Thank you I appreciate the help as always.
Speaker Change: As a reminder, if you would like to ask a question. Please press Star then one to enter the question queue.
Kevin Leidwinger: As a reminder, if you would like to ask a question, please press star and then one to enter the question queue. This concludes our question and answer session. I would like to turn the conference back over to Kevin Leidwinger for any closing remarks.
Operator: This concludes our question and answer session.
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Kevin like linger for any closing remarks.
Kevin Leidwinger: I would like to turn the conference back over to Kevin Liglinger for any closing remarks. Well, thanks again for joining us this morning, and we'll talk to you next quarter. Thank you.
Kevin Leidwinger: Well, thanks again for joining us this morning, and we'll talk to you next quarter. Thank you.
Speaker Change: Well, thanks again for joining us this morning, and we'll talk to you next quarter. Thank you.
Operator: The conference is top included. Thank you for attending today's presentation.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yes.